California palms.jpg“California deserves whatever it gets. Californians invented the concept of life-style. This alone warrants their doom.” ― Don DeLillo, White Noise

“Political corruption, social greed, and Americanized quasi-socialism can ruin even the most wonderful places. California proved that.” ― Tiffany Madison

As a transplant from Michigan who has thrived in California since settling here in 1982, I’ve come to expect sneering and cynicism heaped upon this lovely, blessed state.  The foregoing quotes are of the genre, California sniping, expressed most frequently as Jack Frost approaches elsewhere, biting the rest of the country into its perennial frenzy of Golden-State envy.  We Californians are used to that kind of seasonally-induced, sour-grapes hurling.

But sometimes our state legislature and our governor, the monk formerly known as Moonbeam, take actions that all but invite ridicule.

Recent examples are plentiful, as my colleagues at Seyfarth Shaw, Dana Peterson and Coby Turner, noted in their Nov. 26 posting in the aptly titled, California Peculiarities Employment Law blog (“California Employees Have Even More Protections to be Thankful for This Year“).  

Today’s post will focus on just one section of one of two new laws critiqued in the Peterson-Turner post.   Section 4 of Assembly Bill 263, effective January 1, 2014, adds this new provision (Section 1024.6) to the state’s Labor Code: 

1024.6.  An employer may not discharge an employee or in any manner discriminate, retaliate, or take any adverse action against an employee because the employee updates or attempts to update his or her personal information, unless the changes are directly related to the skill set, qualifications, or knowledge required for the job.

The new section sounds innocuous.  Of course no employer should be allowed to assail an employee who merely updates or tries to update “his or her personal information.”  The transgression seems apiece with that cardinal California sin of violating one’s “personal space.”  The devil, however, is in the subtext.  

Consider these common scenarios:

#1:  An employer, aware that U.S. Immigration and Customs Enforcement (ICE) is increasingly auditing and penalizing employers for violations of the immigration-paperwork requirement to maintain proof of every new hire’s identity and employment eligibility on Form I-9, decides to conduct a voluntary audit of its I-9 records.  The employer discovers mistakes or finds copies of identity documents and work permits that, on second look, appear to be less than genuine.  It wants to take corrective steps to mitigate any fines ICE might impose.

#2:  An employer receives a Social Security Administration letter (a no-match notice) announcing that the  employer’s payroll tax contributions tied to particular employees’ social security numbers (SSNs) contain information that conflicts with the SSA’s own records associated with the earmarked SSNs. Or, an employer receives word from its health insurance carrier or pension administrator that the SSNs of certain employees do not square with SSA data.  This employer likewise wants to fix the problem and minimize potential fines before ICE shows up.

Assume that in scenarios #1 and #2, the employer first checks its own records and finds no reason such as a clerical error or typo to explain and resolve the discrepancy.  The employer then approaches the affected employees, explains that a discrepancy has been noted, and asks the employee to provide an acceptable explanation with documentation that resolves the discrepancy and demonstrates that the individuals in question have the right to work in the United States.  Failing the tender of acceptable evidence, the employee will be required to sign a new Form I-9 to verify identity and employment eligibility.

Rather than provide the requested documentation, each of the employees instead informs the employer that s/he has adopted a new name, a new date of birth, a new marital status, or other newly embraced “personal information” and then presents seemingly genuine and relevant original documents of identity and work authorization to confirm the change. 

Today, before Assembly Bill 263 takes effect, an employer is allowed to terminate the individual’s employment if the submission of inconsistent personal information violated company policies requiring that employees be truthful in all of their dealings with the employer.  AB 263 takes away that power to sanction employee dishonesty.  Moreover, since the law also prohibits employers “in any manner” from discriminating, retaliating or taking any “adverse action against an employee” who has updated his or her personal information, AB 263 may even prohibit an employer from investigating whether the newly provided personal information is accurate or likewise false or flawed.

Suppose the employee(s) in fact lacked the right to work in the U.S. and had merely purchased a new set of papers from the local fraudulent-document purveyor.  Under federal immigration statutes and regulations, an employer may not hire or continue to employee an individual whom the employer “knows” lacks the right to work in the United States.  Knowledge of a person’s unauthorized employment status can be actual or constructive, as provided in 8 CFR § 274a.1(l):

The term knowing includes not only actual knowledge but also knowledge which may fairly be inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition.

In other words, an employer who is aware of certain unexplained facts (such as an “update” of “personal information”), but turns a blind eye to circumstances that seem suspicious or at least worthy of further inquiry, will be treated as knowing the facts that a reasonable investigation would have revealed.  Thus, if the workers were indeed unauthorized but the employer did not investigate the circumstances out of fear of violating the no-adverse-action prohibition of AB 263, ICE would likely fine the employer on two separate grounds.  The fines would be not just for a deficient I-9 but also for the more serious “knowing-continuing-to-employ” offense.

What should the employer do?  Depending on the facts at hand, the better approach would likely be to follow federal immigration law which probably preempts and trumps AB 263.  See, Arizona v. United States, the Supreme Court case which tossed out almost all of Arizona’s SB 1070 on federal-preemption grounds.  Employers presented with personal-information updates should be prepared to defend against state charges under AB 263 by maintaining that merely conducting a reasonable investigation of the facts to determine if an employee is authorized to work in the U.S. is not a form of discrimination, retaliation or adverse action under the new California law.  But since California is indeed peculiar, employers should also be prepared to fight the good fight if organized labor, state authorities or the courts disagree.  At least the weather is nice.