It’s hard to confuse the First District Court of Appeal of Florida (in Tallahassee) with its namesake in California. It’s even harder to confuse with that court’s San Francisco neighbor, the U.S. Court of Appeals for the Ninth Circuit.  The 9th Circuit has a reputation (deserved or not) for issuing controversial decisions on hot button issues – often to the displeasure of the U.S. Supreme Court.

The 1st DCA (of Florida) has no such reputation. So some might be surprised by the outcome of two recent worker’ compensation appeals (the 1st DCA has jurisdiction over all workers’ compensation appeals). In recent weeks, the 1st DCA has handed down decisions in two separate cases affirming the right of immigrants working in the U.S. illegally to receive workers’ comp benefits.

In the first of those decisions, HDV Construction Systems, Inc. v. Aragon, No. 1D10–6401 (handed down on June 28, 2011), the 1st DCA held that an employer was on the hook for permanent total disability (PTD) benefits for an unauthorized worker because it knew or should have known that he could not work legally in the U.S., but continued to employ him anyway until he was permanently injured.

In the second, Garcia-Lopez v. Affordable Plumbing/Vinings Insurance Company, No. 1D10–4949 (issued on July 18, 2011), the 1st DCA required an employer to cover workers’ comp benefits for a Mexican immigrant (employed through a third party with knowledge of his status) who was underage in addition to lacking authorization to work in the U.S., rejecting the argument that he could only be compensated for lost income if he proved that he reported his income to the IRS.

What happened?  Has the ideological outlook of San Francisco overtaken Tallahassee?! I don’t think so, as I’ll explain below.

Aragon 

Aragon, an undocumented Mexican construction worker, fell from a 30 foot high structure that he was framing for HDV, his employer.  After treatment, the medical evidence showed that Aragon would not be physically capable of performing manual labor – as required in the construction, manufacturing, and farming jobs he’d held before being injured.

Aragon filed for workers’ comp benefits.  HDV and HDV’s workers’ compensation carrier (referred to collectively as the “E/C”) argued that as an illegal immigrant, he had no legal right to claim benefits.  Unfortunately for the E/C, however, the JCC (Judge of Compensation Claims – the trial court in workers’ comp cases) found that HDV knew or should have known that Aragon, a Mexican immigrant, was undocumented and could not legally work in the U.S. 

1st DCA Precedent

The 1st DCA explained that the law has been established for more than 25 years, since its decision in Cenvill Development Corp. v. Candelo, 478 So. 2d 1168 (Fla. 1st DCA 1985), that employers are required to cover workers’ comp benefits for illegal immigrant employees when they knew or should have known of the workers’ illegal status prior to the accident at issue.   Why?  Because the plain text of the Florida Workers’ Compensation Law, Florida Statutes § 440.02(15)(a)  defines the persons covered under the statute as including any paid worker, whether “lawfully or unlawfully employed.” 

Based on this precedent, the result in Aragon appears to be driven by apolitical/non-policy-related factors:  the court was bound by its own precedent, and even more so by the meaning and intent of the statute it was interpreting.

Policy Concerns

Given the precedent of Candelo and subsequent decisions applying it, the E/C was left to argue that the court should disregard precedent and the statutory text based on policy arguments – e.g., that illegal immigrants shouldn’t be rewarded for working illegally.  The 1st DCA retorted with policy justifications for covering the claims.

It’s not about reward and punishment for the worker, the court said.  It’s about whether the cost of medical care and sustenance for an injured (and according to the court’s reasoning, likely indigent) worker should be borne by a private employer or by the state and its taxpayers at large.  In addition, the court went on, if an employer doesn’t have to pay workers’ comp for an illegal worker, but does for a legal employee, the employer would be rewarded for hiring illegally – and incentivized to do so. 

 The Result — Continuing PTD Benefits

It got even worse for HDV.  The 1st DCA went on to say that Aragon was owed permanent total disability (PTD) benefits – in part because he’s an illegal immigrant.  It’s true that Aragon would be able to do be able to do sedentary (i.e., non-physical) work going forward, but under Florida Statutes § 440.15, the test is not whether the injured employee is physically able to do sedentary work, but whether he can reasonably find “sedentary employment within a 50-mile radius” of his home, based on his individual circumstances and qualifications. 

Since Aragon couldn’t speak, read, or write English, had no driver’s license, and had no transferable skills, he couldn’t reasonably get a sedentary job within 50 miles of his home, so he qualified for PTD benefits.  Finally, the court clarified, a JCC may award PTD benefits on a continuing basis so long as the evidence supports such a conclusion. In Aragon’s case, it did.  

