The Racketeer Influenced and Corrupt Organizations Act (RICO) is largely thought of as a law designed to combat activities of organized crime enterprises, a reasonable conclusion since it was enacted as part of the Organized Crime Control Act of 1970. RICO allows for civil actions against persons or entities that engage in a pattern of racketeering activities. In 1996, Congress extended the reach of RICO to violations of federal immigration law. So, can RICO potentially result in liability to a company that uses undocumented workers? Under certain circumstances, the answer clearly seems to be “yes.” Furthermore, a RICO claim might support a class action against an employer.

In Williams v. Mohawk Industries, a group of current and former employees sued Mohawk (a carpet and flooring manufacturer that employed 30,000 in the state of Georgia) in 2004 alleging that the company had conspired with third-party recruiters from temporary agencies to recruit undocumented workers and thereby depress the wages of legal employees. The complaint alleges Mohawk paid the recruiting company to supply undocumented workers and hired and harbored the illegal workers in violation of the Immigration and Nationality Act. The lawsuit alleged that Mohawk knowingly and recklessly accepted false documents, such as fake driver’s licenses, from job applicants as proof of eligibility for employment. Some employees who left the company returned under different names, a practice referred to as “recycling,” and some illegal workers who left the company were urged by Mohawk to return and reapply for work, according to the lawsuit. The case has gone through numerous procedural stages and most recently the Eleventh Circuit Court of Appeals overruled the U.S. District Court for the Northern District of Georgia’s decision refusing class certification and sent the case back to the district court to reconsider the class certification issue.

RICO is also being used to pursue criminal sanctions against employers. Immigration and Customs Enforcement (ICE) issued a news release stating that eight individuals were arrested on May 26 for RICO and human trafficking charges as part of a fraudulent labor leasing conspiracy that allegedly employed illegal aliens at hotels and businesses in 14 states, though most of the workers were employed in Kansas City and Branson, Missouri. The indictment alleges an extensive and profitable criminal enterprise in which hundreds of illegal aliens were employed at hotels and other businesses across the country. The defendants allegedly used false information to acquire fraudulent work visas for these foreign nationals. Many of their employees were allegedly victims of human trafficking who were coerced to work in violation of the terms of their visa without proper pay and under the threat of deportation.

The Mohawk case demonstrates that an employer has the potential to be held liable for employing illegal aliens even where it has completed I-9 Employment Eligibility Verification forms for its workers. The case underscores the need for employers to be familiar with the practices of its employees with respect to completing I-9s and to know who the company is doing business with, as a contractor (such as a recruiting company) who acts improperly can potentially pass on liability to the employer. Although none of the companies doing business with the “criminal enterprise” were implicated in the Kansas City case, RICO’s reach and the Obama Administration’s focus on unscrupulous employers (see the May 2009 issue of the Immigration eAuthority) should serve as a sufficient warning for employers to review immigration compliance procedures and contractor relationships.