HOFFMAN PLASTIC COMPOUNDS V. NLRB: AN INVITATION TO EXPLOIT

The Supreme Court decided Hoffman Plastic Compounds, Inc. against the background of a circuit court split over the availability of back pay to undocumented workers. The Second Circuit Court of Appeals would enforce a back pay award before a worker had provided documentation, whereas the Seventh Circuit Court of Appeals would deny back pay until the worker met this requirement.

G. The After-Acquired Evidence Rule: Balancing Competing Objectives by Providing a Limited Remedy

The Supreme Court’s discussion of the after-acquired evidence rule in McKennon v. Nashville Banner Publishing Co. explains the rationale behind the NLRB’s limited remedy order in Hoffman Plastic Compounds, Inc. The after-acquired evidence rule provides an employer who violates a federal law that prohibits discriminatory discharge with a partial defense if he learns, after the unlawful discharge, that the employee had engaged in misconduct that would have justified termination. Where an employer can show that it would have justifiably discharged the employee had it known of the misconduct, the after-acquired evidence rule provides that the back pay period will run from the date of the unlawful discharge until the time that the employer learned of the misconduct. In the context of a discharge that violates NLRA section 8(a)(3), the after-acquired evidence rule balances the NLRB’s “responsibility to remedy the [employer’s] unfair labor practice against the public interest in not condoning [the employee’s misconduct].” Thus, the after-acquired evidence rule does not provide a defense to liability for the employer’s violation but may reduce the employee’s remedy.

The Supreme Court endorsed the after-acquired evidence rule in McKennon, a case involving a discharge that violated the Age Discrimination in Employment Act of 1967 (“ADEA”). In McKennon, an employer violated the ADEA by firing a 62-year-old employee because of her age. However, the employee admitted in a pre-trial deposition that she had copied the company’s confidential financial records. The company claimed that it would have justifiably fired her had it known of that misconduct.

The Court analyzed the issue of back pay availability in terms of the effect that the employee’s conduct would have on her remedy, rather than the employer’s liability. The Court balanced the goal of deterring the employer’s discriminatory conduct against the “equities that [the employer] ha[d] arising from the employee’s wrongdoing.” The Court held that back pay is available to effectuate the ADEA’s public purpose in eliminating employment discrimination, but it is limited to account for the employee’s misconduct. The employer can terminate back pay when the employer can show that it would have justifiably terminated the employee because it learned of the employee’s wrongdoing. In McKennon, the back pay would run from the unlawful discharge until the deposition when the employer learned of the employee’s wrongdoing.

II.  HOFFMAN PLASTIC COMPOUNDS, INC.

In Hoffman Plastic Compounds, Inc., the Supreme Court addressed the issue of whether the NLRB may award back pay to an undocumented worker who falsified immigration documents to obtain employment. The employer, Hoffman Plastic Compounds, Inc. (“Hoffman”), violated section 8(a)(3) of the NLRA by firing Jose Castro (“Castro”) “‘in order to rid itself of known union supporters.’” To remedy the unlawful discharge, the NLRB ordered Hoffman to (1) “cease and desist” violating the NLRA, (2) reinstate Castro, (3) provide back pay, and (4) post a notice at work regarding the order. An administrative law judge was to determine the back pay amount at a later compliance hearing.

When Castro later admitted that he had obtained his job by falsifying documentation required under immigration law, the administrative law judge decided that the NLRB could not order back pay because such an award would conflict with the IRCA, which prohibited the employment of undocumented workers. The NLRB reversed this decision on appeal. The Supreme Court granted certiorari after the Circuit Court of Appeals for the District of Columbia denied the company’s petition for review of the NLRB order. The courts and the NLRB agreed that Hoffman had violated the NLRA. The Supreme Court granted certiorari to determine the availability of back pay to remedy that violation.

A.  The Court’s Two Bases