By John Annarino, Chief Legal Officer, Ohio Bureau of Workers' Compensation; Doug Hayden, Chief Legal Officer, New York State Insurance Fund; and Pete Mihaly, Assistant Law Director, Ohio Bureau of Workers' Compensation
There is an inherent tension between state workers’ compensation law and federal immigration law with regard to the treatment of undocumented or illegal aliens. State workers’ compensation laws are designed to, among other things, provide wage replacement for periods of disability due to workplace injury and promote return-to-work, in the worker’s former job, if possible.
On the other hand, under federal immigration law, undocumented or illegal aliens cannot lawfully work in the United States, and employers cannot knowingly hire them. How then do we treat the illegal alien who nevertheless is working and suffers a workplace injury? Are they entitled to workers’ compensation benefits under state law? If so, can they receive such benefits consistent with federal law? If they can, does federal law still impact what benefits they may receive?
ENTITLEMENT TO WORKERS’ COMPENSATION BENEFITS UNDER STATE STATUTES
To the extent workers’ compensation benefits are creatures of statute, the initial question in determining whether illegal aliens are entitled to such benefits is whether the state statutes involved confer such benefits upon them. Often, the question revolves around whether the illegal alien qualifies under the state statute as an “employee” working “in the service of” another under a “contract of hire.” In Ohio, for instance, the relevant statute provides that an “employee” eligible to receive workers’ compensation benefits includes:
“Every person in the service of any person, firm, or private corporation, including any public service corporation, that (i) employs one or more persons regularly in the same business or in or about the same establishment under any contract of hire, express or implied, oral or written, including aliens and minors, household workers who earn one hundred sixty dollars or more in cash in any calendar quarter from a single household and casual workers who earn one hundred sixty dollars or more in cash in any calendar quarter from a single employer, or (ii) is bound by any such contract of hire or by any other written contract, to pay into the state insurance fund the premiums provided by this chapter.”
Ohio Revised Code 4123.01(A)(1)(b) (emphasis added)
The Ohio statute expressly includes “aliens” without differentiating between legal or illegal aliens. At least one Ohio court has held that the statute therefore encompasses illegal aliens. The court noted that if the Ohio legislature had intended to cover only legal aliens, it could easily have done so, since the Ohio unemployment compensation statute makes such a distinction, and the same workers’ compensation statute defining “employee” specifically excludes certain persons from the definition (e.g., ministers, officers of a family farm corporation, etc.) but not illegal aliens. See Rajeh v Steel City Corp., 157 Ohio App.3d 722.
Courts in states with similar statutes, which include “aliens” in their definition of employee without differentiating, have generally also come to the conclusion that illegal aliens are covered. See, e.g. Correa v. Weymouth Farms, 664 N.W. 2d 324 [Minnesota]. Some state statutes such as New York Workers’ Compensation Law §17 address aliens in a separate statute from the statute defining employee. The New York statute provides that “Compensation under this chapter to aliens not residents or about to become nonresidents of the United States or Canada, shall be the same in amount as provided for residents…” While the statute does not specifically address “illegal” aliens, the New York courts, noting that workers’ compensation is given without reservation and wholly regardless of wrongdoing of any kind, have construed the statute to permit payment to illegal aliens (Testa v Sorrento Restaurant, 10 AD2d 133, lv den 8 NY2d 705).
Absent statutory language addressing an alien’s right to compensation, a different result may occur. The Virginia Supreme Court, in Granados v Windson Development Corp., 257 Va. 103, considered a state statute which defined an employee as someone working under a contract of hire but which did not mention “aliens.” In that case, the court concluded that illegal aliens did not qualify, since they could not legally enter into a contract of hire in this country. The Virginia legislature subsequently amended the statute to add language “including aliens and minors.” Va. Code 65.2-101, cited in Rajeh, 157 Ohio App 3d at 733. But see Dowling v. Slotnik, 244 Conn. 781 [Connecticut].