Observations

• I’m curious about why the court uses a “knew or should have known” test to determine whether the employer must cover benefits. If, as the court says, the statutory text defines covered workers as including employees who are “unlawfully employed,” why does it matter whether the employer knows or should know that the worker cannot be legally employed in the U.S.? The question may be academic, because it would seem nearly impossible for an employer to avoiding falling into the “should have known” category, even if no actual knowledge of the immigration status is proven.  All employers are required to check their employees’ documentation, and verify their immigration status with the ICS.  Even if a reasonable employer is fooled by a worker’s fake papers, one would expect that the ICS would identify false claims of legal status in most cases, and would notify the employer.
• It’s possible that the E/C expected to lose before the panel, but pursued the appeal in hopes of obtaining further review, perhaps to ask the Florida Supreme Court to overturn Candelo. I’d be surprised if the E/C truly expected a 1st DCA panel to overturn prior 1st DCA precedent, which is supposed to be binding on the panel.

Garcia-Lopez

Once you understand the reasoning behind Aragon, you’re probably not surprised that Garcia-Lopez wasn’t denied benefits on the basis of his illegal status.  In fact, the E/C in Garcia-Lopez didn’t question the right of undocumented workers to receive workers’ compensation benefits per se. 

Instead, the issue was whether he could and did prove that he lost “wages” for which he could be compensated.  JCC denied temporary disability benefits to the underage, undocumented claimant because he failed to prove that he earned any wages prior to the accident.  How so?

Florida Statutes §440.02(28) defines the “wages” used to calculate disability benefits as including only “wages earned and reported for federal income tax purposes.”  The 1st DCA held in Fast Tract Framing, Inc. v. Caraballo, 994 So. 2d 355 (Fla. 1st DCA 2008), that this definition requires proof that the claimant’s income was reported to the IRS, and that only the reported amount can be used to calculate his/her recoverable disability benefits.   

The JCC permitted Garcia-Lopez to testify that he reported his wages to the IRS.  But although there was no objection to the testimony and it was unrefuted, the JCC later decided that the testimony was insufficient.  Relying on the “Best Evidence Rule” (under which a party must offer a written document itself into evidence if the party wants to prove what the document says), the JCC discounted the claimant’s testimony that he filed tax returns, because he didn’t offer the tax returns themselves into evidence.

A Claimant’s Tax Returns Need Not Be Put in Evidence

The 1st DCA rejected the JCC’s approach for two reasons.  First, the “Best Evidence Rule” is a consideration in determining the admissibility of evidence, not in deciding what weight to give to the evidence admitted. 

Second, the court explained that the statutory requirement that wages must have been “reported for federal income tax purposes” doesn’t require that a claimant’s tax return be submitted into evidence.  It’s true that a claimant must prove that his/her wages were reported to the IRS by some one, but that some one can be either the claimant or his/her employer.  Employers are required to report to the IRS the amount of wages paid to employees, and there is a “presumption” that when an employer pays wages, it has withheld the proper amount for income taxes.

In the process, the court appears to have blunted the impact of Caraballo considerably.  Caraballo involved a claimant who was paid in cash, which neither the employee nor the employer reported.  The court dismissed as dicta parts of the discussion in Caraballo that suggest that the claimant must prove that the claimant him/herself reported the income to the IRS.

Observations    

• Although played out in technicalities, I think, on a practical level, that this decision is a much bigger win for illegal immigrant claimants than may be apparent at first blush. Garcia-Lopez is likely to play out as a modification of and restriction of Caraballo, and is likely to make it easier for undocumented immigrants like Garcia-Lopez to prove recoverable wages.  Is it realistic to think that an illegal immigrant would report his wages to the IRS? My guess is that it’s considerably more likely that an employer might report such wages, in situations such as in Garcia-Lopez, where the illegal worker was hired (and likely paid) through an “intermediary” who was also an employee of the same employer.
• Although unstated, I’m guessing that the unlikelihood of an illegal immigrant filing tax returns with the IRS may have been part of what was behind the JCC’s decision to discount the claimant’s testimony that he filed tax returns without seeing the returns themselves.
• It’s not entirely clear what the court meant when it said that the statute doesn’t require claimants to file tax returns themselves.  If a claimant must prove the amount of wages that were reported to the IRS, the Best Evidence Rule would appear to require that the documents reporting the wages (if in existence) be offered into evidence before testimony regarding reporting could be admitted.  Under the court’s decision, the documents could relate to the IRS reporting of either the claimant or the employer, but I think they’d still need to be offered to prove the contents of the documents, i.e., the amount reported to the IRS.  Or was the court saying that the Best Evidence Rule doesn’t apply at all in this specific context?         

Aragon and Garcia-Lopez are obvious affirmations of unlawful immigrant workers’ rights to collect workers’ compensation benefits in Florida.  Despite initial appearances, Garcia-Lopez, in my view, is the more surprising result of the two.  Neither decision, however, should cause anyone to confuse Talahassee with San Francisco.