Wednesday, July 2, 2014

On Salas v. Sierra Chemical: Immigration Status and After-Acquired-Evidence in California

Last week, the California Supreme Court decided Salas v. Sierra Chemical.  In Salas, that Court declared that the Immigration Reform and Control Act of 1986 (IRCA) preempted California employment law remedies to a limited extent.  It also concluded that the doctrines of after-acquired-evidence and unclean-hands do not preclude liability, but do restrict otherwise available remedies, under the California Fair Employment and Housing Act (FEHA).  Here, I’ll describe the opinion.  Later, I’ll offer some guesses on how Salas will affect employment litigation.

The facts: In 2007, plaintiff Vicente Salas sued his former employer, Sierra Chemical, under FEHA. He alleged that (1) when employed there, Sierra had failed to reasonably accommodate his disability—multiple back injuries suffered when he had previously worked for Sierra—and (2) after a layoff, Sierra had not rehired Salas because he was disabled and to retaliate for his filing of a workers compensation claim.  After the trial date was set, in one of his motions in limine, Salas stated that he would testify at trial and assert his Fifth Amendment privilege against self-incrimination if asked about his immigration status.  And he asked for permission to “assert the privilege outside the jury’s presence and that the court and counsel not comment at trial on his assertion of the privilege.”

Thereafter, Sierra sought summary judgment on the ground that Salas had used another man’s Social Security number and card to get his past job with Sierra.  This misconduct, Sierra argued, defeated FEHA liability, because of the after-acquired-evidence and unclean hands doctrines.  In support, Sierra submitted a North Carolina man’s declaration that it was his Social Security number that Salas had submitted when he had applied for a job with Sierra. Sierra’s president also declared that Sierra had “a long-standing policy” of not hiring people that federal law would not let work in the US and of immediately firing any employee discovered to have provided false information or documents to establish work eligibility in the US.  In opposing the motion, Salas submitted, among other things, his declaration that Sierra’s production manager, “after learning that several employees had supplied incorrect Social Security numbers, assured them they would not be terminated as long as the company’s president was satisfied with their work.”   The trial court ultimately granted summary judgment, and the California Court of Appeals affirmed. 

The California Supreme Court reversed and remanded.  First, the Court considered a federal preemption challenge to California Senate Bill No. 1818 (SB 1818).  Enacted in 2002 in the wake of Hoffman Plastics, SB 1818 added, among other provisions, this one: “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.” Cal. Gov't Code § 7285(a) (emphasis added).

The Salas Court found conflict preemption on the ground that it was “impossible” for an employer to comply with SB 1818 and IRCA, albeit only to the extent that SB 1818 allows for an award for lost wages for any time after the employer knew of the employee’s unauthorized immigration status (the “post-discovery” period). Under IRCA, once an employer “know[s]” that its employee is an “unauthorized alien”—ineligible to work in the US—that employer may not “continue to employ” that employee. 8 U.S.C. § 1324a(a)(2); 8 C.F.R. § 274a.3.  That prohibition, the Salas Court reasoned, “directly conflicts” with “any state law award that compensates an unauthorized alien worker for loss of employment during the post-discovery period . . . .  Such an award would impose liability on the employer for not performing an act (continuing to employ a worker known to be an unauthorized alien) expressly prohibited by federal law.”

In contrast, the Court concluded, federal immigration law does not prohibit an employer from paying an employee wages for employment “wrongfully obtained by false documents, so long as the employer remains unaware of the employee’s unauthorized status.”  Accordingly, to the extent SB 1818 “allow[s] lost wages” for the pre-discovery period---the time the employer did not yet know of the employee’s unauthorized status— it is “not impossible” to comply with immigration law and SB 1818.

Moreover, the Salas Court rejected conflict-preemption on the ground that allowing lost wages for the pre-discovery period would unduly frustrate IRCA’s purposes. SB 1818 at best only “minimal[ly]” encourages unauthorized aliens to seek a job in the US or use false documents to get a job.  “[T]he typical unauthorized alien wage earner is not familiar with the state law remedies available for unlawful termination and . . . job seekers rarely contemplate being terminated in violation of the law.”  And even if they did, they would know that by pursuing such State law remedies, “they would risk discovery of their unauthorized status,” and with that, prosecution and deportation. If undocumented workers could not recover even pre-discovery lost wages, the Salas Court reasoned, employers in effect would enjoy immunity when they illegally discriminate, retaliate, or commit illegal wage-and-hour practices against undocumented workers, thereby undermining IRCA’s goal of “eliminating employers’ economic incentives to hire such workers.”  (In a separate “concurring and dissenting” opinion, Justice Baxter disagreed with this ruling, relying on Hoffman Plastics to conclude that if Salas is an unauthorized alien, IRCA preempts any State law award to compensate him for the loss of employment.)

Second, the Court declared that the after-acquired-evidence defense from McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), “applies with equal force to” FEHA claims. McKennon was a lawsuit under the federal Age Discrimination in Employment Act (ADEA) for an illegal firing.  The defendant-employer discovered---during a deposition—that the plaintiff had stolen confidential company documents while she was on the job.  The US Supreme Court held that this misconduct did not defeat her ADEA claim, but that Court also read the ADEA to require taking “due account of the lawful prerogatives of the employer in the usual course of its business and the corresponding equities that it has arising from the employee’s wrongdoing.”  Accordingly, it declared, if the defendant-employer proves that the plaintiff-employee’s misconduct was so severe that “the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge,” then the plaintiff cannot get certain remedies in its ADEA suit: reinstatement and front pay, as well as any back pay otherwise owed for the time after the employer in fact discovered the employee’s misconduct.  The trial judge could then further adjust the back pay award based on “extraordinary equitable circumstances that affect the legitimate interests of either party.” 

However incomplete and incoherent its reasoning, many appellate courts have read McKennon into other employment discrimination statutes.  In Salas, the California Supreme Court joined this herd by reading McKennon’s defense into FEHA.  This, in turn, required a remand.  The McKennon defense demands that Sierra show that, had it rehired Salas, it would have subsequently fired him once Sierra learned that “his name did not match the Social Security number he had provided.”  This was a triable issue of fact, the Court concluded, because some evidence suggested that Sierra “deliberately chose to look the other way when put on notice of [other] employees’ unauthorized status,” and thus would have likely done the same for Salas.

Similarly, the Court concluded that although unclean hands doctrine was not a “complete defense” to Salas’s FEHA claims, “equitable considerations may guide the court in fashioning relief in cases involving a legislatively expressed public policy.” In support, the Court referred to cases applying equitable principles “to reduce ordinary tort damages imposed for violation of antidiscrimination laws.” It did not explain how, if at all, these equitable considerations differ from the McKennon defense.

Coming up next—four guesses about the world after Salas.

 Sachin Pandya

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