Can I Sue My Employer for Outsourcing My Job under Federal or New Jersey Anti-Discrimination Laws?

Last updated Oct. 30, 2017.

The last few years have been big for H1-B and H2-B visas. In the fall of 2015, 27 former Disney IT employees filed complaints with the EEOC, claiming that their termination and replacement with H1-B visa workers amounted to illegal discrimination. The issue of employers displacing American workers with foreign visa workers later rose to the forefront of the 2016 presidential campaign.

Our offices have begun to receive calls from exactly such displaced employees, who ask: Can I sue my employer for discrimination for terminating myself and my fellow American coworkers, then replacing us with visa workers?

This is a relatively new area of law that is currently being hammered out by the courts. However, as it stands now, the answer is a qualified yes.

Job Outsourced: What are my rights under federal law?

At least two outsourcing-based employment discrimination suits are winding their way through the federal court system. Kohler v. Infosys Technologies Limited, Inc., Case No. 13-CV-885-pp, is currently pending in the Eastern District of Wisconsin, while Heldt v. Tata Consultancy Services, Ltd., Case No. 15–CV–1696–YGR, is filed in the Northern District of California.

The Kohler and Heldt cases are very similar. In both cases, the American plaintiff employees claim that their termination and replacement with H1-B visa workers is national origin discrimination in violation of Title VII of the Civil Rights Act of 1964. Moreover, in both cases, the plaintiffs have filed their suits as “disparate impact” claims. This means that the plaintiffs do not have to show that their respective employers intentionally discriminated against American workers, as long as they can show that their employers’ actions (i.e., replacing them with H1-Bs) had a statistically significant adverse impact upon American workers as opposed to those of another national origin.

In both Kohler and Heldt, the defendant employers filed motions to dismiss in an attempt to eliminate the plaintiffs’ lawsuits in the early stages of litigation. A motion to dismiss disposes of cases on the grounds that the plaintiff failed to allege a legally viable claim. However, the Kohler and Heldt courts denied the motions, holding the plaintiffs’ stated a valid claim and allowing them to proceed to the discovery phase of litigation.

Time will tell how the courts will rule on the substantive, fact-based merits of the plaintiffs’ claims and whether the plaintiffs will meet their statistical burdens of proof in showing “disparate impact.” In the meantime, the employment law bar and IT consulting firms are watching with interest.

What about New Jersey law?

The question of whether outsourcing qualifies as national origin discrimination under the LAD has not been thoroughly examined by New Jersey courts. However, two cases involving immigrant workers suggest that, at the very least, the New Jersey judiciary would be willing to entertain these types of cases.

The first case, Mattus v. Facility Solutions, Inc., 2005 WL 3132190, was filed by our own offices. In Mattus, we represented janitorial workers who were contracted out to Wal-Mart. Shortly after starting work, our clients were made to train newly hired undocumented immigrants, and then fired and replaced with those same immigrants. We sued Wal-Mart and its co-employer, a cleaning services agency, for national origin discrimination under the LAD. Wal-Mart and the agency then moved to dismiss the claim.

The court, however, ruled in our favor and allowed the claim to stand. In its opinion, the court made clear that although the LAD prohibits discrimination based upon national origin, it doesn’t prohibit discrimination based on citizenship. However, the court found that since all the plaintiffs were American nationals, and all their replacements were not, the plaintiffs had stated a sufficient case of discrimination.

Wal-Mart countered that it could not be liable for discrimination under the LAD because “Plaintiffs were terminated for a non-discriminatory reason. . . .in order to replace them with undocumented aliens who could be paid lower wages.” The court rejected this argument, stating “even if Wal-Mart’s alleged policy was financially motivated, it had the effect of discriminating on the basis of nationality and is therefore prohibited.”

In other words, the court applied Title VII’s disparate impact theory to national origin claims under the LAD. Again, under this analysis, intent is irrelevant if it has the effect of discriminating against American workers.

The same reasoning held in Montalvo v. Larchmont Farms, Inc., 2009 WL 4573279. There, migrant farm workers with dual American and Puerto Rican citizenship were recruited from Puerto Rico to work on a New Jersey farm. They alleged that they were paid less, and otherwise treated less favorably, than workers the farm brought in on H2-A visas. In upholding the plaintiffs’ national origin claim under the LAD, the court held that they need not prove that the farm intentionally discriminated against them, only that the farm’s favoring of H2-A workers had a discriminatory impact.

Has your job been outsourced?

Outsourcing can be a thorny issue. If your employment is being impacted by the work visa program and you’re curious about your legal rights, contact our offices today for a free consultation.