Dan E. White
by Dan E. White

This past fall, Wal-Mart was the subject of a 21-state immigration raid conducted by the federal government. The government says that Wal-Mart’s contractors employed illegal aliens, failed to pay overtime or Social Security taxes, and failed to provide workers’ compensation benefits. Perhaps it is not surprising that some unscrupulous contractors use illegal alien labor and that the businesses who deal with them may face liability. But it may be news to learn that Wal-Mart, if guilty, could be liable for “racketeering” within the meaning of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”).

How can this be? Isn’t RICO intended for Al Capone, John Gotti, and their ilk?

The answer is “often,” but not always. RICO allows private plaintiffs to seek compensation from any entity that causes injury to business or property by engaging in a “pattern” of specific criminal acts known as “predicate offenses.” A pattern of racketeering activity is defined as “at least two acts of racketeering activity.” Engaging in a pattern of racketeering activity for financial gain can result in criminal and civil liability under RICO.

In 1996, Congress broadened RICO to include some violations of federal immigration law as “predicate offenses.” As a result, a RICO claim can now be based not only on the smuggling or harboring of illegal aliens but, as well, upon the employment during any 12-month period of at least 10 illegal aliens who are known by the employer to have been brought into the United States illegally.

The theory behind immigration-related RICO claims is that illegal aliens work for lower wages and perhaps in unsafe working conditions, thus suppressing wages and worsening working conditions for legal employees. The plaintiffs are generally either law-abiding competitors of the defendant, or the “legal” present or former employees of the defendant. Both types of plaintiffs contend that they were harmed by the defendant’s practice of hiring illegal aliens.

In essence, plaintiffs’ attorneys now find themselves serving as private prosecutors for immigration-related RICO claims. To pursue such a claim, the plaintiff has to prove only (1) commission of two or more predicate acts, (2) causation, and (3) damages.

Potential liability under RICO can be substantial, if not devastating. A successful RICO plaintiff is entitled to damages, triple damages, costs, and reasonable attorney’s fees. In addition, the court has the option of ordering the dissolution or reorganization of the enterprise.

In 2000, the first immigration-based RICO suit was brought in Commercial Cleaning Services v. Colin Service Systems. The plaintiffs, competitors of the defendant, alleged that the defendant’s use of illegal aliens allowed it to underbid the plaintiffs on new contracts. The trial court dismissed the case for lack of standing to sue, but the appellate court reinstated it. The case has since been settled.

In two more-recent cases, employees sued their employers under RICO, alleging that the use of illegal aliens depressed wages. Both cases were dismissed by the trial courts, but one has been reinstated and the other is on appeal and likely to be reinstated.

The “Predicate Offense”
The “knowledge” element is the primary hurdle to establishing illegal hiring as a predicate act. Some plaintiffs might attempt to overcome this hurdle by subpoenaing employment records to determine whether employees provided valid Social Security numbers at the time of hire. Using this theory, they could claim that, if the Social Security numbers were invalid but were not verified by the employer, the employer possessed knowledge that it was hiring illegally. (However, employers may, but are not legally required to, verify the validity of a new hire’s Social Security number.)

Another predicate act that would make an employer liable under RICO is the “encouraging or inducing of an alien to come to, enter, or reside in the United States, knowing or in reckless disregard of the fact that such coming to, entry, or residence is or will be in violation of law.” The U.S. Court of Appeals for the Fourth Circuit (Maryland, West Virginia, Virginia, and the Carolinas) has specifically interpreted this provision to apply to any actions that induce illegal immigration or that encourage illegal aliens already in the United States to remain here. Thus, “encouraging” may be much more broad than importing, transporting or concealing illegal aliens.

“Causation” has been the most challenging element to date for plaintiffs in immigration-based RICO cases. As the case law currently stands, there must be a direct relation between the employer’s conduct and the plaintiff’s injury.

In reinstating the Colin case, the appeals court said that the plaintiffs could prevail if they proved that they would have won the contracts but for the lower wage costs attributable to the defendants’ hiring of illegal aliens.

