Remote work and multistate operations have made a once-simple question increasingly complicated: which state’s employment laws apply when an employee works in one state but the employer, managers, payroll, or employment decisions are connected to another?
A newly published California Court of Appeal decision involving SpaceX addresses one part of that question.
In Civil Rights Department v. Space Exploration Technologies Corp., the Court of Appeal upheld an order requiring SpaceX to comply with an investigatory subpoena from the California Civil Rights Department, commonly known as CRD, concerning a former employee who lived and worked in Washington.
The decision does not mean that every out-of-state employee can automatically bring a claim under California’s Fair Employment and Housing Act, or FEHA.
Instead, it makes an important distinction: before deciding whether California law ultimately applies, CRD may need to investigate where the relevant employment decisions actually occurred and whether the dispute has sufficient connections to California.
What Happened in the SpaceX Case?
A former SpaceX employee filed a complaint with CRD alleging discrimination and retaliation in violation of FEHA.
The employee lived and worked in Washington.
She alleged, among other things, that SpaceX paid her less than a male employee hired around the same time, passed her over for a promotion in favor of a less experienced male employee, and later terminated her in retaliation for participating in an open letter criticizing the company’s workplace environment.
SpaceX challenged CRD’s authority to investigate.
Its position was relatively straightforward: the employee lived and worked in Washington, and the relevant employment decisions were made there. According to SpaceX, the alleged conduct therefore fell outside the territorial reach of California’s FEHA.
CRD disagreed. The agency sought information to determine whether the alleged conduct had sufficient connections to California, including where relevant decisions may have been made or ratified.
When SpaceX declined to provide all of the requested information, CRD went to court to enforce its investigatory subpoena.
The trial court ordered SpaceX to comply, and SpaceX appealed.
What Did the Court of Appeal Decide?
The Court of Appeal affirmed the order requiring SpaceX to comply with CRD’s subpoena.
An important part of the Court’s reasoning was that the jurisdictional facts had not yet been fully established.
It was undisputed that the employee lived and worked in Washington. But there were also potential California connections.
The record indicated that the employee had reported to management located in California, her pay statements were issued from California and identified a California facility as her employer, and portions of her new-hire paperwork concerned California employment law.
CRD was attempting to investigate these and other facts to determine whether the allegedly discriminatory conduct occurred, was directed, or was ratified in California.
The Court concluded that SpaceX had not established that CRD was prohibited from conducting that investigation.
Investigation Is Not the Same as Ultimate Liability
This is probably the most important point for businesses to understand about the decision.
The Court did not hold that FEHA necessarily applied to the employee’s claims. Nor did it decide that SpaceX had discriminated or retaliated against the employee.
The case concerned CRD’s authority to investigate.
There is a significant difference between allowing a government agency to obtain information necessary to determine its jurisdiction and ultimately deciding that California employment law governs the dispute.
In fact, CRD itself initially limited portions of its investigation to determining whether sufficient California connections existed.
The Court recognized that CRD could need information from the employer precisely because the agency could not determine the jurisdictional issue without investigating where the relevant conduct occurred.
An employer therefore may not always defeat a California investigation simply by pointing out that the employee physically worked in another state.
Why This Matters More in the Remote-Work Era
The practical significance of the decision extends beyond SpaceX.
Modern employment relationships frequently cross state lines.
An employee may work from a home office in Nevada, Washington, Arizona, or Texas while reporting to managers in California. Human resources personnel may be located in another state. Payroll may originate in California. A promotion or termination decision may involve executives located in several different offices.
In that situation, simply asking, “Where did the employee sit while working?” may not answer every jurisdictional question.
- Where was the challenged decision made?
- Who participated in it?
- Where were the relevant managers located?
- Was the decision reviewed or ratified in California?
- What employment documents governed the relationship?
Those facts may become important when determining whether California has a sufficient connection to the dispute.
California Headquarters Alone May Not Be Enough
The decision should not be read too broadly.
The Court discussed prior California authority involving an employee who lived and worked outside California and whose claims lacked sufficient California connections.
That authority recognizes that the mere fact an employer is headquartered in California does not necessarily make FEHA applicable to every employee working elsewhere.
The difference in the SpaceX case was that the relevant jurisdictional facts had not yet been fully determined.
CRD was seeking information to determine whether there were meaningful California connections, and SpaceX had not established that the agency was categorically prohibited from doing so.
That is a narrower rule than saying California employment law follows a California company everywhere it does business.
The Practical Lesson for Multistate Employers
For businesses with employees in multiple states, the decision is a reminder that employment-law exposure may not always be determined solely by the employee’s physical work location.
When an employment dispute arises, companies should consider where the relevant decisions were actually made and who participated in them.
That may be particularly important for remote employees whose supervisors, human resources personnel, executives, or corporate functions are located in California.
Businesses should also recognize the distinction between challenging ultimate liability and responding to an agency investigation.
An employer may ultimately have a strong argument that California law does not apply to a particular employee. But that does not necessarily mean the employer can refuse an investigation designed to determine the facts necessary to answer that very question.
Civil Rights Department v. Space Exploration Technologies Corp. therefore does not establish a sweeping expansion of FEHA to employees throughout the country.
Instead, it illustrates something increasingly important for multistate businesses: when employees, managers, and employment decisions cross state lines, determining which state’s law applies may require looking beyond where the employee physically worked.
Legal Authorities
- Civil Rights Department v. Space Exploration Technologies Corp. (Cal. Ct. App., filed Aug. 11, 2026; certified for partial publication Sept. 9, 2026)
- California Fair Employment and Housing Act, Gov. Code § 12900 et seq.
Related practice areas: Executive-Related Disputes · Civil Litigation