Undocumented Workers: U.S. Supreme Court Denies Cert in Sierra Chemical v. Salas

California WCAB applies Salas to another Salas case

Karen C. Yotis, Esq., a Feature Resident Columnist for the LexisNexis Workers’ Compensation eNewsletter, provides insights into workplace issues and the nuts and bolts of the workers’ comp world.

Now that the California Supreme Court has resolved the Salas Dilemma by allowing an undocumented worker’s discrimination claim to proceed (while curtailing available damages), the employer in the case sounded a clarion call of its own by filing a Petition for Writ of Certiorari seeking U.S. Supreme Court review. However, on December 8, 2014, the U.S. Supreme Court denied certiorari.

In Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, 327 P.3d 797, 173 Cal.Rptr.3d 689, 79 Cal. Comp. Cases 782, the California Supreme Court determined that the Golden State’s long-standing policy against discrimination in all its invidious forms carries more weight than any interest the public may have (at least in the employment/workers’ compensation context) in not rewarding illegal conduct. Reversing an earlier decision by the Court of Appeal, Third Appellate District (3rd DCA), the Court limited the preemptive reach of Federal immigration law and held that the Immigration Reform and Control Act (IRCA) does not generally preempt either the California Fair Employment and Housing Act (FEHA) or California’s Senate Bill No. 1818, except to the extent that those provisions permit a back pay award for any time after the employer discovers an employee’s ineligibility to work in the United States. The Court also curtailed the doctrines of after-acquired evidence and unclean hands and held, again contrary to the 3rd DCA’s holdings, that these equitable defenses do not operate as a complete shield to an undocumented worker’s claims under the FEHA in and of themselves, although a worker’s undocumented status might affect the range of available remedies.

California Reacts to Salas

Industry response to the California Supreme Court’s resolution of the Salas Dilemma was swift and varied. Speaking out about the implications of Salas in a blog introducing Nicole Kersey’s article on I-9 Enforcement Inequalities, immigration author Angelo A. Paparelli reported:

“Witness . . . California Supreme Court decision, Salas v. Sierra Chemical Co., which held that claims of undocumented workers who present false documentation during the I-9 process are enforceable against employers under state antidiscrimination and worker protection laws, despite the defense of federal immigration-law preemption –at least until the employer receives notice that the worker is unauthorized for employment. So the broken enforcement scheme creates ever more headaches and hurdles for employers.”

But did the California Supreme Court get it right when it comes to federal preemption, equitable defenses, and back pay? Various California thought leaders shared their views on this conundrum for purposes of this commentary after the Court issued the Salas opinion.

Susan V. Hamilton, former Deputy Commissioner, California Workers’ Compensation Appeals Board, offered a practical point of view that is grounded by her years of judicial experience when she opined:

“I believe the majority correctly analyzed the doctrine of Federal preemption and accurately concluded that neither ‘express’ nor ‘field’ concepts were applicable, and that Senate Bill 1818’s provision vis-à-vis pre-discovery period remedies does not frustrate the purpose of the Federal Immigration and Reform Act of 1986, so far as to make preemption under the ‘obstacle’ concept mandatory.”

Jerome Schreibstein, an employment defense lawyer in California, provided an even-handed point of view from the employers’ sector when he stated:

“The Salas decision is consistent with the jurisprudence that has developed around the after-acquired evidence doctrine, holding that damages may be cut-off by the post-litigation discovery of facts that would have potentially independently provided a basis for employment termination. This strikes a good balance between the important laws protecting employee rights, and the business interests in freedom of employment contracting, e.g., ‘at-will’ employment, and the power to end the employment relationship for any reason that is not illegal.”

Post-Salas Dilemma: Another Case with a Different Salas

Salas is the law of the land in California. And in an odd twist, the California Workers’ Compensation Appeals Board (WCAB) has already applied the Salas prohibition on back pay damages for the post-discovery period in a case involving a different undocumented worker with the surname Salas.

In Maria Salas v. IDS USA West, Inc. and Mitsui Sumitomo Insurance Company of America, Case No. ADJ7631255, 2014 Cal. Wrk. Comp. P.D. LEXIS 364 (July 18, 2014), the WCAB applied the California Supreme Court’s rule in [Vicente] Salas that forbids a back pay award for any time after an employer discovers an employee’s ineligibility to work in the United States, and rescinded the increased permanent disability indemnity benefits awarded to an employee who was terminated after the employer discovered her undocumented status. Although the Workers’ Compensation Judge (WCJ) found that Maria Salas was entitled to a 15 percent increase in her permanent disability indemnity payments under California Labor Code section 4658(d) because the defendant employer did not offer her regular, modified, or alternative work within 60 days of her disability becoming permanent and stationary, the WCAB concluded that the increased percentage was impermissible under [Vicente] Salas. The WCAB emphasized the distinction between the pre-discovery period (when an employer has acted wrongfully but does not yet know a complaining employee is ineligible to work) and the post-discovery period (after an employee’s ineligibility is discovered) which underlies the California Supreme Court’s conclusion that federal immigration law preempts SB 1818 to the extent that it compensates unauthorized alien workers for loss during the post discovery period.

Based on the California Supreme Court’s decision in the case filed by her similarly named predecessor litigant, Maria Salas could not recover increased benefits because that award would impose liability on her employer for not performing an act expressly prohibited by federal law. Thus, although undocumented California workers are permitted to bring discrimination claims against their employers for jobs they may not be entitled to have under federal law, employers are not required to pay damages on those claims after an employee’s undocumented status is discovered. But has King Solomon finally cleaved the baby in two?

Publisher’s Note: This article is excerpted in part from a LexisNexis Emerging Issues Analysis article “Salas v. Sierra Chemical Co.: Undocumented Workers and the Clash Between Federal Immigration Policy and State Discrimination Laws”. Purchase the article at the LexisNexis Store. LexisNexis subscribers can access the article online; additional fees might apply: Lexis.com, Lexis Advance [citation: 2014 Emerging Issues 7262]. The Emerging Issues Analysis article covers the following:

Part I outlines the background and factual scenario that may bring an injured worker and his seasonal employer all the way to the U.S. Supreme Court.

Part II recaps the parties’ arguments before the California Supreme Court with respect to the after-acquired evidence and unclean hands defenses, Senate Bill 1818, and the summary judgment standard as it related to each party’s version of the disputed issues of material fact in the case.

Part III illustrates the wider impact that the Salas Dilemma could have, not only on employment and workers’ compensation laws, but on the status and plight of undocumented workers at large.

Part IV scrutinizes the California Supreme Court’s opinion.

Part V recounts the industry’s reaction to the Salas decision.

Part VI reviews the California Workers’ Compensation Appeals Board’s first noteworthy panel decision applying Salas.

Part VII outlines Sierra Chemical’s Petition for Writ of Certiorari.

Part VIII offers practical suggestions for litigants in a post-Salas California.

Part IX concludes with quotes about next steps and anticipated developments in the ongoing litigation from the attorneys representing the Salas parties.

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