What Now?
It is unclear what effect, if any, the latest immigration reform proposals will have on immigration-related RICO claims. President Bush proposes to grant legal “temporary worker” status to aliens who are already here illegally and to other foreign workers. Meanwhile, the Senate has proposed a complete overhaul of our immigration system. (See our sidebar: “So, What Is Happening With Immigration Reform?” below.)

Will a “guest worker” program save Wal-Mart? Stay tuned . . .

Dan White (Nashville, TN) handles business immigration matters, including work visas, employer I-9 compliance, and immigration-related litigation.

by Robin E. Shea

The Family and Medical Leave Act (“FMLA”) has recently been the subject of some interesting decisions from the United States Courts of Appeal. The decisions clarify issues related to the definition of a “serious health condition,” the type of notification that employers may require of employees, and the circumstances under which an FMLA violation will be found to be “willful.”

For the most part, the decisions are employer-friendly—in some cases, perhaps a bit more than justified by the regulations. It is also worth noting that all of the decisions were from three-judge panels of the courts, so it is possible that they will be reheard by the full courts and vacated.

“Serious Health Condition”
The first decision, from the Sixth Circuit (Michigan, Ohio, Kentucky, and Tennessee), held that parents are not entitled to FMLA leave to provide routine day care to children with attention deficit disorder (“ADD”) and attention deficit and hyperactivity disorder (“ADHD”). Presumably, the same reasoning would apply to children with mental retardation and other chronic conditions that render them unable to enroll in regular “custodial” day care programs.

In Perry v. Jaguar of Troy, the plaintiff was permanently replaced after he took the summer off to supervise his 13-year-old son who had ADD and ADHD. The son attended a special school during the nine-month school year but was unable to attend regular summer programs because of his conditions. The father alleged that he could not afford the special summer day care that his son would require.

The panel specifically found that the plaintiff had provided adequate notice to the employer of his need for FMLA leave and that he was not required to provide a medical certification because the employer had not made a specific request that he do so.

Nonetheless, the panel found that the plaintiff was not entitled to FMLA leave because his son was not “incapacitated” from normal daily activities. The need for more supervision than the average child needs is not a “serious health condition” within the meaning of the FMLA, the panel held. The panel pointed out that a younger child with no medical condition would also require closer supervision than an older child, yet the FMLA does not consider the former to be “incapacitated” by virtue of his youth.

This is a close case, and the court’s decision is contrary to preventive advice that some of us at Constangy have given clients in similar situations. It will be interesting to see whether the plaintiff petitions for rehearing and the ultimate result.

As stated above, the Perry court found that the plaintiff had provided adequate notice to his employer and that the employer had to specifically ask for a medical certification if it wanted one.

In Cavin v. Honda of America Mfg., Inc., a panel of the Sixth Circuit clarified the relationship between an employer’s internal leave-reporting policy and the FMLA notification requirements.

The company’s absence notification policy required that single absences be reported to Security. With respect to absences of more than one day, employees were required to notify “Administration-Leave Coordination” rather than Security. In the case of unforeseeable absences of more than one day, the employees were required to notify the Leave Coordinator within three workdays of the first day missed.

On June 21, 1999, the Plaintiff was injured in a motorcycle accident, was treated in a hospital emergency room, and was released with a prescription for pain medication. He also received a doctor’s note excusing him from work for June 21–24, 1999. The Plaintiff called Security each of these days and reported that he would be absent because of injuries received in a motorcycle accident. Meanwhile, on June 22, the Plaintiff saw a different doctor, who wrote him out of work through June 28, 1999. The plaintiff called security again on June 25 and gave notice that he would be absent. The plant was shut down from June 26 through July 5, 1999, so the Plaintiff returned to work on his next scheduled workday, July 6, 1999. His supervisor and co-workers knew that he had been in a motorcycle accident and asked him how he was doing. However, a Human Resources representative issued the Plaintiff an attendance counseling based on the absences in June. He was also given what appears to be a final warning for violating the company’s leave-of-absence reporting policy. When the Plaintiff told the Human Resources representative that he had been out because of a motorcycle accident, she gave him a leave of absence packet, which included FMLA certification materials.

