Salas v. Sierra Chemical: Federal Immigration Law Preempts -- In Part -- FEHA Action By Unauthorized Worker; After-Acquired Evidence and Unclean Hands Are Not Complete Defenses in Such Actions

Salas v. Sierra Chemical Co. considers the impact of an employee using false documents to obtain employment in the context of an action for violation of the Fair Employment and Housing Act (FEHA).

Plaintiff Vicente Salas applied for work with defendant Sierra Chemical in 2003, providing Sierra with a social security number (SSN). In late 2004 or early 2005, Sierra received a "no match" letter from the Social Security Administration (SSA), stating that Salas's name and number did not match SSA's records. Sierra continued to employ Salas. In 2006, after injuring his back twice at work, Salas filed for workers compensation benefits. Later that year, he was laid off.

Salas sued Sierra for disability discrimination and retaliation in violation of FEHA. After Salas filed a motion in limine stating that he would not answer questions regarding his immigration status, Sierra investigated and found that Salas had used another person's SSN to obtain employment. The trial court granted summary judgment for Sierra, and Salas appealed. The Court of Appeal held that both the doctrine of after-acquired evidence and the doctrine of unclean hands barred Salas's claims. (Court of Appeal decision discussed here.)

On review, the California Supreme Court held as follows: 

Federal Preemption

The federal Immigration Reform and Control Act (IRCA) does not preempt the FEHA generally, nor does it preempt California's Senate Bill No. 1818, which provides in part: 

All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state. 

Government Code section 7285 (emphasis added). However, the IRCA does bar an award of lost pay damages for any period of time after an employer discovers that an employee is not eligible for employment under the IRCA.  

Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 127 (NLRB could not “award backpay to an illegal alien for years of work not performed, for wages that could not lawfully have been earned, and for a job obtained in the first instance by a criminal fraud”) does not answer the preemption question here because it does not address federal preemption of state antidiscrimination laws. Slip op. at 9-11. 

Express preemption does not apply because IRCA does not expressly preempt FEHA or Senate Bill 1818. Slip op. at 12-13. 

Field preemption also does not apply because the federal interest in regulating employment of unauthorized aliens is "not so dominant as to preclude state laws on the same subject," and the federal regulation imposed by IRCA "is not so pervasive as to leave no room for any state law on the same subject." Slip op. at 13-14. 

However, conflict preemption -- "which occurs when state law conflicts with federal law either because compliance with both laws is impossible or because state law is an obstacle to 

achieving the federal law's objectives" -- does apply, at least in part. Slip op. at 15-19. 

IRCA preempts "any state law award that compensates an unauthorized alien worker for loss of employment during the [period after an employer discovers that an employee is ineligible to work] because such an award would "impose liability on an employer for not performing an act (continuing to employ a worker known to be an unauthorized alien) expressly prohibited by federal law." Slip op. at 15. Not answered is whether this analysis applies to situations where an employer knowingly hires an unauthorized alien. Slip op. at 15-16 fn. 3. 

IRCA does not preempt an award that compensates an unauthorized alien worker for loss of employment during the period before an employer discovers that an employee is ineligible to work. Slip op. 16. 

After-Acquired Evidence

The after-acquired evidence doctrine "refers to an employer's discovery, after an allegedly wrongful termination of employment or refusal to hire, of information that would have justified a lawful termination or refusal to hire." Slip op. at 21. 

The after-acquired evidence doctrine is not "a complete defense to claims of retaliation and disability discrimination brought under the FEHA." Slip op. at 24. Instead, application of the after-acquired evidence doctrine requires courts to take into account "both the employee's rights and the employer's prerogatives" on a case-by-case basis. Slip op. at 25. 

Generally, the employee's remedies should not afford compensation for loss of employment during the period after the employer's discovery of the evidence relating to the employee's wrongdoing. When the employer shows that information acquired after the employee's claim has been made would have led to a lawful discharge or other employment action, remedies such as reinstatement, promotion, and pay for periods after the employer learned of such information would be “inequitable and pointless,” as they grant remedial relief for a period during which the plaintiff employee was no longer in the defendant's employment and had no right to such employment. 

