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Illegal Aliens' Entitlement To Workers' Compensation Benefits: Employer/Insurers Scramble For A Defense

March 02, 2008 BY J.C. Roper

            Immigration reform is one of the nation’s foremost concerns. After failed attempts to reform federal immigration law, many states have introduced legislation directly impacting illegal immigrants with respect to public assistance, medical care and employment. In , new legislation may be a precursor to barring workers’ compensation benefits to illegal aliens.  This article will focus on case law impacting illegal aliens and employer/insurers in , a survey of other state workers’ compensation systems and a practical approach employer/insurers may utilize in defending workers’ compensation claims filed by illegal aliens in Georgia.

As defined in O.C.G.A. § 34-9-1(2), the term “employee” covers “every person in the service of another under any contract of hire . . . .” Although it does not expressly address illegal aliens as employees, it does specifically include “minors working under contracts that are illegal based on child labor laws,” and courts have interpreted this as similar to illegal aliens because contracts with both are typically void or voidable.[1] However, there is a split of authority over whether an illegal alien constitutes an “employee,” entitled to workers’ compensation coverage.[2]   

            As current case law develops, the question of whether employers can successfully defend against an illegal alien’s claim for benefit entitlement seems to be weighing in favor of the latter.  This is due not only to the “all-inclusive” nature of the workers’ compensation system, but also because of recent Georgia decisions expressly including illegal aliens within the definition of “employee.” 
 

In Georgia Elec. Co. v. Rycroft, 259 Ga. 155, 378 S.E.2d 111 (Ga. 1989), the Supreme Court of Georgia limited an employer’s ability to deny workers’ compensation benefits pursuant to fraudulent inducement in the creation of an employment contract.  The court used a three-prong test for determining whether the contractual relationship was void, and thus bar a claim for benefits: (1) the employee must knowingly and willfully make a false representation; (2) the misrepresentation is a substantial factor in employer’s decision to hire; and (3) there is a causal connection between the fraudulent misrepresentation and the work-related injury. at 158.  This test only referred to the employee’s pre-employment physical condition, and said nothing about one’s status as a legal resident. 
 

A later case, applied the test to an employee’s resident status.  In Dynasty Sample Co. v. Beltran, 224 App. 90, 479 S.E.2d 773 (Ga. Ct. App. 1996), the court held an illegal alien employee was entitled to indemnity benefits because the employer failed to show a causal connection between the employee’s misrepresentation and the injury.  The court stated that “in the absence of any clear legislative direction on the issue to the contrary . . . the [Rycroft] test is equally applicable to all cases involving fraud in the inducement . . . .”    What this case meant for employers in similar situations, is that they will have to prove more than the fact of illegal resident status and that the employee lied about it.  Dynasty was a blow to employers because it rejected a traditional “contract principles” defense to void the employment relationship.
 

             In Continental PET Technologies, Inc. v. Palacias, 269 App. 561, 604 S.E.2d 627 (Ga. Ct. App. 2004), Continental was not aware of Palacias’ illegal status until the time of injury.  Continental argued that § 34-9-1(2), which included illegal aliens within the definition of “employee,” was preempted by federal law. Continental pointed to the provisions of the Immigration Reform and Control Act of 1986, 8. U.S.C.S. §§ 1324a, 1324c, (“IRCA”), arguing Palacias was never technically an employee and therefore, the contract between them was void.[3]  The court found that IRCA did not preempt the Act because nothing in the statute suggested an intent to preempt.[4]  
 

IRCA’s very limited preemption powers were further defined in Wet Walls, Inc. v. Ledezma, 266 Ga. App. 685, 598 S.E.2d 60 (Ga. Ct. App. 2004).  There, an injured employee’s benefits were suspended upon incarceration and deportation.  When the employer refused to resume benefits, based on IRCA’s prohibition of employing illegal aliens, the court found no basis for preemption because federal law did not prohibit illegal aliens from receiving benefits.  The employee’s disability rendered him unable to work, and not his deportation.[5]  Although IRCA would have prevented the employer from rehiring the employee, it did not prevent the employer from paying him income benefits.

Further, in Earth First Grading v. Gutierrez, 270 Ga. App. 328, 606 S.E.2d 332 (Ga. Ct. App. 2004), the court held that illegal immigration status did not mean one was unable to “meaningfully” accept employment at the time of hire.[6]  The court found that Gutierrez could meaningfully accept employment, and was thus entitled to TTD, despite his alien status at the time of hire, since the employer was not aware of his status until after discovery.[7]

A recent case, though narrow in application, gave employers a defense to illegal aliens’ entitlement to benefits.  In Martines v. Worley & Sons Construction, 278 App. 26, 628 S.E.2d 113 (Ga. Ct. App. 2006), the employee was released to return to work with restrictions, after suffering a work injury.  His employer offered him a truck driving position.  However, the employee was an illegal alien and thus, was unable to produce a drivers’ license.  Nevertheless, he was physically capable of driving the car. 

The ALJ found the position unsuitable because he did not have a valid driver’s license, required for the job.  The Appellate Division affirmed, but the Superior Court reversed.  The Court of Appeals referred to O.C.GA. § 34-9-240, for determining whether an employee’s refusal of work is justified:  The offered employment must be suitable to the capacity of the employee.  If suitable, the employee’s refusal to work must be justified.  The court interpreted “suitable” to mean the employee’s capacity to perform the work within physical limitations.[8] The court held that Martines was not unable to do the job because of a physical disability.  His inability to perform was because he could not acquire a valid driver’s license, and he could not do so because he entered the country illegally.[9]  Therefore, he was not justified in refusing the proffered job.

