NY: Employer Does Not Lose Exclusivity Defense in Contribution/Indemnification Case Because Employee was Undocumented Alien

N.Y. Work. Comp. Law § 11 bars third-party lawsuits for contribution and indemnification against an injured employee’s employer unless either (a) the employee suffered a “grave injury,” limited to death and the exclusive list of disabilities defined in the statute, or (b) the employer agreed to contribution and indemnification in a written contract entered into with the third party prior to the accident. Are an employer’s statutory rights under the Workers’ Compensation Law extinguished because its injured employee is an undocumented alien? Affirming a decision of the Appellate Division, Second Department, the Court of Appeals of New York answered the question in the negative [see New York Hosp. Med. Ctr. v. Microtech Contracting Corp., 2014 N.Y. LEXIS 170 (Feb. 13, 2014)]. 

The plaintiff hospital engaged defendant Microtech Contracting (Microtech) to undertake demolition in a basement room housing an incinerator at the hospital’s location in Flushing, Queens. A Microtech “supervisor” met with brothers Luis and Gerardo Lema, and hired them to perform this work. The Lemas, originally from Ecuador, were undocumented aliens not legally employable in the United States. Vibrations created by use of tools provided them by Microtech evidently dislodged a metal chimney or flue. The chimney toppled, and struck and injured both men. The brothers made claims for and received workers’ compensation benefits, which Microtech’s insurance carrier paid. Additionally, the Lemas sued the hospital for violations of the Labor Law. The hospital file the instant action for common-law and contractual contribution and indemnification against Microtech to recover any damages it incurred in the Labor Law litigation with the Lemas. Microtech contended the action was barred by the exclusivity provision of § 11. Microtech contended the pleadings showed that the Lemas did not suffer a grave injury and that Microtech did not enter into the requisite written contract providing for contribution or indemnification. Without proof of a grave injury or contractual contribution or indemnification, Microtech argued, the hospital did not state a claim. Moreover, Microtech contended, non-compliance with the Immigration Reform and Control Act (8 USC § 1324a) would not deprive it of the protection of § 11 since the Workers’ Compensation Law applied to all workers within the state’s borders regardless of their immigration status.

The hospital countered, however, that Microtech should not be allowed to hide behind the language of N.Y. Work. Comp. Law § 11 after violating a federal statute since New York courts had long held that they will not award a plaintiff the benefit of an illegal bargain. The Supreme Court granted Microtech’s motion to dismiss on the ground that the complaint did not state a cause of action. The hospital appealed. The Appellate Division unanimously affirmed (98 AD3d 1096, 951 N.Y.S.2d 546 [2d Dept. 2012]).

The New York high court acknowledged that New York courts typically did not assist parties in taking advantage of their own wrongs. The court indicated, however, that it was not being called upon to enforce or recognize rights arising from an illegal oral employment contract between Microtech and the Lemas, and Microtech was not raising any such employment contract as a defense to common-law contribution or indemnification. Indeed, the court indicated § 11 does not even require an underlying employment contract. The court concluded that the Lemas did not suffer grave injuries. Nor was there any preexisting agreement for contractual contribution or indemnification. Microtech was entitled to the safe harbor in N.Y. Work. Comp. § 11.

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