Luo Yu Jie, et al v. Liang Tai Knitwear Co., Ltd., et al.: Court Upholds Wrongful Termination Verdict in Favor of Workers Who Reported Employer to INS

IMMIGRANTS & EMPLOYMENT

Immigrants' Employment Rights and Remedies

LUO YU JIE, ET AL V. LIANG TAI KNITWEAR CO., LTD., ET AL.: COURT UPHOLDS WRONGFUL TERMINATION VERDICT IN FAVOR OF WORKERS WHO REPORTED EMPLOYER TO INS
Immigrants' Rights Update, Vol. 15, No. 4, June 29, 2001

A California court of appeals has affirmed a lower court's judgment and jury verdict awarding close to $500,000 to two former garment workers who were wrongfully terminated by their employers after the workers told the Immigration and Naturalization Service that the employers were knowingly employing undocumented workers.

The two garment workers, a married Chinese couple, had worked for the employers, a garment manufacturing company and a marketing company with which the manufacturer was closely affiliated, after they immigrated from China in 1992. According to the facts of the case as laid out in the appellate court's decision, when they first began working for the employers, the two workers lacked work authorization and did not know they needed it in order to be legally employed in the U.S. However, the employers obtained "work documents" for the two workers, documents that the workers later discovered were false. Eventually, the couple obtained legitimate work authorization.

While working for the garment manufacturing and marketing companies, the couple became aware that the companies were employing other undocumented workers. The husband complained about this to the employers and, at one point, threatened to report it to the INS. In March 1997, the husband made good on his threat, arranging to have the couple's 15-year-old daughter call the INS to report that the companies were employing workers they knew to be undocumented. In May 1997, the INS raided the companies and detained over 40 percent of their work force. Less than three months later, the couple were the only employees laid off when the employers claimed they were experiencing a slowdown in business. However, despite the claimed slowdown, the employers continued to hire new workers.

The couple sued the two companies, arguing that they had been wrongfully terminated. Specifically, they argued that the defendant companies fired them to retaliate against them for having reported a violation of state or federal laws against employing undocumented immigrants. Such retaliation, they argued, amounts to being fired for performing an act that established public policy would encourage. Under California law, employees who are fired for performing an act that public policy would encourage have the right to sue the employer that fired them-to sue for wrongful termination. The evidence the plaintiff workers presented convinced the jury that they had been wrongfully terminated, and the jury ordered both companies to pay the plaintiffs a total of nearly $500,000 in compensatory and punitive damages.

In their appeal, the defendants argued that the California law upon which the plaintiffs based their claim that they had been wrongfully terminated is preempted by federal law-i.e., by the Immigration and Nationality Act as amended by the Immigration Reform and Control Act of 1986 (IRCA). Since IRCA provides no private right of action such as the one the plaintiffs brought in this case, the defendants argued, the judgment in favor of the plaintiffs must be reversed. The court rejected this argument.

First, the court found that IRCA's prohibition against hiring unauthorized workers is clearly a public policy "involv[ing] a matter that affects society at large rather than a purely personal or proprietary interest of the plaintiff or employer." It is a policy that is "fundamental" and "substantial," and that was "well established" at the time the plaintiffs were fired. Furthermore, it is a public policy that was established by a specific statute, so that "a violation of the statute is also a violation of public policy, and if an employer fires an employee who complains to the authorities about such violation, then the termination is a termination in violation of public policy. And such termination, being in contravention of a fundamental public policy, is hence actionable as the tort of wrongful termination in violation of public policy."

Second, the court found that, since there is no conflict between IRCA and the California law that allows workers to sue for wrongful termination if they were fired for reporting that their employer was employing unauthorized workers, the federal law does not preempt the state law. "If anything," according to the court, "such actions help to enforce IRCA by providing some form of redress for persons willing to risk their jobs by reporting illegal activity." Moreover, the court found that Congress did not intend IRCA to preempt all state laws, since those types of state laws that Congress did intend IRCA to preempt are explicitly described within the statute. For example, IRCA prohibits state or local laws that impose sanctions on employers who knowingly hire undocumented workers.

The defendants also argued that the judgment against them should be reversed since the plaintiffs did not exhaust their administrative remedies under IRCA through the process provided under the statute's antidiscrimination provisions. However, the court found that those administrative remedies are not applicable to workers in the plaintiffs' situation: workers who are fired in retaliation for reporting that their employers are knowingly employing undocumented workers. The defendants also contended that the evidence did not support the judgments against them, particularly those against the marketer, whom the defendants claimed was not the plaintiffs' employer. However, the court found sufficient evidence in the record to hold that both the manufacturer and marketer were employers of the plaintiffs, since the two entities were owned, controlled, and run by the same people; were run out of the same building; and had the same employees.

Luo Yu Jie, et al v. Liang Tai Knitwear Co., Ltd., et al., No. B135141, 2001 Cal. App. LEXIS 407 (Cal. Ct. App. June 3, 2001).