New York Law Review

New York Hospital Medical Center v. Microtech Contracting Corp., 22 N.Y.3d 503 (2014): Employer’s Workers’ Compensation Shield Applies Despite Hiring Undocumented Worker

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New York Hospital Medical Center v. Microtech Contracting Corp., 22 N.Y.3d 503 (2014)

An employer’s rights under Workers’ Compensation Law § 11, which shields employers from third-party claims for contribution and indemnification, are not extinguished solely because the injured employee is an undocumented alien.

Summary

New York Hospital Medical Center hired Microtech Contracting to perform demolition work. Microtech hired two undocumented workers, the Lemas, who were injured on the job. The Lemas received workers’ compensation benefits and then sued the hospital for Labor Law violations. The hospital then sued Microtech for contribution and indemnification. The hospital argued that Microtech’s violation of the Immigration Reform and Control Act (IRCA) by hiring undocumented workers nullified Microtech’s protection under Workers’ Compensation Law § 11. The Court of Appeals held that the employer’s protection under Section 11 was not extinguished and upheld the dismissal of the hospital’s claim. The court reasoned that the illegality of the employment contract did not defeat the employer’s statutory rights under the Workers’ Compensation Law.

Facts

  • The hospital hired Microtech to do demolition work.
  • Microtech hired the Lemas, who were undocumented workers.
  • The Lemas were injured at the worksite due to a falling chimney.
  • The Lemas received workers’ compensation benefits paid by Microtech’s insurance carrier.
  • The Lemas sued the hospital for violations of the Labor Law.
  • The hospital then sued Microtech for common-law and contractual contribution and indemnification.

Procedural History

  • The Lemas sued the hospital, and the Supreme Court granted summary judgment to the Lemas on liability.
  • The hospital sued Microtech for contribution and indemnification.
  • The Supreme Court dismissed the hospital’s complaint, holding that the Workers’ Compensation Law § 11 bar applied.
  • The Appellate Division affirmed the Supreme Court’s decision.
  • The Court of Appeals granted leave to appeal.

Issue(s)

Whether an employer’s violation of the Immigration Reform and Control Act (IRCA) by hiring undocumented workers nullifies the employer’s protection under Workers’ Compensation Law § 11 from third-party claims for contribution and indemnification.

Holding

No, because the illegality of the employment contract does not defeat the employer’s statutory rights under the Workers’ Compensation Law.

Court’s Reasoning

The court reasoned that New York courts typically do not assist parties in taking advantage of their own wrongs or enforce illegal contracts. However, these principles are not applicable here because the court is not being called upon to enforce or recognize rights arising from an illegal oral employment contract between Microtech and the Lemas. Section 11 does not even require an underlying employment contract.

The court relied on its prior decision in Balbuena v IDR Realty LLC, where the court allowed an undocumented alien to recover lost wages in a personal injury action under the State’s Labor Law, rejecting the dissent’s argument that courts should not aid in achieving the purpose of an illegal transaction.

The court explained that New York’s workers’ compensation scheme provides employees with 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 limits an employer’s exposure to third-party liability to situations where the employee suffers a grave injury or the employer enters into a written contract of contribution or indemnification with the third party.

The court stated, “If the illegality of the employment contract does not defeat the employee’s rights under an otherwise applicable state statute, as was the case in Balbuena, it is not clear why it would nonetheless annul the employer’s statutory rights.”

Because the Lemas did not suffer grave injuries, there was no pre-existing agreement for contractual contribution or indemnification, and the hospital did not contend that IRCA preempted section 11, Microtech was entitled to the safe harbor in section 11.

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