Constitutional Law

FEHA Action by Unauthorized Alien for Prediscovery Lost Wage Damages Is Not Preempted by Federal Immigration Law or Barred by Doctrines of After-Acquired Evidence or Unclean Hands

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In Salas v. Sierra Chemical Co. (2014) ___ C.4th ___, ___ C.R.3d ___, ___ P.2d ___, 2014 WL2883878 plaintiff submitted a false Social Security card and number in applying for seasonal employment with defendant. After being laid off and rehired several times from 2003 through 2006, he was recalled to work in 2007, but was never rehired because he failed to provide a doctor’s release for his disability. He brought an action for disability discrimination and retaliation under the California Fair Employment and Housing Act (FEHA), seeking damages for lost wages and emotional distress. The Court of Appeal concluded that plaintiff’s claims were barred by both the doctrine of after-acquired evidence and the doctrine of unclean hands because plaintiff had misrepresented his eligibility under federal law to work in the United States and had used another person’s Social Security number in seeking employment. Also at issue, on appeal from summary judgment, is whether state worker protection provisions are preempted by the federal Immigration Reform and Control Act of 1986 (IRCA). Held, plaintiff was not barred by his unauthorized status from bringing an action against defendant for prediscovery lost wage damages under the FEHA. (___ C.4th ___.)

(a) FEHA and Senate Bill No. 1818. Although federal law preempts an award of lost pay damages under the FEHA for any period after an employer’s discovery of an employee’s ineligibility to work lawfully in the U.S., it does not generally preempt the FEHA. (___ C.4th ___.) In addition to the FEHA, the California Legislature enacted Senate Bill No. 1818 in 2002 in response to the decision of the U.S. Supreme Court in Hoffman Plastic Compounds v. N.L.R.B. (2002) 535 U.S. 137, 122 S.Ct. 1275, 152 L.Ed.2d 271. (___ C.4th ___.) This bill enacted four nearly identical provisions, including Govt.C. 7285, which provides that except for any reinstatement remedy prohibited by federal law, all protections, rights, and remedies available under state 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.” (___ C.4th ___.)

(b) No per se preemption of action under FEHA. In Hoffman, the Court held that the IRCA prohibited the NLRB from awarding backpay to an unauthorized alien who used false documents to get a job. Hoffman addressed the impact of federal immigration law on a federal agency’s authority to award a remedy for violating federal law. It is not controlling here. This case asks whether federal immigration law preempts a state antidiscrimination law enforced through a private action for damages. (___ C.4th ___, ___.) In Arizona v. United States (2012) 567 U.S. ____, 132 S.Ct. 2492, 183 L.Ed.2d 351, 7 Summary (10th), Constitutional Law, §16, the U.S. Supreme Court recently reaffirmed its observation in De Canas v. Bica (1976) 424 U.S. 351, 96 S.Ct. 933, 47 L.Ed.2d 43, 7 Summary (10th), Constitutional Law, §20, that not every state law dealing in any way with aliens is a regulation of immigration that is per se preempted by the federal power to regulate immigration. (___ C.4th ___.)

(c) Established tests for federal preemption. Federal law does not preempt Senate Bill 1818 regarding the recovery of prediscovery damages for unlawful termination in violation of the FEHA:

(1) No express preemption. Although the IRCA specifically preempts state laws that impose civil or criminal sanctions on those who employ unauthorized aliens, there is no express provision in the IRCA addressing the power of a state to grant employment protections to all workers “regardless of immigration status.” (___ C.4th ___.)

(2) No field preemption. There is 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.” (___ C.4th ___.)

(3) Partial conflict preemption. Defendant only learned of plaintiff’s unauthorized status after plaintiff was discharged. Federal law prohibits an employer from continuing the employment of a worker known to be ineligible. Hence, in this situation, any state law award compensating an unauthorized alien for loss of employment during the post-discovery period directly conflicts with federal law and is preempted. (___ C.4th ___, and footnote 3.) However, in the prediscovery period, compliance with both federal and state law is possible. Although federal law prohibits the use of false documents to obtain employment, it does not prohibit an employer from paying wages or an employee from receiving compensation during employment wrongfully obtained by false documents, as long as the employer has no knowledge of the employee’s unauthorized status. (___ C.4th ___.)

(4) No obstacle to achieving purpose of IRCA. Senate Bill No. 1818 does not create an obstacle to accomplishing congressional objectives. The IRCA makes it a crime to use false documents to obtain employment, but Congress did not impose criminal sanctions on unauthorized aliens for seeking or engaging in unauthorized work. (___ C.4th ___.) The protections of Senate Bill No. 1818 extend even to those unauthorized aliens who have used false documents to gain employment. But this protection does not serve as a significant incentive for unauthorized aliens to seek work in this country. Further, pursuing state law remedies after termination would cause an alien to risk discovery of his or her unauthorized status, and would expose the alien to criminal prosecution and deportation. (___ C.4th ___.)

