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Everything you wanted to
know about immigration but didn't know who to ask
A Tough Balancing Act for Employers: RICO-Enhanced Liability Versus Discrimination Issues With the Noncitizen Worker.
By Kathleen Harvey and Mira Mdivani
In 1986, the Immigration Reform and Control Act (IRCA)1 made it illegal for an employer to hire, recruit, or refer for a fee someone not authorized to work in the United States.2 This was the first time the hiring entity, whether a natural person or a business form, was burdened with the responsibility to prevent undocumented workers from gaining employment in the United States. Although the "success" of this change in efforts to control illegal immigration over the past 18 years has been mixed, it is nonetheless the law, and the government’s dedication to such prosecution remains vigorous.
In the past, employers’ exposure was, for all practical purposes, limited to fines imposed by the immigration authorities for failure to verify whether employees were authorized to work in the United States and the disruption of work due to loss of undocumented workers either arrested by immigration or afraid to show up for work after a raid. The most recent broadening of employer’s IRCA-based liability has occurred in th civil and criminal application of the Racketeer Influenced and Corrupt Orgizations (RICO) statute.3 RICO allows for civil and criminal actions to be brought against persons or entities that engage in a pattern of racketeering activity. Section 1962(c) makes it unlawful for any person to engage in, directly or indirectly, a pattern of racketeering activity on behalf of any entity. This section may be triggered by an employer’s failure to comply the immigration law.
The Second Circuit, in Commercial Cleaning Services, L.L. C., v. Colin Service Systems Inc.,4 opened the door to treble damages under RICO for “knowingly’ employing workers who had no authorization to work in the United States. Commercial Cleaning Services (Commercial), a small cleaning services firm, filed a class action suit, together with similar firms, against Colin Service Systems. Colin is one of the largest U.S. companies that cleans commercial facilities.
The plaintiffs alleged they were victims of Colin’s “illegal immigrant hiring scheme” that constituted a pattern of racketeering activity in violation of I8 USC § 1962(c).
As stated by one commentator:
Before criminal or civil liability can attach under RICO, it must be shown that the two or more acts of racketeering alleged in the criminal indictment or civil complaint constitute a pattern of racketeering activity on the part of the culpable person. The statutory definition of pattern ‘requires at least two’ predicate acts occurring within ten years of each other, with one of them occurring after October 15, 1970. More broadly put, the pattern of racketeering activity is a scheme of unlawful conduct with a nexus to both the culpable person and the enterprise.5
Commercial alleged that it lost its profitable cleaning contract with Pratt and Whitney because of Colin’s illegal hiring of low-paid undocumented immigrants — in theory obtaining a significant business advantage over the plaintiffs in the highly competitive and price-sensitive cleaning service industry.
The complaint referred to the hiring of at least 150 undocumented workers; continuing to employ aliens after their work authorization had expired; and failing to prepare, complete, and update employment documents. The allegations asserted that Colin was part of an enterprise composed of entities associated-in-fact that included employment placement services, labor contractors, newspapers in which Colin advertised for laborers, and others. The complaint alleged that Colin’s participation in the enterprise through the illegal immigrant hiring scheme violated 8 U.S.C. § 1324(a), which prohibits hiring certain undocumented aliens and is a RICO predicate offense if committed for financial gain.
Finding that Commercial was directly injured by Colin’s unlawful hiring scheme, the Second Circuit reversed the lower court’s decision to dismiss the claim and allowed the class action to go forward.6 On remand, Commercial could recover damages of three times its actual losses under RICO’s civil remedy provision, in addition to stopping the alleged unlawful activity.
Allowing the class action to go forward may have an impact beyond a competitor’s use of illegal aliens. RICO applies to any party that has maintained an enterprise and caused injury through a pattern of racketeering activity. A pattern of racketeering can involve repeated violation of a long list of federal laws, including mail and wire fraud. As a result, the Commercial Cleaning decision may provide additional grounds for civil and criminal liability.7
The Mendoza v. Zirkle Fruit Co. decision was issued on September 3, 2002.8 In that case, the Ninth Circuit, citing Commercial Cleaning, predictably held that allegations of illegal immigrant hiring may serve as a predicate offense for a RICO claim. In addition, against all predictions, the court also held that liability may be imposed not only for workers who are directly employed by the employer, but also for those who are provided on a contract basis by a staffing company. This set of facts should serve as a wake-up call for employers.
