Amicus Curiae Brief — Hoffman Plastic Compounds, Inc. v. NLRB

FILED

_—

Snureme Sour’, 4S |

No. 00-1595 | DFC 10 2001

IN THE : LERK

Supreme Court of the United States =

esp

HOFFMAN PLASTIC COMPOUNDS, INC.,

Petitioner,

—v.—_—

NATIONAL LABOR RELATIONS BOARD,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE DISTRICT OF

COLUMBIA CIRCUIT

BRIEF AMICI CURIAE OF EMPLOYERS AND

EMPLOYER ORGANIZATIONS IN SUPPORT OF

RESPONDENT

Michael J. Wishnie David A. Schulz

Counsel of Record Jeffrey H. Drichta

Muzaffar Chishti Daniel L. Dovdavany

161 Avenue of the Americas CLIFFORD CHANCE

Fourth Floor ROGERS & WELLS LLP

New York, New York 10013 200 Park Avenue

New York, New York 10166

Attorneys for Amici Curiae

|BEST AVAILABLE COPY}

The Employers and Employer Organizations amici are:

American Nursery and Landscape Association

Associated Corset and Brassiere Manufacturers, Inc.

Greater Blouse, Skirt, Undergarment & Sportswear Association, Inc.

Levi Strauss & Co.

Industrial Association of Juvenile Apparel Manufacturers, Inc.

National Association of Blouse Manufacturers

New York Skirt and Sportswear Association, Inc.

Nicole Miller, Inc.

Plastic and Metal Products Manufacturing Association

San Francisco Small Business Advocates

San Francisco Small Business Network

Small Manufacturers Association of California

The United States Hispanic Chamber of Commerce

U.S.-Mexico Chamber of Commerce

Work in America Institute, Inc.

ABEST AVAILABLE COPY

TABLE OF CONTENTS

ee ii

INTEREST OF THE AMICI CURIAE .............ccccesceeseeeeenes |

STATEMENT OF THE CASE................cccccsceeceeseees heslecaanes 7

SUMMARY OF ARGUMENT ...0..........::cccccseccsseeeseeeseeeeennes 8

ESSERE SELES een 10

I. THE LEGAL ANALYSIS OF THE

SOLICITOR GENERAL IS CORRECT ................ 10

Il. FAIR COMPETITION REQUIRES THE

UNIFORM APPLICATION OF

REGULATORY STANDARD ..............:cccccceeseeeees 10

A. Regulation Imposes Costs That Must

Be Applied Evenly for Competition to

Iai nchiicdichptintitinditantenpemanenesnntegnenseqnecemncees 11

B The Competitive Significance of Even

Regulatory Costs Is Well Documented....... 14

C. The Even Application Of Labor

Regulations Is Particularly Significant

In Competitive, Labor-Intensive :

