In case there was any question, an Indiana staffing company, Access Therapies, learned late last month that the Immigration and Nationality Act (INA) does not absolve employers of their responsibilities under state wage and hour laws. The Southern District of Indiana denied Access Therapies’ motion to dismiss a counterclaims filed by a Philippine citizen who had signed several agreements and promissory notes with the company in return for its sponsorship of his H-1B petition.

According to the counterclaim, the staffing company agreed to hire the therapist for a three year term and to sponsor his H-1B visa. In addition, the company agreed to provide the therapist with free housing for three years, and to pay the fees associated with the H-1B visa process. During the visa process, the therapist took remediation classes for and passed a required English-language proficiency test and obtained certain credentials necessary to work. The staffing company paid the fees, but required the therapist to sign two promissory notes for these expenses: one for $610 and the second for $750. Ultimately, the staffing company required the therapist to sign five more promissory notes for $20,000 (payable if he did not fulfill the three-year term of his written agreement), $2,479.11; $15,000; $200; $164; and $1,910.25—a total of more than $41,000. When the employment relationship ended early and the staffing company sued, the therapist countersued for violations of Indiana’s statutory wage law, breach of contract, and unjust enrichment. Among other theories in its motion to dismiss, the staffing company claimed that the INA preempted and supplanted Indiana law.

The staffing company essentially argued that all of the therapist’s counterclaims were based on the company’s failure to comply with the H-1B requirements and therefore the INA (which provides no private right of action for such a violation) controlled and the therapist’s failure to pursue an administrative remedy with the DOL precluded his claims.

The court disagreed, finding that the staffing company had either demanded payments from him that were not owed or failed to pay him wages and benefits that were owed, which did not raise any INA concerns. However, the court observed that “Indiana statutory and common law provide[d] remedies for just this sort of alleged conduct.” The court held that the staffing agency had failed to identify any language in the INA that would expressly preempt the therapist’s state law claims. The court declined to apply field preemption, either. Field preemption only applies when a federal law so thoroughly occupies a legislative field to reasonably infer that “Congress left no room for the States to supplement it” in state law. Since the INA provided no private right of action, the court reasoned that “basic” state law remedies under “basic” state law theories could not be preempted. Given this separation between the aims of the INA and Indiana’s wage and hour and common law precepts, the court did find any conflict that would require federal preemption.

The court also rejected the explicit argument about an administrative remedy under the INA. Not only did the staffing company’s cited case law fail to address preemption, some of the cases actually permitted state law breach of contract or wage claims to proceed independently of any INA claims.

This case serves as a good reminder for employers that an immigrant—whether documented or not—is still an employee. Like any other employee, they are subject to state and federal wage and hour laws. Hiding behind the INA, or even an employee’s undocumented status, provides no defense to deficient pay practices.