A new decision from the U.S. Court of Appeals for the Eighth Circuit is consistent with the rulings of several lower courts in holding that an individual employed in violation of the Immigration Reform and Control Act (IRCA) because he or she is not authorized to work in the United States is still entitled to recover damages for unpaid minimum wage and overtime under the FLSA for services rendered. Lucas v. Jerusalem Cafe, 2013 U.S. App. LEXIS 15320 (8th Cir. July 29, 2013).

In Lucas, the defendant sought to leverage the United States Supreme Court’s 2002 decision in Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002), in which the Court ruled that an illegal alien could not receive back pay or reinstatement under the National Labor Relations Act because each remedy contemplated work which would have been or would be performed in further violation of the law. Distinguishing Hoffman Plastic, the Eighth Circuit held that to permit employers to raise IRCA as a bar to FLSA claims for work already performed would not be consistent with Hoffman Plastic’s holding regarding prospective work, and would further undermine both IRCA and the FLSA. The court explained that such a finding would encourage employers to use such outside-the-system workers below the wage floor, thereby violating both statutes and creating a competitive advantage for such businesses as compared to employers complying with both laws. In concurrence, Circuit Judge Jamie Loken noted that under the Supreme Court’s ruling in Hoffman Plastic “a modified analysis of the liquidated damages issue” might be required, implying that courts potentially should take the alien worker’s status into account in determining whether liquidated damages are appropriate in such cases. This issue was not expressly challenged on appeal in Lucas.

This ruling, coupled with similar decisions from various district courts and an increasingly aggressive IRCA enforcement scheme presided over by ICE, reinforces the potential business and legal risks associated with both employing individuals not authorized to be in the United States and not paying them properly. Employers must complete the W-4 and I-9 processes with all new workers, and ensure that all workers are paid in accordance with applicable law.