Coverage of Undocumented Workers

Saturday, May 19, 2007 | 0

By Charles H. Tenser, Esq.

Since Congress's enactment of the Immigration Reform and Control Act (IRCA) in 1986, employers have been subject to civil and criminal penalties for knowingly hiring an unauthorized alien. While IRCA criminalizes an alien's use of fraudulent documents purporting to show employment eligibility, it does not impose penalties on an illegal alien for the actual acceptance of employment.

Needless to say, IRCA has not stopped the employment of undocumented workers. Nor has it stopped undocumented workers from being injured on the job and seeking workers compensation benefits. The passage of IRCA initially elicited some employer challenges to claims for workers compensation by injured illegal aliens on the basis that IRCA conflicted with state workers compensation laws, but courts fairly consistently found no conflict between IRCA and those laws. Injured illegal aliens were routinely found to be eligible for workers compensation benefits.

In 2002, however, the United States Supreme Court's decision in Hoffman Plastic Compounds, Inc. v. NLRB raised doubts about the status quo. The Supreme Court ruled in Hoffman Plastic that IRCA prohibited the National Labor Relations Board from awarding back pay to an undocumented worker who was illegally fired because of his support for union activity. An award of back pay to illegal aliens, the Court said, "would unduly trench upon explicit statutory prohibitions critical to federal immigration policy, as expressed in IRCA." The Hoffman Plastic decision prompted a wave of challenges to awards of workers compensation benefits to injured undocumented workers based on the argument that IRCA preempts state workers compensation laws.

Case Review: Claimants Entitled to Workers Compensation Benefits

Florida In Safeharbor Employer Services I, Inc. v. Cinto Velazquez (2003), the court held that the Hoffman Plastic ruling did not preempt the state's right to enact workers' compensation benefits for illegal aliens. The claimant's status as an illegal alien did not preclude him from receiving benefits.

Georgia The court in Wet Walls, Inc. v. Ledezma (2004) rejected the employer's contention that requiring it to pay wage benefits to an undocumented worker is inconsistent with IRCA and violates equal protection. In the case of Earth First Grading & Builders Ins. Group/Ass'n Services, Inc. v. Gutierrez (2004), the court held that the use of the phrase "every person" in the workers' compensation law necessarily includes illegal aliens. In Continental PET Technologies, Inc. v. Palacias (2004), the court held that IRCA did not preempt the state workers' compensation law and that a claimant who was an illegal alien was not disqualified by her status as an illegal alien from receiving workers' compensation benefits. The United States Supreme Court denied certiorari in that case in 2005, refusing to take up the employer's argument that, by enacting IRCA, Congress preempted the field with respect to the employment status of illegal aliens.

Minnesota In Correa v. Waymouth Farms, Inc. (2003), the employer argued that the claimant's benefits should be suspended because IRCA prohibited the employee from conducting a diligent job search -- a condition of receiving temporary total disability benefits in Minnesota. The court held that IRCA does not preclude the employee from receiving temporary total disability benefits.

New Jersey In Crespo v. Evergo Corp. (2004), the court noted that New Jersey case law did not preclude illegal aliens from seeking relief under state workers' compensation law prior to Hoffman Plastic and that, after Hoffman Plastic, courts in other states held that IRCA did not preclude an award of workers' compensation benefits to illegal aliens.

North Carolina In Ruiz v. Belk Masonry Co., Inc. (2002), the court held that IRCA does not prevent illegal aliens from being included in the definition of "employee" in the workers' compensation law or from receiving workers' compensation benefits. The court stated that an illegal alien could demonstrate earning capacity for workers' compensation purposes.

Pennsylvania The courts in Morris Painting v. W.C.A.B. (Piotrowski) (2003) and Mora v. W.C.A.B. (DDP Contracting Co., Inc., and Penn National Insurance) (Pa. 2004) recognized that an illegal alien was entitled to benefits under the state workers' compensation law. In Morris Painting, however, the court said that an employer seeking to suspend the claimant's wage benefits was not required to show available jobs that the claimant could perform because his unauthorized alien status precluded him from lawfully seeking or accepting employment. The court distinguished wage benefits, which were affected by the claimant's legal status, from medical benefits and remanded the case for a determination on whether suspension of the claimant's medical benefits was warranted by a finding that the claimant had reached maximum medical improvement.

Tennessee In Silva v. Martin Lumber Co. (2003), the court noted that the Tennessee Workers' Compensation Act does not contain a provision excluding illegal aliens from coverage under the act and affords benefits to every person, including minors, whether lawfully or unlawfully employed. The court held that the claimant was not barred from receiving workers' compensation benefits because he produced fraudulent documents regarding his eligibility to work in the United States. The claimant did not make a false representation as to his physical condition, and there was no causal connection between this false representation and the injury to warrant the denial of benefits.

California The California workers' compensation law contains a provision stating that immigration status is irrelevant to eligibility for workers' compensation benefits, except with regard to the issue of reinstatement and back pay. In Farmers Bros. Coffee v. Workers' Comp. Appeals Bd. (2005), the court considered that provision and its exception, and concluded that it was not in conflict with IRCA or the reasoning in Hoffman Plastic.