Some state statutes specify that only legal aliens need apply for workers’ compensation benefits. Wyoming Statutes Annotated 27-14-102(a)(vii) provides that employee … includes legally employed minors and aliens authorized to work by the United States department of justice, immigration, and naturalization service. See Felix v Wyoming Workers’ Safety & Compensation Division, 986 P2d 161. Similarly, Idaho Code 72-1366(19)(a) provides that “Benefits shall not be payable on the basis of services performed by an alien unless the alien was lawfully admitted for permanent residence at the time such services were performed, was lawfully present for purposes of performing such services, or was permanently residing in the United States under color of law at the time the services were performed… .”
Another statutory approach to confront the issue of illegal aliens’ right to workers’ compensation benefits is seen in the Florida statute which defines obtaining employment under false pretenses as fraud and disqualifies the claimant from receiving compensation on that basis. Florida Statutes 440.105(4)(b)(9) finds fraud in the case of a misleading oral or written statement as to evidence of identity for purposes of obtaining employment or filing or supporting a claim for workers’ compensation benefits. Florida Statutes 440.09(4)(a) provides that “an employee shall not be entitled to compensation or benefits under this chapter if any judge of compensation claims, administrative law judge, court, or jury convened in this state determines that the employee has knowingly engaged in any of the acts described in s. 440.105 or any criminal act for purposes of securing workers’ compensation benefits.”
THE IMMIGRATION REFORM AND CONTROL ACT OF 1986 (IRCA)
In response to the vast influx of undocumented aliens coming into the United States, Congress passed the Immigration Reform and Control Act of 1986, Pub. L. No. 99-603, 100 Stat. 3359, 8 U.S.C 1324a et seq. (1986) (amending the Immigration and Nationality Act, codified at 8 U.S.C. 1101 et seq.) [IRCA].
Among other reforms, the IRCA made it unlawful for a person or other entity “to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien.” 8 U.S.C. 1324a(a). In addition, the IRCA made it unlawful for a person or entity “after hiring an alien for employment . . . to continue to employ the alien in the United States knowing the alien is (or has become) an unauthorized alien with respect to such employment.” 8 U.S.C. 1324a(a).
The IRCA also requires employers to verify that their employees are authorized to work in the United States by examining certain types of documentation (e.g., drivers’ license) and having the employees execute an employment eligibility verification (I-9) form. 8 U.S.C. 1324a(b). Also, the IRCA makes it unlawful for an unauthorized alien to tender “any forged, counterfeit, altered, or falsely made document” or “any document lawfully issued to or with respect to a person other than the possessor” to the employer during this verification process. 8 U.S.C. 1324c(a)(1)-(3). Civil fines, and, in egregious cases, criminal penalti/s may be imposed on employers [8 U.S.C. 1324a(e)(4)(A); 8 U.S.C. 1324a(f)(1)] and aliens [18 U.S.C. 1546(b)] who are in violation of the statute.
IMPACT OF THE IRCA ON STATE WORKERS’ COMPENSATION SYSTEMS
Subsequent to passage of the IRCA, creative employers contesting the workers’ compensation claims of illegal or undocumented aliens have argued that recognizing such claims is contrary to federal law under IRCA, and that IRCA therefore “impliedly” pre-empts state law and prohibits states from granting workers’ compensation benefits to illegal aliens. They have especially been emboldened to do so in the wake of Hoffman Plastic Compounds, Inc. v. National Labor Relations Board (NLRB), 535 U.S. 137, in which the U.S. Supreme Court overturned the NLRB’s award of backpay to an illegal alien who had been laid off due to his participation in protected union-organizing activity. Noting that under the IRCA, “it is impossible for an undocumented alien to obtain employment in the United States without some party [either the alien or the employer] directly contravening explicit congressional policies,” the Court “conclud[ed] that allowing the Board to award backpay to illegal aliens would unduly trench upon explicit statutory prohibitions critical to federal immigration policy, as expressed in IRCA. It would encourage the successful evasion of apprehension by immigration authorities, condone prior violations of the immigration laws, and encourage future violations.” Hoffman at 148, 151.
