Illegal Labor Could Cost Firms in Court

Dianne Solís, Dallas Morning News, Feb. 14, 2006

Employers who hire illegal immigrants to depress wages have something new to fear: Employees who use racketeering laws to take them to court.

A law originally conceived to hammer the Mafia—the Racketeer Influenced and Corrupt Organizations statute—is now being swung against employers at chicken-plucking plants, apple orchards and janitorial firms.

In April, the U.S. Supreme Court is expected to hear a Georgia racketeering case involving carpet giant Mohawk Industries Inc., its employment practices and allegations that it used labor recruiters in Brownsville.

The case is being closely watched by many employment law specialists—particularly in areas such as North Texas with large illegal immigrant populations—because it could trigger a rash of costly suits against businesses that depend on illegal labor.

A handful of similar suits have already been filed under RICO, and last month a judge approved a $1.3 million settlement in one of them.

“I wouldn’t be surprised at all if this attracted more of these kinds of lawsuits,” said Steven McCown of the Dallas office of Littler Mendelson, a high-profile employment and labor law firm.

Illegal immigration and lax enforcement of existing immigration law are hot-button issues in the U.S., where the illegal immigrant population has swelled to an estimated 11 million.

“The government never adequately funded an enforcement scheme,” Mr. McCown said.

The plaintiffs in the Georgia case—four women who are suing as a class—argue that Mohawk conspired to artificially and illegally depress wages by hiring illegal immigrants. Mohawk has vigorously denied any illegal conduct.

The Georgia case was made possible by a 1996 change to the RICO statute that includes those who knowingly hire illegal workers. It gives workers the right to sue—and for triple damages.

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Under immigration reforms in 1986, it’s illegal for employers to knowingly hire illegal immigrants. But all sides concede that sanctions against employers have become scant.

Officials with the Government Accountability Office, the investigative arm of Congress, noted in testimony last year before a House Judiciary subcommittee that 417 notices of intent to fine were issued against employers in 1999. The number fell to three by 2004.

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Chicago attorney Howard Foster has been behind many of the employees’ cases.

Among his victories is a case involving Zirkle Fruit Co. of Washington. Last month, lawyers for the workers received preliminary approval of a $1.3 million settlement with Zirkle executives in a case that dates to 2000.

As in the Mohawk case, attorneys alleged that the company conspired to hire illegal workers in order to pay them less, resulting in lower wages for legal workers.

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