The Federal District Court for the Northern District of California has ruled that an undocumented worker who filed a wage claim against her employer—who in turn reported the worker to the Immigration and Naturalization Service—has a legitimate claim against the employer under the antiretaliation provision of the Fair Labor Standards Act (FLSA).  The court rejected the defendant’s argument that the suit should be dismissed because any communications it made to the INS were privileged under California law.  The court also rejected the defendant’s alternative argument that punitive damages as a remedy were unavailable under the FLSA.

The plaintiff, Sylvia Contreras, had filed a claim with the Division of Labor Standards Enforcement of the California Department of Industrial Relations against Corinthian Vigor Insurance Brokerage, Inc., to recover unpaid wages and overtime pay. Corinthian subsequently reported Contreras to the INS, whose agents arrested her four days after she attended a pre-hearing conference with the Division of Labor Standards Enforcement regarding her wage claim.  Contreras filed a lawsuit under the FLSA claiming that, in reporting her to the INS, Corinthian had unlawfully retaliated against her for filing a wage claim.

The FLSA requires payment of the federal minimum wage and requires overtime pay for hours worked in excess of 40 per week.  The FLSA also prohibits discharge or other discriminatory conduct in retaliation against an employee for filing a lawsuit or instituting a proceeding to recover FLSA-mandated wages.  The defendant moved to dismiss Contreras’s complaint under the Federal Rules of Civil Procedure, arguing that she had failed to state a claim under which she could recover damages, since any communications the company made to the INS were absolutely privileged pursuant to California Civil Code section 47(b). This section of the California Civil Code provides, with some exceptions, immunity from liability for communications made in legislative, judicial, or other official proceedings authorized by law.

In response to Corinthian’s motion to dismiss, the court expressed doubt that reports to the INS are absolutely privileged under the California Civil Code.  Nevertheless, the court did not have to reach that question because it held that under the Supremacy Clause of the U.S. Constitution, California Civil Code section 47(b) is "preempted insofar as it prevents enforcement of the FLSA."

In reaching this holding, the court observed that preemption could be explicit or implied.  To determine if there was an implied preemption by the FLSA of the California Civil Code provision, the court would have to examine whether this was a situation "where state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’" The court reviewed various cases that demonstrated congressional intent regarding the application of the FLSA (and other labor laws) to undocumented aliens and found that "it is manifestly clear that, even with the passage of [the Immigration Reform and Control Act of 1986, which mandates sanctions against employers that knowingly employ unauthorized workers], Congress intended that undocumented aliens remain under the protection of the FLSA."

Furthermore, the court found that Congress had manifested its intent that this protection included "the right to be free from unlawful retaliation pursuant to the FLSA."  But in the words of the court, "Permitting employers to enjoy absolute immunity under the California Civil Code § 47(b) to file reports with the INS in retaliation for employee complaints not only weakens the anti-retaliation provision of the FLSA, it virtually guts it."  Under these circumstances, the court held that the California Civil Code provision "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress" and therefore was "preempted insofar as it prevents enforcement of the FLSA."  Accordingly, the court ruled that Contreras had set forth a claim for retaliation in violation of the FLSA and denied the employer’s motion to dismiss.

With respect to the employer’s alternative motion to strike Contreras’s claim for punitive damages, the court noted that only one appeals court, the Seventh Circuit, had ruled on the availability of punitive damages in a FLSA retaliation claim.  The Seventh Circuit had ruled that punitive damages were in fact available for such a claim.  But the district court predicted that the Ninth Circuit would agree with the reasoning of the Seventh Circuit.  Given "the Ninth Circuit’s historically expansive view of remedies under federal labor laws," the district court refused to strike Contreras’s claim for punitive damages.

Contreras was represented by Christopher Ho and Marielena Hincapié of the Employment Law Center in San Francisco.