However, state courts that have considered whether the awarding of workers’ compensation benefits to illegal aliens is contrary to, and therefore prohibited by, the IRCA have frequently concluded that it is not (Correa v Waymouth Farms, Inc., 664 N.W.2d 324[Minnesota], Earth First Grading v Gutierrez, 270 Ga. App. 328, [Georgia], Cherokee Industries Inc. v CNA Insurance Company, 84 P.3d 798 [Oklahoma], Reinforced Earth Company v Workers’ Compensation Appeal Board, 570 Pa. 464 [Pennsylvania], Uribe v Aviles, 2004 Cal App.Unpub. LEXIS 9698 [California], Dowling v Slotnik, 244 Conn. 781 [Connecticut]). In doing so, the courts have considered several features unique to workers’ compensation as distinguishing it from regulatory and/or benefit programs which might otherwise be pre-empted as the NLRB’s award of backpay in Hoffman.
First, several courts have made the observation that the workers’ compensation system is a compromise between labor and employment in which injured workers give up their right to bring civil actions against their employers for workplace injuries, and employers in return give up their right to assert traditional common law defenses (contributory negligence, fellow servant doctrine, etc.) and agree to provide no-fault workers’ compensation coverage with a guaranteed level of benefits. Since case law has recognized that illegal aliens have the right of redress to file civil court actions, state courts have reasoned that it would be incongruous to find that illegal aliens may not avail themselves of the statutorily mandated substitute of workers’ compensation in the case of workplace injuries. Mendoza v. Monmouth Recycling Corporation, 288 N.J. Super. 240, 246-48; cited in Rajeh, 157 Ohio App 3d at 731-32.
Second, contrary to the U.S. Supreme Court’s finding in Hoffman that an award of back pay to illegal aliens would condone and encourage further violations of the IRCA, state courts have found that awarding workers’ compensation benefits to illegal aliens cannot reasonably be considered an inducement for aliens to seek work unlawfully. See Dowling, 244 Conn. at 796: “Potential eligibility for workers' compensation benefits in the event of a work-related injury realistically cannot be described as an incentive for undocumented aliens to enter this country illegally.”
Rather, many state courts have found that excluding illegal aliens from eligibility for workers’ compensation benefits would offer a financial inducement for employers to hire illegal aliens, so that excluding illegal aliens from participation in workers’ compensation, not including them, promotes policies contrary to the IRCA! As the New Jersey Superior Court put it, “an employer's immunity from payment of compensation to [illegal aliens] might well provide a disincentive to assuring workplace safety. Moreover, such an immunity from accountability might well have the further undesirable effect of encouraging employers to hire illegal aliens in contravention of the provisions and policies of the Immigration Reform and Control Act.” Mendoza, citing Montoya v. Gateway Insurance Company, 168 N.J. Super. 100, 104. See also Dowling, 244 Conn. at 796“. . . See Conn. Joint Standing Committee Hearings, Judiciary, 1913 Sess., p. 124, remarks of Professor Willard C. Fisher ("unless the employer is required to pay the same [insurance premium for all workers] . . . he is . . . under inducement to take on [uncovered workers] . . . .”
Other states have reached a contrary result. While not finding an express preemption from receiving workers’ compensation benefits based on the IRCA and Hoffman, the state of Michigan found a bar to lost wage benefits on a different basis. In Sanchez v Eagle Alloy, 254 Mich. App. 651, the Court of Appeals of Michigan first noted that illegal aliens would be considered employees under the Michigan statute and that the necessary contract of hire existed to award benefits. However, under Michigan law an employer is not liable for compensation for such period of time as the employee is unable to obtain or perform work because of imprisonment or commission of a crime. The court commented that the statute does not require conviction of a crime, but only commission of a crime and noted that under the IRCA, it is a crime for an unauthorized alien to subvert the employer verification system by tendering fraudulent documents 8 U.S.C. 1324c(a) and that aliens are prohibited from using or attempting to use “any forged, counterfeit, altered, or falsely made document” or “any document lawfully issued to or with respect to a person other than the possessor” for purposes of obtaining employment in the United States. The court added that aliens who use or attempt to use such false documents are subject to fines and criminal prosecution 18 USC 1546(b). In the cases before the Michigan court, the claimants had tendered false documents to obtain employment. Based on this commission of a crime, weekly wage loss benefits were found to have been properly suspended. The Supreme Court of Michigan initially granted leave to appeal the Court of Appeals decision, but subsequently vacated that grant of leave to appeal (471 Mich. 851), allowing the lower court decision to stand.
