The Majority Rule on Undocumented Workers Receiving Workers’ Comp Benefits

April 10, 2017 (5 min read)

Undocumented worker can receive workers’ comp benefits in spite of false papers used in hiring process

The Supreme Court of Kansas now follows the vast majority of states that the employer cannot accept the fruits of a worker’s labor and then claim that there is no existing contract with the worker when the worker is injured AOE/COE. Virtually every decision on this issue regarding undocumented workers, including now that of the Supreme Court of Kansas, is that the employment contract isn’t so much void ab initio, but rather “voidable”.

The Kansas Decision

The Supreme Court of Kansas held that the use of a false name and identification papers to apply for a job does not render a worker’s employment contract void ab initio, so as to preclude the worker from receiving workers’ compensation benefits following a work-related injury. The Court stressed that the definition “employee” should be liberally construed to bring workers within the provisions of the Act. It also noted that there was precedent refusing to void an employment contract for misrepresentation in the employment application, albeit in connection with the Federal Employer’s Liability Act [see White v. Thompson, 181 Kan. 485, 312 P.2d 612 (1957). The Court added that as long as the misrepresentation did not directly lead to the injury, the contract may be voidable but the employer should be liable so long as the claimant was employed. See Mera-Hernandez v. Unified School Dist. 223, 2017 Kan. LEXIS 113 (Mar. 24, 2017).

Larson’s on Undocumented Workers

According to Larson’s Workers’ Compensation Law, the usual outcome has been to permit compensation to be awarded to undocumented immigrants, although there are some exceptions, most notably in Wyoming, Nebraska and Idaho.

Q&A

We spoke with defense counsel Kip A. Kubin of Bottaro, Kubin & Yocum, P.C. in the Mera-Hernandez case.

LexisNexis: The employer, U.S.D. 233, argued that the worker's fraudulent misrepresentations in the hiring process voided her employment contract from the beginning, as a matter of law, and that, without a legally valid employment contract, she was not covered by the Act. The Court disagreed as indicated above. Do you agree with the Court’s reasoning or is it flawed? If flawed, how so?

Kubin: The Kansas Supreme Court seemed to follow the majority rule that permits workers compensation benefits to undocumented workers, but I never really viewed the case in that light. In fact, I argued to the Kansas Supreme Court that this case had nothing to do with undocumented status, but rather was a pure contract issue. The court relied heavily on the definition of the term “employee” under the act and found the claimant, with the use of liberal construction standard, to fall within that definition. However, they seemingly deviate from prior Kansas holdings that the employer/employee relationship is a matter of contract law. (May v Santa Fe Trail Transportation Company, 189 Kan. 419, 370 P.2d 390 (1962)). Prior to this holding the appeals courts had interpreted employment contracts under the Kansas Workers Compensation Act using traditional common law contract principles. (Shehane v Station Casino, 27 Kan. App. 2d 257 (2000)). The court did not address whether Shehane remains good law after this decision and did not cite or discuss Shehane in the decision. Moreover, the court seemed to rely heavily on their decision in White v Thompson, 181 Kan. 485, 312 P.2d 612 (1957). That decision involved striking an affirmative defense in a FELA case. The focus of the decision in White was whether the misrepresentation in the employment application and medical exam were material. In Mera-Hernandez, the claimant misrepresented her identity, which, under Kansas law would have been a material misrepresentation. (Doe v Ks. Dept. of Human Resources, 277 Kan. 795, 90 P.3d 940 (2004)). The minority of jurisdictions have held that misrepresentations to go to the “factum” of the employment contract make the contract void. Other jurisdictions have held that the contract is merely voidable. Kansas has now joined the majority rule of making the contract “voidable”, but it is not a natural extension of their prior holdings.

LexisNexis: How significant is it in your opinion that, in 2011, the Kansas Legislature amended K.S.A. 44-510e(a)(2)(E)(i) to require that a worker prove she or he has the legal capacity to enter into a legal employment contract in order to be awarded postinjury wage loss (which, by the way, was not at issue in the Mera-Hernandez claim), but did not similarly constrain any other benefits under the Act or alter the definition of “employee”?

Kubin: Interestingly, neither party argued that aspect of the case to the court. The statutory change in 2011 was focused on calculation of “work disability”. In Kansas, an injured worker, who has a general disability can get enhanced benefits beyond the medical rating if they are not able to obtain employment that pays a comparable wage. Decisions of the appellate courts prior to the 2011 changes required the administrative law judge to use “actual wages” to make the calculation of the enhanced “work disability” benefits. If an undocumented worker was injured, it was almost impossible to get them back to employment after their injuries because of their undocumented status, which inflated the award of benefits. The 2011 amendments focused on earning capacity, not actual wages in calculating work disability benefits. The legislature addressed the problem with undocumented workers in this scenario by requiring the worker to prove that they had the capacity to enter into employment. The statute was not directly on point, but the court seemed to think it was illustrative of the legislative intent. Since this was not a “work disability” case neither party cited or argued that the statute had any applicability, even in a policy sense, to the issues in the claim. However, the court seemed to think the legislative change had some policy implication. As a practical matter, I am not sure the legislature even contemplated that the 2011 amendments would have any impact of whether someone qualified as an employee under the Kansas Workers Compensation Act. It seems the court could have just as easily indicated that the amendments contemplated that the employment relationship was one of contract and would be interpreted under common law contract principles.

LexisNexis: What is the takeaway of this case for employers?

Kubin: This holding should remind employers and insurers of the difficulty in prevailing on affirmative defenses in workers compensation claims. Even in situations where the worker misrepresents their identity and fraudulently obtains employment, this will not defeat a claim for benefits to an injured worker in the majority of jurisdictions.