The Journal of The DuPage County Bar Association

Back Issues > Vol. 23 (2010-11)

Illegal Aliens and the Balancing of Immigration Reform with the “In Terrorem” Effect
By Glenn Gaffney

Illegal aliens, euphemistically referred to by the courts as “undocumented workers” are not precluded from filing claims under state and federal law to redress injuries and seek remedies allowed to citizens. There is a growing body of case law addressing their rights under various causes of action seeking remedies such as back pay and front pay. Courts have struggled with competing principles which at times have led to paradoxical results. This article explores some of the “undocumented worker” issues raised in state and federal courts, as well as the “in terrorem” effect of a defendant’s inquiry into an illegal alien’s status. 

Supreme Court Decision in Hoffman Plastic v. NLRB Bars Back-Pay Awards. An alien permitted by the government of the United States to remain in this country is entitled to the protection of the laws in regard to his rights of person and property.[1] This includes the benefits of the Fourteenth Amendment, such as the right to earn a living by following the ordinary occupations of life.[2] Although Congress could provide that an alien making an illegal entry into this country could be denied the right to bring lawsuits, it has not so acted.  The courts have found that it is not for them to add to statutory penalties and to further deprive an alien of his right to recover damages for an injury afflicted by another.[3]           

However, in 2002, the United States Supreme Court held that a National Labor Relations Board’s award of back pay to illegal aliens would “unduly trench upon explicit statutory prohibitions critical to federal immigration policy as expressed in the Immigration Reform and Control Act of 1986 (IRCA).[4] A back pay award would “encourage the successful evasion of apprehension by immigration authorities, condone prior violations of the immigration laws, and encourage future violations.”[5] By disallowing back pay to illegal aliens, the Supreme Court’s majority held that the policy goals of the IRCA outweigh those of the NLRB, thus barring undocumented workers from receiving back pay awards. In Hoffman, the Supreme Court cited the IRCA and reasoned that “If an employer unknowingly hires an unauthorized alien, or if the alien becomes unauthorized while employed, the employer is compelled to discharge the worker upon discovery of the worker’s undocumented status, or be subject to civil fines or criminal  prosecution.”[6]

Previously, the Seventh Circuit, relying upon Sure-Tan, Inc. v. NLRB,[7] concluded that an undocumented alien was not “legally harmed” by termination since the alien had no rights to be present in this country at all, and thus was not harmed by the “deprivation of employment to which the alien had no legal entitlement.”[8] In so doing, the Seventh Circuit distinguished Patel v. Quality Inn South,[9] which allowed undocumented aliens to maintain an action for unpaid wages and damages and under the Fair Labor Standards Act (FLSA) for work “they had already performed.”[10]

The In Terrorem Effect of a Plaintiff’s Immigration Status
.  While documented workers face the possibility of a retaliatory discharge for asserting their labor and civil rights under federal laws, undocumented workers confront a harsher reality that in addition to employment discharge, their employer may likely report them to INS and they will be subject to deportation proceedings or criminal prosecution.[11] As a result, undocumented workers are reluctant to report abusive or discriminatory employment practices.[12] Thus, allowing employers as defendants to inquire into a worker’s immigration status implicitly raises a threat of deportation and criminal prosecution every time a worker, documented or undocumented, reports illegal practices or files a federal action.[13] Even legal residents or citizens could likely be intimidated by the prospect of having their immigration history examined in a public proceeding, which would chill the empowerment of individuals to act as private attorneys general in enforcing federal labor and civil rights laws.[14]

Balancing the In Terrorem Effect With Relevance
. Courts have often balanced the in terrorem effect of inquiring into a party’s immigration status when it is not directly relevant to any element of a material claim. Courts have noted that allowing parties to inquire about the immigration status of other parties, when not relevant, would present a “danger of intimidation [that] would inhibit plaintiffs in pursuing their rights.”[15] However, when plaintiff’s immigration status is relevant to prove a material aspect of a defense, discovery will be permitted.[16] Despite allegations that illegal aliens are in pari delicto, allowing defendant’s inquiry into immigration status has the potential to invite abuse by employers and to undermine the goals of federal labor statutes.[17]

