In addition to liability under the Immigration Reform and Control Act of 1986, employers of undocumented workers now face employee class action lawsuits for violating immigration laws. Multiple class action lawsuits have been filed in states across the country, subjecting employers that hire undocumented workers to damage awards under the Racketeering Influenced and Corrupt organizations Act (RICO). In these actions, current and former employees have accused companies of violating RICO by conspiring with recruiters, staffing agencies and other subcontractors to recruit and employ undocumented workers for the purpose of suppressing the wages of legal, documented workers.
Under RICO, it is illegal "for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity. . . ." Specifically, plaintiffs must show that the defending party participated in the operation or management of an "enterprise", that the enterprise committed one or more of the offenses listed in the RICO statute, and that such violation resulted in injury to the plaintiffs. The offenses listed in the RICO statute include violations of alien transportation, harboring, and employment of undocumented aliens laws.
The first immigration-based RICO case, Commercial Cleaning Services v. Colin Service Systems, 271 F.3d 374 (2nd Cir. 2001), was filed in 2000. In that case, a group of office cleaning companies sued a competitor for business they lost as a result of the defendant's pattern of hiring undocumented workers. The plaintiffs alleged that this illegal hiring practice allowed the defendant competitor to reduce costs and underbid the plaintiffs on contracts. The suit was ultimately settled in favor of the plaintiffs. The plaintiff's attorney in Commercial Cleaning subsequently filed two additional class actions, Trollinger v. Tyson Foods, 214 F.Supp. 2d 840 (2002), and Mendoza v. Zirkle Fruit, 301 F.3d 1163 (9th Cir. 2002), against companies alleged to have employed illegal workers. Both cases were brought by groups of employees who claimed that their employers' practice of hiring illegal aliens depressed their wages.
Recently, the U.S. Supreme Court agreed to hear Mohawk Industries Inc. v. Williams, a Georgia case involving immigration-based RICO claims against an employer. The Supreme Court's decision should resolve a split among circuit courts as to whether an employer's relationship with outside recruiters can constitute a racketeering enterprise as defined under RICO. Also notably, shortly after the Supreme Court decided to hear the Mohawk Industries case, Washington-based Zirkle Fruit decided to settle its RICO-based class action lawsuit for over $1 million.
In Mohawk Industries, current and former employees of the defendant company allege that the company and its managers conspired with recruiters and staffing agencies to recruit and hire undocumented workers near the Texas-Mexico border and transported the illegal workers to a Mohawk facility in Georgia. The plaintiffs in the class action claim that the company employed the undocumented workers in order to drive down wages and save on potential workers' compensation costs.
Mohawk contends that it should not be liable under RICO for these immigration-based allegations because the employees' claims do not meet RICO statutory requirements. The class action suit has already survived motions to dismiss in district court and the 11th Circuit Court of Appeals. The 11th Circuit determined that the plaintiffs properly alleged a pattern of racketeering activity based on Mohawk's alleged immigration violations including (1) knowingly hiring within any 12-month period, at least ten illegal workers unauthorized to be accept employment in the U.S.; (2) concealing, harboring or shielding undocumented individuals who illegally entered the U.S.; and (3) encouraging or inducing undocumented individuals to enter or reside in the United States, knowing or in reckless disregard of the fact that such entry or residence is a violation of the law.
In its decision, the 11th Circuit found that Mohawk and its outside recruiters constituted a racketeering enterprise. It also considered whether or not the enterprise members shared a common goal sufficient to show proof of conduct of an enterprise. The Court concluded that the plaintiffs' complaint sufficiently alleged that Mohawk and the recruiters obtained a significant economic benefit from the employment of the undocumented workers, which constituted a "common goal" for purposes of
establishing RICO liability.
The 7th Circuit has rejected such a reading of RICO. In Baker v. IBP, Inc., 357 F.3d 685 (7th Cir. 2005), employees sued a meat processing plant, claiming it conspired with recruiters and a Chinese aid organize to hire illegal workers and drive down their wages. The 7th Circuit agreed that the employer, the recruiters and the aid organization made up a "racketeering enterprise" but concluded that the members of the enterprise did not have a "common purpose," required to establish RICO liability. The 7th Circuit reasoned that each member acted for a different purposes-the employer desired to pay lower wages, the recruiter wanted as much pay as possible for supplying workers and the aid organization wanted to assist Chinese immigrants.
The U.S. Supreme Court's decision to hear the Mohawk Industries case has drawn public attention to this new area of employer liability, providing further confirmation that employers must take steps to ensure their compliance with immigration rules. Likewise, because of the trend in settlement and the uncertainty surrounding the Supreme Court's decision, RICO lawsuits against employers are likely to continue in the future. Employers should minimize potential liability by complying with employment related immigration laws including Form I-9 obligations. Form I-9 procedures should be reevaluated and updated, managers and human resources personnel should be trained in immigration and Form I-9 issues, and periodic internal audits of Forms I-9 should be performed.
For more information on employment-related immigration and Form I-9 issues, please contact Kelly M. Fortier at email@example.com or 414.277.3460.