ISSUES WITH UNDOCUMENTED WORKERS. Josephine B. Vestal and Timothy W. Jones WILLIAMS, KASTNER & GIBBS PLLC. Labor & Employment Half-day Seminar

Transcription

1 ISSUES WITH UNDOCUMENTED WORKERS Josephine B. Vestal and Timothy W. Jones WILLIAMS, KASTNER & GIBBS PLLC Labor & Employment Half-day Seminar March 22, 2006 WILLIAMS, KASTNER & GIBBS PLLC 601 Union Street, Suite 4100 Seattle, WA (206) WILLIAMS, KASTNER & GIBBS PLLC All Rights Reserved

2 I. INTRODUCTION Though it is against the law to employ an undocumented worker 1 in the United States, at least one of every twenty employees in this country is an undocumented worker. The high number of undocumented workers can be attributed to a variety of factors. First, our economy is booming. While the U.S. Customs and Border Protection attempts to keep immigrants out of the country, the U.S. economy is ready to employ anyone who gets in. Second, according to conventional wisdom, many of the available jobs are undesirable and thus go unfilled by U.S. citizens. Third, it is alleged that some businesses intentionally use undocumented workers to drive wages down in their labor market. Finally, many undocumented workers continue to strive for the American Dream, real or imagined, and believe that this country offers better-paying jobs, medical care, and educational opportunities than their country of origin. II. UNDERSTANDING THE BIG PICTURE There are many issues associated with the employment of undocumented workers that affect employers. These issues range from employment verification programs to increased penalties for knowingly hiring undocumented workers. To manage to avoid these employment liabilities, the first step an employer must take is to accept the fact that every employee must be treated as though he or she is potentially an undocumented worker. An undocumented worker transcends all borders, races, and religions. While recent studies show it is likely that an undocumented worker has traveled north from Mexico, it is possible that she came south from Canada instead. Although the same studies show it is likely 1 An undocumented worker is commonly referred to as an undocumented alien or illegal alien. An alien is authorized if he or she has a valid social security account number card or other documentation evidencing authorization of employment in the United States which the Attorney General finds, by regulation, to be acceptable for purposes of this section. 8 U.S.C. 1324a(b)(C). Under 8 U.S.C. 1324a(h)(3)(B), an unauthorized alien is any alien not authorized to be employed by this chapter or by the Attorney General. A list of acceptable documents is also included on a Form I-9, discussed later in this paper. 1

3 that an undocumented worker is a day laborer, cook, or field hand, it is also possible that the undocumented worker is an accountant or computer engineer. Government agencies and academic studies put the number of undocumented workers living in the United States between 8.5 and 12 million. Other analysts have put the number of undocumented workers as high as 20 million. At 11 million, 4.9% of the civilian work force currently would be undocumented workers. Pew Hispanic Center, THE SIZE AND CHARACTERISTICS OF THE UNAUTHORIZED MIGRANT POPULATION IN THE U.S., Research Report, (March 7, 2006). Mexico is the leading source country of undocumented immigration to the U.S. Over fifty percent of the undocumented workers are from Mexico. Approximately twenty five percent of undocumented workers are from other Latin American countries. Ten percent are from Asia. Europe and Canada comprise about five percent. The remaining undocumented workers are from the rest of the world. See id. Undocumented workers usually find employment in construction, production, food processing, farming, or the service sector. Two thirds of the undocumented population live in California, Texas, Florida, New York, Illinois, and New Jersey. However, the most rapid growth of the undocumented population has been outside these of these six states. III. UNDOCUMENTED WORKERS, EMPLOYERS, AND THE LAW The legal landscape of laws that involve employers and undocumented workers is complex and ever-changing as a result of new case law and legislation, including amendments to existing laws. An employer must be diligent in keeping informed of these changes. Otherwise, the employer runs the risk of incurring criminal and civil penalties. This section addresses some of the laws that affect employers on a daily basis. 2

