Liability in More Ways Than One: Employing Undocumented Workers

The restaurant industry’s recent push to liberalize immigration laws has been a hot topic in light of the after-effects of September 11 and the resulting clampdown on immigration in the United States. Although immigration status of a worker may make it illegal for an employer to hire such person, the practical reality of many employers’ labor needs is that they could not successfully run their businesses unless they employed immigrant workers. Such labor needs could explain why, according to the National Restaurant Association’s immigration estimates, the restaurant industry is the largest private sector employer of immigrants in the United States, employing approximately 1.4 million immigrant workers this year.

Unfortunately, there is a common misperception among employers that immigrant workers do not share the same rights as their fellow US citizens or permanent residents with work permits. But employing immigrants generally subjects employers to the same legal implications as employing non-immigrants. For example:

  • Employers are subject to back wages and overtime claims where they fail to pay their employees for work performed, regardless of their employees’ immigration status.
  • Employers may be held liable by their immigrant employees for discrimination based on race, sex or national origin.

Employer misconception about the employment rights of their immigrant employees arises most frequently in regard to undocumented workers, or non-US citizens who are not authorized to work in America and lack legal immigrant status. The employment of undocumented workers fills a great need for labor in the restaurant industry. For example, it is estimated that undocumented workers account for about 10% of the total restaurant work performed in the United States. The reality for employers with undocumented workers is that such employees largely have the same rights as their fellow employees who are US citizens or authorized to work here.

Employers’ misperception about the legal rights of their undocumented workers has been most recently fueled by the U.S. Supreme Court case of Hoffman Plastic Compounds Inc. v. National Labor Relations Board, decided earlier this year. In Hoffman, an undocumented factory worker sued his employer for back pay alleging that the employer fired him in retaliation for attempting to organize a union. Under federal labor law, an employer can be held liable for back pay for work not performed where the employer retaliates against employees who exercise union rights. The U.S. Supreme Court decided that the employee could not collect back pay for work not performed because he was an undocumented worker. The Court reasoned that awarding the employee back pay under federal labor law would not be permissible in light of the Immigration Reform and Control Act—the law that declares it illegal for employers to hire undocumented workers.

Many employers have interpreted Hoffman to mean that undocumented workers are not entitled to back pay at all. Such is not the case. Hoffman, as well as a line of federal courts interpreting it holds that employees are entitled to back pay under the wage and hour laws such as the Fair Labor Standards Act, regardless of their immigration status for hours actually worked. Courts have reasoned that holding employers liable for failing to pay undocumented workers is even consistent with immigration policy. As one court put it: “If employers know they have to pay illegal aliens the same wages as legal workers, they are far less likely to hire an illegal worker and run the risk of subjecting themselves to sanctions” under federal immigration laws.

Hoffman also did not limit employers’ potential liability for discriminating against undocumented workers in violation of federal discrimination laws. In reaction to Hoffman, the Equal Employment Opportunity Commission re-affirmed that federal discrimination laws protect all employees, regardless of their immigration status. The EEOC takes the stance that if employers were not held responsible for discriminating against unauthorized workers, it would create an incentive for unscrupulous employers to employ and exploit such workers and would promote greater illegal immigration into the United States.

Policy reasons aside, many employers feel that the immigration status of an undocumented worker will protect them from anti-discrimination remedies enforced by the EEOC. Such perception is only true in certain circumstances. For example, EEOC guidelines permit awards of reinstatement only for workers eligible to work. By definition, undocumented workers are ineligible to work. While this may benefit an employer seeking to avoid reinstating an undocumented worker, the employer may still be liable for attorneys fees or other injunctive relief the EEOC deems fit.

Given the recognition by courts and the EEOC that undocumented workers share the same rights to wages and protection from discrimination as their legally employed co-workers, employers should not view Hoffman or an undocumented worker’s immigration status as an open invitation to treat such workers differently.

Specific legal problems need specific solutions. This article is for general discussion purposes only and should not be relied on for any purpose. This article is not legal advice, and does not create an attorney-client relationship.