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holding that the IRCA does not preempt the Kansas Wage Payment Act, K.S.A. 44–312 et seq., on the issue of earned, but unpaid, wages of an undocumented worker
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Syllabus by the Court
1. The Immigration Reform and Control Act of 1986 8 U.S.C. § 1324a (2000) et seq., does not preempt the Kansas Wage Payment Act, K.S.A. 44-312 et seq., on the issue of earned, but unpaid wages, of an undocumented worker.
2. Under the facts of this case, an undocumented worker's employment contract was not illegal under the Immigration Reform and Control Act of 1986 and was enforceable under the Kansas Wage Payment Act. The district court erred in holding otherwise.
3. If an employer willfully fails to pay an employee wages, such employer shall be liable to the employee for the wages due and also shall be liable to the employee for a penalty as provided in K.S.A. 44-315(b).
4. Whether an employer willfully fails to pay wages is a question of fact.
5. The fundamental rule to which all other rules are subordinate is that the intent of the legislature governs if that intent can be ascertained. However, when a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be.
6. Under the facts of this case, the district court erred in reversing the penalty imposed against an employer pursuant to K.S.A. 44-315(b) for willful failure to pay wages.
Darren E. Root, of the Department of Labor, argued the cause, and A.J. Kotich, of the same department, was with him on the brief for appellant.
Diane F. Barger, of Wichita, argued the cause and was on the brief for appellees.
OPINION
NUSS, J.:
Cesar Martinez Corral filed a claim for his earned but unpaid wages against his employer, Coma Corporation, d/b/a Burrito Express, and its president, Mario Coria. The Kansas Department of Labor (KDOL) determined that both respondents (Coma) owed Corral wages plus interest and also assessed a civil penalty for a total of $7,657 under the Kansas Wage Payment Act, K.S.A. 44-312 et seq.
On Coma's petition for review pursuant to the Kansas Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq., the district court reversed in part. It concluded that because Corral was an undocumented worker not legally permitted to work in the United States he was only entitled to the applicable minimum wage for work performed and was not entitled to a penalty. The KDOL appeals directly to this court under the KJRA.
The issues on appeal, and this court's accompanying holdings, are as follows:
Accordingly, we affirm in part and reverse in part the judgment of the district court. We affirm the judgment of KDOL.
FACTS
Mario Coria is the president of Coma Corporation, a Wichita enterprise. On May 17, 2004, after Cesar Martinez Corral was fired from his Coma employment, he filed a claim for earned but unpaid wages. Corral alleged that he worked as a cook for Coma from October 2003 to May 12, 2004, at a pay rate of $6 per hour.
Corral testified at a telephone wage hearing conducted by a KDOL hearing officer. Corral stated that the manager, Luis Calderon, agreed to pay him $6 per hour with weekly payment. Although Corral maintained that he worked 6 or 7 days per week (50 to 60 hours), he only requested wages for 24 weeks at 40 hours per week--for a total of $5,760. He further testified that he was paid "$50 or $60 bucks a week." Based upon payment received of $60 per week, the hearing officer clarified that Corral was requesting $5,760 (24 weeks times 40 hours at $6 an hour) minus $2,040 ($1,440 [$60 actually paid per week times 24 weeks] minus $600 [rent of $100 per month times 6 months]) for a total of $3,760. No one besides Corral testified.
In granting Corral's claim, the hearing officer determined that the evidence presented no issues of fact and awarded wages plus interest:
The hearing officer also awarded Corral a penalty of $3,720 for Coma's willful and knowing withholding of his wages. Based upon $3,720 in wages, $217 in interest, and a penalty of $3,720, the hearing officer awarded Corral a total of $7,657 against Coma and Coria as its president. Coma filed a motion to dismiss, or in the alternative, to set aside initial order, which the Secretary of the KDOL denied. Coma also filed a petition for review that was denied.
Coma then filed a Petition for Judicial Review of Final Order with the district court. There, KDOL stipulated that Corral is an undocumented worker "not legally permitted to work in the United States."
In a 17-page opinion, the district court concluded that the Kansas Wage Payment Act (KWPA), K.S.A. 44-312 et seq., did apply to undocumented workers. It held, however, that Corral was only entitled to the applicable minimum wage for work performed because the employment contract was illegal due to Corral's status as an undocumented worker. The court remanded to KDOL for recalculation at the applicable minimum wage. It also reversed the hearing officer's penalty award, holding that federal immigration policy should prohibit a statutory penalty.
