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QSR Feature
The Case Against Illegal Hiring
On April 26, the U.S. Supreme Court heard arguments in a case that could make businesses think long and hard about how they hire hourly workers.

Like most cases that make the Supreme Court’s docket, the question posed in Mohawk Industries v. Williams, et al is a smaller piece needed to complete the puzzle in a much larger legal battle. When the court hands down its decision, it will only be ruling whether Mohawk, the country’s second largest rug and carpet manufacturer, and temporary employment agencies with which the company worked constitute an enterprise under the Racketeer Influenced and Corrupt Organizations (rico) Act.

By itself that doesn’t seem like much. But that decision, in turn, will determine if former Mohawk employees were right to sue the company for back wages and damages under RICO, a suit that could cost the company millions and open the door to any number of similar actions taken against other employers, including quick-service restaurants.

The Allegations

Former Mohawk employees allege that the Calhoun, Georgia–based company, which employs 32,000 workers, depressed their wages by illegally employing and harboring large numbers of undocumented workers, a charge the company categorically denies, says Juan P. Morillo, lead counsel for Mohawk.

The complaint was originally filed on January 6, 2004, in the U.S. District Court for the Northern District of Georgia by Howard Foster, a lawyer specializing in RICO litigation with Chicago-based Johnson & Bell. Foster, who was also the counsel behind similar lawsuits against Tyson Foods and Zirkle Fruit Co., a Washington state fruit production and packaging company that settled with former employees before trial, says he’s also been contacted by workers from “three very large fast-food chains” making similar allegations against their employers.

“What these people tell me is the restaurants hire huge numbers of illegal immigrants,” Foster says. “They do it openly; everybody knows about it. It’s sort of the way they do business.”

In order to prove the allegations, he has to show the court that the company has a scheme or practice of hiring large numbers of illegal immigrants. One way to do that is through the establishment of the existence of an association-in-fact RICO enterprise with temporary employment recruiters, which  former Mohawk employees allege the company used to knowingly accept false documents, recruit undocumented workers at the U.S.-Mexico border, and recycle illegal workers under different names.

The Defense

While Morillo says Mohawk absolutely denies any such charges, the basis for the company’s defense before the Supreme Court, interestingly enough, does not hinge on proving that it did not knowingly hire undocumented workers. Instead, Morillo hopes to persuade the court that the RICO statutes do not apply to this case because of the absence of an enterprise.

He explains that a loss for Mohawk on this point could set a dangerous precedent that would greatly expand the scope of the already broad RICO Act and spell trouble for American businesses.

“They want corporate employers to perform the job duties that immigration officials would otherwise be performing,” he says. “We believe that should be the function of the federal government, and not corporate employers.”

Anglo Amador, director of immigration policy for the U.S. Chamber of Commerce, which filed a friend-of-the-court brief on behalf of Mohawk, agrees.

“What they’re trying to do is enforce immigration law through other channels which are not the channels that are there in the law,” he says. “Immigration law and immigration law enforcement are covered by the Immigration and Nationality Act, and that’s where the only enforcement mechanism can be found, not on the RICO laws, which were really created to deal with mobsters and things like that. RICO laws are there for a particular reason, and this is not one of them.”

What the Law Says

Others, however, disagree. Organizations like the Federation for American Immigration Reform (fair), a national, non-profit public-interest group that seeks to stop illegal immigration, say RICO, which was expanded by Congress in 1996 to include “alien smuggling” among its list of offenses, was designed to be a broad legal tool.

“As far as scope, the Supreme Court has been saying for at least 20 years that Congress intended the RICO statute to apply very, very broadly,” says Mike Hethmon, senior staff council for FAIR, which filed an amicus curiae on behalf of the Mohawk employees. Further, he says, a defeat for Foster would have an adverse affect on numerous criminal prosecutions brought by the U.S. Department of Justice.

The RICO Act was originally passed by Congress as part of the Organized Crime Control Act of 1970, legislation designed as a means for federal prosecutors to start cracking down on the Mafia. Under the statute, a person or group who commits any two of a list of crimes within a 10-year period and has committed those crimes with similar purpose or results can be charged with racketeering. The RICO statutes also contain a civil component allowing plaintiffs to sue for treble damages, making charges filed under them a serious threat for companies. What’s more, RICO charges are filed in federal courts, increasing the cost of fighting them.

“These kinds of cases are expensive to fight,” says Elizabeth Gaudio, senior attorney for the National Federation of Independent Business, which counts quick-service restaurant owners and franchisees among its 600,000 members. “And then there’s just the additional stigma associated with a RICO charge.”

The Supreme Court is expected to issue a ruling in the case sometime this month, but even if the court decides in favor of Mohawk, the fight might still be far from over. Morillo says Foster could attack from another angle if the enterprise theory is shot down. And if the court rules in favor of the employees, experts on both sides of the debate agree that the battle will have only just begun.

“A holding that adopts a finding that a business and a contractor or a business and a recruiter constitutes a RICO enterprise would dramatically increase potential exposure to civil RICO liability,” Gaudio says. “There’s always a concern that once this catches on with the plaintiff’s bar there’s the possibility of the creep effect. I think there is potential for even smaller businesses, smaller restaurants, even franchisees to potentially be targets of a RICO claim.”

Foster, too, believes a win for his clients will open the floodgates to similar suits. “If it’s decided in my favor I think that you will see other lawyers around the country really start bringing these cases,” he says.

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