10/26/2006

As the mid-term elections approach, several pressing issues are at the forefront of national debate. Included among these topics is immigration reform and the hiring of undocumented workers, issues that affect all employers. While most businesses are aware of the basic laws addressing the hiring of illegal aliens, many employers will be surprised to learn that an undocumented, unauthorized workers may be granted the right to recover damages for personal injuries incurred on the job despite their illegal status. This article will examine a brief history of worker immigration laws and then analyze a recent New York Court of Appeals decision that allowed an undocumented alien the right to sue under state law to recover lost wages.

In 1952, Congress enacted the Immigration and Nationality Act ("INA") to delineate "the terms and conditions of admission to the country and the subsequent treatment of aliens lawfully in the country." Because the INA did not make it a crime to employ an illegal alien or an alien without work authorization, the United States Supreme Court in Sure-Tam, Inc. v. NLRB held that the provisions of the National Labor Relations Act ("NLRA"), which was designed to protect employees, could be applied to employment practices that affected illegal aliens. The Supreme Court reasoned that, "[a]pplication of the NLRA help[ed] to assure that the wages and employment conditions of lawful residents [were] not adversely affected by the competition of illegal alien employees." Thus, employers had no reason to favor illegal aliens in hiring.

Despite these protective measures, waves of illegal aliens continued to enter the U.S. for work. In 1986, Congress responded by adopting the Immigration Reform and Control Act ("IRCA"), which President Ronald Reagan said was intended to "remove the incentive for illegal immigration by eliminating the job opportunities which draw illegal aliens." The IRCA created an "employment verification system" that provides formal documentation to aliens legally present and approved to work, usually in the form of a green card. The IRCA also requires all employers to verify a prospective worker's identity and work eligibility before hiring a worker. Any employer who knowingly violates the employment verification requirements is subject to civil or criminal prosecution and penalties. See 8 U.S.C. §1324. Moreover, it is also illegal under the IRCA for an alien to provide a potential employer with false employment documents.

Based upon the IRCA, in 2002, the United States Supreme Court ruled in Hoffman Plastic Compounds, Inc. v. NLRB that an illegal alien who gained employment by presenting false work documents in violation of the IRCA could not be awarded back pay for an improper termination stemming from lawful participation in union activities because such an award would conflict with the purpose of the IRCA. Specifically, the Supreme Court found that, "[e]ither the undocumented alien tender[ed] fraudulent identification … or the employer knowingly hire[d] the undocumented alien in direct contradiction of its IRCA obligations."

However, a February ruling from the New York Court of Appeals distinguishes Hoffman, and provides that an undocumented and unauthorized worker can sue under state tort law to recover for personal injuries. In Balbuena v. IDR Realty, LLC, plaintiff Georgonio Balbuena entered the U.S. illegally from Mexico. While performing construction work in New York, he fell from a ramp while pushing a wheelbarrow, sustaining severe injuries. He sued for negligence and violation of New York state labor laws, seeking numerous damages, including lost wages from the time of accident and future lost wages. During the discovery phase of the litigation, the defendants discovered that Balbuena was an undocumented alien and did not have proper work authorization documents. Based upon this fact, the defendants argued that under the principles in Hoffman, the IRCA prohibited any recovery by Balbuena.

Contrary to the defense arguments, the high court of New York found that the IRCA did not preempt New York's state labor laws. Specifically, the Court of Appeals found that Congress did not explicitly declare that the IRCA was intended to supersede state law (also known as express preemption). More importantly, the Court of Appeals found that there was not a direct conflict between state labor laws and the federal IRCA (also known as conflict preemption). The Court of Appeals reasoned that, "[s]tates possess broad authority under their police powers to regulate the employment relationship to protect workers within the State … [and] [t]he Labor Law, therefore, applies to all workers in qualifying employment situations – regardless of immigration status." Moreover, the Court found that "limiting a lost wage by an injured undocumented alien would lessen an employer's incentive to comply with the Labor Law and supply all of its workers the safe workplace that the Legislature demands."

To reconcile this case with Hoffman, the Court of Appeals also reasoned that "in order to further the laudable purposes of [the] IRCA and [the New York] Labor Law, tort deterrence principles provide a compelling reason to allow an award of such damages against a person responsible for an illegal alien's employment when that person knew or should have known of that illegal alien's status." The Court went on to note that unlike the plaintiff in Hoffman, Balbuena did not provide any fraudulent work documents to his employer, and in fact was not even asked to present any work authorization documents as required by the IRCA.

While it remains to be seen if other jurisdictions will follow the reasoning in Balbuena, or if the United States Supreme Court will eventually have to reconcile the interplay between the IRCA and state tort remedies for workers, this case is presently important for employers because it warns of two possible exposures when hiring undocumented workers. First, employers can face possible civil and criminal liability if they knowingly violate the employment verification requirement of the IRCA, or if they unknowingly hire an illegal alien but subsequently learn that the alien is not authorized to work and they do not immediately terminate the relationship. Second, if an undocumented worker without work authorization is hired, through no fault of the company or deception of the worker, and then is injured on the job, the worker still may be allowed to recover for personal injuries under state tort law remedies, despite his or her illegal status.

Alexander Marks, an associate in the firm’s litigation practice, wrote this article. He can be reached at (312) 840-7022 or amarks@burkelaw.com.