4 A. Immigration Reform And Control Act The Immigration Reform and Control Act ( IRCA ) makes it unlawful to hire any person who is not legally authorized to work in the United States. It also includes the requirement for employment eligibility verification and anti-discrimination provisions. The IRCA applies to employees with four or more employees. 1. Civil and Criminal Penalties It is unlawful to knowingly hire an undocumented worker. 8 U.S.C. 1324a(a)(1)(A). It is also unlawful to continue to employ an undocumented worker knowing that individual is not properly authorized to work. 8 U.S.C. 1324a(a)(2). Employers who violate these provisions may be punished by civil fines. 8 U.S.C. 1324a(e)(4)(A). Violations of these provisions may also subject an employer to criminal prosecution. 8 U.S.C. 1324a(f)(1). 2. Employment Eligibility Verification Under the IRCA, employers are required to verify the eligibility of all individuals hired after November 6, C.F.R. 274a.2. To comply with this verification process, the employer and employee must complete an Employment Eligibility Verification form, commonly referred to as Form I-9. During this process, an employee must present an original document or set of documents that, taken together, establish both the employee s identity and employment eligibility. An employer should not require any more documentation than the minimum required by the Lists of Acceptable Documents. The Lists of Acceptable Documents is part of the Form I-9. A document is acceptable if it reasonably appears on its face (1) to be genuine and (2) to relate to the employee. Some documents, discussed later, can be accepted even with an expiration date. 3

5 Employers must retain I-9 Forms and associated records for up to three years from the employee s hire date or one year after the date the individual s employment is terminated, whichever is longer. 8 C.F.R. 274a.2(b)(2). Employers have the responsibility of tracking the expiration dates of the acceptable documents that were supplied during the employment eligibility verification process. 8 C.F.R. 274a.2(b)(1)(vii). Reverification must take place no later than the expiration date of the originally documented authorization. It is important to note that a Federal Register notice may extend the validity of a particular I-9 document. In addition, reverification of an employee s eligibility is not required for U.S. citizens or lawful permanent residents with I-551 cards, regardless of any expiration date on the I-551 card. 8 C.F.R. 274a.12(a)(1). If one company acquires another company and retains the predecessor s employees, the acquiring company is not required to complete new forms. However, a reverification or, at a minimum, a review of the documents makes good business sense as the acquiring company inherits all of the liabilities associated with any of the predecessor s I-9 paperwork violations concerning existing employees. There are many reports of undocumented workers using forged or borrowed documentation to comply with the employment eligibility requirements. When an employer suspects that an employee has used false documents to obtain employment, the employer should reverify work authorization by allowing the employee another opportunity to present acceptable documentation and complete a new Form I-9. If the employee is unable to present acceptable documentation, the employer is required to terminate the employee. If the unauthorized employee is not terminated, then the employer might be subject to penalties for knowingly continuing to employ an unauthorized worker. 8 U.S.C. 1324a(a)(2). 4

6 It is critical that employers comply with I-9 requirements. Paperwork violations can result in substantial civil fines. 8 U.S.C. 1324a(e)(5). In 1994, the Immigration and Naturalization Service (now an integrated component of the Department of Homeland Security) fined Disneyland $395,000 for I-9 paper work violations. INS investigators discovered 1,156 paperwork violations during a review of employee records. The investigators determined that nearly 150 employees had questionable papers. Walt Disney Company attorneys contested the fine and it was later reduced to $260,000. This fine could have been avoided, however, had Disney initially complied with the I-9 requirements. 3. Anti-Discrimination Provisions There are several federal laws that prohibit discrimination in the workplace, including Title VII of the 1964 Civil Rights Act which prohibits, among other things, discrimination because of national origin, and the Age Discrimination in Employment Act. The IRCA is another such statute. Under the IRCA, employers cannot discriminate against applicants or employees on the basis of their citizenship or national origin. 28 C.F.R (a)(1). Although employers cannot employ undocumented workers, they are not required to report undocumented workers or applicants to the Department of Homeland Security. Moreover, it is against the law to threaten to report, or to report a worker, to the Department of Homeland Security because a worker opposed unlawful discrimination or participated in a proceeding under anti-discrimination laws. 4. Employer Compliance with IRCA The verification requirements and anti-discriminations provisions create a difficult legal framework for employers. Employers may be penalized if they employ undocumented workers, but they cannot make the verification process too demanding. However, employers who, out of 5

