Labor Law Pointers

Volume III, Special Edition
Thursday, February 13, 2014

A Monthly Electronic Newsletter Addressing
New York State Labor Law
 Decisions and Trends

From the Editor:   

A new decision today from the Court of Appeals where the plaintiffs were un-documented workers, who were paid workers compensation benefits by their employer and, following a verdict for the plaintiffs against the property owner a motion was made to allow for common law contribution or indemnification from the employer to the property owner based on the plaintiffs status as undocumented workers.  The court held that as the employer paid the workers compensation benefits that they had essentially lived up to their portion of the bargain and thus were entitled to the exclusive remedy as provided in section 11.

In addition today we have launched a new group on LinkedIn entitled New York Labor Law which will also provide analysis of developments in New York labor law.  I invite anyone interested to join the group and engage in discussions regarding this area of the law.  Thanks for reading, hope you enjoy it. 

David

David R. Adams
Hurwitz & Fine, P.C.

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New York Hospital Medical Center of Queens v Microtech Contracting Corp.
February 13, 2014
Court of Appeals

Plaintiff New York Hospital Medical Center (“Hospital”) engaged defendant Microtech Contracting (“Microtech”) to undertake demolition in a basement room housing an incinerator at the Hospital's location in Flushing, Queens.  A Microtech "supervisor" met with brothers Luis and Gerardo Lema, and hired them to perform this work.  The Lemas, originally from Ecuador, were undocumented aliens not legally employable in the United States.  At the site, Microtech supplied the Lemas with a sledge hammer and a chipping gun, and explained what they were supposed to do.  The vibrations created by use of the tools given them dislodged a metal chimney or flue attached to the wall between 11 and 20 feet above the floor, which toppled, and struck them both. 

The brothers made claims for and received workers' compensation benefits, which Microtech's insurance carrier paid.  Additionally, the Lemas sued the Hospital for violations of the Labor Law.  The trial court granted the Lemas summary judgment on liability on their causes of action grounded in Labor Law §§ 240(1) and 241(6).  The parties thereafter entered into a high-low agreement at the ensuing damages trial, and after the verdict, the judgment was paid in keeping with this arrangement.  Meanwhile, the Hospital brought this action for common-law and contractual contribution and indemnification against Microtech, alleging that Microtech was performing the work pursuant to an agreement/contract with it; Microtech breached this contract/agreement and violated the Immigration Reform and Control Act (“IRCA”) when it hired the Lemas; the Lemas were injured solely on account of Microtech's negligence; and that Workers' Comp. § 11 did not preclude its lawsuit against Microtech.

In lieu of answering, Microtech moved to dismiss the Hospital's complaint on the grounds of documentary evidence and failure to state a cause of action, taking the position that section 11 barred the Hospital's action because evidence showed that the Lemas did not suffer a grave injury and that Microtech did not enter into the requisite written contract providing for contribution or indemnification.  Microtech further argued that absent proof of a grave injury or contractual contribution or indemnification, the Hospital did not state a claim, and contended that non-compliance with IRCA (which it disputed) would not deprive it of the protection of section 11 since the Workers' Comp. Law applies to all workers within the state's borders regardless of their immigration status.

In opposition to Microtech's motion, the Hospital did not argue that the Lemas suffered grave injuries or that Microtech had agreed in writing to contribution or indemnification.  Rather, the Hospital argued that Microtech should not be allowed to "hid[e] behind the language of Workers' Comp. § 11 after violating a federal statute" since "New York courts have long held that they will not award a plaintiff the benefit of an illegal bargain."  The trial court granted Microtech's motion to dismiss, reasoning that "[t]he exceptions to [section 11's] bar of claims for indemnity and contribution (against an employer providing Workers' Comp. benefits such as Microtech) do not include the circumstance here; essentially that Microtech employed unauthorized aliens who were injured on the job."

The Hospital appealed to the Appellate Division, arguing again that Microtech may not "profit" from its violation of IRCA.  The Hospital more clearly argued conflict preemption – i.e., that permitting an employer who knowingly hires undocumented workers to enjoy the tort immunity conferred by section 11 conflicts with IRCA's goal to discourage illegal immigration by decreasing employment opportunities for undocumented workers.  In response, Microtech first argued that section 11 barred the hospital's claim, as stated by the trial court.  Next, Microtech countered that whereas hiring an undocumented worker knowingly or without verifying employment eligibility is unlawful and exposes an employer to penalties under IRCA, this circumstance does not make IRCA "conflict [with], contradict or supersede" New York's Workers' Comp. Law.  Microtech argued that since it is well-settled that Workers’ Comp. applies to undocumented aliens, the statute logically also covers the employer who hires undocumented workers.  Third, Micortech asserted that it did not “profit” form the alleged IRCA violation because it paid premiums to its insurance carrier to obtain medical care and compensation benefits for its employees, including the Lemas. 

