On August 9, 2011, both the California Court of Appeal and the National Labor Relations Board ("NLRB") issued decisions holding that undocumented workers, who were not lawfully qualified to work in the first place, are not entitled to recover backpay or be reinstated even if their claims might otherwise have merit.

In Salas v. Sierra Chemical Co., the Court of Appeal applied the after-acquired evidence and unclean hands doctrines to affirm a trial court's dismissal of an undocumented worker's claim for disability discrimination. Similarly, in Mezonos Maven Bakery, Inc., the NLRB concluded that, under the U.S. Supreme Court's decision in Hoffman Plastics Compounds, undocumented workers are precluded from receiving backpay awards irrespective of whether it was they or their employer who violated the Immigration Reform and Control Act ("IRCA").

Salas v. Sierra Chemical Co.

Background

Salas sued Sierra Chemical for disability discrimination in violation of the California Fair Employment and Housing Act ("FEHA") and denial of employment in violation of public policy. At that time, he provided Sierra Chemical with a resident alien card and a Social Security card. Salas printed the Social Security number on his employment application and signed it to verify the truth of the information contained therein, acknowledging that any false statements would be grounds for dismissal. Following an annual layoff, when he was re-hired in 2004, Salas provided the same resident alien card and Social Security card he used at the time of his hire.

In 2006, Salas injured his back at work. He returned to work for a short time on modified duty, but injured his back again when he was re-assigned to his regular duties. Following his injury, he brought a workers' compensation claim against Sierra Chemical. In December 2006, Salas was again laid off in Sierra Chemical's annual reduction. In 2007 Sierra Chemical contacted Salas, informing him that he could return to work if he could provide a medical release. Salas could not provide a release so he was precluded from returning pursuant to Sierra Chemical's policies.

Salas sued Sierra Chemical for disability discrimination in violation of the FEHA and denial of employment in violation of public policy. Specially, he alleged that Sierra Chemical failed to reasonably accommodate his disability and failed to engage in the interactive process. He also alleged that he was denied employment as punishment for filing a claim for workers' compensation benefits, and to deter him and others from filing such claims.

Salas filed a motion in which he advised the court that he would assert his Fifth Amendment right against self-incrimination in response to any questions regarding his immigration status. Following the motion, Sierra Chemical discovered that the Social Security number used by Salas with the company belonged to a man in North Carolina.

Sierra Chemical then filed a motion for summary judgment on the grounds that the after-acquired evidence and unclean hands doctrines barred Salas's causes of action as a matter of law. After initially denying the motion, and following an appeal, the trial court granted the motion for summary judgment. Salas appealed that decision.

The Appeal

On appeal, the court analyzed cases applying the after-acquired evidence and unclean hands doctrines and determined that both provided Sierra Chemical with a complete defense. Noting that this was not merely an issue where an employee violated an employer's self-imposed policy by making a misrepresentation on an employment application, the court explained that Salas was "not lawfully qualified for the job." Indeed, Salas misrepresented a job qualification imposed by the federal government. By doing so, he placed Sierra Chemical at risk by putting it in a position of submitting a false I-9 form and filing out inaccurate returns with the IRS and the Social Security Administration.

Acknowledging that undocumented workers were still entitled to all the protections available under employment law, the court distinguished Salas's claims from those brought by undocumented workers alleging sexual harassment. Salas's case did not involve pervasive discriminatory conduct that caused injuries during his employment; his claims stemmed from a failure to (re)hire. Moreover, Salas provided no direct evidence that the company knowingly hired undocumented aliens and then failed to discharge them when their status was discovered. Rather, Sierra Chemical had a settled policy of refusing to hire applicants who submitted false Social Security numbers.

The court also examined the applicability of the unclean hands doctrine with respect to Salas's claims, concluding that as with the after-acquired evidence doctrine, Salas's claims were barred. "Because Salas was not lawfully qualified for the job, he cannot be heard to complain that he was not hired."

Finally, the court analyzed Sierra Chemical's defenses in light of California Senate Bill 1818 ("SB 1818"). This bill states in pertinent part that "a person's immigration status is irrelevant" for "purposes of enforcing state" employment laws. SB 1818 was enacted in response to the U.S. Supreme Court's ruling in Hoffman Plastic Compounds, Inc. v. NLRB. In Hoffman, the Supreme Court ruled that the NLRB could not "award backpay to an illegal alien for years of work not performed, for wages that could not lawfully have been earned, and for a job obtained in the first instance by criminal fraud." Salas argued that because Hoffman precluded the NLRB from awarding backpay to illegal immigrants, and SB 1818 was enacted to limit Hoffman's effects, it necessarily followed that SB 1818 allowed him to recover for allegedly discriminatory acts regardless of whether after-acquired evidence or unclean hands doctrines precluded him from bringing his claims.

After a thorough examination of SB 1818's legislative history the court was not persuaded. SB 1818 did not enlarge the rights of undocumented workers. Rather, SB 1818 explicitly affirmed that its provisions were "declaratory of existing law." Since existing law precluded an employee??whether legally able to work or undocumented??from maintaining a claim for wrongful termination or failure to hire if he or she misrepresented a federally imposed job qualification, the rule applied regardless of immigration status. Thus, Salas had no recourse for his wrongful failure to hire claim, and the Court of Appeal affirmed the summary judgment in Sierra Chemical's favor.

Mezonos Maven Bakery, Inc.

Just as the court in Salas sought to reconcile the Supreme Court's pronouncements in Hoffman with SB 1818, in Mezonos Maven Bakery, Inc. the NLRB wrestled with whether Hoffman's reasoning also covered employers who knowingly hired undocumented workers.

In Mezonos Maven Bakery, Inc., a group of undocumented workers were terminated following complaints about the treatment they were receiving from a supervisor. The employees then filed unfair labor practice charges. The employer opposed the employees' reinstatement and claim for reimbursement on the grounds that their undocumented status precluded backpay, despite the fact that it was the employer, not the employees, who violated the IRCA.

The Board analyzed the Supreme Court's decision in Hoffman Plastic Compounds and ultimately concluded that regardless of which party violated the IRCA??the employee or employer??an award of backpay was foreclosed. "The holding is categorically worded: backpay may not be awarded to undocumented aliens. It suggests no distinction based on the identity of the IRCA violator." Thus, whether the employer knowingly hired undocumented workers, or was deceived by false documentation, "undocumented immigrants working in the United States are party to an employment relationship the Court deems criminal." Accordingly, a backpay remedy was beyond the limits of the Board's remedial discretion.

What Salas and Mezonos Maven Bakery, Inc. Mean for Employers

Salas highlights the effectiveness of the after-acquired evidence and unclean hands doctrines, and illustrates their importance in litigating employment claims. This is particularly true in light of the growing number of undocumented workers in California. The use of the doctrines may reduce the risk of successful discrimination claims against employers that are diligent with respect to their IRCA requirements. The Salas decision, however, explicitly precludes the use of the doctrines in those scenarios where pervasive discriminatory conduct harms an employee??whether documented or not??during his or her employment.