Hoffman Plastics
Held Not Applicable to FLSA Claims.
The definition of “employee” under the Fair Labor Standards Act (FLSA) includes “any individual employed by an employer” which has been held to include undocumented workers.[18] In Villareal v. El Chile, Inc.,[19] Northern District of Illinois Judge Brown, in a claim for unpaid wages under the FLSA, reviewed the Supreme Court decisions in Hoffman and Sure-Tan, as well as the Seventh Circuit decision in Delrey Tortilleria, finding that the “back pay” at issue in those cases were for the period after the employee was terminated. However, Villareal’s claim was “for work actually performed” and thus distinguishable from the “back pay” at issue in the NLRB context.[20] The Court found that application of the FLSA to both undocumented and documented workers alike supports the policies of the IRCA by reducing the incentive to hire undocumented aliens willing to work for less, and thus discourages illegal immigration.[21]

The court further found that allowing immigration status to be discoverable would have an in terrorem effect likely to deter FLSA claims.[22]   The court thus concluded that, “[i]f forced to disclose their immigration status, most undocumented aliens would withdraw their claims or refrain from bringing an action... in the first instance. This would effectively eliminate FLSA as a means for protecting undocumented workers from exploitation and retaliation.”[23]

Applicability of Hoffman to Title VII Cases
. Non-citizens are entitled to protections under Title VII.[24] In passing Title VII, Congress intended to empower individuals to act as private attorneys general in enforcing the Act’s provisions.[25] A judicial determination that undocumented workers are not entitled to pursue civil rights claims on their own behalf would likely chill these important provisions and provide employers with an incentive to hire undocumented workers who would have no such ability to enforce these rights.[26]

Although not yet addressed by the Seventh Circuit, other circuits have held that Hoffman does not apply to Title VII cases.[27] In Delrey Tortilleria, Inc., the Seventh Circuit stated in a footnote that like Patel’s FLSA action, Rios under Title VII “is also distinguishable.”[28] At least one federal court in Illinois[29] has stated that the remedial goals of Title VII presumes that back pay is appropriate in a Title VII case and may only be denied for reasons which “if applied generally, would not frustrate the central statutory purposes of eradicating discrimination... and making persons whole” and thus the Court did not find Hoffman to be dispositive on the back pay issue.[30]

In EEOC v. Bice of Chicago,[31] the EEOC obtained a protective order barring all discovery relating to charging party’s immigration status, but there the plaintiffs “were not seeking front pay, back pay, lost wages or benefits.” The District Court cited Rivera v. Nibco, Inc.,[32] for the proposition that the chilling effect on employee’s ability to challenge workplace discrimination warranted a protective order precluding discovery into their immigration status, even though defendants argued that the charging parties’ credibility was at issue and that they should be able to discover falsification of their identity along with their immigration status. The District Court disagreed, finding that the defendants could inquire only about aliases or false names but not their immigration status.[33]

Workers’ Compensation Laws and Illegal Aliens.
There is a split of state authority as to whether an illegal alien is an employee for workers’ compensation benefits.[34] The United States Supreme Court denied certiorari in Continental Pet Technologies, Inc. v. Palacias.[35] where the Georgia Appeals Court held that the Federal Immigration Reform and Control Act of 1986 (IRCA), did not preempt Georgia’s workers’ compensation law.

However, the Illinois First District Appellate Court has held that all aliens in the service of another pursuant to a contract for hire, regardless of their immigration status are defined as “employees” within the meaning of the Illinois Workers’ Compensation Act.[36] In Illinois, the act specifically includes “aliens.”[37] Although the act does not provide a definition of “aliens,” in  Economy Packing Company v. Illinois Workers’ Compensation Commission,[38] the First District Appellate Court found that it includes not only foreign-born citizens that can legally work in the United States, but also those that cannot.[39] In Economy Packing, the claimant violated the Federal Immigration Act by using false documents to obtain employment which the employer asserted should preclude the alien from receiving Permanent Total Disability Benefits (PTD) under the IRCA and the doctrine of federal “field” preemption. The First District Appellate Court rejected that argument as well as application of Hoffman Plastic, finding that the award of PTD Benefits to the claimant was separate and distinct from any “continuing violation of the IRCA” and therefore not in conflict with federal immigration policies.[40] The court further cited authority for the proposition that excluding undocumented aliens from receiving workers’ compensation benefits would contravene the purpose of the IRCA by providing employers with a financial incentive to hire undocumented workers.[41] The court further noted that an illegal alien’s eligibility for workers’ compensation benefits in the event of a work-related accident cannot realistically be described as an “additional incentive for undocumented aliens to unlawfully enter the United States for work.”[42]

