Working Immigrants

In a one paragraph ruling, the U.S. Supreme Court has dismissed the effort by a class action lawyer to use the RICO law in order to sue Mohawk Industries for its use of illegal workers. It sent the case back to the Appeals Court level for reconsideration. The Supreme Court appears in effect to be rejecting the notion that RICO can be applied. If this is the case, a dark cloud is removed from over the heads of thousands of American employers who recruited undocumented workers. For those interested in the Court’s apparent reasoning, go to The White Collar Crime Prof Blog which discusses how the Supreme Court had problems with the expansionist use of RICO in another case.
I have covered this RICO strategy in several earlier postings.
Per Reuters, “The Supreme Court on Monday dismissed a case on whether carpet and floor-covering maker Mohawk Industries Inc. can be sued under the federal anti-racketeering law for allegedly using outside recruiters to hire illegal workers.’
The story continues:

In a one-paragraph ruling, the high court said the appeal was dismissed and that it should not have been granted in the first place. The court gave no explanation why, but the ruling did not decide the main issue. The justices also set aside a U.S. appeals court ruling that the Calhoun, Ga.-based company and the recruiters can constitute an “enterprise” within the meaning of the Racketeer Influenced and Corrupt Organizations Act. The justices sent the case back to the appeals court for more consideration in view of a different Supreme Court ruling on Monday in which it held that Ideal Steel Supply Corp. cannot sue rival National Steel Supply under the anti-racketeering law for allegedly underpaying New York sales tax. The court said the direct victim of the alleged racketeering violations is New York state, not Ideal.

In the Mohawk case, a group of current and former employees claimed in the lawsuit that the carpet giant engaged in the systematic hiring of illegal workers and it was done by entering into contracts with outside recruiting firms. Mohawk has denied the allegations.

The employees said they have been hurt because the hiring practices have depressed their wages and they seek triple damages, as provided under the anti-racketeering law. The case attracted attention because it had been before the Supreme Court at a time when Congress is considering a sweeping overhaul of immigration laws and the federal government has been attempting to crack down on companies that hire illegal workers. The anti-racketeering law was initially adopted in 1970 and designed mainly to fight organized crime. But the law has been used in a number of lawsuits against businesses, and in 1996 it was expanded to include violations of federal immigration law.

Risk & Insurance Magazine published an article by me on the current employer dilemma with regard to hiring of illegal immigrants: the workers are needed, but the practice is illegal. Employers hiring workers who live in the United States illegally risk fines and civil lawsuits. In addition, the huge size of the illegal work force is causing the workers’ compensation system in some states to deteriorate.
Here is the full text of the article:
The last time the United States tried to reform its immigration laws was in 1986. Now the economic stakes are a lot higher, and vastly more employers are at legal risk. Twenty years ago, illegal workers were mainly in agriculture. Because the 1986 legislation did nothing to prevent more illegal workers from entering the United States, and because the law also fell short in giving them a legitimate status regarding their employment, the reform efforts of 20 years ago are considered a failure.
Since then, the illegal U.S. work force has increased to 7.5 million persons, growing at a rate of 350,000 annually. This is about equal to the number of new legally authorized foreign workers who come each year. Employers large and small who hire illegal workers risk incurring heavy fines from federal immigration authorities. They also risk being targeted by new state laws and aggressive state attorneys general. And they risk private action law suits. Any of these actions can lead to financial ruin. In addition, employers, workers’ compensation insurers and state regulators are coping with the impact of the illegal work force on the workers’ comp systems, which have deteriorated under the weight of hidden employment practices and legal quandaries.

Continue reading Analysis of employer liabilities over illegal employees