Monthly Archives: February 2015

HAS THE CALIFORNIA SUPREME COURT GONE TOO FAR?

On February 18, 2015, the California Supreme Court held in Horne v. District Council 16 International Union of Painters and Allied Trades that a convicted felon, who was ineligible for the job he sought because of the conviction, may nevertheless sue the employer for discriminatory failure to hire him under California’s Fair Employment and Housing Act (FEHA), Government Code §12900 et seq., and may recover damages, including wages for the period of time when the applicant was not eligible for the job.  The Supreme Court relied on its prior decision in Salas v. Sierra Chem. Co., 59 Cal.4th 407 (2014), where it ruled that an undocumented worker who obtained employment using someone else’s social security number was able to sue for wrongful termination and discrimination under the FEHA.

The Supreme Court held in Salas that federal immigration law does not preempt this result, except to the extent that the employee seeks to recover lost wages for any time after the employer discovers the employee’s undocumented status.  In what appears to be a result oriented analysis, the Supreme Court relied upon California Government Code §7285, 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 Supreme Court reasoned that this code section does not frustrate the purpose of the federal Immigration Reform and Control Act of 1986, 8 U.S.C. §1101 et seq., which prohibits the employment of illegal aliens, and is thus not preempted.

The Supreme Court gave lip service to the rights of employers, stating that the equities between the parties should be balanced.  Under such a balancing of the equities, the Court concluded that remedies such as reinstatement, promotion, and back pay for periods after the employer learned of the disqualification would, generally speaking, be inappropriate. Rather, the damages available to the employee or potential employee should be limited to what is required to compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired the information of the employee’s wrongdoing or ineligibility.  The Salas Court recognized that under federal law, the State cannot require an employer to pay lost wages to the employee for the time period after it learns of the employee’s undocumented status.  In both the Horne and Salas cases, the employers did not find out about the ineligibility until long after the employee was either not hired or the employment was terminated.  Thus, the employees were compensated for time that they neither worked nor were legally eligible to work.

Though not expressed, the Salas and the Horne decisions undercut the Supreme Court’s prior decision in Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, which has long been regarded as setting the standard for an employee’s burden in discrimination cases.  In Guz, the Supreme Court ruled that in addition to establishing a discriminatory motive behind an adverse employment action, the employee was required to establish that he or she “was qualified for the position he sought or was performing competently in the position he held.”  However, in both Horne and Salas, the Supreme Court skipped over that requirement as neither employee in those cases was “qualified” for the position held or sought.

While the Supreme Court declares that prohibiting lawsuits by ineligible employees would allow employers to engage in discriminatory conduct without ramifications, it failed to consider the ramifications of allowing undocumented and otherwise ineligible individuals the right to receive the benefits of employment, often without even having to work.  Preventing discrimination in all forms and in all situations is certainly a laudable goal.  But, it should be done without encouraging unintended consequences.  These decisions promote conduct inconsistent with the Immigration Reform and Control Act of 1986, and other laws setting forth eligibility requirements for certain positions.  Instead of promoting a consistent and evenhanded application of the law, they reward those who successfully hide their ineligibility by falsifying government documents or other deceitful measures, and those who hide it the longest get the most reward.

THE SAN DIEGO SUPERIOR COURT FINDS DRIVERS TO BE EMPLOYEES AND NOT INDEPENDENT CONTRACTORS

In late January, a Superior Court Judge ruled that drivers providing services to Pacer Cartage in the ports of Los Angeles and Long Beach are employees, not independent contractors.  The seven drivers were collectively awarded more than $2 million in damages.  Judge Bloom noted that the key indicator in any employment relationship is whether the worker has control over their own activities, profits, and losses, and he found that in this case, it was Pacer Cartage that had the control.

The vehicle lease agreement between Pacer Cartage and the drivers was criticized by the Judge, who commented that the “complex” leasing agreement was only available in English, even though the seven Latino drivers “spoke virtually no English,” and only two had graduated from high school.  Pacer Cartage had set up a separate company which leased the vehicles through a bank, and then subleased the vehicles to the drivers, who never saw the terms of the original lease.  The Judge found that the leases were more akin to traditional employer-employee contracts because the drivers had limited control over the vehicles, and were required to purchase insurance through Pacer Cartage.  Further, the Judge noted that the drivers were told where to park the vehicles, they could not transport freight for other companies, and they were punished if they received moving violations.  Separate from the vehicle leases, the Judge found other factors to support his ruling, including the facts that the drivers had to complete job applications, were issued identification cards with the Pacer logo, could not bill their customers, or set prices or rates, were required to complete log books and other forms of bookkeeping, and were required to follow rules laid down by Pacer.  The Judge’s reference to the log books is particularly troubling as they are required by law so all drivers complete them.

The attorney for the Plaintiffs stated that he will be filing similar cases against other drayage companies.  XPO Logistics Inc., the parent company of Pacer Cartage, said they would appeal the ruling.