Tort Claims for Lost Wages
. There is a well established body of law providing illegal aliens with access to the courts and eligibility to bring suit to redress civil wrongs such as for negligent and other tort injuries.[43] However, there is also authority for the proposition that Hoffman Plastics precludes an illegal alien’s ability to recover lost United States wages under state laws, especially when the alien laborer unlawfully subverted IRCA’s enforcement mechanism by tendering fraudulent identification to obtain employment.[44] Other courts have allowed juries to consider the issue and award future lost wages against a negligent defendant if the jury finds that the alien would have continued to reside in the United States after the accident and obtain work.[45] Even though every remedy provided an undocumented worker, provides a marginal incentive for such workers to illegally come here, it is also true that employers have a similar economic incentive to hire them and “given this tension, the courts must attempt to sensibly balance competing considerations.”[46]

In 2005, the Supreme Court of New Hampshire explored the body of case law and held that an illegal alien is entitled to bring such an action for his injuries but that “allowing an illegal alien to recover lost United States earnings, creates a paradoxical situation in which an illegal alien can lawfully become entitled to the value of United States wages only if he becomes physically unable to work.”[47] The court concluded that although an illegal alien’s status is irrelevant to the issue of liability, it is relevant to the issue of lost earnings and although the evidence is prejudicial, such information “is both discoverable and admissible should an illegal alien wish to pursue a claim for lost earning capacity measured at United States wage levels.”[48] Other courts have also found that a tort law remedy of back pay and lost wages is distinguishable from allowing workers’ compensation benefits which is a statutory form of insurance and pursuant to Hoffman Plastics should not be allowed as contrary to both the letter and spirit of the IRCA, which would otherwise be undermined.[49]

The Credibility Argument
. Defendants in many cases have argued that undocumented workers use false names perpetrating a fraud upon their employers, which should be deemed admissible at trial for purposes of attacking their credibility as these employees “willingly continue to perpetrate criminal fraud.”[50] Courts have held that even assuming a plaintiff lied to their employers to secure a job, it is not dispositive of their credibility such that it outweighs the harm of the in terrorem effect.[51] Recently, a similar credibility argument raised by a defendant employer in a wage case met the same result in Solis v. Saraphino’s, Inc.[52]

The After-Acquired Evidence Doctrine
.  The “after-acquired evidence” doctrine limits an employee’s ability to receive remedies for a wrongful discharge if the employer later “discovers” evidence of wrongdoing that would have led to the employee’s termination had the employer known of the misconduct.[53] Defendants argue that they would eventually have discovered an undocumented worker’s illegal status and then terminated the discovered illegal alien which negates an award of back pay or front pay. However, courts have held that regrettably, many employers turn “a blind eye to immigration status during the hiring process so as to assemble a workforce that is both cheap to employ and minimizes the risk of being reported for violations of statutory rights. Thus, employers have a perverse incentive to ignore immigration laws at the time of hiring but insist upon their enforcement once the employees complain.”[54]  The employer must prove that it would have actually fired the employees had it known they were undocumented. Without that foundation, discovery of the employees’ immigration status is irrelevant. The outcome may be different if the employer is truly vigilant and the alien clearly deceptive.

Unclean Hands
. It may not be just the undocumented worker’s “status” which may be relevant to a given claim, but rather the litigant’s participation in a fraudulent or unlawful act. Illinois does not enforce agreements that violate federal or state law and will leave the parties where it finds them. For example, a court will refuse to enforce a contract that violates a statutory ban on fee sharing.[55] Similarly, divorce courts refuse to enforce an agreement which has the purpose and effect of evading a child’s right to support.[56] Agreements to evade the payment of federal taxes are unenforceable and courts decline to enforce them.[57] Thus, in Patel v. Boghra,[58] plaintiff, a citizen of India, sued on an illegal agreement entered into with his employer designed to evade immigration statutes. The District Court refused to enforce the agreement and that decision was affirmed by the Seventh Circuit. The agreement misrepresented Patel’s salary which would have rendered Patel removable from the United States and exposed all participants to criminal penalties.[59]  The Seventh Circuit pointed out that aliens who lack legal entitlement to work in the United States are not without remedies if employers fail to keep their promises but also found that Patel could not enforce an agreement including falsifying information to immigration officials.

Conclusion. In Hoffman Plastics, the United States Supreme Court made a clear pronouncement that awarding back pay to an illegal alien unduly trenches upon federal immigration policy. Yet, because of competing principles, the reach of that decision has not prevented undocumented workers from obtaining benefits under other bodies of both federal and state law, including claims under FLSA, Title VII and state tort and workers’ compensation acts. In fact, providing the same remedies and benefits to both undocumented workers as citizens has been held to actually support immigration reform by reducing employer incentive to hire undocumented workers willing to work for less and give up civil rights afforded citizens. Also in the balance are the competing purposes of federal-state laws underlying the passages of Title VII, FLSA and state workers’ compensation acts. In Illinois, at least one appellate court has allowed a claim under the Illinois Workers’ Compensation Act for permanent disability pay which assumes the illegal alien’s ability to work for future United States wages. One implicit assumption that can be gleaned from the case law is that the American employer is at least partially complicit. However, such a presumption is inapplicable to other claims such as the negligent act of a non-employer. The courts need to clearly address the principles upon which these decisions are made so that the laudable goals in one case are not expanded to another where they do not belong.