Washington State’s apple-growing industry generates more than $1 billion a year. There are more than 30,000 orchard pickers and 15,000 fruit packers who work in the apple orchards every year. The Immigration and Naturalization Service conducted investigations that found as much as half the growers’ workforce is employed illegally.9 Mendoza v. Zirkie Fruit Co. was not an action by the immigration authorities to fine the company or by the U.S. district attorney based on criminal grounds: It was a civil action by legal U.S. workers against the employers. The complaint alleged that fruit growers Zirkle Fruit Company and Matson Fruit Company had knowledge of illegal harboring and/or smuggling of undocumented workers. According to the complaint, the illegal scheme was facilitated by Selective Employment Agency Inc., a separate company that employed the illegal workers. It is important to note that the U.S. workers did not sue the employment agency but went directly after their own employers. The court held that knowledge of illegal employment alone was sufficient to allege the predicate act of knowingly hiring undocumented workers, as required to state a claim under RICO.
This point cannot be emphasized enough: A company not only may be found liable for knowingly hiring or continuing to employ unauthorized workers, but also, under Mendoza, may be found liable if the company knowingly uses somebody else’s unauthorized workers. It is also important to understand that current interpretation of “knowingly” may include looking the other way, i.e. not having or following a comprehensive immigration compliance policy and plan.
Not every circuit addressing immigration-related RICO claims has agreed. On February 4, 2004, the Court of Appeals for the Seventh Circuit in Baker v. IBP 10 held that a RICO claim will not be allowed where plaintiff, U.S. legal workers, alleged that the company should pay them treble damages under RICO. Plaintiffs in that case alleged that their wages were depressed because their employer hired undocumented workers.11
On April 12, 2004, the U.S. District Court for the Northern District of Georgia handed down its decision on a motion to dismiss a RICO-based class action in Williams v. Mohawk Industries. 12 Based on allegations by current and former employees of Mohawk Industries that the company knowingly hired illegal workers and violated federal and state RICO laws, the Court followed the Commercial Cleaning and Mendoza cases and allowed yet another class action of this kind to go forward, despite the ruling in the IPB case that came down just a month earlier.
On June 3, 2004, the U.S. Court of Appeals for the Sixth Circuit inTrollinger v. Tyson Foods Inc., 13 allowed a class action lawsuit by employees against Tyson Foods Inc. to go forward based on alleged violations of RICO involving “knowingly hiring” unauthorized immigrant workers. Again, the Court referred to Mendoza as settled law.
Employers looking at potential liability must realize that actual knowledge of unauthorized employment is not required. The “should have known” standard is applied where the employer fails to verify and reverify the employee’s status to determine the continuing validity of the employee’s employment authorization. 14 The applicable government regulation adopts a broad view in its definition of “knowing” as including “not only actual knowledge, but also knowledge which may be fairly inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition.” 15 Under immigration regulations “knowledge may be inferred where the employer fails to complete or improperly completes an 1-9; has information available that the indicated employee is not authorized to work; or acts with reckless disregard by permitting another individual to introduce unauthorized workers to the work force." 16 Defenses and mitigating circumstances to a charge of “knowingly hiring” such workers may include: the size of the employer, good faith of the employer; seriousness of the violation, employee in fact being authorized to work, and any history of previous violations by the same employer.” 17
In addition, businesses should be aware that a federal contractor may lose its right to do business with the federal government for IRCA violations under Executive Order 12989 (Feb. 13, 1996). Kansas employers should also remember that it is a class C misdemeanor under Kansas law to knowingly employ an alien who is “illegally within the territory of the United States.” K.S.A. § 21-4409.