7 an abundance of caution, refuse to hire an authorized worker with appropriate but suspicious documentation might be in violation of the IRCA s anti-discrimination provision. A number of agencies are authorized to demand to review the employer s compliance with the requirements for the I-9s. To avoid compliance problems, every employer should establish an I-9 audit system. At a minimum, this audit system should include the following steps: a. Section 1. Require employees to complete Section 1 of the I-9 form at the time of hire. 8 C.F.R. 274a.2(b)(1)(i)(A). b. Section 2 and Review. Within three business days of hire, the employer must physically examine the documentation presented by the individual and complete Section 2. 8 C.F.R. 274a.2(b)(1)(ii). Procedures for review should be consistent among all employees. c. Acceptable Documents. The employer should accept any of the documents on the I-9 Lists of Acceptable Documents. An employer should not require any more documentation than is required by the Lists of Acceptable Documents. This document is part of the Form I-9. A document is acceptable if it reasonably appears on its face (1) to be genuine and (2) to relate to the employee. d. Retention. The employer must retain all I-9 forms for three years after the date of the hire or one year after the date the individual s employment is terminated, whichever is longer. e. Section 3 and Reverification. Section 3 is completed by the employer when it is necessary to update or reverify an employee s work authorization. The employer should establish a scheduling system to reverify the I-9 form before an individual s employment authorization is set to expire. Employers should also avoid (1) refusing to hire an individual based on a pending expiration date, (2) charging special fees to complete the verification process, and (3) reviewing employment eligibility documents before making an applicant a job offer. Finally, an employer should not try to evade IRCA requirements through the use of independent contractors. Wal- Mart Stores, Inc. learned this lesson through a highly publicized settlement with the United States government. 6

8 In March 2005, Wal-Mart agreed to pay $ 11 million as a result of Wal-Mart s cleaning contractors employing undocumented workers. In a series of immigration enforcement actions, U.S. Immigration and Customs Enforcement ( ICE ) raided 60 Wal-Mart stores in 21 states. In these actions, ICE agents arrested 245 undocumented workers who were working as night janitors and cleaners. The Wal-Mart settlement did not detail the basis for ICE s actions, but as part of the settlement Wal-Mart agreed to develop a means to verify whether its independent contractors were complying with immigration laws. In addition to the civil settlement, 12 cleaning contractor corporations were charged in federal court for their involvement in the illegal employment of undocumented workers. B. Back Pay for an Undocumented Worker In 2002, the U.S. Supreme Court held in a 5-4 decision that the IRCA precluded the National Labor Relations Board ( NLRB ) from awarding back pay to an undocumented worker who fraudulently obtained employment by presenting false documents. Hoffman Plastic Compounds, Inc. v. National Labor Relations Board, 535 U.S. 137 (2002). This decision has had a limited impact on the rights of undocumented workers and the availability of remedies for their wrongful discharge. In Hoffman, Hoffman Plastic Compounds hired Jose Castro after he presented false documents that appeared to verify his authorization to work in the United States. Hoffman then laid off Castro after he supported a union-organizing campaign. The National Labor Relations Board ( Board ) found that the act of laying off Castro violated the National Labor Relations Act ( NLRA ). It ordered Hoffman to give back pay and provide other relief. At an administrative law hearing to determine the amount of back pay, Castro testified that he was not authorized to work in the United States and that he had used a birth certificate 7