The Plaintiff returned in a timely manner an FMLA medical certification, among other documents, but the company denied his leave request for June 21–23 because he allegedly made his request for leave more than three workdays afterward. He was granted the leave for the absences on June 24–25.

The Plaintiff had three additional periods of absence because of shoulder pain resulting from the injury. He was granted leave for two of them but was denied leave for the third because of his failure to provide the required paperwork in a timely manner. He was then terminated for violating the company leave-of-absence reporting policy twice.

The Sixth Circuit panel first found that the company’s leave-of-absence reporting policy violated the FMLA to the extent that it exceeded the FMLA’s notification requirements. The court noted that the FMLA regulations stated, in the case of foreseeable leave, that the employer may not deny the leave based on the failure of the employee to comply with the employer’s internal notification policies— provided that the employee provides some type of timely notice. Although the regulations do not contain a comparable provision for unforeseeable leave, the panel found that there was no basis to impose a more strict requirement in the case of unforeseeable leave.

Thus, the panel held that employers cannot deny FMLA leave based on an employee’s failure to comply with internal notice requirements as long as the employee gave notice that would be adequate within the meaning of the FMLA. Because the plaintiff called in each day and told Security that he was out for injuries received in a motorcycle accident, the court found that he had provided legally adequate notice.

The above seems to be a reasonable reading of the applicable FMLA regulations. More troubling is the holding as it relates to the specific information provided by the Plaintiff.

As the court noted, being involved in a vehicular accident does not necessarily mean that the individual is entitled to FMLA leave. In this case, the court found that the Plaintiff had notified the company—through Security—that he had (1) been in the hospital, and (2) was unable to work due to his injury. It does not appear that the Plaintiff said he would be out of work for any extended period.

Nonetheless, the court held that the Plaintiff was not required to ask for “leave” or a “leave of absence” to qualify for FMLA leave. In the context of this case, that holding may not be objectionable, but it seems inappropriate to the extent that it absolves employees of any obligation to indicate that they will be out of work for an extended period.

“Willful” violation
In Hillstrom v. Best Western TLC Hotel, a panel of the U.S. Court of Appeals for the First Circuit (Maine, Massachusetts, New Hampshire, Rhode Island, and Puerto Rico) determined whether an alleged FMLA violation was “willful.”

The FMLA generally has a two-year statute of limitations; however, if the violation is "willful," the statute of limitations is three years.

In Hillstrom, the plaintiff suffered an aneurysm and took a medical leave of approximately six weeks. While he was on leave, one of his peers was promoted to a newly created position that would supervise the plaintiff. The former peer also took over the plaintiff’s office and moved all of the plaintiff’s belongings to a much smaller office. When the plaintiff returned to work in March 1999, he was forced to move to the small office and report to his former peer rather than the CEO, although his pay and title remained unchanged. He was eventually terminated in April 2000, after a conflict with the former peer.

The plaintiff filed suit in April 2001, more than two years after his return from FMLA leave. He alleged that his employer retaliated against him by failing to restore him to the same or a substantially equivalent position upon his return, and he sought to escape the statute of limitations problem by contending that the employer’s violation was “willful,” entitling him to the three-year statute of limitations. (He did not contend on appeal that his termination was in retaliation for exercising his FMLA rights.)

The panel affirmed dismissal of his FMLA claim as untimely and rejected the “willfulness” argument. The panel correctly cited the law under the Fair Labor Standards Act stating that the employer’s unlawful behavior must be either knowing or at least reckless to qualify as “willful.” Then, with virtually no discussion, the panel found that the employer’s alleged behavior was not “willful” and dismissed the claim.

This decision is very employer-friendly, and the panel’s reasoning would be undoubtedly correct as applied to a simple FMLA violation (for example, terminating an FMLA-qualifying employee for poor attendance). However, it is not at all clear that the panel’s reasoning is appropriate in an FMLA retaliation case. Retaliatory behavior, by its very nature, is intentional (i.e., willful). One cannot “negligently retaliate.” Thus, it seems that the issue of “willfulness” should turn on whether the employer acted in a retaliatory manner. If so, then the employer’s conduct should be considered “willful.” If not, then it should not.