[1] Fong Yue Ting v. United States, 149 U.S. 698, 724, 13 S.Ct. 1016 (1893).
[2] Terrace v. Thompson, 263 U.S. 197, 215, 44 S.Ct. 15 (1923).
[3] Martinez v. Fox Valley Bus Lines, 17 F.Supp. 576, 577 (D.C.Ill. 1936).
[4] 8 U.S.C. § 1324(a).
[5] Hoffman Plastics Compounds, Inc. v. NLRB, 535 U.S. 137, 151, 122 S.Ct. 1275 (2002).
[6] 8 U.S.C.A. § 1324(a); Hoffman, 535 U.S. at 148.
[7] Patel v. Quality Inn South, 846 F.2d 700, 706 (11th Cir. 1988), cert. denied, 489 U.S. 1011 (1989).
[8] Delrey Tortilleria, Inc. v. NLRB, 976 F.2d 1115, 1119 (7th Cir. 1992).
[9] Patel v. Quality Inn South, 846 F.2d 700, 706 (11th Cir. 1988), cert. denied, 489 U.S. 1011 (1989)
[10] Delrey Tortilleria, Inc., 976 F.2d at 1122, F.N. 7.
[11] Rivera v. Nipco, Inc., 364 F.3d 1057, 1065 (9th Cir. 2004); Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 886-87, 104 S.Ct. 2803 (1984) (employer reported five undocumented workers after they voted in favor of union representation); Fuentes v. INS, 765 F.2d 886, 887 (9th Cir. 1985) (employer reported undocumented workers after employing them for three years for less than minimum wage when they filed suit to recover wages owed).
[12] See United States v. Drignoni-Ponce, 422 U.S. 873, 879, 95 S.Ct. 2574 (1975) (illegal aliens are vulnerable to exploitation because they cannot complain of substandard working conditions without risking deportation).
[13] Rivera, 364 F.3d at 1065.
[14] Rivera, 364 F.3d at 1065.
[15] Liu v. Donna Karan International, Inc., 207 F.Supp.2d 191, 193 (S.D.N.Y. 2002).
[16] Topo v. Dhir, 210 F.R.D. 76, 78 (S.D.N.Y. 2002); David v. Signal International, LLC, 257 F.R.D. 114, 124 (E.D.La. 2009). (Court finds that defendant’s opportunity to test the credibility of plaintiffs does not outweigh the public interest in allowing employees to enforce their rights and inquiry into immigration status implicitly raises threats of negative consequences when a worker reports illegal practices).
[17]David, 257 F.R.D. at 125.
[18] Patel v. Quality Inn South, 846 F.2d 700, 704 (11th Cir. 1988), cert. denied, 489 U.S. 1011 (1989).
[19] Villareal v. El Chile, Inc., 266 F.R.D. 207 (N.D.Ill. 2010).
[20] Villareal, 266 F.R.D. at 214. (Such a claim does not assume the continued availability of the worker or trigger a new IRCA violation).
[21] See Patel, 846 F.2d at 704-05; Flores v. Amigon, 233 F.Supp.2d 462, 464 (E.D.N.Y. 2002).
[22] Villareal, 266 F.R.D. at 214.
[23] Flores, 233 F.Supp.2d at 465 N.2.  See also INS v. Lopez-Mendoza, 468 U.S. 1032, 1047 N.4 (distinguishing between “retroactive” and “prospective” remedies in labor cases involving undocumented workers). 
[24] Espinoza v. Farah Mfg. Co., 414 U.S.86, 94 S.Ct.334 (1973).
[25] N.Y. Gaslight Club, Inc. v. Carey, 447 U.S. 54, 63, 100 S.Ct. 2024 (1980).
[26] Equal Employment Opportunity Commission v. The Restaurant Company, 490 F.Supp.2d 1039, 1047 (D.Minn. 2007).
[27] See Rivera v. Nibco, Inc., 364 F.3d 1057, 1067 (9th Cir. 2004); Rios v. Enterprise Ass’n. Steamfitters Local 638, 860 F.2d 1168, 1173 (2nd Cir. 1988).
[28] Delrey Tortilleria, Inc., 976 F.2d at 1121, F.N. 7.