New York’s intermediate appellate court, the Appellate Division, in Sanango v 200 East 16th Street Housing Corp., 15 AD3d 36 and Balbuena v IDR Realty LLC, 13 AD3d 285, addressed the effect of Hoffman and the IRCA on lost earnings claims of illegal aliens in a civil litigation case and found that prior New York court decisions recognizing the validity of such lost earnings claims were no longer valid based on the IRCA and the Supremacy Clause of the United States Constitution. The court noted that if even a coequal federal statute such as the National Labors Relations Act must, under some circumstances, give way to the IRCA, as Hoffman holds, it follows that a state law, which by virtue of the Supremacy Clause, is subordinate to any federal policy, must give way to the IRCA as well. The court found that illegal aliens could no longer recover for lost wages that they would have illegally earned in the United States. The court’s remedy was to instead limit the lost earnings claims to that which would have been lawfully earned in the worker’s country of origin. While these were not workers’ compensation cases, if the IRCA and the Supremacy Clause govern New York decisions on lost earnings to illegal aliens in one context, they presumably could not be disregarded when the court addresses lost earnings claims for workers’ compensation purposes. New York’s highest court, the Court of Appeals is expected to rule on the issue of lost earnings claims for illegal aliens sometime in 2006 and the final result remains uncertain.
IMPACT OF THE IRCA ON SPECIFIC BENEFIT TYPES
Even assuming, as many states have found, that the IRCA does not pre-empt state statutes providing workers’ compensation benefits to illegal aliens, it does not necessarily follow that the IRCA has no impact on state workers’ compensation programs, or that all workers’ compensation benefits are equally unaffected. For example, the payment of medical benefits would not seem to implicate the IRCA. On the other hand, Ohio law provides that an injured worker is entitled to temporary total disability benefits until they (1) return to work; (2) are released by their physician to return to their former position of employment; (3) are offered work within their physical restrictions by their employer or another employer; or (4) have reached maximum medical improvement. Ohio Revised Code 4123.56 The same statute also provides that “[w]here the employee is capable of work activity, but the employee's employer is unable to offer the employee any employment, the employee shall register with the director of job and family services, who shall assist the employee in finding suitable employment.”
Obviously, application of certain aspects of this statute to an injured worker who is an illegal alien is problematic in light of the IRCA. The alien cannot legally return to work in this country, and for that reason also cannot legally be offered work within their physical restrictions in this country, or be assisted by Ohio’s Department of Job and Family Services in finding suitable employment in this country. Still, as the Ohio appellate court in Rajeh noted, “. . . while [an illegal alien] is not legally allowed to work in the United States, he would still be able to work in his own country or possibly another country had he not sustained a work-related injury. Thus, he still suffers a loss of earnings because he cannot return to work anywhere due to his on-the-job injury.” Rajeh, 157 Ohio App.3d at 730 (emphasis added).
Courts in other states have recognized similar dilemmas in dealing with state laws requiring a “job search,” for instance (Correa v. Weymouth Farms, 664 N.W. 2d 324); (Gayton V. Gage Carolina Metals, Inc., 149 N.C. App 346).
Vocational rehabilitation is another area where a state workers’ compensation system might run afoul of the IRCA. Vocational training or job search assistance to help an illegal alien obtain employment within the United States would be contrary to the policies behind the IRCA. However, vocational training or other rehabilitation efforts directed towards helping an illegal alien obtain employment outside the United States would seem to be permissible. The Supreme Court of Nevada suggested as much in Tarango v State Industrial Insurance System, 117 Nev. 444: (“. . . it is our view that although SIIS would be facilitating future employment for an unauthorized alien by providing vocational rehabilitation benefits . . . we do not consider it outside the realm of possibility that appellant's future employment lies outside the boundaries of the United States, and such vocational training could be put to use elsewhere.”). Nevertheless, in that case the court concluded that Nevada law prohibited illegal aliens from receiving vocational rehabilitation benefits.
The inherent tension between state workers’ compensation law and federal immigration law with regard to the treatment of undocumented or illegal aliens continues. While a number of state courts have found illegal aliens entitled to workers compensation benefits, notwithstanding the IRCA, many highest state appeals courts have yet to address the issue. Many questions, as to exactly which benefits and what impact the IRCA may yet have, remain unresolved.