IRCA Does Not Preempt FEHA, But Limits Available Remedies

by Fenwick & West LLP
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In Salas v. Sierra Chemical Co., the California Supreme Court addressed the issue of whether the federal Immigration Reform and Control Act (“IRCA”) preempts the application of the antidiscrimination provisions of California’s Fair Employment and Housing Act (“FEHA”)—which protect California workers “regardless of immigration status.” The Court concluded that IRCA does not preempt FEHA, but does preclude an award of lost pay damages for any period of time after the employer discovers the employee’s ineligibility to work in the United States.

In April of 2003, Vicente Salas used a false Social Security Number to obtain employment with Sierra Chemical, a manufacturer and distributor of chemicals for treating water in swimming pools. On two separate occasions, in March and August of 2006, Salas injured his back while stacking crates, and performed modified duties until a seasonal lay off in December of 2006. In May of 2007, Salas’ supervisor informed Salas that he could return to work when he is “released to return to full duty.”

Salas sued Sierra Chemical for failing to reasonably accommodate his disability and for wrongfully denying him employment in retaliation for his filing of a workers’ compensation claim. During trial preparation, Salas stated that he would testify at trial but would assert his privilege against self-incrimination if asked about his immigration status. This disclosure led Sierra Chemical to investigate Salas’ immigration status, and following the investigation, Sierra Chemical moved to dismiss the lawsuit based on Salas’ fraudulent use of another person’s Social Security Number to obtain employment with Sierra Chemical. After initially being denied relief by the trial court, Sierra Chemical appealed to a California Court of Appeal, which determined that Salas’ lawsuit was barred by the legal doctrines of “after-acquired evidence” and “unclean hands” because Salas was not eligible to work in the United States and misrepresented his ability to do so.

On appeal, the California Supreme Court first determined that IRCA—which requires employers to immediately terminate an employee when it discovers the employee is legally unauthorized to work—does not override the remedies in California’s antidiscrimination law, which is “available to all individuals regardless of immigration status.” The Court reasoned that FEHA was intended to protect unauthorized aliens who, in violation of federal immigration law, have used false documents to secure employment. The Court also stated that by denying unauthorized workers the ability to obtain state remedies under the antidiscrimination laws would effectively immunize employers who discriminate against workers on impermissible grounds.

The Court further held that the legal doctrines of “after-acquired evidence” and “unclean hands” did not bar recovery. The Court found that after-acquired evidence—which refers to an employer’s discovery of information after termination that would have justified termination or a refusal to hire—only bars recovery for loss that occurs after the employer acquired information of the employee’s wrongdoing or ineligibility for employment. The Court also determined that the doctrine of unclean hands—which applies when a plaintiff has acted unconscionably, in bad faith or inequitably in the matter in which he or she seeks relief—similarly may not be used to wholly preclude a claim, but can be used by a trial court as a guide for fashioning relief.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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