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Workers Comp-Undocumented Worker FULL

Workers Comp-Undocumented Worker FULL

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Published by Tom Leonard

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Published by: Tom Leonard on Jul 06, 2008
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05/09/2014

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W
ORKERS
C
OMPENSATION
 
AND
 
THE
U
NDOCUMENTED
W
ORKER 
Thomas R. Lee, Professor of Law, Brigham Young UniversityDennis V. Lloyd, Chief Legal Counsel, Workers Compensation Fund (Utah)Illegal immigration is a hot-button political issue that has spawned a wide range of legaland public policy questions. One set of particularly difficult questions arises in the context of aworkplace injury involving an undocumented worker. A year ago, an article in this newsletter raised this important issue. The paragraphs below update and expand on that analysis.The threshold question is eligibility for workers’ compensation benefits. This is aquestion of state law. State legislatures have followed three general approaches: (a) someexplicitly say whether illegal aliens are covered; (b) some expressly address the eligibility of aliens, but without reference to their legal status; and (c) others set forth eligibility criteriawithout any mention of aliens or immigration status. Even where aliens are theoreticallyeligible, some state courts have foreclosed their benefits on alternative grounds. The relevantstatutes and case law are summarized below.The next question is whether federal immigration law places limitations on the benefitsthat may be afforded to illegal workers who are generally eligible to participate in a workers’compensation scheme. Although an undocumented worker may be eligible for workers’compensation benefits as a matter of state law, some of those benefits may run afoul of theImmigration Reform and Control Act (IRCA). As summarized below, the courts have begun todevise various strategies to try to reconcile the prohibitions of IRCA with the benefits availableunder workers’ compensation statutes.
I.Statutory Coverage of Illegal Aliens Under WorkersCompensation Statutes
At least eight states have enacted workers’ compensation statutes that expressly addressthe eligibility of illegal aliens. Six of those states (California, Florida, Nevada, New York, Texas,and Utah) expressly include illegal aliens in their workers’ compensation coverage.
See, e.g.,
C
AL
. L
AB
. C
ODE
§ 3351 (2007) (defining employee as “every person in the service of an employer . . . whether lawfully or unlawfully employed, and includ[ing] aliens and minors”). Two states(Idaho and Wyoming) expressly exclude illegal aliens from their workers’ compensationregimes.
See, e.g.,
W
YO
. S
TAT
. A
 NN
. § 27-14-102(a)(vii) (2006) (defining employee to includeonly those aliens “authorized to work by the United States department of justice, office of citizenship and immigration services, and aliens whom the employer reasonably believes, at thedate of hire and the date of injury based upon documentation in the employer’s possession, to beauthorized to work by the United States department of justice, office of citizenship andimmigration services”). In this first group of states, the courts uniformly take the legislatures attheir word, holding that illegal workers are covered where they are within the express terms of the statute and not covered where they are not.
 Farmer Bros Coffee v. Workers’ Comp. Appeals Bd.
, 35 Cal. Rptr. 3d 23, 26 (Cal. Ct. App. 2005) (refusing to exclude illegal aliens from theambit of the statute);
 Felix v. State ex rel. Wyoming Workers’ Safety and Compensation Div.
, 986P.2d 161-64 (Wyo. 1999) (holding statute to exclude undocumented workers).
 
A second set of statutes expressly address aliens, but without clear reference to their legalstatus. In five states (Illinois, Michigan, Minnesota, North Dakota, and Ohio), for example, theworkers’ compensation provisions expressly include aliens but make no express reference totheir legal or illegal status. See, e.g., 820 I
LL
. C
OMP
. S
TAT
. 305/1(b)(2) (2005) (“Every person inthe service of another . . . including aliens”); M
ICH
. C
OMP
. L
AWS
§ 418.161(1)(l) (2007) (“Every person... including aliens.”) Where those statutes have been interpreted by the courts, they have been deemed to include illegal aliens—on the rationale that the legislature could have limitedcoverage to “legal” aliens if it had intended such a limitation.
Sanchez v. Eagle Alloy Inc.
, 658 N.W.2d 510, 515-516 (Mich. Ct. App. 2003);
Correa v. Waymouth Farms, Inc.
, 664 N.W.2d 324,329 (Minn. 2003). In several other states (Alabama, Arizona, Colorado, Montana, NorthCarolina, South Carolina, and Virginia), the legislature has extended coverage to “aliens andminors” who are “legally authorized” to work.
 E.g.,
 N.C. G
EN
. S
TAT
. § 97-2(2) (2003). Thisformulation begs the question whether the “legally authorized” modifier extends to aliens or onlyto minors. The courts that have addressed this question generally conclude that it does not—andthat all aliens (legal and illegal) are covered.
See
 