9 belonging to a friend to get hired. The Administrative Law Judge ( ALJ ) found that the Board was precluded from awarding Castro relief based on case law and the IRCA, which makes it unlawful for employers to knowingly hire undocumented workers and also prohibits employees from using fraudulent documents to establish employment eligibility. The Board reversed the ALJ with respect to back pay. The Board reasoned that the most effective way to further the IRCA immigration policies is to provide the NLRA s protections and remedies to undocumented workers in the same manner as it applies to other employees. The Court of Appeals denied review and enforced the Board s order. The U.S. Supreme Court granted certiorari. The Supreme Court determined that tendering false documents to satisfy the I-9 requirements subverts the employer verification system. It also recognized that an employer who knowingly hires an undocumented worker contravenes the IRCA. The court concluded that allowing the Board to award back pay to undocumented workers would unduly trench upon explicit statutory prohibitions critical to federal immigration policy, as expressed in IRCA. The court recognized that the employer did not get off scot-free. Instead, the Board had already imposed other sanctions against Hoffman. The Supreme Court reversed the judgment of the Court of Appeals. Despite this prohibition against back pay, Hoffman can be distinguished on a few important points. First, in Hoffman, the court did not address the availability of back pay where an employer had knowingly hired an undocumented worker. Second, the court did not hold than an undocumented worker is barred from recovering back pay for work actually performed. Third, the court did not limit additional remedies available under other labor and employment statutes such as the Fair Labor Standards Act ( FLSA ) and the Agricultural Worker Protection 8

10 Act ( AWPA ). Courts have recognized that these statutes, in addition to others, require an employer to pay at least the minimum wage as well as overtime premiums to its workers, regardless of the worker s immigration status. Hoffman has also been considered by some federal courts. See, e.g., Singh v. Jutla & C.D. & R's Oil, Inc., 214 F. Supp. 2d 1056 (N.D. Cal. 2002); Flores v. Amigon, 233 F. Supp. 2d 462 (E.D.N.Y. 2002). See also Rivera v. NIBCO, Inc., 364 F.3d 1057 (9th Cir. 2004) (declining to extend Hoffman to Title VII cases while holding that the discovery process cannot be used to inquire into plaintiffs immigration status). In Singh, the defendant, Jutla, recruited Singh to work in the United States. Singh came to the U.S. and worked for Jutla from May 1995 to February 1998, but received no pay. Singh filed a claim under the FLSA and the California Labor code, seeking unpaid wages and overtime pay for work actually performed. Jutla and his corporation argued that Hoffman effectively held that undocumented workers are not entitled to any of the remedies available under the national labor laws. The court disagreed. First, the court reasoned that Hoffman did not preclude an undocumented worker from seeking any form of relief. Second, the court held that Hoffman did not apply where an employer knowingly recruited an undocumented worker. Throughout Singh s employment, Jutla and his corporation were aware of Singh s illegal status as an undocumented worker but continued to employ him. Third, the court recognized that Hoffman precluded undocumented workers from receiving back pay. The court, however, reasoned that Hoffman did not prohibit an award of unpaid wages to undocumented workers for work actually performed. Fourth, the court determined that Singh s FLSA claim is consistent with the underlying polices of the FLSA. The court stated that to hold otherwise would provide a perverse economic incentive to 9

11 employers to seek out and knowingly hire illegal workers in contravention of immigration laws. The court concluded that Singh s FLSA claim was not barred. C. Workers Compensation Workers Compensation is a form of industrial insurance that covers nearly all nonfederal workers in Washington. Unless an employer has chosen to self-insure, employers and employees pay premiums into the nonprofit state fund that is operated by the Washington State Department of Labor and Industries. This state fund is then used to provide insurance for workers who suffer job-related injuries or illnesses. In the United States, there is a split of authority as to whether an undocumented worker is covered under a workers compensation system. Although Washington courts have not explicitly addressed this issue, California recently joined the group of states that provide coverage to undocumented workers the same group of states that includes Washington. See Farmers Brothers Coffee v. Workers Compensation Appeals Board, 133 Cal. App. 4th 533 (2005). In Farmers Brothers Coffee, the California Court of Appeal for the 2nd District held that undocumented are entitled to workers compensation benefits when they are injured on the job. The court stated that immigration status is irrelevant when deciding whether to pay compensation to an injured employee. The Washington State Department of Labor and Industries ( L&I ) has indicated in the past that it supports protection of undocumented workers. For purposes of workers compensation claims, L&I treats an undocumented worker the same as a legally documented worker. On May 21, 2002, apparently responding to Hoffman, the Director of L&I, Gary Moore, issued the following statement: The 1972 law that revamped Washington s workers compensation system is explicit: All workers must have coverage. Both employers and workers contribute to the insurance fund. The Department of Labor and Industries is 10

