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June 27, 2014

California Supreme Court Holds Unauthorized Workers Are Not Precluded From Suing Employers For Alleged Violations Of California Employment Laws


On June 26, 2014, the California Supreme Court held that all employees, regardless of immigration status, are entitled to all of the protections, rights and remedies provided under California employment laws and held that California law is not pre-empted by federal immigration law prohibiting employment of unauthorized workers.  Salas v. Sierra Chemical.

Background
Plaintiff Vicente Salas obtained employment with Defendant Sierra Chemical Company in 2003, providing a false Social Security number and documentation to the employer.  During his employment, Salas and several of his co-workers received letters from the Social Security Administration stating that the employee’s name and Social Security number did not match.  Salas alleged that he and his co-workers were told by their production manager at Sierra not to worry about the letter, and that as long as they did good work they would not be terminated.  

Salas was injured on the job and filed for workers’ compensation.  Sierra told Salas that he could come back to work only when he received a complete medical release.  Salas did not provide the release and Sierra did not hear from him again.  Salas later sued for disability discrimination based upon his workers’ compensation claim. Just before trial, Sierra learned of Salas’s use of false documents in the employment application process.  Sierra argued that it would not have hired Salas had it known of the false documentation, and that this evidence should bar his claims. 

The trial court denied Sierra’s motion, and Sierra appealed. The Court of Appeal concluded that Salas’s claims were barred by both the doctrines of after-acquired evidence and unclean hands, reasoning that the doctrine of after-acquired evidence barred Salas’s causes of action because he had misrepresented to Sierra his eligibility under federal law to work in the United States. It also held that Salas’s claims were subject to the doctrine of unclean hands because he had falsely used another person’s Social Security number in seeking employment with Sierra.  The California Supreme Court granted review.

Federal Law does not preempt California Law in this case
The California Supreme Court first reviewed the issue on the basis of preemption, and whether the federal Immigration Reform and Control Act of 1986 (“IRCA”), which prohibits the employment of unauthorized workers (and requires their termination when discovered), preempts or trumps the application of the antidiscrimination provisions of California’s Fair Employment and Housing Act (“FEHA”) to workers who are unauthorized aliens.  

The Court reviewed the case law and legislation since the enactment of the IRCA and concluded that the FEHA is generally not preempted by federal immigration law.  Since the Court found that preemption did not bar the suit, it next turned to the “after acquired evidence” defense raised by Sierra.  The “after acquired evidence defense” refers to an employer’s discovery, after an allegedly wrongful termination or refusal to hire, of information that would have justified a lawful termination or refusal to hire.  The Court determined that the defense may result in a reduction in available remedies, and bars an award of lost pay damages for any period of time after an employer’s discovery of the employee’s ineligibility to work in the United States, but does not act as an absolute defense or bar to the action.  

The Court then turned to the “unclean hands” defense, which applies when a claimant has acted unconscionably or in bad faith in the very matter in which he seeks relief.  The Court held that although unclean hands may be a complete defense to some causes of action, it may not be used to defeat a claim based on a public policy, such as a discrimination claim, though it may reduce the damages awarded.

The Court noted that the employer’s implied knowledge or suspicion of an employee’s illegal status while employed would likely bar or weaken both of these defenses, so as not to encourage employers to turn a blind eye to suspicions that a worker is undocumented while it is of benefit to the employer, then assert the defense in the event of an employee lawsuit.  This decision contrasts with the 2002 U.S. Supreme Court decision in Hoffman Plastic Compounds v. NLRB, in which the Court ruled that IRCA prevented undocumented workers from obtaining back pay for violations of the National Labor Relations Act.  

What does this decision mean to California employers?
Employers are not able to use an employee’s or former employee’s status as an unauthorized worker to entirely defeat that employee’s claims under California law, since rights and protections afforded authorized employees will be extended to unauthorized employees. However, assuming that the employer had no prior knowledge or reason to know of the employee’s illegal status, the post termination discovery of the former employee’s unauthorized status does effectively cut off damages from that point forward, since the employee would presumably have been terminated at that time.  Employers should also be reminded of the passage of the so-called, 2013 Unfair Immigration-Related Practices package of laws (SB 666, AB 263, AB 524; effective January 1, 2014), which, among other provisions, allows for the suspension or revocation of a business license for threatening or retaliating against an employee based on citizenship or immigration status.

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