[29] Delarosa v. Northern Harvest Furniture, 210 F.R.D. 237, 238 (C.D.Ill. 2002).
[30] Delarosa, 210 F.R.D. at 239.
[31] EEOC v. Bice of Chicago, 229 F.R.D. 581 (N.D.Ill.2005)
[32] Rivera v. Nibco, Inc., 364 F.3d 1057, 1065 (9th Cir. 1004).
[33] Bice of Chicago, 229 F.R.D. at 583.
[34] Application of Workers’ Compensation Laws to Illegal Aliens, 121 ALR 5th 523 (2004).
[35] Continental Pet Technologies, Inc. v. Palacias, 269 G.A.App. 561, 604 S.E.2d 627 (2004), cert. denied, 126 S.Ct. 362 (U.S. 2005)
[36] Economy Packing Company v. Illinois Workers’ Compensation Commission, 387 Ill.App.3d 283, 901 N.E.2d 915 (1st Dist. 2009).
[37] 820 ILCS 305/1(b)(2).
[38]  Economy Packing Company v. Illinois Workers’ Compensation Commission, 387 Ill.App.3d 283, 901 N.E.2d 915 (1st Dist. 2009).
[39]  Economy Packing, 387 Ill.App.3d at 289.
[40] Economy Packing, 387 Ill.App.3d at 291.
[41] See Dowling v. Slotnik, 244 Conn. 781, 796, 712 A.2d 396, 404 (1998); Rajeh v. Steel City Corp., 157 Ohio App.3d 722, 731, 813 N.E.2d 697, 703 (2004).
[42]  Economy Packing, 387 Ill.App.3d at 291-92.
[43]Davila v. Grimes, 2010 WL 1737121 (S.D.Ohio, April 29, 2010); Mendoza v. Monmouth Recycling Corp., 288 N.J.Super. 240, 672 A.2d 221, 225 (1996); Martinez v. Fox Valley Bus Lines, 17 F.Supp. 576, 577 (N.D.Ill. 1936).
[44] See Veliz v. Rental Service Corp. USA, Inc., 313 F.Supp.2d 1317, 1335-36 (M.D.Fla. 2003).
[45] See Madeira v. Affordable Housing Foundation, Inc., 315 F.Supp.2d 504, 507 (S.D.N.Y. 2004).
[46] Singh v. Jutla, 214 F.Supp.2d 1056, 1062 (N.D.Cal. 2002).
[47] Rosa v. Partners in Progress, Inc., 152 N.H. 6, 13, 868 A.2d 994, 1000 (2005).
[48] Rosa v. Partners in Progress, Inc., 152 N.H. 6, 15, 868 A.2d 994, 1002 (2005).
[49] Veliz v. Rental Service Corporation, 313 F.Supp.2d 1317, 1337 (M.D. Fla. 2003).
[50] See Hernandez v. Citywide Insulation of Madison, Inc., 2006 WL 3474182 at *1 (E.D.Wis. Nov. 30, 2006).
[51]Hernandez, at *1; Ponce v. Tims Time, Inc., 2006 WL 941963 at *2 (N.D.Ill. March 16, 2006). (Magistrate Keys’s finding that the danger of unfair prejudice – not just prejudice, but unfair prejudice – is indeed high).
[52]Solis v. Saraphino’s, Inc., 2010 WL 4941953 at * 2 (E.D.Wis. Nov. 30, 2010).
[53]McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 360-63, 115 S.Ct. 879 (1995).
[54]Rivera v. Nibco, Inc., 364 F.3d 1057, 1072 (9th Cir. 2004); EEOC v. First Wireless Group, Inc., 225 F.R.D. 404, 407 (E.D.N.Y. 2004) (Protective order against defendant’s discovery of charging party’s immigration status proper because of a potential in terrorem effect without evidence establishing that defendant inquired into charging party’s immigration status at the time of hiring).
[55] Vine Street Clinic v. Health Link, Inc., 222 Ill.2d 276, 292-93, 856 N.E.2d 422 (2006).
[56] In Re: Marriage of Best, 387 Ill.App.3d 948, 901 N.E.2d 967, 970-72 (2009).
[57]  Nutri-Pro v. Phelps, 172 Ill.App.3d 505, 526 N.E.2d 891 (1988).
[58]  Patel v. Boghra, 369 Fed.Appx., 722 (7th Cir. 2010)
[59] Patel, 369 Fed.Appx. 722 at *2.
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