The Appellate Division unanimously affirmed.  Although acknowledging that precluding Microtech from receiving the protections provided by Workers' Comp. § 11 for its violations of the IRCA might support the IRCA’s ultimate goals by punishing Microtech for failing to verify the Lemas' immigration status, the Appellate Division opined that affording Microtech the economic protections of Workers' Comp. § 11 would not stand as an obstacle to the accomplishment or execution of the full purposes and objectives of Congress such that Workers' Comp. § 11 should be considered preempted.  Further, to rule in the Hospital's favor would effectively deny Microtech the economic protections it acquired under the Workers' Comp. Law in return for providing the Lemas with compensation for their injuries, as well as relieve the Hospital of its responsibility to ensure a safe construction site for workers under the Labor Law.  Accordingly, the Appellate Division held that the IRCA violations alleged did not abrogate the protection from third-party claims afforded to Microtech by section 11.  The Hospital appealed.  

Labor Law § 240(1) (DRA)

Section 11 bars third-party lawsuits for contribution and indemnification against an injured employee's employer unless the employee suffered a "grave injury," limited to death and the exclusive list of disabilities defined in the statute, or the employer agreed to contribution and indemnification in a written contract entered into with the third party prior to the accident.

The Hospital chose not to assert conflict preemption in its brief to the Court of Appeals.  Rather, the Hospital argued that the employment contracts between Microtech and the Lemas were illegal contracts unenforceable in New York Courts.  Thus, Microtech may not defend this case on the ground that the Lemas were its employees and therefore the action is barred by section 11.  According to the Hospital, Microtech violated federal law when it hired the Lemas without asking for any documentation showing they were authorized to work in the U.S. 

The Court of Appeals noted that it was not asked to enforce or recognize rights arising from an illegal oral employment contract between Microtech and the Lemas, and Microtech was not raising any such contract as a defense to common-law contribution or indemnification.  Moreover, section 11 does not even require an underlying employment contract. 

The Court of Appeals stated that under New York’s workers’ comp. scheme, an employee receives medical benefits and compensation for workplace injuries, regardless of fault, paid for by the employer.  In exchange, the employee gives up the right to sue the employer for personal injuries.  Section 11 “now explicitly limits an employer’s exposure to third-party liability to those situations where the employee suffers a grave injury, or the employer enters into a written contract of contribution or indemnification with the third-party.” 

In this case, the Lemas did not suffer grave injuries, there was no preexisting agreement for contractual contribution or indemnification, and the Hospital does not contend that IRCA preempts section 11.  Therefore, Microtech is entitled to the safe harbor in section 11, and the Court of Appeals affirmed the Appellate Division’s decision.

PRACTICE POINT:  The outcome appears to me to be logical; given that the employer did in fact pay comp benefits to the plaintiffs it seems as if they lived up to their portion of the bargain.  If the plaintiffs status as un-documented workers does not preclude a recovery for lost wages, and the employer is obligated to pay comp benefits to the same un-documented employees, is seems logical that the employer would be entitled to the protection of the exclusive remedy provided under section 11 of the workers compensation law.  I do not see this case as causing a shift in the way that labor law cases are prosecuted or defended, but it is an issue to be aware of.

Labor Law Pointers is published the first Wednesday of each month.  If you know of others who may wish to subscribe to this free publication, please feel free to forward it.  If you wish to subscribe or unsubscribe, please send an e-mail to [email protected] or call the Editor/Labor Law Team Leader David R. Adams directly at (716) 849-8916.
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Labor Law Pointers

Editor
David R. Adams

Associate Editor

V. Christopher Potenza

Associate Editor
Steven E. Peiper

Associate Editor

Jennifer A. Ehman

Associate Editor
Marc A. Schulz

Labor Law Team

            David R. Adams, Team Leader                                            Steven E. Peiper
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            Dan D. Kohane                                                                       Cassandra A. Kazukenus
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            Michael F. Perley                                                                  Jennifer A. Ehman
[email protected]                                                           [email protected]

            V. Christopher Potenza                                                        Marc A. Schulz
[email protected]                                                            [email protected]

 

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Phone:  716.849.8900
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