ANALYSIS
Standard of Review
KDOL actions are reviewable under the Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq. See K.S.A. 44-322a (c). Our standard of review is statutorily defined by the KJRA. See Blue Cross s&sBlue Shield of Kansas, Inc. v. Praeger, 276 Kan. 232, 245, 75 P.3d 226 (2003). KDOL argues that in the instant case a court shall grant relief to Coma only if it determines:
See K.S.A. 77-621(c)(4) and (7).
On appeal, we exercise the same statutorily limited review of the KDOL's action
as does the district court, i.e., " 'as though the appeal had been made directly to this court.' " 276 Kan. at 245, 75 P.3d 226. The party asserting the agency's action is invalid bears the burden of proving the invalidity. K.S.A. 77-621(a)(1). 276 Kan. at 245, 75 P.3d 226. As a result, Coma--as the petitioner for review to the district court--retains the burden in this court of proving that at least one of the above-listed statutory bases for error exists.
Issue 1: An undocumented worker's employment contract is enforceable under the Kansas Wage Payment Act.
Coma argues that Corral's employment contract was illegal and unenforceable because he is an illegal alien. Intertwined with this argument is another: Coma claims that federal immigration law preempts the KWPA. The KDOL responds that the district court was correct in concluding that Corral was covered by the KWPA, essentially rejecting the preemption argument. It argues the court erred, however, in concluding that Corral's employment contract was illegal and unenforceable due to his status as an undocumented worker and that Corral therefore was entitled only to minimum wage.
To the extent resolution of the issues necessitates statutory interpretation, this court's review is unlimited. Schmidtlien Electric, Inc. v. Greathouse, 278 Kan. 810, 819, 104 P.3d 378 (2005). As we stated in Blue Cross s&sBlue Shield of Kansas, Inc., v. Praeger, 276 Kan. at 247, 75 P.3d 226:
KDOL specifically alleges that it is an agency of special competence and experience. As a result, it argues that the doctrine of operative construction applies to its interpretation providing KWPA coverage to undocumented workers such as Corral. Cf. A.O. Smith Corp. v. Kansas Dept. of Human Resources, 36 Kan.App.2d 530, 535, 144 P.3d 760 (2005) (applying operative construction).
Application of the KWPA to undocumented workers
As mentioned, Coma's "illegal contract" argument is intertwined with its allegation that the KWPA does not apply to Corral because "it contravenes the central policy of federal immigration law," i.e., state law is preempted by federal law. Coma quotes Ray v. Atlantic Richfield Co., 435 U.S. 151, 158, 98 S.Ct. 988, 55 L.Ed.2d 179 (1978):
Preemption is a question of law over which we exercise de novo review. Doty v. Frontier Communications, Inc., 272 Kan. 880, 888, 36 P.3d 250 (2001).
Because of Coma's reliance upon preemption, it does not dispute that K.S.A. 44-313(b) of the KWPA expansively defines an employee as " any person allowed or permitted to work by an employer." (Emphasis added.) Nor does it dispute that pursuant to K.S.A. 44-314(a), an employer is required to pay all wages due to an employee at least once a month. In short, the plain language of the
statute does not exclude undocumented workers from the "employee" definition or from the protections of the KWPA. Nor are there any KWPA exceptions to this expansive definition.
Coma's purported trumping argument is instead based upon 8 U.S.C. § 1324a(a) (2000), which makes employment of unauthorized aliens illegal, and Hoffman Plastic Compounds v. NLRB, 535 U.S. 137, 122 S.Ct. 1275, 152 L.Ed.2d 271 (2002). In Hoffman, the United States Supreme Court reversed a National Labor Relations Board's (NLRB) award of back pay to an undocumented worker because recovery was "foreclosed by federal immigration policy" as stated in the Immigration Reform and Control Act of 1986 (IRCA). 535 U.S. at 140, 122 S.Ct. 1275. Technically, Hoffman itself did not involve preemption, but rather concerned a conflict between competing federal laws: the National Labor Relations Act (NLRA) and IRCA.