The court cited several unpublished FMLA decisions in support of its position; however, the cases cited—unlike this case—all found that there was insufficient evidence of any retaliatory behavior on the part of the defendant.

Robin Shea (Winston-Salem, NC) practices in the areas of employment litigation prevention and defense, affirmative action and defense of wage-hour class and collective actions.


Sadly, this edition of Insights reads like an “America’s Most Wanted” of employers. We feature subcontractors who knowingly hire illegal aliens so they can evade the requirements of the minimum wage, overtime, and other employee protections, and underbid their competitors. We have an employer who refused to let an employee take a summer off without pay to care for his disabled son. We have a corporate development executive who suggests that managers emulate TV-gangster Tony Soprano. Finally, we have an employer who allegedly gave $10,000 rewards to employees who “opted out” of a wage and hour class action lawsuit.

Of course, none of the aforementioned employers were our clients, but perhaps this is a good time to review the concept of “positive employee relations.” Studies have long shown that money is not the primary consideration in most employees’ jobs. In fact, it’s relatively low on the list. What do they care about? Those “lovely intangibles”– even-handedness (a.k.a. lack of favoritism), fairness, honesty, communication, concern for them as individuals, and genuine recognition that they have “lives” away from the workplace.

Treating employees with respect is the right thing to do. But, for those few who aren’t particularly motivated by a desire to do the right thing, there are other motivations. First, note how all of the “bad apples” made it into this newsletter – therefore, they have all (with the exception of “Tony Soprano’s” company) been sued. In fact, the employer who allegedly made the $10,000 payoffs is now the defendant in a second class action—this time, alleging that it acted improperly in bribing the employees.

“Positive employee relations” wards off lawsuits, and it also makes unions superfluous. Thus, a good relationship between employees and their management (not just supervisors, but at all levels) has a real impact on the bottom line.

So, whether we do it for the right reasons or not, maybe we can all resolve in ‘04 to watch what our “featured employers” do . . . and then do the opposite!

Robin E. Shea, Editor, Winston-Salem, NC

¿Necesita una auditoría en español? ¡Llámenos!

Are your facilities in Spanish-speaking countries languishing unaudited? Are your Spanish-speaking employees in the U.S. going without harassment or other employment training?

Call us! (That’s what “¡Llámenos!” means.) Constangy’s Craig Moore, Joey Gould, and Louise Davies can conduct employee-relations and compliance audits and training in Spanish. Craig (Nashville, TN) and Joey (Tampa, FL) are attorneys who practice in all areas of labor and employment law. Louise is a paralegal in Constangy’s Macon, GA, office.


Constangy, Brooks & Smith joined 21 law firms in the Kansas City, Missouri metropolitan area by participating in a Diversity Signing Ceremony that took place in December 2003. Constangy and the other participating firms affirmed their commitment to increasing diversity in the number of attorneys recruited, hired and promoted by their firms. The signing ceremony was sponsored by the Kansas City Metropolitan Bar Association.

Constangy Regional Workshop 2004 YOU CAN’T “SURVIVE” WITHOUT IT!

Constangy, Brooks & Smith proudly presents its 2004 Regional Workshop, How to Be an HR SURVIVOR, to be presented in six cities this spring. The one-day program, designed for human resources professionals, business managers and in-house counsel, will be presented in the following cities on the following dates:

  • Tampa, FL
    March 11
  • Jacksonville, FL
    April 8
  • Kansas City, MO
    April 22
  • Charlotte, NC
    April 30
  • Nashville, TN
    May 6
  • Atlanta, GA
    May 13

The sessions will cover the gamut of labor and employment survival topics, including “Business Ethics in a Devious World,” avoiding EPLI “quicksand” and “venomous” OSHA issues, and “COBRA and HIPAA and Other Exotic Creatures.” We’ll also cover wage and hour, alternative dispute resolution, pre-employment screening, protected concerted activity, and many other challenges. For complete details on continuing education credits, topics, meals, fees and registration, visit www.constangy.com or call your Constangy attorney.