The remedial relief generally should compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired information of the employee's wrongdoing or ineligibility for employment. Fashioning remedies based on the relative equities of the parties prevents the employer from violating California's FEHA with impunity while also preventing an employee or job applicant from obtaining lost wages compensation for a period during which the employee or applicant would not in any event have been employed by the employer. In an appropriate case, it would also prevent an employee from recovering any lost wages when the employee's wrongdoing is particularly egregious. 

Slip op. at 25-26. 

Applying the after-acquired evidence doctrine to the present case, the Supreme Court reversed the trial court's grant of summary judgment in favor of Sierra because the evidence could support a finding that Sierra continued to employ Salas after being put on notice of his immigration status. Slip op. at 26. "Such a finding could affect application of the after-acquired evidence doctrine and thus the remedies available to plaintiff employee." Slip op. at 27. 

Unclean Hands

The unclean hands doctrine -- which applies when a plaintiff has acted unconscionably, in bad faith, or inequitably in the matter in which he seeks relief -- is not a complete defense to a claim "based on a public policy expressed by the Legislature in a statute" such as the FEHA. Slip op. at 27. "Nevertheless, equitable considerations may guide the court in fashioning relief in cases involving a legislatively expressed public policy." Ibid.

Salas v. Sierra Chemical Co. is available here. 

Salas v. Sierra Chemical: Supreme Court Decision Due Today

In Salas v. Sierra Chemical Co. (Supreme Court Case No. S196568, docket here) (appellate decision discussed here) the California Supreme Court will consider whether an employee's use of a false social security number to obtain employment prevents the employee from later suing his employer for disability discrimination. The issues stated:

Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance?  

Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 

On February 27, the Court asked the parties to address an additional issue:

Does federal immigration law preempt state law and thereby preclude an undocumented worker from obtaining, as a remedy for a violation of "state labor and employment laws" (Lab. Code § 1171.5; Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000), an award of compensatory remedies, including backpay? (See Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137.)

The Supreme Court will announce its decision at 10:00 am. As always, watch this space for details. 

Salas v. Sierra Chemical: Court Schedules Oral Argument In Undocumented Worker Case

In Salas v. Sierra Chemical Co. (Supreme Court Case No. S196568, docket here), the California Supreme Court will consider whether an employee's use of a false social security number to obtain employment prevents the employee from later suing his employer for disability discrimination. The issues stated:

Did the trial court err in dismissing plaintiff's claims under the Fair Employment and Housing Act (Gov. Code § 12900 et seq.) on grounds of after-acquired evidence and unclean hands, based on plaintiff's use of false documentation to obtain employment in the first instance?  

Did Senate Bill No. 1818 (2001-2002 Reg. Session) preclude application of those doctrines in this case? (See Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000; Lab. Code § 1171.5.) 

On February 27, the Court asked the parties to address an additional issue:

Does federal immigration law preempt state law and thereby preclude an undocumented worker from obtaining, as a remedy for a violation of "state labor and employment laws" (Lab. Code § 1171.5; Civ. Code § 3339; Gov. Code § 7285; Health & Saf. Code § 24000), an award of compensatory remedies, including backpay? (See Hoffman Plastic Compounds, Inc. v. NLRB(2002) 535 U.S. 137.)

The Court has scheduled Salas for oral argument on Wednesday, April 2, 2014, at 9:00 a.m., in Los Angeles. The Court's decision will be due 90 days later, or July 1, 2014.

We are working to bring you a Watch List webinar on the decision shortly after it comes down. 

Undocumented Workers Have Equal Rights Under the Wage and Hour Laws

"Do not withhold the wages due to your poor or destitute hired hand, whether he is one of your brethren or a stranger living in a settlement in your land." Deuteronomy 24:14.