Industries with Low Profit Margins ............ 17

Il. FAIR COMPETITION IS A

CONGRESSIONAL GOAL OF THE

LABOR AND IMMIGRATION LAWS ................ 23

SS ES 30

TABLE OF AUTHORITIES

CASES

ABF Freight Sys., Inc. v. NLRB,

OG a EASE ee 22

A.P.R.A. Fuel Oil Buyers Group, Inc.,

320 N.L.R.B. 408, 1995 WL 803434 (Dec. 21, 1995)...... 28

Chesapeake Bay Found. v. Gwaltney,

611 F. Supp. 1542 (E.D. Va. 1985)............c.ccccccesseeeeseenees 15

Commercial Cleaning Services v. Colin Serv. Sys.,

-- F.3d --, No. 00-7571, 2001 WL 1426953

Wi es ac a 20

Contreras v. Corinthian Vigor Ins. Brokerage, Inc.,

25 F. Supp. 2d 1053 (N.D. Ca. 1998) ..........cccccceeeeeeneenees 30

Local 512, Warehouse and Office Workers’ Union v. NLRB,

yp Pe fk 30

McKennon v. Nashville Banner Publ'g Co.,

Sa Fie ee ctenbiatetniniattiahiecncctmenninmnatinne 22

National Licorice Co. v. NLRB,

SE Fr ee cenipctcitrtasigthinctnintamensshtiinmess 23

NLRB v. Apollo Tire Co., Inc.,

ot Bt eee 22

NLRB V. A.P.R.A. Fuel Oil Buyers Group, Inc.,

636 B.D SOG Cie Fae tectenesinecttesssinsmnenstins 29, 30

Patel v. Quality Inn South,

846 F.2d 700 (11th Cir. 1988)..0..........ccccccccecseeeeceeeeees 21, 30

Sure-Tan, Inc. v. NLRB,

ESE SAI a 29

United States v. Mac's Muffler Shop, Inc.,

Civ. A. No. C85-138R, 1986 WL 15443

EE 15

United States v. Mun. Auth.,

A Ee ee 14, 15

RULES AND STATUTES

Clean Water Act,

A Seen eee 14

Fair Labor Standards Act of 1938

ch. 676, § 2, 52 Stat. 1060 (1938) ..............cccccccesseeeeceeeeees 16

Fair Labor Standards Act ("FLSA")

29 U.S.C. § 201 ef seg. (2001) ...........cecceececcecceeseeeseeees 12, 16

ESS Se 17

ETE ae Ie 27

Federal Trade Commission Act

EE 16

Immigration Reform and Control Act of 1986 § 111(d),

Pub. L. No. 99-603, 100 Stat. 3359.00... ccccccccccecceceeeeeeeeee 27

Immigration Reform and Control Act of 1986 ("IRCA")

BS UB, © BRGa Ge ee, COGN) aaceccccccccsesscs<cecccccscescceces 12

RS A ee 24, 27

National Labor Relations Act ("NLRA")

Se rn Oe re GU, Go tctintettertenstinecicreretntnaniinmenss 7

te Oe ee CD cecrctnntictecsiedninniicatenteentenbeectintes 17,24

Occupational Safety and Health Act

29 U.S.C. § 651 ef Seq. (2001) .........erecsesseeeenesneeneeneeenennees 12

United States Supreme Court Rule

Be res Cin A caaictesiitetittinaitceteaniaiarrsittiaaiastictiniailimamansiianeamtias l

OTHER AUTHORITIES

132 Cong. Rec. H10584 (Oct. 15, 1986) (remarks of Rep.

Lungren, Ranking Member of the House Immigration

Subcommittee of the House Judiciary Committee, made

immediately prior to the final vote on IRCA on

64” Annual Report of the National Labor Relations Board,

for the Fiscal Year Ended September 30, 1999................. 13

Alan Barkema, et al., The New U.S. Meat Industry, in

FEDERAL RESERVE BANK OF KANSAS CITY,

ECONOMIC REVIEW 33 (2001) (available at

www.kc. frb.org/Publicat/econrev/PDF/2q0 1 bark.pdf)..... 19

George J. Borjas, et al., How Much Do Immigration and

Trade Affect Labor Market Outcomes?, in

BROOKINGS PAPERS ON ECONOMIC ACTIVITY,

Calculation of the Economic Benefit of Noncompliance

in EPA's Civil Penalty Enforcement Cases, Notice,

64 Fed. Reg. 32,948 (Jume 18, 1999) ...........ccccsceeeeeseenes 15

iv

Closing the Back Door — The Need for Employer

Sanctions, in Staff Report of the Select Commission

on Immigration and Refugee Policy 559

(U.S. Immigration Policy & the National

Rertawant Auge. 3B, 19B1) ...c.ccccccesscsccssesceccssocsocenensccococencoseees 18