There, Hoffman hired Jose Castro based upon documents which purported to verify his authorization to work in the United States. Hoffman subsequently fired Castro for his involvement in a union-organizing campaign. Three years later, the NLRB concluded that Hoffman unlawfully selected four employees, including Castro, for layoff, due to involvement in union activities. As a remedy, the NLRB ordered Hoffman to, among other things, offer reinstatement and back pay to the fired employees. Later, at a compliance meeting before an Administrative Law Judge (ALJ), Castro confirmed he had fraudulently obtained documents to support his employment application. He testified that he was born in Mexico, that he had never been authorized to work in the United States, and that he used a friend's birth certificate to fraudulently obtain a California driver's license and Social Security card. Based upon Castro's acknowledgment, the ALJ determined that the NLRB was precluded from awarding Castro back pay or offering reinstatement, because such relief was in conflict with the IRCA. Four years later, the NLRB reversed the specific issue of back pay.
In the Supreme Court's analysis, it first discussed Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 104 S.Ct. 2803, 81 L.Ed.2d 732 (1984). In Sure-Tan, the Court affirmed the NLRB's determination that the NLRA applied to undocumented workers. 467 U.S. at 892, 104 S.Ct. 2803. The Sure-Tan Court noted that "[f]or whatever reason, Congress has not adopted provisions in the INA [Immigration and Nationality Act] making it unlawful for an employer to hire an alien who is present or working in the United States without appropriate authorization." Sure-Tan, 467 U.S. at 892-93, 104 S.Ct. 2803; Hoffman, 535 U.S. at 144-45, 122 S.Ct. 1275. The Sure-Tan Court determined that although the NLRA applied to undocumented workers, remedies for violations were limited by federal immigration policy. 467 U.S. at 903, 104 S.Ct. 2803.
After construing Sure-Tan, the Hoffman Court discussed changes that occurred after the case was decided:
Based on the foregoing analysis, the Hoffman Court reasoned that as an undocumented worker, Castro did not have the right to a remedy based on the presumption of his continued illegal employment. 535 U.S. at 149, 122 S.Ct. 1275.
Thus, wages for work not actually performed were not appropriate.
The Court concluded:
To begin our preemption analysis, we acknowledge that the Supremacy Clause of Article VI of the United States Constitution provides for federal preemption of state law. Preemption may arise through an express provision, by implication, or through conflict between a federal and state law. New York State Conference of Blue Crosss&sBlue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 654, 115 S.Ct. 1671, 131 L.Ed.2d 695 (1995). Through Coma's citation to Ray v. Atlantic Richfield Co., 435 U.S. 151, 98 S.Ct. 988, 55 L.Ed.2d 179, it argues "conflict preemption." See Balbuena v. IDR Realty LLC, 6 N.Y.3d 338, 356, 812 N.Y.S.2d 416, 845 N.E.2d 1246 (2006) (citing Ray).
Preemption, however is not presumed: "[D]espite the variety of these opportunities for federal preeminence, we have never assumed lightly that Congress has derogated state regulation, but instead have addressed claims of pre-emption with the starting presumption that Congress does not intend to supplant state law. [Citation omitted.]" 514 U.S. at 654-55, 115 S.Ct. 1671; see also Doty v. Frontier Communications, Inc., 272 Kan. 880, Syl. ¶ 5, 36 P.3d 250 (2001) ("In the absence of express preemption in a federal law, there is a strong presumption that Congress did not intend to displace state law."). Additionally, "it is well established that the states enjoy 'broad authority under their police powers to regulate ... employment relationship[s] to protect workers within the state.' " Madeira v. Affordable Housing Foundation, Inc., 469 F.3d 219, 228 (2d Cir.2006) (citing DeCanas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 47 L.Ed.2d 43 [1976]). "[M]inimum and other wage laws ... and workmen's compensation law are only a few examples" of the exercise of this broad authority. 424 U.S. at 356, 96 S.Ct. 933.
In Madeira, the Second Circuit Court of Appeals thoroughly examined preemption issues arising after Hoffman. There, an undocumented worker who was injured while working at a construction site sued his employer for failing to provide adequate safety equipment in violation of New York state law. On appeal, the employer and others argued that pursuant to Hoffman, "federal immigration law prohibiting the employment of undocumented aliens precludes state tort or labor law from awarding an injured undocumented worker ... compensatory damages for lost earnings at United States pay rates." 469 F.3d at 227. The Madeira court specifically noted that unlike the worker in Hoffman who had fraudulently obtained and provided false documents to his employer, which is criminal conduct under IRCA, Madeira had not done so. It held that outside of knowingly or recklessly using false documents to obtain employment, Congress did not otherwise prohibit undocumented aliens from seeking or maintaining employment. 469 F.3d at 231.
