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Hoffman Plastic Compounds, Inc. v. NLRB

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Immigrants′ Rights Update, Vol. 16, Issue 2, April 12, 2002

Supreme Court Bars Undocumented Worker from Receiving
Back Pay Remedy for Unlawful Firing

The United States Supreme Court has ruled that federal immigration policies prohibit the National Labor Relations Board (NLRB) from awarding undocumented workers back pay under the provisions of the National Labor Relations Act (NLRA). Under the NLRA, back pay is a remedy available to workers who are fired for engaging in union activities. The NLRB awards back pay as a means of compensating workers for the wages they would have earned had the employer not fired them. The 5 to 4 decision in the case of Hoffman Plastic Compounds, Inc. v. National Labor Relations Board has tremendous ramifications for the rights of low-wage immigrant workers across the country and for the labor movement in general.

Procedural Background

In January 1989, Hoffman Plastic Compounds fired José Castro and several of his coworkers after they began a union organizing campaign at Hoffman's plant. The United Rubber, Cork, Linoleum, and Plastic Workers of America, AFL-CIO, filed charges with the NLRB on behalf of four workers. In January 1992, the NLRB found that Hoffman had violated the NLRA when it terminated the workers "in order to rid itself of known union supporters" and ordered Hoffman to (1) cease and desist from future violations, (2) post a notice at the plant for its employees regarding the NLRB's order, and (3) offer reinstatement and back pay to the workers it had retaliated against. As a result, the NLRB held compliance proceedings—i.e., an administrative hearing before an administrative law judge (ALJ)—to determine the amount of back pay Hoffman owed each of the workers. During the hearing, Castro admitted to being undocumented and to having used false documents to get his job at the Hoffman plant.

As a result of this testimony, in June 1993, the ALJ held that Castro was not entitled to back pay because the Immigration Reform and Control Act of 1986 (IRCA) made it unlawful for employers to knowingly hire undocumented workers and for workers to use false documents to obtain work. The ALJ's decision was appealed, and the NLRB ultimately held in September 1998 that Castro was indeed entitled to back pay but that the amount he was owed would be limited to what he would have earned in the period between the date he was discriminatorily fired and the date that the employer discovered that Castro was undocumented. Subsequently, Hoffman appealed that decision to the Court of Appeals for the District of Columbia Circuit and then petitioned the court for a rehearing en banc (i.e., a hearing before all of the justices on the court of appeals, rather than a panel of three judges), but the court affirmed the NLRB's decision to award the limited back pay. Hoffman appealed once again, and the Supreme Court has now reversed the NLRB's decision, finding that no award of back pay may be made to Castro.

The Court's Reasoning

In reaching its decision, the Court, in an opinion written by Chief Justice Rhenquist, first relied on previous decisions in holding that the NLRB's authority to award back pay to a worker who had engaged in "serious illegal conduct" is limited, particularly when the NLRB's decision might conflict with federal laws or policies. The Court noted that in enacting IRCA, Congress set up a comprehensive employment eligibility verification system aimed at combating the hiring of undocumented workers in the U.S., which became central to the policy of immigration law.

The Court distinguished Hoffman from its pre-IRCA decision in Sure-Tan, Inc. v. NLRB, 467 U.S. 883 (1984), in which it affirmed the NLRB's award of reinstatement and back pay for undocumented workers who had been reported to the INS in retaliation for their union activities. In Sure-Tan, the Court had held that undocumented workers were protected by the NLRA and were entitled to remedies, although it limited back pay for those workers who were "unavailable," since some of the workers had already been deported from the U.S. The Court held that the NLRB's remedies in Sure-Tan did not conflict with the immigration laws at the time, whereas now the legal landscape has changed dramatically because of the enactment of IRCA's provisions.

The Court held that the NLRB's decision in the Hoffman case is not entitled to the deference that administrative agencies normally get for their expertise in enforcing the laws under their jurisdiction. The Court found that the NLRB's authority had to yield to the policies set forth by IRCA, which requires that employers verify the employment eligibility of each new employee hired. Under this employment eligibility verification system, it is illegal for an employer to hire a worker who is unable to establish that he or she is eligible to work in the U.S. The Court noted that if an employer hires someone who later turns out to be undocumented or whose work authorization expires, the employer must fire that worker. On the other hand, IRCA provides that an employer who "knowingly" hires an undocumented worker is subject to fines and potential criminal prosecution under IRCA's employer sanctions provisions. Finally, the immigration laws also make it a crime for an employee to use fraudulent documents to try to comply with the employment eligibility verification process. The Court concluded that awarding back pay to undocumented workers runs counter to IRCA, since "it is impossible for an undocumented alien to obtain employment in the United States without some party directly contravening explicit Congressional policies."