Statement of Ann L. Combs, Assistant Secretary of

Labor for Pension and Welfare Benefits, et al.,

Congressional Testimony before U.S. House

Subcommittee on Labor, Health and Human

Services and Education, Committee on

Appropriations (May 23, 2001) (available at

www.dol.gov/_sec/media/congress/

Se ID erecocnsccszsssrssncsscavesccccssszevssevscassscnssscees 18

W. Mark Crain & Thomas D. Hopkins, The Impact

of Regulatory Costs on Small Firms,

RFP No. SBAHQ-00-R-0027

(U.S. Small Bus. Admin. 2001) .............:cscsssseeeeeeeees 12, 13

Economy and Efficiency in Government Procurement

Through Compliance With Certain en and

Naturalization Act Provisions,

61 Fed. Reg. 6,091 (Feb. 13, 1996)

SD, GRE ee: BD rteencctccsrscsztensessnnezcsctsenensecncesseees 28

Editorial, Limited Amnesty for Immigrants,

CHICAGO TRIBUNE, Aug. 6, 2001 ...........c.ccceecssseerseereeneeees 10

EEOC Enforcement Guidance on Remedies Available to

Undocumented Workers Under Federal Employment

Discrimination Laws, Number 915.002, in EEOC

COMPLIANCE MANUAL § 622, App. B (Oct. 26, 1999)..... 28

Environmental Protection Agency, ENVIRONMENTAL

INVESTMENTS: THE COST OF A CLEAN

ENVIRONMENT 2-1 (1990) ..........:ccceccssscsssseseseeeseceeeeeeseveeees 14

EPA: Incentives for Self-Policing: Discover, Disclosure,

Correction, and Preventic 1 of Violations, Notice,

60 Fed. Reg. 66,706 (Dec. 22, 1995)

ee a IID cocceincishtirisetecnsetnicteidecetdutnctarinectnecnes 15

EPA Science Advisory Board, Notification of

Public Advisory Committee Meetings,

66 Fed. Reg. 19,770 (Apr. 17, 2001) .............ccccsceeseeeeeseees 15

Statement of John R. Fraser, Deputy Administrator

Wage and Hour Division Employment Standards

Administration U.S. Department of Labor Before

the Subcommittee on Immigration and Claims of

the House Judiciary Committee (July 1, 1999),

available at www.house.gov/judiciary/fras0701.htm ....... 28

General Accounting Office, GARMENT INDUSTRY: EFFORTS

TO ADDRESS THE PREVALENCE AND CONDITIONS OF

ES ET 19

H.R. Rep. 98-1.5 (I) (Statement of Robert W.

Searby, Deputy Under Secretary for International

Labor Affairs, Dep't of Labor (Mar. 16, 1983).................. 26

H.R. Rep. No. 99-682 (1986), reprinted in

1986 U.S.C.C.A.N. 5649 .occccccccssssseees ORR eh ae 24, 26

JOSEPH JOHNSON, A REVIEW AND SYNTHESIS OF THE COST

OF WORKPLACE REGULATIONS (Regulatory Studies

Program, Mercatus Center, George Mason University,

Working Paper, Aug. 2001) ..............cc.scsssecsessenseeseesseneeenes 12

Thomas G. Krattenmaker and Steven C. Salopp,

Anticompetitive Exclusion: Raising Rivals'