Statutory changes over the last several years and a 2007 Court of Appeal decision, Reyes v. Van Elk (2007) 148 Cal.App.4th 604, make clear that all workers have the right to enforce California’s wage and hour laws, regardless of their immigration status. Indeed, questions about immigration status have no place in wage and hour litigation, and discovery directed at a worker’s immigration status is expressly prohibited.

California Labor Code section 1171.5, enacted in 2002, "finds and declares" the following: 

(a) All protections, rights, and remedies available under state law, except any reinstatement remedy prohibited by federal law, are available to all individuals regardless of immigration status who have applied for employment, or who are or who have been employed, in this state.

(b) For purposes of enforcing state labor and employment laws, a person’s immigration status is irrelevant to the issue of liability, and in proceedings or discovery undertaken to enforce those state laws no inquiry shall be permitted into a person’s immigration status except where the person seeking to make this inquiry has shown by clear and convincing evidence that the inquiry is necessary to comply with federal immigration law.

(c) The provisions of this section are declaratory of existing law.  

California Civil Code section 3339 and Government Code section 7285 contain similar language, but include civil rights and employee housing laws under the protection afforded by Labor Code section 1171.5. 

The Legislature enacted these statutes in response to Hoffman Plastic Compounds, Inc. v NLRB (2002) 535 US 137, 122 S Ct 1275, 152 L Ed 2d 271, the decision in which the United States Supreme Court held that the National Labor Relations Board ("NLRB") may not award "backpay" to undocumented workers. Hoffman concerned remedies available to undocumented workers under the National Labor Relations Act ("NLRA") and not their standing to file a claim before the NLRB. In fact, the Supreme Court in Hoffman reaffirmed its earlier holding in Sure-Tan, Inc. v. NLRB (1984) 467 US 883, 104 S Ct 2803, 81 L Ed 2d 732, that undocumented workers have standing to file claims under the NLRA and are considered "employees" within the meaning of that statute. 

In March of 2007, in Reyes v Van Elk (2007) 148 Cal.App.4th 604, the Second District Court of Appeal held that the Immigration Reform and Control Act of 1986 ("IRCA") and Hoffman do not preclude undocumented workers from asserting claims for unpaid prevailing wages, and do not preempt California’s immigration status privacy statutes. In a case brought by employees on public works projects subject to California’s prevailing wage law, (Lab Code, §§ 1720-1861), the Court began by recognizing that prevailing wages are minimum wages, and that an employee has a private statutory right to recover unpaid prevailing wages from an employer. The court then wrote: "Earned but unpaid salary wages are vested property rights, [cite omitted]. Noncitizens are guaranteed the same property rights as citizens. (Cal Const, art I, § 20)." Hoffman, the Court continued, "does not prohibit plaintiffs from having standing to raise claims for prevailing wages, as those claims are ... for work already performed." See also Patel v. Quality Inn South (11th Cir 1988) 846 F.2d 700 (IRCA does not limit remedies for unpaid wages available to undocumented workers under the Fair Labor Standards Act).  

Concerning preemption by the IRCA, the Second District emphasized that the historic police powers of the states are not to be superseded by federal act unless that is the clear and manifest purpose of Congress. The Court further explained: 

We conclude there is no actual conflict between the IRCA and the prevailing wage law as the state law is not an obstacle to the accomplishment and execution of the full purposes and objectives of the IRCA.... [¶] The ultimate goal of the IRCA is to control illegal immigration into the United States by prohibiting the employment of unauthorized aliens... Allowing employers to hire undocumented workers and pay them less that the wage mandated by statute is a strong incentive for the employers to do so, which in turn encourages illegal immigration...

Reyes confirms a number of important points for California employees, both documented and undocumented. First, employees have a private right of action to pursue prevailing wage claims, just as they do to pursue other wage claims. Second, undocumented workers have the same right as documented workers to enforce California’s wage and hour laws. Finally, all workers have the right to prosecute such actions without intrusive and irrelevant inquiries into their immigration status.