The Court rejected the arguments of Justice Breyer (who wrote the minority decision) and of the NLRB that in awarding back pay to Castro the NLRB had "reasonably accommodated" the federal policies enunciated in both the NLRA and IRCA, because back pay helps deter violations of both labor and immigration laws. In fact, as Justice Breyer noted, "As all the relevant agencies (including the Department of Justice) have told us, the National Labor Relations Board's limited backpay order will not interfere with the implementation of immigration policy" (emphasis in original). The NLRB further asserted that in tolling Castro's back pay award at the time when the employer discovered his wrongdoing, the award was tailored so as not to conflict with IRCA while still enforcing the remedies available to persons found, under the provisions of the NLRA, to have been discriminated against. As the NLRB noted, while IRCA criminalized the use of false documents, it did not explicitly take back pay or other remedies away from undocumented workers. However, because IRCA makes it a crime for an individual to use false documents to get a job, the Court majority found that there is no reason to believe that Congress would allow that worker to be awarded back pay. The majority concluded that, "[f]ar from 'accommodating' IRCA, the [NLRB]'s position, recognizing employer misconduct but discounting the misconduct of illegal alien employees, subverts it. Indeed, awarding backpay in a case like this not only trivializes the immigration laws, it also condones future violations."

The majority dismissed Justice Breyer's argument that awarding back pay to undocumented workers is actually in line with Congress's intent as set forth in IRCA's legislative history. Justice Breyer pointed to a congressional committee report which states that in enacting IRCA Congress did not intend to "undermine or diminish in any way labor protections in existing law, or . . . limit the power of federal or state labor relations boards . . . to remedy unfair practices committed against undocumented employees." He also contended that denying back pay to undocumented workers will only serve as an incentive for employers to hire undocumented workers, since the cost of labor violations will be less if a back pay remedy is not available to workers who are wronged. Without responding to this argument, the majority asserted that the NLRB's lack of authority to award back pay to undocumented workers "does not mean that employers get off scott-free." The majority pointed to the fact that in Hoffman the NLRB also imposed other "significant sanctions," such as the cease and desist order and the requirement that Hoffman post a notice at its plant. In holding that the NLRB does not have the authority to award back pay to undocumented workers, the Court concluded that, given "the practical workings of the immigration laws, any 'perceived deficienc[y] in the NLRA's existing remedial arsenal' must be 'addressed by congressional action,' not the courts."

Legal Ramifications of Hoffman

The Supreme Court's holding in Hoffman that undocumented workers are no longer entitled to back pay under the NLRA has a direct impact on all employees—not just those who are undocumented—trying to organize a union or to collectively improve their workplace conditions. Implicit in the Court's decision is that undocumented workers continue to be "employees" under the NLRA, which provides workers with the right to form a union. However, if an undocumented worker is fired for organizing a union, then that worker is not entitled to back pay. Because the NLRA protects not only workers engaged in union organizing but also those who engage in "concerted activity" to improve conditions at their workplace, the decision will have a chilling effect on workers who seek to complain about violations such as failure to pay minimum wage or overtime, or about health and safety hazards.

Part of the Court's reasoning in denying back pay to undocumented workers is that under the NLRA the back pay award is "remedial" in nature and the NLRB is prohibited from imposing punitive remedies against employers. In other words, back pay under the NLRA is to compensate the worker who has been discriminated against for the harm he or she has suffered. The Court's position is that an undocumented worker who is in the U.S. unlawfully and cannot obtain work without violating the immigration laws cannot technically be "harmed." The Court's reasoning may have repercussions for back pay as a remedy provided under other statutes such as Title VII of the Civil Rights Act of 1964 (Title VII), which protects workers from discrimination based on race, religion, national origin, or gender (which includes sexual harassment). Because courts have traditionally looked to similar statutory schemes in analyzing an employment statute such as Title VII, future courts will look to the Supreme Court's holding in Hoffman to analyze back pay-related provisions in employment and labor statutes other than the NLRA. In October 1998, the Equal Employment Opportunity Commission (EEOC) issued a guidance on remedies available to undocumented workers under Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act, specifically relying on the NLRB's position prior to Hoffman. However, because these statutes do have additional remedies such as compensatory and punitive damages that can be assessed against employers, only the back pay remedy should be affected by this Hoffman decision. Administrative agencies such as the EEOC may also be reviewing their positions based on the Hoffman decision.

Despite the Court's decision in Hoffman with respect to an undocumented worker's right to back pay under the NLRA, this decision does not affect the many other basic employment rights undocumented workers have, such as protection from national origin (including language-related) or racial discrimination and sexual harassment, and the right to worker's compensation benefits and safe work environments. As stated above, however, Hoffman potentially limits the remedies available to undocumented workers under the laws providing for these rights. Moreover, it should be noted that the Supreme Court's decision does not affect the authority of courts or administrative agencies to order employers that have violated state or federal minimum wage and overtime laws to pay undocumented workers for unpaid wages for work already performed.

Hoffman Plastic Compounds, Inc. v. National Labor Relations Board, 535 U.S. __ , No. 00-1595 (Mar. 27, 2002).