The U.S. Immigration and Customs Enforcement (ICE) raided several Wal-Mart stores in October 2003 and arrested approximately 200 undocumented workers. In an expected scenario, the government then raided Wal-Mart’s headquarters and removed boxes of documents from its offices. The federal indictment for violations of IRCA and RICO followed several weeks later, and a civil class action by the company’s workers followed very shortly. This was all happening while Wal-Mart said that it had no knowledge of the violations and that the arrested undocumented workers were not employed by the company but were, in fact, a contractor’s employees. Anti-Discrimination Laws and Unfair Immigration-Related Employment Practices Under IRCA
Employers must realize that while it is important to comply with immigration law, compliance must not be achieved by violating antidiscrimination laws. Title VII, 42 U.S.C. § 2000, and the Kansas Act Against Discrimination, K.S.A. § 44-1001, et seq prohibit employment discrimination based on race, gender, national origin, and religion. 42 U.S. Code § 1981 prohibits employment discrimination based on race. IRCA (Act) also prohibits immigration-related discriminatory employment practices, 18 which protects citizens and nationals ofthe United States, legal permanent residents, and refugees and asylees. 19 IRCA is still a powerful tool in the hands of aggrieved employees and job applicants who are authorized to work in the United States. The statute prohibits discrimination against an employee because of national origin or citizenship in hiring, recruitment, referral, or discharge. Those who file charges or assert rights under this Act are given protection from intimidation. The Act also covers “document abuse” where the employer, seeking to comply with I-9 requirements, asks for more or different documents than required or refuses to accept documents that appear genuine on their face. 20 Asking any immigrant employee or a job applicant, “Are you illegal?” or demanding specific documents such as a birth certificate or a green card rather than documents from the acceptable 1-9 document list is unlawful. Asking for extra documents that are not required of employees born in the United States, or refusing to hire a foreign-born applicant because his or her work permit is expiring soon, is also unlawful and may expose an employer to liability for discriminatjon and document abuse, which may result in fines to punitive damages.
Solutions: Company Immigration Compliance Plan
If a business wants to protect itself from immigration-based liability while making sure that it also complies with antidiscrimination provisions of our laws, it must have a comprehensive immigration law compliance plan. Depending on the specific issues facing the company, such a plan should be in writing, subject to regular revision, and should incorporate, at a minimum, the following elements:
1. A written immigration compliance policy;
2. Employee immigration compliance procedures;
3. Contractor immigration compliance procedures;
4. I-9 and contractor compliance audits;
5. Recurrent training for human resources and management on immigration compliance issues;
6. Use of legal visas for foreign workers, such as H-2B or H-1B, and permanent residency based on offers of employment; and
7. Tickler systems for reverifying employment and timely I-9 destruction.
The I-9 employment eligibility verification form audit helps address several issues. If I-9 paperwork violations are found, 100 percent of such violations may be addressed through appropriately recorded corrections or execution of new I-9s. This addresses the issue of the company’s exposure to penalties of up to $1,100 per I-9 form.
The I-9 audit examines the company compliance with appropriate procedures to record whether its workers are in fact authorized to work in the United States. The purpose of I-9 audits goes to the heart of protecting the business from civil and criminal liability under IRCA and RICO. In addition, the mere fact that the I-9 audit targeted at immigration law compliance takes place is significant if the company is attacked for alleged immigration law violations as confirmation of its good faith effort to comply with immigration law. Timing (before and not after the company is attacked) and the recurrent nature of the I-9 audits makes them successful risk management tools.
In its effort to comply with immigration law, a company usually begins an I-9 audit. The company appears to ask for more documents and keeps copies of documents presented only for employees with certain names, e.g. Hispanic-sounding ones. Employment discrimination issue? Yes. A benefit of an I-9 audit is making sure I-9 policies are applied uniformly to all employees in order to reduce liability based on ethnic and national origin discrimination.
The “rocket science” of filing, updating, and keeping I-9s and documenting contractor compliance should be the subject of, at least, annual training sessions involving everyone within the company who signs them on behalf of the company, as well as those who may be ultimately responsible if paperwork or substantive violations occur, i.e. executives and management. Training also provides employers with additional options on how to comply with immigration law in an economy where approximately 19 percent of workers are foreign born, such as employer’s sponsorship of legal work visas or permanent residency for workers. The best timing for such training is right after an I-9 audit. Not all the issues may be addressed in employer training sessions, as immigration law and policy change constantly. Thus, it is imperative that the company have access to an immigration law expert or know where to look for the most recent information, including regulations and case law. Establishing or updating an immigration compliance plan is also best done after an internal I-9 audit to help address problems at hand.
