Labor & Employment Law Daily Wrap Up, IMMIGRATION—Cal. App.: University relied on improper criteria in continuing to use policy that discriminates based on immigration status, (Aug 8, 2025)

By Kathleen Kapusta, J.D.

The question before it, said the court, was whether the continued use of a facially discriminatory policy could be justified solely by the university’s assessment of the risks posed by the termination of its policy.

The University of California’s employment policy—which prohibits it from employing undocumented students who do not have federal work authorization—facially discriminates based on immigration status, a California appeals court held, finding that in light of applicable state law, the university abused its discretion when it relied on improper criteria—that the discontinuation of the policy might result in significant harm to students and employees based on perceived risks of potential federal law violations—in continuing to use the policy. Accordingly, the court issued a writ of mandate directing the university to reconsider its policy based on proper criteria (Muñoz v. Regents of the University of California, No. A171410 (Cal. App. Aug. 5, 2025)).

Two individual petitioners challenged the university’s employment policy, arguing that it discriminates in violation of the state’s Fair Employment and Housing Act (FEHA) and specifically section 11028, subdivision (f)(3) of title 2 of the California Code of Regulations, which provides that it is “an unlawful practice for an employer or other covered entity to discriminate against an employee because of the employee’s or applicant’s immigration status, unless the employer has shown by clear and convincing evidence that it is required to do so in order to comply with federal immigration law.”

IRCA. Pursuant to Section 1324a of the IRCA, it is unlawful for “a person or other entity” to knowingly hire a person who is not either lawfully admitted for permanent residence in the United States or authorized for employment under federal law. The term “entity” is defined to mean “any legal entity, including but not limited to, a corporation, partnership, joint venture, governmental body, agency, proprietorship, or association” and includes an “entity in any branch of the Federal Government.” The provision also authorizes the federal government to investigate and bring civil and criminal enforcement actions regarding potential violations.

Although the university hires undocumented students who are enrolled in the Deferred Action for Childhood Arrivals (DACA) program because they can obtain temporary work authorization from the federal government, it determined, in deciding to continue with its policy, that if it hires undocumented students without federal work authorization, it would face significant risk that the federal government would read IRCA to apply to the university to initiate enforcement action.

Challenge. The petitioners sought a writ of mandate directing the university regents to abandon its policy of refusing to hire undocumented students for on-campus work. They sought review in the state high court, which granted review and transferred the matter back to the state appeals court with instructions to issue an order to show cause. The court did so, asking the university to address four questions. In its response, the university argued that the credible threat of federal enforcement is a legitimate, nondiscriminatory reason for its work authorization policy that provides a complete defense to any FEHA claim.

While the court agreed with the university generally that “a quasi-legislative policy decision based on an assessment of risks falls” mostly within its sound discretion, it pointed out that the university did not cite “any authority suggesting that the continued use of a policy that is unlawful under state law can be justified solely on a determination that discontinuing the policy might result in significant harm to the students and employees of the University based on perceived risks of potential federal law violations, even reasonable risks based on a careful assessment of what positions federal actors might take.”

For its part, the university argued that its policy does not violate FEHA based on immigration status—indeed, it pointed out that it hires students with DACA status provided they have federal work authorization. In response, the petitioners argued that because “students lack federal work authorization because of their immigration status,” the “lack of federal work authorization is therefore not materially distinct from immigration status itself.” Further, they contended, because the university’s policy facially discriminates based on immigration status, the policy is an “unlawful practice” under state law unless the university can show by clear and convincing evidence that its policy is required to comply with federal immigration law.

Continued use of policy. Instead of taking a position on whether IRCA applies to state government entities or responding to the petitioners’ assertion that IRCA does not apply at all, the university argued that its policy is permissible even if the court were to conclude that IRCA does not apply to state government entities. Accordingly, said the court, the issue was whether the university’s continued use of a facially discriminatory policy could be justified solely by its assessment of the risks posed by the policy’s termination.

BFOQ. Here, said the court, the university failed to show that an employer can engage in an unlawful employment practice, without a showing that such discrimination is required by federal law, based solely on concerns that there may be significant consequences to adopting a contrary practice. While the university cited to a state regulation setting forth the “Bona Fide Occupational Qualification” defense to intentional discrimination, it could not claim, the court explained, that federal work authorization is a BFOQ without showing that the federal law requiring work authorization applies to it. “A preference for employees with work authorization, so as to avoid the potential for enforcement proceedings, does not establish that the University’s policy is reasonably necessary to its normal business operations,” reasoned the court.

The university also argued that “[e]ven if Petitioners successfully show that IRCA is best read not to apply to the University, . . . both state and federal courts have repeatedly and correctly held, the desire to avoid a credible risk of litigation is a legitimate and nondiscriminatory basis for a policy—whether or not the litigation would ultimately result in a judgment against the employer.” But again, said the court, none of the cases cited by the university holds that an employer can continue to engage in an unlawful employment practice solely to avoid possible litigation over the practice’s lawfulness.

Safe harbor provisions. Also rejected was the university’s contention that FEHA’s statutory “safe harbor” provisions, which it asserts “affirm[] that an employer is not liable for actions motivated by a desire to comply with a directive from the federal government[,] . . . independently preclude liability for the University’s adoption of a policy to avoid a credible threat of federal prosecution.” The university, the court observed, did not argue that its policy complies with a “directive” from the federal government.

Finally, the university argued, if it is required to prove conclusively that it is required to comply with IRCA, “no employer in California could safely rely on federal regulations or the federal government’s interpretation of a federal statute when making employment decisions—no matter how clear the risk of federal prosecution.” But again, the court observed, the university did not argue that it relied on the requirements of a federal statute or regulation in deciding to not to amend its policy but rather on the risks associated with adopting a policy that the federal government might consider unlawful.

The policy, said the court, noting the university’s predicament, “is unlawful under FEHA unless federal law requires it, and neither the University nor anyone else has argued to us that it does. Without more, there is no basis for us to hold that the risk of federal prosecution alone justifies continuing it.” Thus, the court found the university abused its discretion by relying on an improper justification for continued application of its facially discriminatory policy. As a result, it issued a writ directing the university to reconsider its policy based on proper criteria.

Scope of writ. As to the scope of the writ, the court did not require the university to take any specific action. Instead, it required that the university not rely on litigation risk alone as the justification for its facially discriminatory policy.

The case is No. A171410.

Judge: Goldman, J.

Attorneys: Stacey M. Leyton (Altshuler Berzon) for Jeffry Umaña Muñoz. Bryan H. Heckenlively (Munger, Tolles & Olson) for The Regents of the University of California.

Companies: The Regents of the University of California

Cases: Immigration Discrimination StateLawClaims CaliforniaNews GCNNews