HOFFMAN PLASTIC COMPOUNDS V. NLRB: AN INVITATION TO EXPLOIT

Writing for the majority, Chief Justice Rehnquist held that the NLRB could not award an undocumented worker back pay to remedy an unlawful discharge. The Court reasoned that back pay would conflict with the IRCA by (1) reimbursing a worker for work that the IRCA prohibited him from performing and (2) rewarding him for having obtained a job by “criminal fraud.” Therefore, the Court’s analysis rested on two bases. First, the employee had no legal right to employment during the period for which back pay would compensate him. Second, the NLRB could not compensate an employee who had obtained his job by violating the IRCA. The Court determined that the employee was not entitled to any back pay and that the NLRB could not grant an award, even if limited by the after-acquired evidence rule.

The Court rejected arguments that it had previously upheld back pay awards despite significant employee misconduct. For example, the Court distinguished an earlier case upholding a back pay award where an employee lied under oath in an NLRB compliance hearing. The Court stated that “[perjury], though serious, was not at all analogous to misconduct that renders an underlying employment relationship illegal under explicit provisions of federal law.”

B. The Dissent: Denial of Back Pay Conflicts with Labor and Immigration Policy

In his dissent, Justice Breyer found that denying back pay would conflict with both labor and immigration policy. He described back pay as the only tool in the NLRB’s “remedial arsenal” that gives the NLRA any credibility. Justice Breyer noted that by prohibiting the NLRB from awarding back pay, employers could flout labor laws “at least once with impunity.” He argued that by focusing only on the worker’s misconduct, the majority overlooked the reward that a denial of back pay gives to an employer who violates labor law. Justice Breyer stated that awarding back pay to Castro was consistent with immigration policy. He explained that the majority would give employers an incentive to find and hire undocumented workers in violation of immigration law because these employers would be immune from liability under labor law. Finally, Justice Breyer noted the inconsistency of the Court’s decision in upholding a back pay award when an employee had committed perjury but denying such an award when an employee’s misconduct consisted of obtaining a job by falsifying immigration documents.

Hoffman Plastic Compounds, Inc. is inconsistent with labor and immigration policies and raises questions about its potential application under other worker protection statutes. Specifically, whether this decision would preclude the NLRB from awarding back pay if the employer knew of the worker’s immigration status at the time of hire is unclear. The effect the decision will have on the protection of undocumented workers under other worker protection laws is also unclear.

III.  WHETHER HOFFMAN PLASTIC COMPOUNDS, INC. APPLIES TO KNOWING EMPLOYERS

In determining that the NLRB could not grant back pay to Castro, the Court relied in part on the rationale that back pay would reward his IRCA violation. The Court reasoned that the employee’s misconduct in obtaining a job by falsifying documents in violation of the IRCA justified the total denial of back pay. Conversely, in McKennon, the employee’s act of copying confidential records limited, rather than eliminated, the back pay award because the Court balanced the employer’s interest against the competing objective of deterring employment discrimination. Although the Court in Hoffman Plastic Compounds, Inc. did not limit its holding to cases involving only unknowing employers, whether back pay would also be unavailable where a knowing employer had violated the NLRA by unlawfully discharging an undocumented employee is unclear.

In his dissent, Justice Breyer concluded that the majority opinion did not extend to cases involving an employer who had hired an undocumented worker with knowledge of the worker’s undocumented status. Although the majority did not expressly so limit its holding, the importance that the majority placed on the relative culpability of the parties with respect to IRCA violations supports this inference. The majority’s reasoning suggests that if an employee’s IRCA violation precluded any recovery under the NLRA, an employer’s IRCA violation should similarly impose full liability when the employer violates labor law. Therefore, the answer to the question of whether Hoffman Plastic Compounds, Inc. applies to knowing employers may turn on the relative importance of the employee’s culpability in the Court’s decision.

Congress intended IRCA sanctions to work in tandem with labor law protections. Immunizing knowing employers from labor law liability is thus contrary to both labor and immigration policy because IRCA sanctions alone may not be sufficient to counteract the economic incentive that such immunity would give employers to knowingly hire and exploit undocumented workers. If Hoffman Plastic Compounds, Inc. does not prohibit back pay awards to the unlawfully discharged undocumented workers of these knowing employers, the NLRB arguably has the authority in these cases to award back pay. The NLRB took that approach in A.P.R.A. Fuel Oil Buyers, Inc.