After extensively discussing principles of federal preemption, the Second Circuit limited Hoffman's holding and concluded that the applicable state law was not an obstacle to IRCA's policy objectives under any type of preemption theory:
Similarly, in Balbuena v. IDR Realty LLC, 6 N.Y.3d 338, 812 N.Y.S.2d 416, 845 N.E.2d 1246, after extensive discussion of preemption, New York's highest court held that Hoffman did not preempt state law and did not prevent awarding injured undocumented workers compensatory damages for lost earnings. As did the Madeira court, it noted that unlike in Hoffman, its undocumented workers had not themselves violated federal immigration law when they procured employment. 6 N.Y.3d at 360-61, 812 N.Y.S.2d 416, 845 N.E.2d 1246. With this holding, Balbuena resolved a split that had developed between the New York state appellate divisions. See Madeira, 469 F.3d at 227 fn. 8.
Madeira's and Balbuena's conclusions on preemption are consistent with other jurisdictions. As the district court in the instant case generally noted,
The district court, however, also acknowledged contrary case law limiting rights of undocumented workers, citing Crespo v. Evergo Corp., 366 N.J.Super. 391, 399-400, 841 A.2d 471 (2004) (worker's undocumented status precluded termination benefits); Bastas v. Board of Review, Dept. of Labor and Ind., 155 N.J.Super. 312, 315, 382 A.2d 923 (1978) (illegal alien may not receive unemployment benefits); Granados v. Windson Development Corp., 257 Va. 103, 108-09, 509 S.E.2d 290 (1999) (illegal alien not an "employee" under workers compensation act), superceded by statute as stated in Rajeh v. Steel City Corp., 157 Ohio App.3d 722, 732, 813 N.E.2d 697 (2004); and Sanango v. 200 East 16th St. Housing Corp., 788 N.Y.S.2d 314, 321, 15 A.D.3d 36 (2004) (undocumented worker may not be awarded lost earnings for a personal injury action based on wages he would have earned; later overruled by Balbuena).
Although not involving an issue of federal preemption of state law, but rather one of potential conflict between two federal laws-- IRCA and the Fair Labor Standards Act (FLSA)--the district court also noted that federal courts have consistently upheld the applicability of FLSA protections to undocumented employees. See Patel v. Quality Inn South, 846 F.2d 700, 705-06 (11th Cir.1988) (under the FLSA, undocumented worker was entitled to recover unpaid minimum wages and overtime for work already performed); Donovan v. Burgett Greenhouses, 759 F.2d 1483, 1486 (10th Cir.1985) (employer required to pay wages, including overtime for work performed by illegal aliens); Chellen v. John Pickle Co., 344 F.Supp.2d 1278, 1294 (N.D.Okla.2004) (Indian nationals not authorized to work in the United States were "employees" under the FLSA); and Flores v. Amigon, 233 F.Supp.2d 462, 463 (E.D.N.Y.2002) (Hoffman is not extended when "the plaintiffs had already performed the work for which unpaid wages were being sought.").
The district court also observed that there is little precedent in Kansas upon which to rely. It stated that this court
Based upon the weight of what the district court considered "persuasive authority," and the plain language of K.S.A. 44-313(b), the court concluded that like the FLSA, the KWPA applies to undocumented workers. It specifically noted "the reasoning of many courts which have addressed this question--that the enforcement of employment statutes actually furthers the goals of the IRCA by creating disincentives for employers to hire illegal aliens," and that K.S.A. 44-313(b) "on its face makes no exception for illegal aliens."
We agree. Based upon other jurisdictions' rejection of IRCA preemption of certain state labor laws, coupled with their narrow reading of Hoffman, we conclude that under this case's facts, Coma has not overridden the presumption against federal preemption afforded by the Supremacy Clause.