Maryland The court in Design Kitchen and Baths v. Lagos (2005) held that IRCA did not preempt the state workers' compensation law and did not preclude an award of benefits to an undocumented alien. IRCA did not, by itself, preclude an illegal alien from being considered an employee for purposes of the state law.

Oklahoma The court in Cherokee Industries v. Alvarez (2004) determined that authorization to work in the United States does not affect an employee's entitlement to benefits under the workers' compensation act and awarded the claimant temporary total disability benefits. The court did add, however, that benefits like vocational rehabilitation or medical treatment by specific physicians may not be available to a claimant who cannot legally remain in the United States.

Nebraska The workers' compensation court in Ortiz v. Cement Products Inc. (2004) awarded vocational rehabilitation and wage-loss benefits and medical expenses to an undocumented worker.

New York Although they were dealing with common law tort claims rather than workers' compensation claims, courts in Cano v. Mallory Management (2003) and Santiago v. 200 E. 16th St. Hous. Corp. (2004) concluded that Hoffman Plastic did not preclude illegal aliens from bringing common law tort claims. The court in Santiago did note, however, that recovery for lost income would be based not on wages in the United States but on wages in the worker's native country.

Kansas The court in Hernandez-Cortez v. Hernandez (2003) in a common law tort suit, found that an undocumented worker could still seek damages for medical expenses and lost wages after Hoffman Plastic but would be limited to wage rates in the worker's native country when calculating lost income. The court in Doe v. Kansas Dept. of Human Resources (2004) held that a finding that the claimant had committed fraudulent and abusive acts in obtaining workers' compensation benefits through the use of an assumed name and social security number was not unconstitutionally based on the claimant's status as an alien. The court upheld the assessment of penalties and fines against the claimant, not based on her alien status, but based on her actions in intentionally and willfully using a false identity throughout the workers' compensation proceedings.

Texas In Tyson Foods, Inc. v. Guzman (2003), a negligence action for damages by an injured undocumented worker, the court noted that Texas law does not require citizenship or the possession of work authorization permits as a prerequisite to recovering damages for lost earning capacity. The court held that the fact that the worker was not a United States citizen at the time of the accident did not affect his ability to recover damages for lost earning capacity after he was injured.

Cases Finding Claimants Ineligible for Workers' Compensation Benefits

District of Columbia In Marboah v. Ackerman (2005), the court held that an illegal alien could not recover on his workers' compensation claim where the claimant used the name and social security card and number of another person and fraudulently concealed his true identity from his employer, attorneys, and the court. The court also noted that illegal aliens were not "employees" for the purpose of the workers' compensation statutes.

Michigan In Sanchez v. Eagle Alloy Inc. (2003), the court found that employment agreements between undocumented aliens and an employer constituted a "contract of hire," as required by the workers' compensation law, but that the aliens' use of false documents to obtain employment constituted the "commission of a crime," within the meaning of the workers' compensation law. Weekly wage loss benefits may be suspended when an employee is unable to work because of the commission of a crime.

Virginia In several cases before Hoffman Plastic and before Virginia statutory amendments took effect, courts in Virginia had concluded that illegal aliens could not be "employees" under the workers' compensation law. Because illegal aliens could not be lawfully employed under IRCA, they could not have a valid and enforceable "contract for hire." The Virginia workers' compensation law's definition of "employee" was modified by legislation in 2000 to specifically state that "employee" includes aliens, "whether lawfully or unlawfully employed." The same amendments also provide that unlawfully employed claimants are not entitled to compensation for partial incapacity.

Wyoming In Felix v. State ex rel. Wyoming Workers' Safety & Compensation Division (1999), the court denied compensation to an illegal alien based on a specific provision in the Wyoming statutes stating that the workers' compensation law only covered "aliens authorized to work by the United States department of justice, immigration, and naturalization." The definition of "employee" in Wyoming has since been modified to state that the workers' compensation law covers aliens "whom the employer reasonably believes, at the date of hire and the date of injury based upon documentation in the employer's possession, to be authorized to work by the United States department of justice, office of citizenship and immigration services."

An Altered Landscape

Although it is too soon to state with confidence that the 2002 United States Supreme Court's decision in Hoffman Plastic Compounds, Inc. v. NLRB wave has crested, that decision does not appear to have altered the landscape for workers' compensation dramatically. Most, though not all, courts deciding undocumented worker eligibility for state workers' compensation coverage since Hoffman Plastic have concluded that the Supreme Court's decision and IRCA do not preclude the award of state law medical and wage replacement benefits to injured undocumented workers.

This article was written by Charles H. Tenser, Esq., who has represented clients in the areas of insurance, administrative, and antitrust law for 20 years, including 6 years as in-house counsel for NCCI. A graduate of the University of Virginia School of Law, Mr. Tenser currently practices in Richmond, VA. This article was published in NCCI Holdings, Inc.'s 'Workers' Compensation 2007 Report' and has been republished here with the permission of NCCI.

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