By Todd Dickerson
In a substantial victory for undocumented workers and benefit plans alike, a recent court decision secures the right of benefit funds to recover delinquent benefit contributions on behalf of undocumented workers under ERISA.

A recent decision coming out of the Eastern District of New York found that undocumented workers are entitled to recover unpaid benefits under the Employee Retirement Income Security Act of 1974 (“ERISA”).  This decision, one of the very few on the issue, will create strong precedent and help ensure a benefit plan’s ability to recover unpaid benefits owed to undocumented workers going forward.

The issue concerning an undocumented worker’s ability to recover unpaid benefits stems from the Immigration Reform and Control Act (“IRCA”).  Congress enacted IRCA in 1986, intending that it would establish a comprehensive scheme prohibiting the employment of undocumented workers.  Courts interpreting IRCA have found that it can serve, in some instances, to prohibit an undocumented worker’s recovery of labor-based remedies.  For example, numerous courts have found that IRCA prohibits courts from awarding an undocumented worker backpay following an unlawful termination.  This is because such a remedy—backpay for work not actually performed—presumes that the undocumented worker would have remained in the United States illegally and continued to work illegally.  Courts have found that IRCA does not condone such a presumption.

Undocumented workers are not barred by IRCA from recovering all labor-based remedies.  Many courts have found that IRCA does not prohibit undocumented workers from recovering for claims of unpaid minimum or overtime wages brought pursuant to the Fair Labor Standards Act (“FLSA”).  This is because in such cases the remedy—the payment of minimum or overtime wages for work already performed—does not require or even presume a continued IRCA violation, and thus the award of such a remedy does not run contrary to IRCA’s purpose.

Left unanswered was the question of whether undocumented workers are entitled to recover unpaid benefits under ERISA.  A set of recent decisions in the case Trustees of the Pavers and Road Builders District Council Welfare, Pension, Annuity & Apprenticeship, Skill Improvement & Safety Funds v. M.C. Landscape Group, Inc., Dkt. No. 12-cv-0834 (E.D.N.Y.) have provided guidance on this issue.  In M.C. Landscape, the plaintiffs, the trustees of benefit funds governed by ERISA, brought an action against an employer to collect delinquent contributions.  Following discovery, the plaintiffs moved for summary judgment, claiming that there was no genuine issue of material fact that defendant failed to remit over $250,000 in delinquent contributions.  In response, defendant claimed that it should not be liable for a substantial portion of these contributions on the grounds that it had recently learned that many of its employees were undocumented and thus not allowed to work legally in the United States.  The defendant then claimed that IRCA prohibits the plaintiffs from recovering contributions on behalf of these employees.

In one of the first decisions on this issue in the ERISA context, Magistrate Judge Vera M. Scanlon rejected defendant’s argument and found that IRCA did not prohibit the plaintiffs’ recovery of unpaid benefit contributions on behalf of undocumented workers.  Judge Scanlon reasoned that ERISA claims for unpaid benefits, like FLSA claims for unpaid wages, seek recovery for work already performed.  Accordingly, such ERISA claims do not presume the continued illegal employment of the undocumented worker and thus these claims do not run contrary to IRCA’s purpose.  Judge Scanlon noted that allowing benefit funds to recover delinquent benefit contributions on behalf of undocumented workers furthers IRCA’s purpose, in that absolving defendants of their funding contributions for undocumented workers would create a financial incentive for employers to hire such workers.  District Judge Carol Bagley Amon agreed and, on March 29, 2016, adopted Judge Scanlon’s decision in its entirety.  Virginia & Ambinder, LLP represented the plaintiffs in this decisive victory.   

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