More specifically, we agree that the KWPA applies to earned, but unpaid, wages of an undocumented worker--the exact question before us. See e.g., Zavala v. Wal-Mart Stores, Inc., 393 F.Supp.2d 295 (N.J.2005); Flores, 233 F.Supp.2d 462; Zeng Liu v. Donna Karan Intern., Inc., 207 F.Supp.2d 191, 192 (S.D.N.Y.2002) ("Courts have distinguished between awards of post-termination back pay for work not actually performed and awards of unpaid wages pursuant to the Fair Labor Standards Act"); Singh v. Jutla, 214 F.Supp.2d 1056, 1060-61 (N.D.Cal.2002) (Hoffman does not hold that an undocumented employee is barred from recovering unpaid wages for work actually performed); Garcia v. Pasquareto, 11 Misc.3d 1, 812 N.Y.S.2d 216 (2004) (courts construing Hoffman have consistently held that it has no effect on claims for wages earned but not paid); Gomez v. Falco, 6 Misc.3d 5, 792 N.Y.S.2d 769 (2004) (award for payment due and owing not back pay barred by federal immigration law); Galaviz-Zamora v. Brady Farms, Inc., 230 F.R.D. 499, 501-03 (W.D.Mich.2005); Hernandez-Cortez v. Hernandez, 2003 WL 22519678, at *6 (D.Kan.2003) (unpublished opinion) (plaintiff correct in arguing that Hoffman does not prevent undocumented employees from recovering unpaid wages for work actually performed); and Flores v. Albertsons, Inc., 2002 WL 1163623, at *5 (C.D.Cal.2002) (unpublished opinion) (" Hoffman does not establish that an award of unpaid wages to undocumented workers for work actually performed runs counter to IRCA").
Coma's cited cases, Chaudhry v. Mobil Oil Corp., 186 F.3d 502 (4th Cir.1999) (foreign national was not qualified for employment because failed to present documentation and was thus not protected by Title VII or ADEA), and Egbuna v. Time-Life Libraries, Inc., 153 F.3d 184 (4th Cir.1998) (former employee had no cause of action under Title VII because of his status as alien without work authorization), do not address the earned but unpaid wages of an undocumented worker. Because they are easily distinguishable, they are unpersuasive.
Finally, we agree with the rationale set forth in Flores v. Amigon, 233 F.Supp.2d 462, where the court granted FLSA protections to an undocumented worker and determined that payment of unpaid wages for work actually performed furthers the federal immigration policy:
The legality of the employment contract
In an argument heavily intertwined with federal preemption, Coma also asserts that Corral's employment contract is illegal under state law. Specifically, it argues that KDOL regulations require that a contract of employment contain lawful provisions in order to be enforceable. Coma reasons that because Corral does not have a legal right to be or to work in the United States, his contract violates IRCA and is unenforceable under KDOL regulations and state law. In support, it cites Sweet v. Stormont Vail Regional Medical Center, 231 Kan. 604, 611, 647 P.2d 1274 (1982) (contracts that are unreasonable or illegal are unenforceable).
The district court appeared to agree with Coma. Despite acknowledging that Corral was an employee under the KWPA, it stated:
The court then referenced K.A.R. 49-20-1 et seq. , which provides procedures for enforcing the payment of wages. K.A.R. 49-21-2(b)(6) states in part:
After noting that the regulation requires a lawful contract, the district court concluded that Corral's contract was not lawful:
Given our rejection of IRCA preemption of the KWPA on Corral's claim for earned yet unpaid wages, we initially are unclear how his employment contract can violate IRCA and therefore be illegal and unenforceable. The case of Neville, Administratrix v. Wichita Eagle, 179 Kan. 197, 294 P.2d 248 (1956), illustrates our concern. There, the mother of a deceased 16-year-old employee argued that federal law--the FLSA--required that he be 18 years old in order to have performed the hazardous job of operating an elevator. She essentially argued that although he was legally employed under Kansas law--minimum age 16--he was "unlawfully employed," i.e., his contract was illegal, pursuant to the FLSA greater age requirement. 179 Kan. at 201, 294 P.2d 248. She argued that as a result, Kansas workers compensation law did not cover her son and its "exclusive remedy" provision did not bar her wrongful death action.
In essentially refusing to find that the federal law preempted Kansas law and made his employment contract illegal, this court held that the son was covered by workers compensation:
Under our district court's rationale, the Neville court correctly held there was no preemption by the FLSA, but then should have held that the FLSA applied to make the employment contract illegal.