(d) Immunization of employers. Not allowing unauthorized workers to pursue state remedies for unlawful discharge would immunize employers who discriminate and retaliate, or who fail to pay required state wages. Further, the resulting lower employment costs would encourage employers to hire unauthorized workers, which is contrary to the purpose of federal immigration law to eliminate employers’ economic incentives to hire unauthorized workers by imposing civil and criminal penalties. (___ C.4th ___.)

(e) Declaration of existing law. Senate Bill No. 1818 was made “declaratory of existing law.” This means that it applies “to all existing causes of action from the date of its enactment.” (___ C.4th ___, quoting Western Sec. Bank v. Superior Court (1997) 15 C.4th 232, 62 C.R.3d 243, 933 P.2d 507, 7 Summary (10th), Constitutional Law, §624.) “Thus, we infer here that the Legislature intended to extend to cases predating Senate Bill No. 1818’s enactment that statute’s central directive that state law protections should extend to all employees ‘regardless of immigration status.’ Nothing in the statute states or implies that its central directive would not apply to any unauthorized alien who used false documentation to obtain employment.” (___ C.4th ___.)

(f) Application of after-acquired evidence doctrine. 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.” (___ C.4th ___.) The Supreme Court in McKennon v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, 8 Summary (10th), Constitutional Law, §860, 115 S.Ct. 879, 130 L.Ed.2d 852, held that, although after-acquired evidence can limit the remedies available to an employee, it does not bar all relief under the federal Age Discrimination in Employment Act (ADEA). Barring all relief “would be inconsistent with the federal statutory scheme and would impair the efficacy of the ADEA’s enforcement mechanism.” (___ C.4th ___.) The Supreme Court rejected an absolute rule barring the recovery of backpay because it would undermine the objectives of the ADEA. (___ C.4th ___.)

(g) After-acquired evidence doctrine is not complete defense. The Court’s reasoning in McKennon applies with equal force to plaintiff’s claim here. Achievement of the antidiscrimination goal of FEHA “would be substantially impaired if the doctrine of after-acquired evidence were a complete defense to claims of retaliation and disability discrimination.” In these cases, the employer’s alleged wrongful act precedes the employer’s discovery of information that would have justified the employment action. “To allow such after-acquired evidence to be a complete defense would eviscerate the public policies embodied in the FEHA by allowing an employer to engage in invidious discrimination with total impunity.” (___ C.4th ___.) Generally, the remedial relief “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.” (___ C.4th ___.) This relief prevents the employer from violating the FEHA with impunity and prevents the employee from collecting backpay for a period during which he or she had no right to be employed with the employer. (___ C.4th ___.)

(h) Effect of defendant’s knowledge of plaintiff’s unauthorized status. The trial court initially denied defendant’s motion for summary judgment because there was a triable issue of material fact regarding defendant’s knowledge that plaintiff was an unauthorized alien. Evidence that plaintiff and several other employees had supplied incorrect Social Security numbers without consequences “would support a finding that defendant employer deliberately chose to look the other way when put on notice of employees’ unauthorized status. Such a finding could affect application of the after-acquired evidence doctrine and thus the remedies available to plaintiff employee.” (___ C.4th ___.)

(i) Unclean hands doctrine. Although the unclean hands doctrine may be a complete defense to legal as well as equitable actions, it may not “be used to wholly defeat a claim based on a public policy expressed by the Legislature in a statute.” (___ C.4th ___.) Hence, the Court of Appeal erred in treating the doctrine as a complete defense to the action here. (___ C.4th ___.)

Two justices dissented on the issue of federal preemption over claims of post-termination lost wage damages, but they concurred with the majority that defendant’ motion for summary judgment should not have been granted. (___ C.4th ___.) Although plaintiff used a false Social Security card and number to obtain employment, the evidence on summary judgment does not establish whether plaintiff actually is an unauthorized alien. (___ C.4th ___.)

Witkin Cross-References:

On federal supremacy in foreign affairs, see 7 Summary (10th), Constitutional Law, §§16, 20.

On employment of unauthorized aliens, see 7 Summary (10th), Constitutional Law, §188.

On after-acquired evidence of wrongdoing, see 8 Summary (10th), Constitutional Law, §860.

On doctrine of unclean hands, see 13 Summary (10th), Equity, §§9 et seq.

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Last updated
Friday, July 25, 2014