Mass. Board Doesn't Hoffman's Reach & Affirms Undocumented Workers' Right To Workers' Comp

IMMIGRANTS & EMPLOYMENT

Immigrants' Employment Rights and Remedies

MASSACHUSETTS BOARD DOES NOT EXTEND HOFFMAN'S REACH AND AFFIRMS UNDOCUMENTED WORKERS' RIGHT TO WORKERS' COMPENSATION
Immigrants' Rights Update, Vol. 18, No. 1, February 17, 2004

The Reviewing Board of the Massachusetts Dept. of Industrial Accidents (DIA) recently issued an important decision upholding the right of undocumented workers to be compensated under state workers' compensation laws. The DIA issued its decision after hearing an appeal by the company that insured the employer of an injured undocumented worker who was awarded workers' compensation.

In appealing the decision, the insurance company asserted that the U.S. Supreme Court's decision in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), bars the worker from receiving workers' compensation benefits because he is undocumented. (For a summary of the Hoffman decision, see "Supreme Court Bars Undocumented Worker from Receiving Back Pay Remedy for Unlawful Firing," IMMIGRANTS' RIGHTS UPDATE, Apr. 12, 2002.) The DIA based its ruling that Hoffman does not bar undocumented workers from receiving workers' compensation on two findings.

First, the DIA ruled that a contract of employment between an employer and an undocumented worker is an enforceable contract, insofar as all workers, regardless of immigration status, should be compensated for legitimate work injuries under the contract of workers' compensation insurance. Second, the DIA ruled that Hoffman does not preempt the interpretation of Massachusetts law as giving undocumented workers an enforceable contract of employment for purposes of workers' compensation.

The case involved a fifty-one-year-old cleaner and construction laborer, Guillermo Medellín, who fell into an eight-foot-deep hole after the ground crumbled beneath his feet while he was excavating poles with a jackhammer. Despite surgeries and extensive physical therapy, his right arm remains impaired. Medellín filed a claim for workers' compensation, but the insurance company resisted payment. During a hearing on Medellín's claim, he admitted that he was unauthorized to work in the U.S. because he was on a visitor's visa, and that he was using a false Social Security number to work. The judge presiding over the hearing awarded Medellín continuing workers' compensation, including temporary and total incapacity benefits, under Massachusetts state law. In doing so, the judge relied on a 1997 Massachusetts workers' compensation case that established that undocumented workers are employees under the state workers' compensation law, and that, therefore, an employee's immigration status does not bar receipt of benefits under this law.

The insurance company appealed the decision only after the Supreme Court issued its decision in Hoffman. Though Medellín argued that the insurance company had waived its right to appeal because it did not challenge the claim on the basis of his status as an undocumented worker at the time of the hearing, the DIA ruled that the company's timing was reasonable because Hoffman "has vastly changed the legal landscape for undocumented immigrant employees." In considering the appeal, the DIA first analyzed Medellín's workers' compensation award in the context of the Hoffman decision. The DIA recognized that despite Hoffman, other "traditional" sanctions under the National Labor Relations Act (NLRA) still stand. In fact, it quoted the Supreme Court's assertion that "[l]ack of authority to award backpay does not mean that the employer gets off scot-free." The DIA also recognized the federal district court decision in Singh v. Jutla, et al, 214 F.Supp. 2d 1056 (N.D. Cal. 2002) (for more on Singh, see "Court Denies Motion to Dismiss in Retaliation Case Where Worker Was Reported to INS," IRU, Oct. 21, 2002, p. 10) and the amici curiae briefs submitted on behalf of Medellín that interpret Hoffman as reaffirming that undocumented workers are "employees" under the NLRA and other federal statutes such as the Fair Labor Standards Act.

However, the DIA declined to accept the argument that Hoffman unequivocally supports the position that there is a legitimate employment relationship between undocumented workers and their employers. Instead, the issues the DIA considered seminal in determining whether Medellín should be covered under the state's workers' compensation laws were (1) whether a non-U.S. citizen worker's engaging in illegal employment as defined by section 274a of the Immigration and Nationality Act (i.e., being employed in the U.S. without employment authorization) makes his or her contract of employment under Massachusetts workers' compensation law also illegal, and (2) if it does not-i.e., if state law is construed as supporting an enforceable contract of employment for undocumented workers-whether federal immigration law preempts this law.

Addressing the first issue, the DIA concluded that employment contracts between undocumented workers and employers are enforceable contracts for the purposes of coverage under state workers' compensation laws. The DIA based its decision on previous case law regarding fraudulent inducement to enter a contract. It reaffirmed prior rulings holding that, while the defrauded party (in this case, the employer) can repudiate a contract upon learning of the fraud (in this case, learning that an employee was not, in fact, authorized to be employed in the U.S.), that repudiation does not in any way operate retroactivity-i.e., it does not capture an event (such as a workplace accident) that occurred prior to it. In addition, the DIA examined whether the enforceability of the contract was "tainted" by the illegality of the worker's conduct. Applying the tests established by Massachusetts courts, the DIA concluded that it is not. "[T]he nature of the employment contract was affected by the illegal conduct of the employee insofar as Mr. Medellín sought and attained the employment by fraudulent means," the DIA found. "However, that illegal behavior was, at most, an incidental part of the contract performance." The DIA also concluded that "[t]he policy against illegal immigration is, of course, a strong one, but it is juxtaposed against the policy of [the Massachusetts workers' compensation statute] that ensures that legitimate work injuries are compensated under the contract of workers' compensation insurance, which remedy is an integral component of the contract of employment."

The DIA then addressed the second issue, namely whether federal immigration law preempts a construction of state law as supporting an enforceable contract of employment for undocumented workers. In determining that that federal law does not preempt the Massachusetts workers' compensation statute, the DIA noted that it is a well-established principle that states have great latitude under their powers to legislate matters involving "the protection of the lives, limbs, health, comfort, and quiet of all persons." The DIA concluded that mandatory insurance schemes, including workers' compensation, are within these powers.

The DIA also cited the McCarran-Ferguson Act, in particular 15 USC sec. 1012(b), which establishes that state laws enacted "for the purpose of regulating the business of insurance" do not yield to conflicting federal statutes unless a federal statute specifically requires otherwise. The DIA relied on a U.S. Supreme Court ruling that federal immigration law does not specifically relate to the business of insurance and relied on a prior state court decision to conclude that the Massachusetts workers' compensation statute is a law enacted for the purpose of regulating the business of insurance. By making these two findings, the DIA upheld, despite Hoffman, Massachusetts common law establishing that employees' status as undocumented workers does not bar them from receiving workers' compensation otherwise due under state law.

The insurer has appealed the decision. NILC appeared as amicus curiae along with the National Employment Law Project. Briefs on this case are available by contacting NILC's Anita Sinha at sinha@nilc.org.

Medellín v. Cashman KPA, et al., Board No. 03324300,
Massachusetts Dept. of Industrial Accidents,
Reviewing Board Decision, Dec. 23, 2003.