Even assuming that our rejection of federal preemption on Corral's wage claim does not foreclose Coma's argument that his employment contract violates IRCA, we disagree that IRCA makes the contract illegal and therefore unenforceable. Kansas has not examined this exact issue. Despite the district court's conclusion that many of the employment statutes at issue in other states are unlike the KWPA, other jurisdictions do provide guidance on the issue of purported illegal contracts with undocumented workers.
Prior to IRCA's enactment, the Alaska Supreme Court confronted the issue of whether a contract of employment entered into by a Canadian alien was barred by illegality. Gates v. Rivers Construction Co., Inc., 515 P.2d 1020 (Alaska 1973). The court first discussed the nature of illegal contracts:
The Gates court then concluded that enforcement of the employment contract with the Canadian alien was not barred. It looked at the statutory language:
The court next advanced the concept of equity and fairness to the employee:
Finally, in a general foreshadowing of the benefit described in Flores, i.e., of reducing employer incentives to violate the law, the Gates court stated:
The IRCA and purported illegal employment contracts were specifically at issue in Majlinger v. Cassino Contracting Corp., 25 A.D.3d 14, 802 N.Y.S.2d 56 (2005). There, an injured undocumented worker sued the contractor and site manager for injuries sustained when the worker fell from a scaffold while installing siding. In addressing whether
the award of damages for lost wages was preempted by IRCA, the court held that the defendants could not avoid liability merely because of the worker's undocumented status. Within this context, the court also discussed changes to immigration law:
Majlinger also addressed the specific contract illegality issue: "As between the undocumented worker and the employer ... there is a contract of employment, under which the worker is entitled to be paid for his or her work." 25 A.D.3d at 24, 802 N.Y.S.2d 56. It found unpersuasive the case law barring recovery of damages for lost income gained from illegal activities, observing that "[a]n undocumented alien performing construction work is not an outlaw engaged in illegal activity, such as bookmaking or burglary [citations omitted]. Rather, the work itself is lawful and legitimate; it simply happens to be work for which the alien is ineligible or disqualified [citations omitted]." 25 A.D.3d at 29, 802 N.Y.S.2d 56. The court held the undocumented worker was entitled to proceed with a loss of wages claim.
Majlinger was affirmed by New York's highest court in the previously cited case of Balbuena, 6 N.Y.3d 338, 812 N.Y.S.2d 416, 845 N.E.2d 1246. There, the Court of Appeals noted that similar to the Immigration and Nationality Act (INA), the IRCA does not penalize an alien for attaining employment without having proper work authorization unless he or she engages in fraud, such as presenting false documentation to secure the employment: "Notably, IRCA does not make it a crime to work without documentation." 6 N.Y.3d at 360, 812 N.Y.S.2d 416, 845 N.E.2d 1246. Because there was no allegation that Majlinger and others had produced false work documents, the court concluded they had not committed a criminal act under IRCA. After recognizing that their presence in this country without authorization was impermissible under federal law, it nevertheless stated: "Standing alone, however, this transgression is insufficient to justify denying plaintiffs a portion of the damages to which they are otherwise entitled." 6 N.Y.3d at 361, 812 N.Y.S.2d 416, 845 N.E.2d 1246.
While the Balbuena court noted, as had the court in Majlinger, that under its case law recoveries had been denied to parties who have engaged in illegal activities, it clarified that
Finally, on the specific issue of whether a worker was barred from bringing a state law claim for earned but unpaid wages against his employer because his contract was illegal due to his undocumented status, the court
held in Garcia v. Pasquareto, 11 Misc.3d 1, 3, 812 N.Y.S.2d 216:
Employers' argument that a worker's undocumented status makes his employment contract illegal under IRCA and therefore void and enforceable has been rejected in the related area of workers compensation as well. In Design Kitchen v. Lagos, 388 Md. 718, 882 A.2d 817 (2005), the court concluded that because the IRCA does not specifically prohibit undocumented workers from seeking employment, and the definition of "employee" under state law does not exclude employees who are undocumented workers, the employment contract is not illegal. 388 Md. at 739-40, 882 A.2d 817; see also Dowling v. Slotnik, 244 Conn. 781, 807, 712 A.2d 396 (1998) (because IRCA does not declare it unlawful for an undocumented worker to seek employment and then accept offer of employment, rejected argument that "an employment agreement between an employer and an illegal alien is so tainted by illegality that, as a matter of law, the agreement cannot constitute 'a contract of service' "); Fernandez-Lopez v. Jose Cervino, Inc., 288 N.J.Super. 14, 18, 671 A.2d 1051 (1996) (rejecting argument that petitioner was an illegal alien, that it is against federal law for him to be in and work in this country, and that his contract of employment therefore must be illegal); cf. Champion Auto Body v. ICAD, 950 P.2d 671, 673 (Colo.App.1997) ("Since IRCA did not prohibit the claimant from entering into an employment contract, we disagree with employer's argument that the claimant was under a 'legal disability' which prevented him from working.").
