Daily Blast June 26, 2014

The California Supreme Court issued an opinion in Salas v. Sierra Chemical Co. (June 26, 2014, S196568) __ Cal.4th __, analyzing “whether the federal Immigration Reform and Control Act of 1986 (8 U.S.C. § 1101 et seq.), also known as IRCA, preempts application of the antidiscrimination provisions of California’s FEHA to workers who are unauthorized aliens.” (Slip opn., p. 7.) The Supreme Court held that “FEHA is generally not preempted by federal immigration law, but that federal preemption does bar an award of lost pay damages under the FEHA for any period of time after an employer’s discovery of the employee’s ineligibility under federal law to work in the United States.” (Ibid., italics in original.) The Court, in essence, permitted plaintiff to pursue his FEHA cause of action, despite evidence suggesting that he used a false Social Security number to apply for employment in the first place.

Plaintiff sued his former employer under FEHA alleging that defendant employer failed to reasonably accommodate his physical disability and refused to rehire him in retaliation for plaintiff’s having filed a workers’ compensation claim. The defendant subsequently learned of information suggesting that plaintiff had used another man’s Social Security number to gain employment with defendant. (Slip opn., p. 1.) The defendant moved for summary judgment, claiming it was entitled to a judgment as a matter of law under the legal doctrines of after-acquired evidence and unclean hands, based on plaintiff’s fraudulent use of another person’s Social Security number and card to obtain employment with defendant. (Id. at p. 6.) The trial court eventually granted defendant’s summary judgment motion. (Id. at p. 1.) The Court of Appeal affirmed, holding that “plaintiff’s action was barred by the doctrines of after-acquired evidence and unclean hands and that the application of those doctrines was not precluded by Senate Bill No. 1818, which extends state law employee protections and remedies to all workers ‘regardless of immigration status.’” (Id. at pp. 1-2.) The Supreme Court granted review.

The Supreme Court first concluded that Senate Bill No. 1818 “is not preempted by federal immigration law except to the extent it authorizes an award of lost pay damages for any period after the employer’s discovery of an employee’s ineligibility to work in the United States.” (Slip opn., p. 2.) The court reasoned that “[because] under federal immigration law an employer may not continue to employ a worker known to be ineligible (8 U.S.C. § 1324a(a)(2)), any state law award 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. 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.” (Id. at p. 15.) “Thus, federal law preempts state Senate Bill No. 1818 to the extent that it makes a California FEHA lost pay award available to an unauthorized alien worker for the post-discovery period.” (Id. at pp. 15-16.) However, “Senate Bill No. 1818, insofar as it makes available to such workers the remedy of prediscovery period lost wages for unlawful termination in violation of the FEHA, does not frustrate the purpose of the federal Immigration Reform and Control Act of 1986, and thus is not preempted.” (Id. at p. 18, italics in original.)

Further, the Court held that “the doctrines of after-acquired evidence and unclean hands are not complete defenses to a worker’s claims under California’s FEHA, although they do affect the availability of remedies.” (Slip opn., p. 2.) According to the Court, “[in] after-acquired evidence cases, both the employee’s rights and the employer’s prerogatives deserve recognition.” (Id. at p. 25.) “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.” (Ibid.) Additionally, the Court held that although equitable considerations may guide the court in fashioning relief in cases involving a legislatively expressed public policy, “[equitable] defenses such as unclean hands may not . . . be used to wholly defeat a claim based on a public policy expressed by the Legislature in a statute.” (Id. at p. 27.)