Unclean Hands Not a Hands Down Defense

Sierra J. Spitzer, Partner
Schwartz, Semerdjian, Ballard & Cauley, LLP
Published:  11.01.2014

In Salas v. Sierra Chemical Co., 59 Cal.4th 407 (2014), the Supreme Court of California considered the question of whether the discovery of an employee’s unclean hands with regard to immigration status provides an employer with a complete defense to California Fair Employment and Housing Act (“FEHA”) claims brought by that employee.

Plaintiff Vicente Salas worked for Sierra Chemical Company as a production line laborer.  The position was subject to seasonal layoffs in December, with rehires in the Spring.  In 2006, Salas sustained an industrial injury which resulted in work restrictions.  Sierra Chemical accommodated the restrictions, and Salas worked until being laid off in December as part of the standard seasonal reduction.  In Spring, Salas was recalled to work subject to his being 100% recovered.  However, because he was still treating and remained subject to work restrictions, he was denied re-employment.  In response to not being rehired, Salas filed suit, alleging claims under FEHA that Sierra Chemical had failed to reasonably accommodate his physical disability and had refused to rehire him in retaliation for having filed a workers' compensation claim.  

In the course of discovery in the ensuing litigation, Sierra Chemical learned that the social security number that Salas had provided to obtain employment actually belonged to someone else.  Based on this discovery, Sierra Chemical brought a motion for summary judgment, arguing that Salas’s use of fraudulent documents to gain employment served to completely bar his FEHA claims based on the doctrines of after-acquired evidence and unclean hands.  Salas, in turn, argued that under California law and as reaffirmed by Senate Bill No. 1818, his immigration status is irrelevant in terms of determining an employer’s liability under FEHA. [(2001 2002 Reg. Sess.) (Senate Bill No. 1818), enacted in 2002 (Stats.2002, ch. 1071, pp. 6913 6915) which declares:  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. ]  

The trial court initially denied Sierra Chemical’s motion for summary judgment, but the Third District Court of Appeal issued an alternative writ in its favor, and the trial court ultimately ended up vacating its original order and granting the summary judgment motion.  Salas appealed the judgment, which the Court of Appeal affirmed, holding that his action was barred by the doctrines of after-acquired evidence and unclean hands (based on information defendant acquired during discovery showing wrongdoing by plaintiff), and that here application of those doctrines was not precluded by Senate Bill No. 1818.  Salas then successfully petitioned the California Supreme Court for review, putting before the Court the lingering questions of, to what extent, if any, are the rights of undocumented workers protected?  And if there are protections available, are they the same as those available to documented workers?  

In trying to answer these questions, the court attempted to consider and balance the competing need for repercussions in the event of both an employer’s alleged wrongful employment practice and an employee’s wrongdoing.  For guidance, the court looked to the U.S. Supreme Court case of McKennon v. Nashville Banner Publishing Co. 513 U.S. 352 (1995).  In McKennon, the Supreme Court held that the after-acquired evidence doctrine did not provide the employer with a complete defense to a wrongful termination claim based on age discrimination, but if did affect the fashioning of remedies.  For example, while the employee’s wrongdoing may foreclose remedies such as reinstatement, promotion or payment for periods after the employer learned of the employee’s wrongdoing, it would not rule out the remedy of back pay calculated from the date of the unlawful employment practice to the date the employer acquired evidence of the employee’s wrongdoing.  McKennon, 513 U.S. at 360-361.  

The Salas court applied this same logic to the instant matter, reasoning that because the employer’s alleged wrongful act occurred before the employer’s discovery of information justifying the employer’s decision, to allow after-acquired evidence to be used as a complete defense “would eviscerate the public policies embodied in the FEHA by allowing an employer to engage in invidious employment discrimination with total impunity.”  Salas, 59 Cal. 4th at 430.  The court further reasoned, however, that it was nonetheless equally important that the employee’s wrongdoing also be taken into consideration.  McKennon, 513 U.S. at p. 361.  Specifically, the court stated: 

In after-acquired evidence cases, therefore, both the employee's rights and the employer's prerogatives deserve recognition. The relative equities will vary from case to case, depending on the nature and consequences of any wrongdoing on either side, a circumstance that counsels against rigidity in fashioning appropriate remedies in those actions where an employer relies on after-acquired evidence to defeat an employee's FEHA claims. 

Salas, 59 Cal. 4th at 430. 

The Salas court further elaborated that fashioning remedies based on the relative equities of the parties prevents the employer from violating California's FEHA with impunity while also preventing an employee or job applicant from obtaining lost wages compensation for a period during which the employee or applicant would not in any event have been employed by the employer.  Id. at 431.  

The court’s decision in Salas provides an important and useful framework for balancing the equities in this tough, yet common, situation.