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New York State Labor Law Trumps Federal Law On Lost Wages For Illegal Immigrants

October 25, 2010 • Posted By Barry Meade • Trial Practice

The State of New York Court of Appeals, the state's highest court, previously looked at whether the Immigration Reform and Control Act (“IRCA”), a federal law created to regulate immigration, supersedes New York State’s Labor Law and prohibits undocumented alien construction workers injured as a result of a violation of the state Labor Law from recovering lost wages in personal injury lawsuits.  The short answer was NO.  See Balbuena v. IDR Realty LLC, 6 NY3d 338, 845 N.E.2d 1246, 812 N.Y.S.2d 416 (2006).  The court found that the Labor Law applies to all workers in qualifying employment regardless of immigration status. Id. at 358. The court reasoned that prohibiting undocumented aliens from recovering lost wages in personal injury lawsuits would undermine federal immigration laws as well as the state’s safety regulations.

Congress adopted the IRCA in 1986 reasoning that the principle means of controlling illegal immigration was to sanction employers who hire illegal aliens. The statute requires employers to verify a worker’s identity and work eligibility before hiring him/her, i.e., an “employment verification system”. See 8 USC § 1324a.  The IRCA also makes it illegal for employers to knowingly violate the employment verifications requirements or for an illegal alien to provide false work documentation.

The U.S. Supreme Court in Hoffman ruled that an illegal alien who violated the IRCA by presenting false work documentation to obtain a job could not be awarded back pay after he was impermissibly terminated for engaging in union-organization activities. See Hoffman Plastic Compounds Inc. v. NLRB, 535 U.S. 137, 122 S.Ct. 1275, 152 L.Ed. 2d 271 (2002). 

In Balbuena, the employers argued that the IRCA bars an illegal alien from recovering lost wages in a personal injury action, and, as such, an award would only serve to undermine the IRCA.  The employees argued that prohibiting lost wages claims by illegal aliens would simply encourage employers to hire them, which would undermine the IRCA, and also, eliminate the employers’ incentive to comply with state Labor Law.  The court agreed with the employees.

In Hoffman, the court noted that there was no allegation that the illegal alien had produced false work documents in violation of the IRCA or that any work authorization documents were even requested by the employers.  Presumably, the court would come to a different conclusion if the employee had submitted fraudulent documents.  However, further extending the holding in Balbuena, New York’s Second Department, in Coque, held that “where an employer violates the IRCA in hiring an employee, such as by failing to properly verify the employee’s eligibility for work, the employee is not precluded, by virtue of his submission of a fraudulent document to the employer, from recovering damages for lost wages as a result of a workplace accident”. See Coque v. Wildflower Estates Developers, Inc., 58 A.D.3d 44, 54, 867 N.Y.S.2d 158 (2d Dep’t 2008).

As the law stands today, in New York an illegal alien working in the construction trades who suffers a work site injury may seek damages for past and future lost wages for violations of New York Labor Law.  Interestingly, in cases involving damages for alleged violation of the Labor Law an action can be brought against the owner and general contractor, but an action against the employer is barred by Workers’ Compensation Law §11.  This is just another reason why owners and general contractors are well advised to ensure that their contracts provide for adequate additional insured coverage, and contain enforceable indemnification and hold harmless agreements.