Although narrow, this holding opens the door for defending against benefit entitlement when an illegal alien employee refuses to accept work because of a legal inability to perform the job.  It will be interesting to see how courts interpret legal inability versus physical inability when determining suitability of proffered employment.

                Minority of Courts Split:

            There is a split of authority as to whether an illegal alien is included within the workers’ compensation definition of “employee.”[10]  In Grenados v. Windson Development Corp., 257 Va. 103, 509 S.E.2d 290 (Va. 1999), the court defined “employee” as “every person . . . in the service of another under any contract of hire,” such that an illegal alien was not under a contract of hire because he cannot be lawfully employed in the United States pursuant to IRCA.[11]  This case has since been superceded by statute, to include aliens, both lawfully or unlawfully employed, within the definition of “employee.”[12]  It is interesting to note however, that prior to the amendment, the language in the statute was similar to that currently in .

            Two states’ courts recognized that workers’ compensation benefits are not always available to illegal aliens.  See Gambalan v. Kekaha Sugar Co., 39 Haw. 258, 1952 WL 7343 (1952) (denying benefits to alien dependents residing outside United States); Tarango v. State Indus. Ins. System, 117 Nev. 444, 25 P.3d 175 (2001) (precluding employer from providing undocumented worker with modified employment per his physical restrictions, even though Nevada’s workers’ compensation laws applied to all injured workers, because employer could not continue to employ a worker known to be an alien without violating IRCA.)

Legislative change is not out of the question, but without it, employers will remain underdogs in the debate over benefit entitlement.  amended in 2000.  Eleven other states use the terms “unlawfully employed” and “alien” in their statute.[13]  Otherwise, only if the inability to perform is due to legal inability, will the employer be shielded from liability for injury and indemnity benefits. 

Recent Legislation and the Impact Upon Illegal Aliens

Employers need to check and recheck documents purported to confer legal residency, to decrease the chance of being duped by fraudulent acts of potential employees.  Otherwise, absent the Martines narrow exception, an injured alien employee will be entitled to receive benefits in .  Helping employers increase disclosures is recent legislation (April 2006), the Georgia Security and Immigration Compliance Act (“SICA”), that requires residents 18 years old and older, who seek certain welfare benefits, to prove their legal status.  SICA also requires public employers and currently a certain class of state contractors and subcontractors, to verify information regarding employees’ lawful employment status. [14]

SICA has potential to impact workers’ compensation claims in .  Section 5 authorizes law enforcement officials to verify legal residency of an undocumented worker when incarcerated on a felony charge, and upon conviction of a crime and sentencing, an employer may unilaterally suspend indemnity benefits.  This information would at least place an employer/insurer on notice of the potential for suspension.  It may also curb employer non-compliance and enables law enforcement with authority to identify illegal residents via the state’s penal system.  SICA may also be the precursor to the Georgia State Legislature joining the minority of jurisdictions that consider illegal alien workers outside the definition of an “employee” for purposes of workers’ compensation benefits. 

From a practical standpoint, presuming the employer has conducted a reasonable background investigation, such that he comes to court with clean hands, even though the employer/insurer cannot initially deny benefits based strictly on illegal residency, the employer/insurer still may be able to suspend temporary total benefits.  The employer can suspend benefits after offering the illegal alien worker employment pursuant to O.C.G.A. §34-9-240 by tendering an approved light-duty job description and current medical report from the authorized treating physician.  The light-duty position must be a job the employee is physically able to perform. The employer/insurer should also condition the light-duty job offer on the worker providing valid documentation of his residency and legal employment status.  At this point, if the worker cannot produce the proper residency or employment documents which appear legitimate on its face, then the employer may suspend temporary total disability benefits because the worker will have to refuse the employment based on her illegal residency or employment status and not because of a physical inability to perform the work. 

J.C. Roper, Jr. is a partner in the Atlanta GA office of Drew, Eckl & Farnham, LLP. His practice is devoted primarily to defense of workers’ compensation claims on behalf of employers, insurers and self-insured clients. He also practices first party property defense litigation throughout the southeast. Mr. Roper may be reached at (404) 885-6417 or by email at [email protected]

 

[1] See Dynasty Sample Co. v. Beltran, 224 App. 90 (Ga. Ct. App. 1996)

[2] See 121 A.L.R.5th 523 (2006).

[3] The purpose of IRCA was to establish procedures that inhibit the employment of undocumented workers and to punish employers who knowingly offer employment 269 App. 561, at 563.

[4] Federal preemption of state law relates to Congressional intent and it may be shown in one of three ways: (1)by expressly defining the extent of the preemption; (2) by regulating an area so pervasively that an intent to preempt the entire field may be inferred; and (3) by enacting a law that directly conflicts with state law.

[5] at 687.

[6] 270 App. 328, at 331.

[7]

[8] 278 App. at 28.

[9] 278 App. 26, at 29.

[10] 82 Am. Jur.2d Workers’ Compensation § 126 (2006).

[11] at 109.

[12] Code Ann. § 65.2-101.

[13] 89 L. Rev. 709, 719 (2004).

[14] Georgia State Senate Bill 529 as passed.

The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved. 

Editorial Board:

H. Michael Bagley
(Editor-in-chief)