Employers Beware: Rights of Undocumented Workers to Damages Upheld by New Hampshire Supreme Court

August 1, 2005

Co-written by: Cathryn Vaughn

August 2005

The New Hampshire Supreme Court sent a signal to employers that they must be diligent in confirming the status of applicants for employment and in following up on information that might lead to the conclusion that a worker is undocumented. The case of Rosa v. Partners in Progress, Inc., No. 2004-232 (March 4, 2005) also confirmed that illegal workers can collect damages for loss of earning capacity, and also ruled that these damages may, in certain circumstances, be calculated at United States wage rates as opposed to the rate the employee would earn in his or her country of origin.

The plaintiff in Rosa was from Brazil and was not authorized to work in the United States. He was employed by Eagle General Laborers who had been subcontracted by Partners in Progress, the painting subcontractor for the general contractor, Wrenn Associates, Inc. to paint the exterior of a Wal-Mart store. Rosa was injured when an aerial lift, owned and rented by United Rentals, Inc., tipped over and fell on him. Rosa named Partners in Progress, Wrenn and United Rental as defendants in the law suit.

Before deciding the case, the Superior Court certified three questions to the New Hampshire Supreme Court on interlocutory appeal. Presumably because the case presented three novel questions of law in New Hampshire, the Supreme Court agreed to hear the matter on interlocutory appeal without awaiting the outcome of a jury trial or dismissal motion at the superior court level. The questions addressed by the Supreme Court were:

  1. May an illegal worker bring a claim for lost wages and earning capacity when he is not legally entitled to work in the United States?
  2. If he may bring such a claim, should he be limited to recovering what he legally could have earned in his country of origin?
  3. If the worker is permitted to bring such a claim, can the employer offer evidence regarding the worker’s illegal employment and immigration status at trial?

The defendants initially argued that the plaintiff should be completely precluded from bringing a claim for lost earning capacity. The court dismissed this argument confirming that there was a well established body of law holding that illegal aliens have rights of access to the courts to enforce contracts, to receive compensation for personal injury and to redress other wrongs. The court saw no reason to treat a claim for lost wages any differently stating “surely the effect on the worker of his injury has nothing to do with his citizenship or immigration status.”

The second question provoked the most analysis and discussion. The defendants again argued in unison that even if Rosa were allowed to maintain his suit, his damages should be measured by what he could have earned in his country of origin and not by what he could have earned, but for his injury, by working illegally in the United States. The court agreed that the defendants’ analysis would be correct in most cases.

However, the court concluded that if the employee can demonstrate that the employer knew or should have know that the employee was working illegally, then the employee may recover lost wages and earning capacity at United States levels rather than at the level the employee would have earned in his native country.

The court discussed employer’s obligations under the federal Immigration Reform and Control Act of 1986 (“IRCA”) and conceded that the statute provides that illegal aliens cannot recover such items as back pay at levels above that which they could have earned in their native countries. Nevertheless, because IRCA has not preempted New Hampshire common law, the court concluded, for what it clearly termed public policy reasons, that the level of damages the employee could collect was dependent upon the employer’s knowledge of the employee’s illegal status.

The analysis the court went through in arriving at this conclusion should be informative to employers. First, the defendants argued that allowing illegal workers to collect damages at United States wage rates would undermine IRCA because providing such employees with the potential to recover lost earnings would, in theory, increase the economic incentives drawing illegal aliens to this country. On the contrary, every potential remedy denied to an illegal worker at least arguably provides an incentive for employers to hire such workers. In addition, the principles of deterrence inherent in American tort law, according to the court, provided a compelling reason to allow an award of damages at the higher rate against the person responsible for the employment when the person knew or should have known of that illegal alien’s status. The threat of tort liability serves as an incentive to reduce the risk of injury. On the contrary, refusing to allow such recovery might provide an incentive for those who know or should know of the worker’s status to target illegal aliens for employment in the most dangerous jobs or to provide them with substandard working conditions.

The court sent a clear message to employers that if they fail to comply with the requirements of IRCA, they will be held liable at the higher rate for damages resulting in loss of earning capacity to the victim. The court quoted case law construing the federal statute by stating that

IRCA “places an affirmative duty on employers to determine that their employees are authorized `and` it has been held that an employer is imputed with constructive knowledge that a worker is unauthorized if the employer deliberately fails to investigate suspicious circumstances.”

Rosa, supra quoting Zamora v. Elite Logistics, Inc., 316 F. Supp. 1107, 1119 (D.Ka. 2004).

It is noteworthy that although neither Partners nor Wrenn directly employed Rosa, they were held to the same standard of knowledge as his employer under IRCA. In other words, even a contractor’s constructive knowledge of a subcontractor’s employee’s illegal status would open them up to liability at the higher United States wage rates. In order to protect themselves, employers should first comply with the letter of the IRCA at the time of hire. No worker should be allowed to commence work without adequate documents. If during the course of employment suspicions arise about the worker’s status, the employer should diligently follow up on its suspicions. Finally, no owner or contractor should engage in business relationships with subcontractors they know or should know to employ illegal aliens.

Finally, the court also concluded that it was permissible for the defendants to introduce evidence of Rosa’s status as an illegal alien despite the potential prejudicial effect this information might have on the jury. His employment status was not considered relevant to the issue of liability, but it was deemed relevant to the issue of damages and , therefore, admissible.

In summary, Rosa serves as a reminder to employers and contractors that they must be diligent in their compliance with the IRCA.

Charla Bizios Stevens is a member of the Employment Law Practice Group at the law firm of McLane, Graf, Raulerson & Middleton, P.A. The McLane Law Firm is the largest full-service law firm in the State of New Hampshire, with offices in Concord, Manchester and Portsmouth.  Co-authored by Cathryn E. Vaughn.