Costs to Achieve Power Over Price,

een Se icctsentusectentinccemncensesesseceszeseveeveees 11

NANCY HOMEL MONTWEILER, THE IMMIGRATION

REFORM LAW OF 1986 (BNA 1986) ....cccc.cssccccssssssseesssseeen 27

Letter from James C. Miller II], FTC Chairman, to the

Hon. John D. Dingell, Chairman, U.S. House

Committee on Energy and Commerce entitled

"FTC Policy Statement on Deception,” n.58

(Oct. 14, 1983) (available at

http://www. ftc.gov/bep/policystmt/ad-decept.htm) .......... 16

Memorandum of Understanding Between the Immigration

and Naturalization Service Department of Justice

and the Employment Standards Administration

Department of Labor, Nov. 23, 1998,

reprinted in 227 DAILY LAB. REP. E. (Nov. 25, 1998) ..... 28

Press Release, FTC Chairman Steiger Stresses Uniform

Law Enforcement to Protect Both Consumers and

Competition (Mar. 18, 1992) (available at

http://www. ftc.gov/opa/predawn/F93/jds-dalla4.htm)...... 16

Statement of Joe Razo, Director, Concentrated

Enforcement Program, Division of Labor

Standards Enforcement, U.S. Department of

Labor Before the Select Commission on

Immigration and Refugee Policy, Feb. 5, 1980,

in Staff Report of the Select Commission on

Immigration and Refugee Policy; App. E,

Supplement to the Final Report and

Recommendations of the Select Commission on

Immigration and Refugee Policy 243 (April 30, 1981). ... 25

vii

Bernard D. Reams, Jr. and Mary Ann Nelson, /mmigration

Reform And The Simpson-Rodino Act: A Legislative

History Of The Immigration Reform And Control Act

Of 1986 (P.L. 99-603) With Related Documents

And Secondary Sources,

22 INT'L J. LEGAL INFO. 12 (1994) .0.........cccsccceseesscesseeencees 25

Cindy Rodriguez, For Labor Activists, Unlikely Alliance,

THE BOSTON GLOBE, May 2, 2001, at B10... eee 10

a Fee a ccteececnicneenniitnitibtiniinipttitaariennetnesigndnmiinn 26

Philip Saunders Jr., Civil Penalties and the Economic

Benefits of Noncompliance: A Better Alternative

for Attorneys than EPA's BEN Model,

22 ENVTL. L. Rep. 10003 (Jam. 1992). ...........ccccccecceseeeeeees 11

Richard B. Stewart, Symposium, Environmental Regulation

and International Competitiveness,

De is SC hcttniteseneniccnscesnciennnsegernenennasegion 14

U.S. Department of Labor, A PROFILE OF U.S. FARM

WORKERS: DEMOGRAPHICS, HOUSEHOLD COMPOSITION,

INCOME, AND USE OF SERVICES 1-5 (1997).............ccss0e00- 19

U.S. Immigration & Naturalization Serv., THE TRIENNIAL

COMPREHENSIVE REPORT ON IMMIGRATION (1999)........... 10

Harry Valetk, "J Cannot Eat Air!": An Economic Analysis of

International Immigration Law For The 21st Century,

7 CARDOZO J. INT'L & Comp. L. 141 (1999).................00.. 19

Harry Weiss, Economic Coverage of the Fair Labor

Standards Act,

FS, 5. Ba, Ga Ca invictcencsencneniscegsternisntiiscinsnnsensts 17

Aaron Zitner, Immigrant Tally Doubles in Census Count:

U.S. has Twice As Many Undocumented Workers as

Estimate, LOS ANGELES TIMES, Mar. 10, 2001, at Al

10

This brief amici curiae is submitted on behalf of

employers, industry associations, business networks,

chambers of commerce, organizations of small

manufacturers, and a business-labor coalition (collectively,

the “Employer Organizations”) to urge affirmance of the en

banc decision of the United States Court of Appeals for the

District of Columbia Circuit.’

INTEREST OF THE AMICI CURIAE

Amici and their members engage in business in a

wide range of United States industries, including sectors that

employ significant numbers of recent immigrants and other

low-wage workers. Amici and their members include more

than 45,000 companies located across the country.

This case arises against a backdrop of myriad federal

and state laws governing labor relations, terms and

conditions of employment, and immigration policy, each of

which directly regulates the actions of amici and their

members. The Employer Organizations have a vital interest

in the outcome of this case, because the uniform application

of legal rules to all employers is essential to the maintenance

of a level playing field upon which amici can fairly compete.

