News & Blog

Indemnification/Contribution Issues & Illegal Aliens

December 26, 2012 • Posted By Joseph A. French • Complex Litigation, Construction Claims

In a recent Second Department case, the Second Department addressed indemnification and contribution issues in light of a plaintiff who was illegally in this country seeking benefits under the Workers’ Compensation Law.  In an underlying related case, New York Hosp. Med. Ctr. of Queens v. Microtech Contr. Corp., N.Y.S.2d (2d Dept. 2012), 2012 N.Y. Slip. Op. 06287, the defendant had moved to dismiss the complaint on the grounds that the plaintiff’s claims for contribution and indemnification had been barred by Workers’ Compensation Law §11.  The Second Department overturned and reversed the lower court’s grant of summary judgment to the defendant. 

Microtech allegedly employed two undocumented aliens to work on the plaintiff’s property.  When the employees were injured on the job, defendant provided them with compensation through the Workers’ Compensation carrier.  The employees then sued the plaintiff for damages related to their injuries predicated upon violations of the Labor Law.  The plaintiff in this action then commenced this separate action seeking contribution and indemnification from Microtech. 

The Court reviewed the purpose of Workers’ Compensation Law going back to when the law was first enacted in 1914.  As it stated, the Workers’ Compensation Law is “intended to be the employer’s exclusively liability to its employees.”  In the ¶11 change approximately 16 years ago, the court quoted an earlier case and stated that, “an employer may be held liable for contribution or indemnification only if the employee has sustained a grave injury as defined by the Workers’ Compensation Law ¶11 or when there is a written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to contribution or indemnification of the claimant.”

In the instant case, there were no grave injuries sustained by the employee.  It was also not alleged that the defendant had expressly agreed to contribution or indemnification in any written contract.  In opposing the defendant’s summary judgment motion, the plaintiff apparently did not allege it was entitled to contribution or indemnification either pursuant to a written contract or even as a result of an employee’s grave injury.  Instead, plaintiff asserted that defendant had failed to verify the employee’s immigration status and that this failure constituted a violation of the Immigration Reform and Control Act of 1986 (IRCA).  It is further contended that this violation should result in the loss of protections provided to the employers under the Workers’ Compensation Law. 

The court reviewed the IRCA and noted that it was deemed to be a means of “eliminating job opportunities for undocumented aliens in an attempt to curtail illegal immigration.”  The IRCA requires an employer to verify the prospective worker’s identity and work eligibility by examining the government-issued documentation.  Without documentation, the alien could not be hired.  Any employer who does not check this and establish the legal status of the alien would risk civil or criminal prosecution and penalties.  While the Supremacy Clause of the Constitution provides authority for federal preemption of state law, courts do not readily assume this preemption.  Indeed, the court also noted that states enjoy an “historic right to regulate employment relationships to protect workers within the State.  This power emanates from the State’s police powers to enact laws affecting occupational health and safety of workers.  They found that the IRCA was not intended to “undermine or diminish in any way labor protections in existing law.”  It noted that there was nothing in the Workers’ Compensation Law that sought to impose civil or criminal sanctions upon those who employ or recruit for a fee for employment, unauthorized aliens.  “While precluding the defendant from receiving the benefits and protections afforded by the Workers’ Compensation Law ¶11 for any violations of the IRCA may support the ultimate goals of the IRCA, by punishing the defendant for failing to verify the subject worker’s immigration status . . . affording the defendant the economic protections of Workers’ Compensation Law ¶11 even in light of a violation of the IRCA would not ‘stand as an obstacle to the accomplishment or execution of the full purposes and objectives of Congress’ such that Workers’ Compensation Law ¶11 should be considered.”  In addition, if they were to accept the plaintiff’s contention it would not only deny the defendant the “economic protections it acquired under the Workers’ Compensation Law, but it would relieve the plaintiff [property owner] of its responsibility to ensure a safe construction site for workers under the Labor Law.”  These results would not be “consistent with the legislative intent behind these statutes, which are designed to strike a balance between the needs of business and the importance of the welfare of workers.” 

The court held that because no federal preemption exists, “the proper course of action is not to create such a rule through a judicial determination, but, rather, to allow the New York Legislature to enact an appropriate rule based upon its policy preferences with respect to the welfare of state workers”.  The court concluded that IRCA does not preempt “the applicable provisions of the Workers’ Compensation Law and that the violations of the IRCA alleged here do not abrogate the protections provided to the defendant by Workers’ Compensation Law §11 from third-party claims for contribution and indemnification.”  Accordingly, the court reversed the lower court’s ruling. 

Thus, a contractor which hires illegal aliens, yet provides them with protection under the Workers’ Compensation Law §11, will have met their statutory duty, and they will not be forced or compelled to forego the protection and immunity afforded by the Workers’ Compensation Law.  Nevertheless, it does seem as if this decision is an attempt by the court to prompt the legislature to take action and to address this issue concerning the rights of the illegal aliens who are injured in this state, and the rights or liabilities of those who employ them.  To date, as the Second Department has stated, this has been created through judicial determination, yet the legislature must consider and address the numerous issues presented by illegal aliens who work and then are injured at job sites.