Conclusion
Employers who are not interested in learning how to comply with immigration law are not protected against sanctions by the government or criminal and civil liability. Complying with immigration law must be carefully balanced with making sure efforts to verify eligibility to work do not translate into discrimination based on race, national origin, or religion. A good-faith way to balance both is through implementation of comprehensive immigration compliance plans.
About the Authors
Kathleen Anne Harvey is a solo practitioner specializing in immigration law in Overland Park. She has taught, written, and lectured on immigration law and is a 1992 honors graduate ofthe Universizy of Missouri-Kansas City (UMKC) School of Law. Harvey's law school honors include International Law Moot Court and UMKC Law Review managing editor. Her practice focuses on nonimmigrant and immigrant business visas, international adoption, battered immigrant issues, family member and religious worker immigration, and political asylum for clients throughout the United States. Her extensive professional experiences have included many years with federal and local government agencies. Harvey is a member ofthe American Immigration Lawyers Association; the Kansas, Johnson County, and Missouri bar associations; the Kansas Women Attorneys Association; and the Christian Legal Society. 
Mira Mdivani leads the immigration law practice at Mdivani Law Firm LLC in Overland Park. Her expertise covers employer immigration law compliance, I-9 audits, work visas, permanent residency based on employment and family, and naturalization. Mdivani has been invited to present on immigration law issues by the Kansas, Wichita, and Kansas City-Missouri Metropolitan bar associations; Kansas Women Attorneys Association; and the National Business Institute. She is a member of the Kansas Bar Association and Immigration Lawyers Association.
ENDNOTES
1. Immigration and Nationality Act U.S.C. § 274A.
2. 8 U.S.C. § 1324a, INA 274(a)(1).
3. 18 U.5.. §1964(c).
4. 271 F.3d. 374 (2nd Cir. 2001).
5. David R. Mccormack, Racketeering Influenced Corrupt Organizations, KNOWLES LAW BOOK §1.04, at 1-20 (1998).
6. Id. at 381.
7. Frederick D. Braid, United States: Second Circuit Allows RICO Claim Against Competitor Using Illegal Aliens (providing a detailed summary and analysis of the court’s decision in Commercial Cleaning). HOLLAND AND KNIGHT EMPLOYMENT, LABOR AND BENEFITS NEWSETTER, Feb. 2002, Vol. 12 #1.
8. Mendoza v. Zirkle Fruit Co., 301 F 3d 1163 (9th Cir. 2002).
9. Id.
10. Deborah Baker and Richard Eneyart v. IBP Inc., Nos. 02-3967 and 02-4065 (7th Cir. Feb. 4, 2004).
11. Id.
12. Williams v. Mohawk Industries, 314 F. supp. 2d 1333 (N.D. Ga. 2004).
13. Trollinger v. Tyson Foods Inc., No. 02- 6020 (6th Cir. 2004)
14. U.S. v. Buckingham Limited Partnership, 1 OCAHO 151 (Apr. , 1990).
15. 8 CFR §274a(1)(1).
16. Id.
17. INA §274A(e)(5), 8CFR §174a. 10(b)(2); U.S. v. Felipe Inc. (for the good faith defense, it is necessary to demonstrate “honest intention to exercise reasonable care and diligence to ascertain what IRCA requires and to act in accordance with it.”). See also, U.S. v. Great Bend Packing Co., 6 OCAHO 835 (Feb. 13, 1996) (“Good faith is determined by the company’s actions at the time of the violations and not willingness to cooperate subsequent to investigation.”) (Emphasis added). Id. at 6.
18. INA § 274B, 8 USC § 1324b.
19. Legal permanent residents, asylees, and temporary residents are covered only if they apply for naturalization within six months of eligibility and become naturalized within two years or are actively pursuing citizenship. INA § 274B(a)(3).
20. INA § 274B(a)(6), see also, US. v. Strano, 5 OCAHO 748 (Mar 28, 1995) (fine in excess of $100,000), and US. v. Lasa Marketing Firms, 1 OCAHO 106 (Nov. 27, 1989) (finding that knowing discrimination includes failure to exercise reasonable care to acquire knowledge of legal significance of immigration-related employment documents and to conduct employment practices in a fair and consistent manner).