 Ruiz v. Belk Masonry Co., Inc.
, 559 S.E.2d 249,252 (N.C. Ct. App. 2002).The third and largest set of statutes do not address aliens at all. Nineteen states (Alaska,Arkansas, Connecticut, Delaware, Hawaii, Iowa, Kansas, Louisiana, Maine, Massachusetts, Nebraska, New Hampshire, New Jersey, New Mexico, Oklahoma, Pennsylvania, Rhode Island,Washington, Vermont) have very broad definitions of covered workers—largely paralleling thefederal definition: “an individual employed by an employer,” 29 U.S.C. § 203(e)(1). Five states(Georgia, Indiana, Kentucky South Dakota, Wisconsin) use similarly broad language, whileexpressly including minors.
 E.g.,
G
A
. C
ODE
A
 NN
. § 34-9-1(2) (2006). Six other states (Maryland,Mississippi, Missouri, Oregon, Tennessee, West Virginia) likewise expressly include minorswithin their broad definition of covered workers, while also providing that minors are covered
regardless of their illegal status
.
 E.g.
, M
D
. C
ODE
A
 NN
., L
AB
. & E
MPL
. § 9-202 (2006).These formulations seem open to a construction that would either cover or decline tocover illegal aliens, depending on the legislative history or other indications of legislative intent.At least two courts, however, have found the latter two variations to encompass illegal aliens.
See Continental PET Technologies, Inc. v. Palacias
, 604 S.E.2d 627, 629 (Ga. App. 2004);
 Design Kitchen and Baths v. Lagos
, 882 A.2d 817, 824-828 (Md. 2005). As for the first, anumber of courts have held the statutes to include illegal aliens because the broad languageindicated legislative intent to include all workers, whether legal or not, and the statute did notexpressly exclude aliens.
See Dowling v. Slotnik 
, 712 A.2d 396, 407-08 (Conn. 1998);
 Artiga v.M.A. Patout and Son
, 671 So.2d 1138, 1139 (La. App. 1996);
 Fernandez-Lopez v. Jose Cervino, Inc.
, 671 A.2d 1051, 1053 (N.J. Super. Ct. 1996).Even where illegal aliens are otherwise deemed to fall within a broad definition of covered workers, they are sometimes excluded on alternative grounds—such as the absence of anenforceable contract, fraud, or lack of causation. The seminal case is
Granados v. Windson Dev.Corp.
, 509 S.E.2d 290 (Va. 1999), which was addressed in this newsletter last year.
Granados
held that because illegal aliens “cannot be employed lawfully in the United States,” theemployment contract was void and Granados was therefore not an “employee” for purposes of the Virginia workers’ compensation statute.
 Id.
at 293. The Virginia state legislature
 
subsequently overruled this holding, however,
 see
Va. Code Ann. § 65.2-101 (2007), and severalother states have recently declined to follow
Granados
’ lead.
See Coma Corp. v. Kansas Dept.of Labor 
, 154 P.3d 1080, 1087 (Kan. 2007);
 Design Kitchen and Baths v. Lagos
, 882 A.2d 817,824 (Md. 2005);
 Rajeh v. Steel City Corp.
, 813 N.E.2d 697, 733 (Ohio App. 2004).In
 Doe v. Kansas Dept. of Human Resources
, 90 P.3d 940 (Kan. 2004), the KansasSupreme Court acknowledged that the illegal alien claimant was “legally entitled to . . . benefits”under the workers’ compensation statute,
id.
at 944, but concluded nonetheless that her misrepresenting her identity constituted a fraudulent and abusive act that allowed for suspensionof permanent partial disability benefits.
 Id.
at 948. It explained that “[Claimant [wa]s not being penalized based on her alien status, but for her actions in intentionally and willfully using a falseidentity throughout the workers compensation proceedings.”
 Id.
at 949. This was so regardless of her employer’s actual knowledge of her status.
 Id.
Similarly, the Michigan Court of Appealsheld that while an illegal alien was an “employee” for purposes of the workers’ compensationact,
Sanchez v. Eagle Alloy, Inc.
, 658 N.W.2d 510, 515 (Mich. App. 2003), a misrepresentationof legal status constituted a crime allowing for suspension of wage-loss benefits.
 Id.
at 518.The Pennsylvania Supreme Court has refused workers’ compensation benefits to anundocumented worker on causation grounds. In
 Reinforced Earth Co. v. W.C.A.B. (Astudillo)
,810 A.2d 99 (Pa. 2002), the court held that while the claimant was entitled to the wage-replacement benefits he received, those benefits could be suspended on the grounds that theclaimant’s disability was not caused by his workplace injury, but rather by his illegal status.
 Id.
at 108. Pennsylvania courts have consistently followed this approach,
 see
 
Mora v. W.C.A.B.
, 845A.2d 950, 954 (Pa. Cmwlth. 2004);
Morris Painting v. W.C.A.B.
, 814 A.2d 879, 881 (Pa.Cmwlth. 2003).
II.IRCA Preemption of Workers’ Compensation Benefits
Even where illegals are initially eligible for workers’ compensation under state law,federal immigration law (IRCA) may impose some limitations on the benefits they may beentitled to receive. The starting point for this issue is the U.S. Supreme Court’s decision in
 Hoffman Plastic Compounds
, which was discussed at some length in last year’s newsletter.
 Hoffman Plastic
held that IRCA prevented “backpay” compensation to an illegal alienwho was unlawfully fired for his union-organizing efforts. Since the alien could not lawfullywork under IRCA, the Court held that IRCA also prohibited compensating him for work that hecould now lawfully perform. The core of the Supreme Court’s analysis is the following:“[A]llowing the [NLRB] to award backpay to illegal aliens would unduly trench upon explicitstatutory prohibitions critical to federal immigration policy, as expressed in IRCA. It wouldencourage the successful evasion of apprehension by immigration authorities, condone prior violations of the immigration laws, and encourage future violations.”
 Hoffman PlasticCompounds, Inc. v. N.L.R.B.
, 535 U.S. 137, 151 (2002).After 
 Hoffman
, the key question is whether and to what extent federal immigration lawmay preempt workers’ compensation benefits. Three categories of benefits are addressed below:reimbursement for medical expenses, wage replacement, and rehabilitation / reemployment.

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