California Supreme Court Decision Limits Remedies Available to Undocumented Workers in Employment Cases

California Supreme Court Decision Limits Remedies Available to Undocumented Workers in Employment Cases

The California Supreme Court recently issued an opinion limiting the remedies available to undocumented workers under The Fair Employment and Housing Act, California Government Code section 12940 et seq., (“FEHA”).  In Salas v. Sierra Chemical Co., the plaintiff provided a Social Security number and a resident alien card when he applied for a job with the defendant.  He signed a federal Immigration and Naturalization form I-9, under penalty of perjury.  He also signed an IRS withholding form W-4, using the Social Security number given to the employer.  During the course of his employment, he submitted a workers’ compensation claim for an alleged on duty injury.  He later sued Sierra Chemical Company for failure to reasonably accommodate a disability under the FEHA.  He also alleged that the defendant wrongfully denied him employment, in violation of public policy, and that he was retaliated against for filing a workers’ compensation claim and for being disabled.

During the course of the litigation, the defendant investigated the authenticity of the documents plaintiff submitted to obtain employment with the defendant and learned that the plaintiff used another man’s Social Security number.  Sierra Chemical moved the trial court for summary judgment, arguing that is was entitled to judgment as a matter of law under the after-acquired evidence doctrine and the unclean hands doctrine because it was learned that the plaintiff fraudulently used someone else’s Social Security number to obtain employment with the defendant.  The trial court denied the defendant’s motion.

The defendant sought relief with the California Court of Appeal, which issued an alternative writ.  The trial court thereafter vacated its earlier order and entered an order granting summary judgment to the defendant.  Plaintiff appealed and the Court of Appeal upheld the dismissal, finding that the plaintiff’s action was barred by the doctrines of after-acquired evidence and unclean hands since Plaintiff had misrepresented to the employer his eligibility under federal law to work in the United States.  The Court of Appeal found that those doctrines were not precluded by California Senate Bill 1818, which added nearly identical provisions to the Civil Code, Government Code, Health and Safety Code, and Labor Code.  These 2002 statutory changes provided, among other things, that protections, rights and remedies available under state law were available to individuals regardless of immigration status.  The bill was a response to the United States Supreme Court’s decision in Hoffman Plastic Compounds, Inc. v. NLRB (2002) 535 U.S. 137, which overturned a decision by the National Labor Relations Board (NLRB) awarding backpay to an employee who used a friend’s birth certificate to obtain a California driver’s license and federal Social Security card to gain employment.  In Hoffman, the United States Supreme Court held that awarding backpay to illegal aliens would conflict with the policies underlying federal immigration law.

In Salas, the California Supreme Court decided the issue of whether federal immigration law preempted Senate Bill 1818, a bill that was intended to extend protections under state law to undocumented workers.  The Court recognized that under the U.S. Constitution’s Supremacy Clause, federal law can preempt or supersede state law.  However, it ultimately held that Senate Bill 1818 was not preempted in its entirety by the Immigration Reform and Control Act of 1986, 8 U.S.C. section 1101 et seq.  That law requires employers to verify the identity and work eligibility of new employees.  An employer who learns that a worker is not eligible to work must terminate the employment or face civil fines and criminal prosecution.  (8 U.S.C. section 1324a(a)(2), (e)(4)(A), (f)(1).)  A worker who uses false documents to gain employment is also subject to civil fines and criminal prosecution.  (8 U.S.C. section 1324c(a)(1)-(3), 18 U.S.C. section 1546(b).)

In evaluating the preemption issue, the Court noted that there was no “evidence of a clear and manifest purpose by Congress to occupy the field of immigration regulation so completely as to preclude the states from applying to unauthorized aliens the states’ own worker protection labor and employment laws.”  (Salas, p. 14.)  However, the Court went on to find that a California FEHA award for lost pay after the time the employer discovers the employee is not eligible to work is preempted by federal law.  As the Court explained, “[b]ecause under federal immigration law an employer may not continue to employ a worker known to be ineligible…, any state law that compensates an unauthorized alien worker for loss of employment during the post-discovery period directly conflicts with the federal immigration law prohibition against continuing to employ workers whom the employer knows are unauthorized aliens.” (Salas, p. 15.)  The Court determined that recovery of lost wages is not prohibited to an alien worker as long as the employer did not have knowledge of the worker’s status during that time period.

The California Supreme Court also looked at the issue of whether the after-acquired evidence doctrine and the unclean hands doctrine are complete defenses to a worker’s FEHA claims.  The after-acquired evidence doctrine applies when an employer discovers information that would have justified a lawful termination or refusal to hire, but only after an allegedly wrongful termination or refusal to hire.  The Court followed the United States Supreme Court’s decision in McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, which held that the after-acquired evidence doctrine was not a complete defense to suit because it would undermine the enforcement mechanism of anti-discrimination laws.  However, as the Court recognized, it is well settled that when the doctrine applies, the remedies available to the plaintiff-employee are limited.  Although it would depend on the particular circumstances of the case, the Court agreed that reinstatement would not generally be an appropriate remedy and damages for lost earnings would be limited to backpay from the date of the unlawful discharge to the date the new information was discovered by the employer.  This approach protects the lawful interests of the employer, without undermining the goal of the anti-discrimination laws to redress employment discrimination.

The Court also discussed the applicability of the doctrine of unclean hands.  That doctrine “applies when a plaintiff has acted unconscionably, in bad faith, or inequitably in the matter in which the plaintiff seeks relief”.  (Salas, p. 27.)  The Court determined that the unclean hands doctrine is not a complete defense to suit, but is a defense that if applicable, would limit the remedies available to a plaintiff in a FEHA case.

The California Supreme Court’s recent decision in Salas establishes that there are limits to the recovery available to undocumented workers who sue for employment discrimination, though if and when damages for lost earnings are cut off is dependent on the employer’s knowledge of the workers’ illegal status.  Notably, the Court did not foreclose the availability of other remedies under the FEHA to undocumented workers, such as injunctive relief, costs and attorney fees, and even punitive damages.

By: Stephanie Quinn


The information presented in this article is intended for general educational purposes. It is not intended to be legal advice. Every company or person’s situation is different and requires individual analysis by competent counsel before legal advice can be rendered. If you are confronted by a legal issue retain competent legal counsel to advise you immediately. This article is not a substitute for legal advice from an attorney licensed to practice in your jurisdiction.

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