On June 26, 2014, the California Supreme Court decided that an
employee may proceed with a discrimination lawsuit even though he
presented false work authorization documents to obtain employment
in the first place.
The case involved an employer's reliance on the defenses of
"after-acquired evidence" and "unclean hands."
That's when, during litigation, an employer discovers for the
first time, misconduct that would have justified termination had
the employer learned of it earlier.
The main issue in the case was how these defenses would square
with California discrimination law, which states that, "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."
While the California Supreme Court ultimately concluded that the
lawsuit could continue, the Court found that the amount of wages
the employee could recover would be limited. Salas v. Sierra
Chemical Co.
Not Who He Claimed To Be
Vincent Salas worked for Sierra Chemical, a manufacturer and
distributor of water-treatment chemicals. When he applied for the
job, he provided a false Social Security Number and a false
resident alien card to support his form I-9. Salas was laid off and
rehired on several subsequent occasions because of seasonal
reductions in force, and each time he provided the same false
documents. Toward the end of his employment, he was injured and
filed a Workers' Compensation claim after which he was laid off
again and not reinstated. Salas subsequently sued Sierra for
allegedly failing to accommodate his disability and for retaliating
against him because he had filed a Workers' Compensation
claim.
Shortly before trial, the employer discovered that Salas was not
authorized to work in this country and had submitted false
documents. (This is the "after-acquired evidence"
argument). The company then asked the court to dismiss the lawsuit
based on the employee's fraudulent use of someone else's
Social Security Number and identification card to obtain
employment. (In other words, Salas had "unclean
hands.")
The company showed that it had a long-standing policy against
hiring unauthorized workers. Ultimately, the California Court of
Appeal found in the company's favor and dismissed the lawsuit.
Salas appealed to the California Supreme Court.
State Protections Still Apply
The California Supreme Court initially considered whether the
federal Immigration Reform and Control Act (IRCA) somehow
preempted, or trumped, the application of California's
anti-discrimination law in the case where an employee had
misrepresented his authorization to work. The Court reviewed
principles concerning preemption and ultimately concluded that the
federal law did not preempt California law.
In the Court's view, there was no evidence that Congress had
intended that the federal law would preempt state
anti-discrimination laws at issue and that such laws do not
regulate immigration to begin with. The Court also concluded that
the defenses would not completely prevent the employee from
pursuing the discrimination claim, reasoning that an important
purpose of the law was to prevent discrimination.
On the other hand, the Court set parameters on the amount of money
damages the employee could receive. It held that, generally, Salas
would be entitled to recover lost wages that would have been earned
before Sierra discovered the misrepresentations. But Salas would
not be permitted to recover any lost wages for the period after the
employer had discovered his misrepresentations because federal law
prohibits an employer from "continuing to employ" a
worker that it knows to be unauthorized. And the Court left the
door open for further limiting the employee's lost wages when
the wrongdoing was "particularly egregious."
A Significant Decision
The Salas case establishes important principles concerning the
defense of after-acquired evidence. While neither that defense nor
the defense of "unclean hands" will completely bar an
employee from recovering damages for alleged discrimination, they
can be used to limit those damages significantly. The Court
suggested that there should not be bright-line rules regarding the
amount of an employee's recovery and that the outcome will
depend on the misconduct at issue.
The Court noted that "particularly egregious" conduct
may prevent an employee from recovering any lost wages based on the
defenses of after-acquired evidence and unclean hands, but did not
indicate the type of "egregious" conduct it had in mind.
That will be left for another day.
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