12 responsible for... providing workers with medical care and wage replacement when an injury or an occupation disease prevents them from doing their job. The agency has and will continue to do all that without regard to the worker s immigration status. (Emphasis added). This statement was confirmed by L&I s Public Affairs in an to Williams, Kastner & Gibbs PLLC dated March 8, L&I is handling workers compensation claims without regard to the claimant s immigration status. A claimant with an accepted claim does not need to reside in the United States to receive workers compensation payments, unlike unemployment compensation. Washington law establishes a broad definition for worker. Under RCW (1), a worker includes every person who is engaged in the employment of an employer [.] See also Macias v. Department of Labor & Industries, 100 Wn.2d. 263 (1983). If Washington courts are ever faced with this issue directly, Washington will likely follow the line of cases providing undocumented workers with coverage. D. RICO The Racketeer Influenced and Corrupt Organizations Act ( RICO ) is a federal law which provides extended penalties for criminal acts performed as part of an ongoing criminal organization. In the late 1990s, Congress amended RICO and added workplace immigration claims to the list of acts supporting RICO claims such as wire and mail fraud. In the last few years, there have been a number of RICO claims brought by legally documented workers against their employers for engaging in a pattern of violations of section 274 of the Immigration and Nationality Act. Under the provisions of RICO, it is illegal for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise s affairs through 11

13 a pattern of racketeering U.S.C. 1962(c). Under RICO, any person injured in his business or property by reason of a violation of section may sue... in any appropriate United States district court for civil damages. 18 U.S.C. 1964(c). Racketeering activity includes any act which is indictable under the Immigration and Nationality Act, section U.S.C. 1961(1)(F). Under section 274, it is a federal crime to knowingly hire at least 10 individuals with actual knowledge that the individuals are undocumented during any twelve-month period.. 8 U.S.C. 1324(a)(3)(A). In Mendoza v. Zirkle Fruit Co., 301 F.3d 1163 (9th Cir. 2002), plaintiffs were a class of legally documented agricultural employees who worked for Zirkle Fruit and Matson Fruit Company. Zirkle Fruit and Matson Fruit operated fruit orchards and packing houses in Eastern Washington. Plaintiffs alleged that these two agricultural companies conspired to hire undocumented workers at below market wages, and this illegal hiring scheme served to depress the normal labor market, and specifically the legal workers wages. Plaintiffs further alleged that the scheme was facilitated by a separate company, Selective Employment Agency, Inc., that employed workers and then loaned them to the growers. The district court dismissed the complaint on the grounds that the damages were too speculative and difficult to ascertain. Plaintiffs appealed. The Court of Appeals considered whether the plaintiffs had statutory standing by focusing on whether the alleged injury was too remote to allow recovery. The court reasoned that there was not a more direct victim of the illegal conduct than the plaintiffs. The court also determined that the measure of harm was not too speculative because the employees sufficiently alleged that the growers singularly had the ability to define wages in the labor market. In 2 See Exhibit A for the text of sections 274 and 274A-D, codified as 8 U.S.C. 1324, 1324a-d. 12

