Employees who violate federal law are awarded damages

By Charles S. Plumb

You would think that employees who violate federal immigration and income tax laws couldn’t turn around and sue their employer over a wage dispute, right? If you answered “yes” to that question, you would be wrong, as Safe Hurricane Shutters, Inc., recently learned.

Employees’ unlawful acts not a problem

Nine installers sued Safe Hurricane Shutters, two of its directors, and its president under the Fair Labor Standards Act (FLSA), claiming the employer failed to pay overtime wages they were owed. At trial, a jury found in favor of the installers, awarding them overtime pay and liquidated damages (double the actual damages award).

During the trial, Safe Hurricane Shutters established that some of the installers who filed suit were undocumented aliens and not authorized to work in the United States. One employee had used a false Social Security number when applying for work, while two others had failed to accurately report earned income to the IRS.

Safe Hurricane Shutters argued that an employee who files a lawsuit after violating federal law ? specifically, the Immigration Reform and Control Act of 1986 (IRCA) and IRS income tax requirements ? shouldn’t be able to collect an award under the FLSA. The employer relied heavily on a 2002 U.S. Supreme Court decision in which the Court held that the National Labor Relations Board (NLRB) couldn’t award back pay to undocumented aliens terminated for union activity in violation of the National Labor Relations Act (NLRA). Hoffman Plastic Compounds, Inc. v. NLRB.

In the current case, the court chose not to follow the Hoffman Plastic Compounds decision when it came to the IRCA. According to the court, the IRCA doesn’t exclude undocumented aliens from the protections of the FLSA and their entitlement to overtime pay for hours worked in excess of 40 during a workweek. The installers sought to recover unpaid wages for work they had already performed (as opposed to claiming they were unlawfully prevented from working). Therefore, despite their own violations of immigration and income tax laws, they were allowed to recover FLSA damages against their employer.

To add insult to injury, the court found the company’s two directors and president personally liable. Under the FLSA, officers and directors may be held personally liable if they exercised sufficient operational control over the employer. The evidence showed that the president and the two directors were significant equity owners in Safe Hurricane Shutters. Additionally, they exercised sufficient operational control over payroll. Those factors justified finding them individually liable to the nine installers on their FLSA overtime claims. Lamonica v. Safe Hurricane Shutters, Inc., Case No. 11-15743 (11th Cir., 3/6/13).

Bottom line

As a starting point, employers should be diligent and careful when completing I-9 forms and making sure they are hiring only individuals who are authorized to work in the United States. Even if, for one reason or another, you inadvertently employ an unauthorized individual, he still is entitled to protection and overtime pay under the FLSA.