Although Kansas appellate courts have not examined this exact issue in the area of wages, our workers compensation case law does provide some guidance. Just as the district court in the instant case looked to Corral's employment contract for determining wages, this court has held that in the workers compensation area, "[t]he liability of an employer to an injured employee arises out of contract between them, and the terms of a statute are embodied in that contract." Lyon v. Wilson, 201 Kan. 768, 774, 443 P.2d 314 (1968) (cited in Jurado v. Popejoy Constr. Co., 253 Kan. 116, 122, 853 P.2d 669 [1993]). And Kansas has allowed undocumented workers, i.e., those with purported illegal contracts of employment, to receive workers compensation benefits under those contracts. See In re Doe, 277 Kan. 795, 803-04, 807, 90 P.3d 940 (2004).
Whether IRCA made the undocumented worker's employment contract illegal was not directly raised in Doe. Indeed, there was never an argument that the worker was not entitled to workers compensation because of her illegal alien status. Remarks at all levels of review throughout the opinion cast doubt on whether this was a valid argument. For example, the order of the Board stated: " '[I]f claimant could not legally work in the United States, that factor alone would not prevent her from recovering workers compensation benefits.' " 277 Kan. at 805, 90 P.3d 940. Upon the district court's review, it held: " 'The simple truth of the matter is that Petitioner lied about her identity on numerous occasions in order to obtain workers compensation benefits. Her entitlement to those benefits is no excuse for intentionally misrepresenting herself.' " (Emphasis added.) 277 Kan. at 800, 90 P.3d 940. Additionally, this court began its opinion by stating:
Finally, Doe claimed that her testifying falsely or concealing or misrepresenting a material fact was prohibited under the Workers Compensation Act only if she was trying to obtain benefits to which she was not entitled under the Act. 277 Kan. at 801, 90 P.3d 940.
Inherent in this argument is the general contention that she was legally entitled to the benefits. In rejecting her argument, this court held that "making false statements by lying under oath in workers compensation proceedings are abusive, notwithstanding [her] ... legal entitlement to the benefits obtained." (Emphasis added.) 277 Kan. at 802, 90 P.3d 940. Indeed, the Doe court observed that in Acosta v. National Beef Packing Co., 273 Kan. 385, 44 P.3d 330 (2002), this same claimant had received $57,936.72 in compensation and further observed that this was still a valid award. 277 Kan. at 806, 90 P.3d 940.
We need not decide today whether undocumented workers are entitled to workers compensation benefits because that question is not before us. We do note, however, that the definition of employee in the workers compensation statute is virtually identical to the definition of employee in the wage payment statutes. Compare the expansive language in K.S.A. 44-508(b), " 'workman' or 'employee' or 'worker' means any person who has entered into the employment of or works under any contract of service or apprenticeship with an employer," with that contained in K.S.A. 44-313(b), " '[e]mployee' means any person allowed or permitted to work by an employer."
Finally, we agree with KDOL's position concerning the strong and longtime Kansas public policy of protecting wages and wage earners. As we stated in Burriss v. Northern Assurance Co. of America, 236 Kan. 326, 333, 691 P.2d 10 (1984):
KDOL has generally reinforced this strong public policy with its authoring of K.A.R. 49-21-2(b)(6). That regulation not only declares certain agreements diluting employee rights under the KWPA to be per se failures to pay earned wages but it also nullifies those provisions violative of the Act:
As a further indication of the strong public policy of protecting wages, the legislature has created a stiff penalty for employers failing to pay wages already earned: 1% of the unpaid wages for every day they are not paid, up to a total of 100%. See K.S.A. 44-315(b).
