At the time of hiring, employees must present documents demonstrating their identity and their eligibility to work in the United States, and employers must honor documents that appear to be valid. In a recent case, the California Supreme Court ruled that an employee who presents fraudulent eligibility documents is not barred from later pursuing a lawsuit alleging discrimination or wrongful termination. Salas v. Sierra Chemical Co., 2014 WL 2883878 (Cal. S. Ct. 2014)

Background

Sierra Chemical Co. manufactures and distributes products for treating swimming pool water. Business picks up in warmer months, and the company hires additional seasonal employees. Sierra Chemical typically lays off those workers in fall and winter, recalling them to work in spring and summer.

In April 2003, Vicente Salas applied for a job at Sierra Chemical, providing a Social Security number and a resident alien card. He completed the Form I-9 based on those documents, and put the Social Security number on his W-4 form.

Consistent with its seasonal needs, Sierra Chemical laid off Salas in late 2003 and late 2004 and rehired him each of the following springs. Each time he was rehired, Salas provided the same Social Security number to fill out his W-4 form.

Around 2005, Salas (along with several co-workers) received a letter from the Social Security Administration stating that his name and Social Security number did not match. Salas claimed that his manager told him not to worry about it and that he and the others affected would not be terminated as long as the company’s president was satisfied with their work.

In March 2006, Salas injured his back while stacking crates at Sierra Chemical. Salas was placed on work restrictions.

In August 2007, Salas sued Sierra Chemical, alleging that his employer failed to accommodate his disability and refused to rehire him in retaliation for filing a workers’ compensation claim and for being disabled.

Discovery of False Documents

During preparations for trial, Sierra Chemical investigated the authenticity of the documents that Salas presented in connection with his employment, including the Social Security card he used. Sierra Chemical learned that Salas fraudulently used the Social Security number of another person to fill out his I-9 and W-4 forms.

Sierra Chemical sought to have the case dismissed before trial on the grounds that Salas unlawfully obtained employment and his wrongdoing should bar his lawsuit. Sierra Chemical also argued that Salas should not be eligible for any award of back pay because he unlawfully obtained employment. Federal laws prohibit companies from paying wages to unauthorized workers, and Sierra Chemical had a policy of refusing to hire unauthorized workers. Had Salas not presented fraudulent documents, Sierra Chemical argued, he never would have been eligible to earn wages.

The appellate court agreed with Sierra Chemical, but Salas then appealed to the California Supreme Court.

The state Supreme Court addressed two issues:

  • Whether federal immigration law pre-empted this lawsuit; and
  • Whether Salas’ wrongdoing barred his lawsuit or affected his damages.

Conflicting Laws

Federal immigration laws require employers to verify employees’ identity and eligibility to work. Immigration laws also impose civil and criminal sanctions against employers and employees who violate the laws.

Federal courts have relied on immigration laws to deny compensation to employees who suffered discrimination or were wrongfully terminated but presented fraudulent documents at the time of hiring. For example, in a 2002 case, the U.S. Supreme Court ruled that back pay should not be available to an unauthorized worker because he did not lawfully earn wages in the first place, and because his job was obtained by criminal fraud. Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002)

In response to that ruling, California’s Legislature enacted several laws stating that protections under state employment laws apply to individuals regardless of their immigration status. For example, Government Code Section 7285 provides that California applicants and employees are entitled to employment rights and protections “regardless of immigration status” and, for liability purposes, “a person’s immigration status is irrelevant …”

Which Law Governs?

The issue before the California Supreme Court was which laws govern: federal immigration laws or state laws which extend discrimination and other job protections to workers regardless of immigration status.

According to the U.S. Constitution, federal law may pre-empt or supersede state law in certain circumstances. However, the California Supreme Court noted that pre-emption is not automatic: In the Salas case, federal immigration laws would supersede the state Government Code only if compliance with both laws was impossible.

The state Supreme Court ruled that because federal law prohibits businesses from employing workers known to be ineligible to work in the United States, the federal laws will supersede any state laws that compensate an unauthorized worker for work performed after an employer discovers that the worker is unauthorized.

In that scenario, a business could not comply with both laws: a state law damage award to an unauthorized worker after the employer learns of his/her illegal status directly conflicts with federal immigration laws, which prohibit employers from continuing to employ workers whom the employer knows are unauthorized aliens.

Based on this conflict, the state Supreme Court ruled that federal immigration laws supersede California laws to the extent that California laws permit an award of lost wages earned after the employer discovers the worker’s unauthorized status. The court’s ruling means that Salas could not recover any lost wages that he might have earned after Sierra Chemical learned of his immigration status.

As for the period of time before an employer learns that an employee is unlawfully performing work in the United States, the court found no conflict in the laws, and the unauthorized worker is entitled to employment protections.

Federal law prohibits using false documents to get a job, but federal law “does not prohibit an employer from paying, or an employee from receiving, wages earned during employment wrongfully obtained by false documents, so long as the employer remains unaware of the employee’s unauthorized status,” the court stated in its ruling.

Protection Extended to Unauthorized Workers

The court held that California laws protecting workers against wrongful employment practices extend to those workers who, in violation of federal law, use false documents to secure employment.

Sierra Chemical also argued that Salas’ misconduct in presenting fraudulent documents should bar him completely from recovering any damages. The court rejected this argument, but noted that the presentation of false documents could limit a damage award following trial.

The state Supreme Court did not evaluate whether Sierra Chemical’s actions constituted discrimination or retaliation. Instead, the sole issue before the court was whether federal immigration laws prevented Salas from recovering damages or whether the case should proceed to trial based on California laws deeming immigration status irrelevant.

Salas’ case will now proceed to trial on the issue of whether Sierra Chemical violated any laws pertaining to his employment, an area of the law where courts have expanded worker protections over the last year.

Best Practices

  • Establish policies requiring managers to verify eligibility for employment, and review all documents that employees present in support of their I-9 forms.
  • If an employer complies with the verification requirements when hiring an individual but later discovers the employee is an unauthorized alien, it is unlawful to continue to employ that person. Employers are advised to discuss the situation with legal counsel before terminating the employee.
  • If you receive a letter indicating that the Social Security number of an employee does not match his/her name, you are on notice that the employee may not be eligible to work. Give the employee an opportunity to present acceptable documentation prior to continuing work.
  • Do not presume that an employee’s misconduct will prevent the employee from pursuing a lawsuit for unlawful employment practices; investigate all claims of harassment, discrimination or wrongful termination, regardless of any violations the complaining employee may have committed.

…this article will be continued next week..