' Counsel for amici curiae authored this brief in its entirety. No

person or entity made 2 monetary contribution to the preparation or

submission of the brief. See Sup. CT. R. 37.6. Further, the Office of

the Solicitor General, on behalf of the Respondent, and counsel for

Petitioner Hoffman have granted consent for amici curiae to file this

brief pursuant to Sup. CT. R. 37.2(a). See Letter from Sol. Gen.

Theodore B. Olson to Jeffrey H. Drichta dated Dec. 6, 2001; Letter

from Jeffrey H. Drichta to Maurice Baskin dated Nov. 27, 2001.

Original copies of these consent letters have been filed with the

Clerk of the Court contemporaneously with this brief.

Amici Employer Organizations have a powerful stake in

assuring the imposition of consistent sanctions against any

employer who attempts to reduce costs by skirting the law

by, for instance, ignoring health, safety, environmental,

consumer protection, wage and hour, or antidiscrimination

laws, or by evading the requirements of the National Labor

Relations Act (“NLRA”) that are at issue here.

Amici Employer Organizations hold differing views

about the appropriate types and levels of government

regulation of business, and riany amici are active in efforts

to reform these costly and often inefficient rules.

Nevertheless, the Employer Organizations and _ the

companies they represent are responsible corporate citizens

who endeavor to comply with the Nation’s laws and business

regulations as written, and whose businesses would be

threatened by the increased, unfair competition from less

responsible employers that would result if this Court

reversed the holding below.

The amici Employers and Employer Organizations

are:

American Nursery and Landscape Association

(“ANLA”), founded in 1875, representing agricultural,

service, and retail businesses that grow, sell, and use

landscape plants. ANLA's 2,300 active member firms

produce an estimated seventy-five percent of the United

States’ landscape plant material. Through the membership

of state and regional associations, ANLA represents an

additional 15,000 small and family farms and businesses.

ANLA's chief purpose is to advocate the industry's interests

before government on labor, employment, tax,

environmental, trade, and related business issues. The

wholesale value of nursery and greenhouse plants produced

annually is estimated to exceed $12 billion. The industry

employs an estimated 600,000 to 750,000 workers during

peak seasons. Greater than fifty percent of the peak-season

workforce is believed to consist of immigrants.

Associated Corset and Brassiere Manufacturers, Inc.,

founded in 1933, representing girdle and brassiere

manufacturers. The Association’s members employ sample

makers, cutters, sewing machine operators, and distribution

workers. The clothing they produce is sold to large national

department stores, discount stores, mail order houses, and

specialty stores throughout the United States. Members are

parties to collective bargaining agreements that require them

to maintain high standards of wages and shop conditions.

Greater Blouse, Skirt, Undergarment & Sportswear

Association, Inc., an association of contractors in New

York's garment industry. Established in 1933, the members

of the association are small to medium size entrepreneurs

who produce garments for major jobbers and manufacturers

in the industry. Most of the workers in this industry are

recent immigrants. The membership of the association has

declined in recent years because of severe competition from

sweatshop contractors who constantly violate labor and other

laws of the workplace.

Levi Strauss & Co. (“LS&CO”), one of the world’s

largest brand-name apparel manufacturers and marketers

with sales in more than eighty countries. LS&CO products

are sold under the Levi’s®, Dockers®, and Slates® brands.

LS&CO was founded in 1873 by Levi Strauss and Nevada

tailor Jacob Davis. Today, the Levi’s® trademark is one of

the most recognized in the world and is registered in more

than 160 countries. The company is privately held by

descendants of the family of Levi Strauss.

Industrial Association of Juvenile Apparel

Manufacturers, Inc., formed in 1936 to represent employers

in the garment industry who specialize in the production of

children's apparel and swimwear. The Association’s

3

members have entered into collective bargaining agreements

since its founding. The items they produce are sold to

children’s wear shops and to department stores like Wal-

Mart, Kmart, and Sears. Members face stiff competition

from contracting shops that engage in low-wage production.