Accordingly, we conclude that to deny or to dilute an action for wages earned but not paid on the ground that such employment contracts are "illegal," would thus directly contravene the public policy of the State of Kansas. See Garcia v. Pasquareto, 11 Misc.3d 1, 3, 812 N.Y.S.2d 216 (2004).
We hold for the above reasons that the district court erred in concluding that Corral's employment contract was illegal under IRCA and therefore not enforceable under the KWPA.
Issue 2: KDOL did not err in assessing penalties against Coma pursuant to K.S.A. 44-315(b).
Next, the KDOL argues that the district court erred in reversing penalties assessed against Coma under K.S.A. 44-315(b). To the extent resolution of this issue necessitates
statutory interpretation, this court's review is unlimited. Schmidtlien Electric, Inc., 278 Kan. at 819, 104 P.3d 378.
K.S.A. 44-315(b) provides in part:
Whether an employer willfully failed to pay wages is a question of fact. Holder v. Kansas Steel Built, Inc., 224 Kan. 406, 411, 582 P.2d 244 (1978). Where an "honest dispute" arises over the amount of wages due, a statutory penalty will not be assessed against the employer. Holt v. Frito Lay, Inc., 217 Kan. 56, 61, 535 P.2d 450 (1975) (citing Bradshaw v. Jayco Enterprises, Inc., 212 Kan. 206, 510 P.2d 174 [1973]). However, " '[t]here is generally little room for an honest dispute.' " 217 Kan. at 61, 535 P.2d 450 (same).
In assessing penalties against Coma, the hearing officer stated:
We review an agency's findings of fact, e.g., Coma's willful failure to pay wages, under a substantial evidence standard. See K.S.A. 77-621(c)(7). Substantial evidence supports the hearing officer's finding. Here, Coma undisputably employed Corral during the 6-month period. As stated by the hearing officer, "[t]he evidence as to the agreement, the work done and the payment of some wages is not conflicting and presents no issue of fact." Coma called no witnesses to refute Corral's evidence.
Despite substantial evidence establishing a willful violation, the district court vacated the penalty, declaring that imposing a penalty for the benefit of an undocumented worker was not intended by the legislature.
As suggested by the district court, the fundamental rule to which all other rules are subordinate is that the intent of the legislature governs if that intent can be ascertained. Schmidtlien, 278 Kan. at 822, 104 P.3d 378. However, when a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed rather than determine what the law should or should not be. See 278 Kan. at 822, 104 P.3d 378. The statute, K.S.A. 44-315(b), does not carve out any "illegal alien" exception. Its language is plain: "If an employer willfully fails to pay an employee wages as required by K.S.A. 44-314 ... such employer shall be liable ... to the employee for a penalty...." (Emphasis added.)
Corral was a "person allowed or permitted to work by an employer," and was therefore an employee of Coma. See K.S.A. 44-313(b). Coma willfully failed to pay its employee his earned wages; Coma is therefore properly penalized under the plain language of the statute. The district court erred in reversing imposition of the penalty. To address the district court's concerns, the legislature may always consider amending the statute to provide that the civil penalty be awarded to the state and not to the undocumented worker. Cf. K.S.A. 44-5,120(k) (penalties imposed against the employer in workers compensation are paid to the workers compensation fee fund).
Coma also asserts that the KDOL erred in assessing the penalty because Corral acquiesced to a modification of the oral contract. According to Coma, Corral was told he would get paid once the restaurant started getting "more business," which Coma essentially argues is an unmet condition precedent to payment of his wages. However, the record on appeal does not reveal that Coma ever raised the acquiescence argument to the district court; it was not raised by or responded to by KDOL in its response, nor does it appear in the district court's written judgment. Because it appears for the first time before this court, we will not consider it. State v. Puckett, 230 Kan. 596, 640 P.2d 1198 (1982). We have reviewed Coma's other arguments and conclude they have no merit.
The judgment of the district court is affirmed in part and reversed in part. The judgment of the Kansas Department of Labor is affirmed.
ALLEGRUCCI, J., not participating.
LOCKETT, J., Retired, assigned.
REPORTER'S NOTE: Justice Tyler C. Lockett, Retired, was appointed to hear case No. 95,537 vice Justice Allegrucci pursuant to the authority vested in the Supreme Court by K.S.A. 20-2616.