ROB FLOYD (Fairfax, VA, litigation prevention and defense, including wage-hour issues) received his bachelor’s degree in psychology from West Chester University of Pennsylvania, his juris doctor magna cum laude from the District of Columbia School of Law, and his LL.M. in Labor and Employment from the Georgetown University Law Center. Before joining Constangy, Rob was an attorney with the U.S. Department of Labor and worked in employee relations in the private sector. Currently, Rob is studying to be a Coast Guard Licensed Captain. When he is not practicing law, Rob enjoys sailing, sailboat racing, and fishing. Rob and his wife, Laura, have two sons who are nine and seven years old.

TOWNSELL MARSHALL(Atlanta, GA, labor relations and immigration) is the firm’s financial managing member and co-chair of the Labor Relations practice group. Townsell received his bachelor’s degree in commerce from the University of Kentucky and his law degree from the University of Tennessee at Knoxville. Before joining Constangy, Townsell was with the National Labor Relations Board and in the U.S. Army Reserves. He also assisted in revising How to Take a Case Before the National Labor Relations Board, Sixth Edition. When he is not practicing law, Townsell enjoys hunting, gardening and golf. He and his wife, Sue, have two grown children, both also living in Georgia.

BILL PRINCIPE (Atlanta, GA, occupational safety and health) is co-chair of the firm’s Occupational Safety and Health practice group. He received his bachelor’s degree magna cum laude in English from the University of Notre Dame and his law degree from the Georgetown University Law Center. Bill has written numerous OSHA-related articles in the publications of the American Corporate Counsel Association and the Voluntary Protection Programs Participants. Before Bill joined Constangy, he was an attorney with the Occupational Safety and Health Review Commission. When he is not practicing law, Bill enjoys reading and anything having to do with baseball.

DAVID WILEY (Birmingham, AL, employment litigation prevention and defense, and workers’ compensation) received his bachelor’s degree cum laude in Business from Wake Forest University, and his law degree magna cum laude and MBA with honors from the University of Georgia. Before attending law school, David was a Supply Corps Officer in the U.S. Navy. When he is not practicing law, David enjoys spending time with his wife, Kathi, playing golf, remodeling, and playing video games. He also cross-stitches birth and wedding announcements for his family and friends.

CANDICE WOOTEN (Winston-Salem, NC, employment litigation prevention and defense) received both her bachelor’s degree in history and her law degree from the University of North Carolina at Chapel Hill. Candice is serving her second term as Vice President of the Winston-Salem Bar Association and is chair of the Minorities in the Profession Committee of the North Carolina Bar Association. She is also an adjunct instructor of Business Law at Winston-Salem State University.

In January, President Bush gave broad outlines to a proposed reform of the laws governing foreign workers. This reform would require that a U.S. employer first attempt to recruit American employees for job vacancies. If that effort fails, the employer would be able to fill the vacancies with foreign employees. Applicants from abroad could be hired and brought into the United States. Alternatively, the employer could hire aliens who are currently in the United States illegally, but these latter workers would be required to pay an enrollment fee before becoming eligible for hire.

Alien employees would be granted “legal” status in three-year increments, but not indefinitely. Furthermore, they would be removed from the United States if they fail to remain employed, violate the rules of the program, or commit a crime.

Enrolled aliens would be issued temporary worker cards and would be able to visit their home countries and return to the United States without adverse consequences. The U.S. government would coordinate with foreign governments to allow these enrolled aliens to receive pension credit under their home country’s pension plans for the time spent working in the United States. These aliens would be covered under all applicable U.S. labor and employment laws during the time that they were in the program.

The Senate has recently responded to President Bush’s proposal by introducing a bipartisan bill for comprehensive immigration reform. As stated by Senator Hagel in a press release regarding the bill: “It is not in our security interest to have 8 to 10 million people undocumented and unaccounted for in our country. Congress must reform the patchwork of immigration laws that have created an underground, black market labor force.”

Clearly, the debate is just beginning as to illegal immigration. Meanwhile, the Wal-Mart raids and RICO private action suits continue.

