Posted on March 22, 2006

A Body Blow To Illegal Labor?

Business Week, March 27, 2006

It could soon be high noon in Calhoun. The town of 13,000 tucked away in the northwest corner of Georgia has been reshaped during the past decade by a huge influx of Latinos. The big draw: jobs at Mohawk Industries Inc., the town’s largest employer. The $6.6 billion carpet maker employs 32,000 workers in all, 4,000 of them in Calhoun and surrounding Gordon County. Once staffed largely by whites, Mohawk today has a workforce made up substantially of immigrants from Mexico and other Latin American countries. The lure of $7-an-hour work has helped lift Hispanics to 12% of Gordon’s population today, up from less than 1% in 1990.

Increasingly, some Anglos, as many locals call themselves, are feeling threatened by the newcomers. Drive past Calhoun’s quaint downtown courthouse, and you’ll see new Latino-owned shops and restaurants, such as La Hacienda and La Tienda Guadalupana, lining the streets. Spanish is so prevalent that Taxi Domingo feels compelled to reassure white customers by putting advertisements on its cabs that say: “We speak English!” Says Gary White, a deacon of the local Agape Baptist Church: “The numbers [of immigrants] and the language are a problem.” On Mar. 12 his church hosted Race Relations Day as part of an ongoing dialogue on the clash of cultures.

Now Calhoun finds itself in the middle of the nation’s heated debate over illegal immigration. Two years ago tensions between immigrant and local workers at Mohawk Industries spilled into the courts in a case that could affect all companies employing some of the estimated 7 million illegal aliens working in the U.S. Four current and former Mohawk workers brought a class action against the company for allegedly conspiring to depress their wages by hiring illegal immigrants. Filed in federal court, the suit alleges that Mohawk, sometimes with help from local hiring agencies, knowingly accepted false documents, recruited illegals at the U.S.-Mexico border, and rehired undocumented workers under different names. “To the managers of Mohawk, the influx of illegals is a dream,” charges Bobby Lee Cook, a local lawyer representing the workers. “To others, it might be the apocalypse.”

In its legal briefs, Mohawk denies all the allegations. But the suit poses a threat to U.S. business because it was filed under the Racketeer Influenced & Corrupt Organizations Act (RICO), a 1970 law passed to fight the Mafia that assesses triple damages against those found to be in violation. Congress amended the statute in 1996 to allow workers to sue corporations that knowingly hire illegal workers. Three similar lawsuits are working their way through the federal courts.

In Mohawk’s case, two lower courts refused to dismiss the plaintiffs’ complaint, and now the U.S. Supreme Court plans to hear Mohawk’s appeal on Apr. 26. The high court won’t consider the underlying allegations. Instead, it will decide whether RICO could apply to companies in this situation.

If the court rejects Mohawk’s defense, “companies would essentially be converted into law enforcement agencies,” says Juan P. Morillo, a Mohawk attorney at Sidley Austin LLP. Mohawk declined to discuss the case but issued a statement through Morillo, arguing that the plaintiffs want to force employers to limit or avoid hiring Spanish-speaking employees. “Mohawk intends to stand firm in its resistance to these extortionate litigation tactics,” says the statement.