By Monica Guizar
Employment Policy Attorney

     The Ninth Circuit Court of Appeals recently ruled that the “employer sanctions” provision of federal immigration law (which was added by the Immigration Reform and Control Act of 1986, or IRCA) does not preempt California’s wrongful termination law, which provides for remedies to workers who have been terminated in violation of an express or implied contract that they will not be discharged without good cause.  Perhaps more importantly, the court found that IRCA does not bar employers from granting workers unpaid leave to resolve employment authorization problems.

     Giancarlo Incalza, a native of Italy, was employed by Fendi North America, Inc., and worked in the United States under an employer-sponsored E‑1 visa.  From 1990 to 2000, his employer had sponsored the renewal of his work visa several times.  In mid-2002, however, when French nationals purchased a majority interest in Fendi, the company’s immigration counsel advised it that because of the change in ownership, Incalza’s work visa was no longer valid.  However, the counsel did advise Fendi that the company could petition to sponsor Incalza on a different type of work visa, an H-1B.  Rather than file a petition for an H-1B visa on Incalza’s behalf, Fendi terminated his employment in January 2003 and falsely told him “that nothing could be done to remedy his visa problems.”  When Incalza requested an unpaid leave of absence in order resolve his work authorization problems, Fendi denied the request, stating again that the “immigration problem could not be resolved.”  After Incalza resolved his work authorization issue, he wrote Fendi a letter asking to be reinstated, but the company refused to rehire him. 

     Incalza filed suit under the California Fair Employment and Housing Act (FEHA), alleging that Fendi had wrongfully terminated him because of his Italian heritage and in violation of an implied contract that he would be fired only for good cause.   Fendi then filed a motion for summary judgment in federal district court, arguing that IRCA’s employer sanctions provision required that Fendi terminate Incalza when it discovered that his E-1 visa was no longer valid.  Fendi, relying on the U.S. Supreme Court’s decision in Hoffman Plastic Compounds, Inc. v. NLRB, 437 U.S. (2002), also argued that IRCA preempts California law.  (For a summary of the decision in Hoffman, see “Supreme Court Bars Undocumented Worker from Receiving Back Pay Remedy for Unlawful Firing,” Immigrants’ Rights Update, Apr. 12, 2002.)  The district court denied Fendi’s motion, and the case proceeded to trial.  A jury found that Incalza had been wrongfully terminated, in violation of the implied contract, and Fendi appealed the award to the Ninth Circuit.

     The appellate court held that Fendi was not required by IRCA to terminate Incalza because it could have suspended his employment without pay for a reasonable period of time while he was obtaining a change in work authorization to which he was entitled.  In reaching its decision, the court held that while IRCA requires that employers not continue to employ workers once the employer discovers that they are unauthorized to work, IRCA “does not bar an employer from suspending an employee or placing him on unpaid leave for a reasonable period while he remedies the deficiency in his status.”  The court ruled that because an employment-ineligible worker who is placed on leave without pay (or whose employment status is suspended) is not receiving pay and is not working, the employer is not continuing to employ that individual and therefore is not violating federal immigration law.

     With respect to Fendi’s argument that the Hoffman decision required that Fendi discharge Incalza immediately upon learning that his E‑1 visa was no longer valid, the court rejected this argument and distinguished Hoffman, stating that Hoffman requires employers to discharge workers immediately “who are indisputably not authorized to work.”  According to the court, Hoffman did not address the question of terminating employees whose work authorization problems could be expeditiously resolved, nor did it consider whether these workers could be suspended or granted leave without pay.  The court also held that the California law does not conflict with federal law and that it was not preempted by IRCA.

     Because employers often fire immigrant workers when their work authorization documents expire and they have not yet received renewal documents from U.S. Citizenship and Immigration Services (USCIS), this decision should prove extremely helpful for such workers who have applied for renewal documents.  When communicating with the employers of such workers, advocates should cite to this decision and ask that workers be granted an unpaid leave of absence while they wait for the renewed work authorization document to arrive from USCIS.

Incalza v. Fendi North America, Inc., 479 F.3d 1005 (9th Cir. 2007).