Dan White

Anglo Stores, Inc., requires that its sales clerks speak English when dealing with the public. Maria, who is Puerto Rican and bilingual, believes Anglo’s policy is discriminatory. She speaks English when directly dealing with English-speaking customers, but she continues to speak Spanish to her Spanish-speaking co-workers in the presence of English-speaking customers. Anglo gives her progressive warnings and then terminates her for insubordination.
If Maria sues Anglo, who wins?

Probably Anglo. English-only policies are generally lawful if adopted for legitimate business reasons, and requiring employees to speak English in the presence of customers is generally considered legitimate. Thus, Maria’s refusal to comply with the policy is arguably insubordinate and can result in her termination.

On the other hand, employers in this situation should beware that they do not create liability for retaliation. If Maria had elected to protest the policy using legitimate means, and if Anglo had taken action against her as a result, then Anglo probably would have been liable. This would be the case even if Maria mistakenly, but in good faith, believed that Anglo’s policy was illegal.

Constangy, Brooks & Smith will team up with the Georgia Employers Association for a leadership conference and golf tournament on March 28–30. The conference will be held at the Cloister at Sea Island, Georgia. To access a brochure with full details on agenda, costs, and guest speakers, visit www.georgiaemployers.org.

Speaking of racketeering . . . this ain’t it. The U.S. Court of Appeals for the Ninth Circuit (Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, Guam, and Northern Mariana Islands) affirmed summary judgment in a RICO case brought by employees who claimed that their employer misrepresented the law regarding overtime pay and used the U.S. Mail to do it (by mailing paychecks and W-2 forms). “We decline to expand RICO’s reach to transform the federal courts into a general venue for ordinary state wage disputes.”

“Man-boy love” held not legally protected activity. The U.S. Court of Appeals for the Second Circuit (Connecticut, New York, and Vermont) affirmed summary judgment to the New York City School Board in a case brought by an ex-high school teacher, now thankfully unemployed. The teacher, an admitted pedophile, alleged that the First Amendment protected his activities related to the North American Man/Boy Love Association (“NAMBLA”).

No NAMBLA, and no neo-Nazis, neither. A federal district court in New Jersey found that a convenience store did not violate the First Amendment by terminating a store manager for violating the company’s core values. The manager, as a sideline, ran a website that sold “neo-Nazi skinhead music,” swastika flags, and the like.

“If I were younger, I bet you’d let me work for no pay.” A federal court in the Northern District of Illinois dismissed an age discrimination lawsuit filed by a junior college administrator who was terminated. The evidence showed that the college had lost funding for her position.

“Warm fuzzies” held not same-sex harassment. Annoying, cloying behavior does not equal harassing behavior, said the U.S. Court of Appeals for the Fifth Circuit (Louisiana, Mississippi, Texas), affirming summary judgment for the defendant employer. The relatively cold-and-prickly plaintiff, a loan assistant, alleged that her warm-fuzzy supervisor was “overly effusive” and greeted her employees with hugs and kisses, and told them “I love you,” or “You’re the greatest.”

Good management? Fuhgeddaboudit! Fox News reports that some executives are holding up fictional mob boss Tony Soprano as a role model for their subordinates to emulate. Soprano is admired for his “direct” approach, “plain” language (is that the kind of language that is?), and use of the “sit-down” to resolve disputes. One can only hope that “murder,” “theft,” and “beating up one’s girlfriends” are still frowned upon.

Bribe doesn’t pay. The employer-defendants in a class action for unpaid overtime paid a $10,000 bonus to each employee who opted out of the class, threw them a party, and treated them to a steak dinner after the case settled. This resulted in a second class action alleging that the defendants discriminated and retaliated against the employees who had joined in the class in the first lawsuit. The court denied the defendants’ motion to dismiss the second class action.

Constangy will soon unveil a new and greatly improved website, which will feature attractive new graphics, search capabilities, links to articles from our firm publications, and even free tools designed to help you do your job better. Be on the lookout for a mailing that will tell you exactly when the new site goes “live”!


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