14 addition, the court stated that there was not a high risk of multiple recovery. Thus, the court concluded that the plaintiffs had standing to sue under RICO. The Court of Appeals reversed the decision of the district court and remanded the case. Zirkle Fruit Company later settled the class action lawsuit for $1.3 million. The U.S. Supreme Court recently granted a writ of certiorari to a federal case involving a RICO claim in the 11th Circuit. Williams v. Mohawk, 411 F.3d 1252 (11th Cir. 2005). In Williams, plaintiffs were hourly employees of Mohawk Industries, Inc. They filed a RICO class action lawsuit alleging that Mohawk reduced labor costs by depressing wages for its hourly employees by knowingly employing undocumented workers. Plaintiffs alleged that these actions violated section 274 of the Immigration and Nationality Act. Similar to Mendoza, the Court of Appeals in Williams analyzed whether the plaintiffs in Williams had sufficiently alleged all the elements of their claim. The court concluded that plaintiffs properly alleged conduct of an enterprise through a pattern of racketeering activity. The court also found that plaintiffs properly alleged sufficient proximate cause and that Mohawk s illegal conduct was aimed primarily at them. The Court of Appeals held the district court properly denied the employer s motion to dismiss as it related to the federal RICO claim. Mohawk then appealed this case to the U.S. Supreme Court. The Supreme Court s decision in this case could have a significant impact on employers. If the court rules in favor of the plaintiffs, employers in general could be exposed to a wide range of liability as a result of routine hiring practices. Legally documented workers are not the only plaintiffs in RICO actions. In Idaho, Canyon County is the first municipality to file a RICO lawsuit against a business for knowingly hiring undocumented workers. The lawsuit was dismissed by a federal district court, but Canyon 13

15 County appealed the case to the 9th Circuit Court of Appeals. For residents of this county, it is an attempt to recover perceived costs of illegal immigration, including welfare costs and community service expenses. E. Alien Tort Claims Act The Alien Tort Claims Act ( ATCA ) grants the federal district courts original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States. 28 U.S.C The ATCA was adopted in 1789 as part of the original Judiciary Act, but it was rarely used until That year, the Second Circuit interpreted the ATCA in an expansive way in the case of Filartiga v. Pena-Irala, 630 F.2d 876, (2d. Cir. 1980) (holding that the ATCA gave subject matter jurisdiction over the claim of two Paraguay citizens where a former Paraguayan police inspector-general tortured and killed a member of their family while in Paraguay in violation of the customary international law prohibition against official torture). Since Filartiga, claimants have more frequently sought redress under the ATCA. The ATCA has generally been applied to human rights violations that occurred outside the United States. In recent years, undocumented workers have used the ATCA to sue for labor violations that occurred in the United States. See, e.g., Manliguez v. Joseph, 226 F. Supp. 2d 377 (E.E.N.Y. 2002); Topo v. Dhir, 210 F.R.D. 76 (S.D.N.Y. 2002). These cases typically involve claims of involuntary servitude that occurred after the defendants allegedly coerced or recruited the plaintiffs to leave their country of origin. As of yet, this approach is rather novel and its implications are not quite clear as the ATCA has not received substantial treatment with respect to domestic labor violations involving undocumented workers who were recruited to move to the United States. 14

16 F. Proposed Guest Worker Programs Issues involving undocumented workers remain a hot topic in the nation s capitol. President Bush supports a guest-worker program that would allow immigrants to work for six years but then they would have to leave the country permanently. Senators John McCain and Ted Kennedy support a program that allows workers presently here to eventually earn citizenship. Senator Arlen Specter supports an immigration bill that would allow undocumented workers to remain in the country indefinitely. At this point, there are several proposals on the table that address the issues of undocumented workers. Meanwhile, it remains evident to politicians, despite party affiliations, that U.S. immigration policy is in need of reform and that the U.S. economy needs the labor the immigrants provide. IV. CONCLUSION The laws related to undocumented workers and employers are continually subject to new amendments and inconsistent interpretation. This requires that an employer be proactive and diligent about staying current on the state of existing law. Fortunately, an employer can develop and maintain straight-forward procedures that address the legal requirements prohibiting the employment of undocumented workers. Such procedures will likely help the employer avoid incurring Form I-9 paperwork violations and defending IRCA-based anti-discrimination claims and RICO class action lawsuits. 15