National Association of Blouse Manufacturers,

founded in 1933 to represent a number of women's clothing

manufacturers in their labor relations, public relations,

industry promotion, and governmental affairs. Its members

have their merchandise produced in contracting shops that

employ workers covered by collective bargaining

agreements. Maintaining decent workplace standards is an

important goal of the association and its members.

New York Skirt and Sportswear Association, Inc.,

founded in 1933 and representing manufacturers and jobbers —

who produce women's sportswear at their own facilities or in

contracting shops. Members of the association supply their

merchandise to major retail stores like Macy's, JC Penney,

Kmart, and Sears. More than 15,000 workers (largely recent

immigrants) are employed by contractors who produce

garments for members of the association. Members face

unfair competition from contractors who ignore labor, health,

and safety standards.

Nicole Miller, Lid., a world-class apparel design

company. Nicole Miller designs for and women are

found in fine specialty retailers like Neiman Marcus, Saks

Fifth Avenue, Bloomingdale’s, Lord & Taylor, as well as

over 1,200 boutiques across the United States. In a recent

survey, eight out of ten women in the United States between

the ages of twenty-five and fifty recognized the Nicole

Miller brand. In addition to manufacturing, Nicole Miller

Plastic and Metal Products Manufacturing

Association, founded in 1936 to represent management in

industrial relations, quality control, and workplace

4

environment issues. The association represents over 100

manufacturers of small plastic items. Association members

abide by union contracts that guarantee minimum union

standards and conditions. The members collectively employ

over 8,000 workers, and they are vulnerable to competition

from manufacturers who pay substandard wages.

San Francisco Small Business Advocates (“SFSBA”),

a group of executives of small businesses based in San

Francisco who operate on a national basis. The purpose of

SFSBA is to advocate for small business on public policy

issues on the local, state, and national levels. Among other

initiatives, the organization has focused on energy policy in

California and the implementation of the Workforce

Investment Act in California and San Francisco.

San Francisco Small Business Network (“SFSBN”),

founded in 1984 and comprised of nineteen diverse member

organizations representing 19,000 small businesses.

Member firms range from professional societies to nonprofit

resource centers, from ethnic chambers of commerce to

neighborhood business alliances. SFSBN advocates for

legislation that promotes the success of small businesses and

supports appointments of small business leaders to

prominent policymaking positions, among other activities.

Small Manufacturers Association of California, a

statewide association headquartered in Glendale, California,

representing approximately 10,000 small manufacturing

companies in California. The grass roots organization

provides advocacy aimed at retaining and supporting the

manufacturing base, and preserving manufacturing jobs, in

the most populated state in the Nation.

The United States Hispanic Chamber of Commerce

(“USHCC”), the preeminent Hispanic organization

dedicated to representing, promoting, and advocating for the

1.2 million Hispanic owned businesses in the U.S. and

Puerto Rico. In addition to actively promoting the economic

5

growth and development of Hispanic businesses, the

USHCC serves as the umbrella organization for 200 local

U.S.-Mexico Chamber of Commerce (“USMCOC”),

a 501(c)(6), non-profit business association chartered in

Washington, D.C. by distinguished Mexican and US.

businessmen, with fifteen offices in the United States and

seven offices in Mexico. Since 1921, the USMCOC has

been fostering business, investment, and trade relationships

between the United States and Mexico. The USMCOC

represents more than 2,000 businesses in the United States

and Mexico.

Work in America Institute, Inc., a non-partisan, not-

for-profit organization dedicated to the advancement of

productivity and quality of working life, and to promoting

partnership between management and labor. Governed by a

tri-partite Board of Directors representing major

corporations, international labor unions, and the public

sector, the Institute conducts research and produces public

events in support of its mission. Since its founding in 1975,

the Institute has served over 400 different organizations

through its membership arm.

STATEMENT OF THE CASE

The background of this case is set forth fully in the

briefs of the parties. Certain undisputed facts, however,

underscore the importance of this case to fair business

competition:

1. Petitioner Hoffman Plastic Compounds, Inc.

(“Hoffman”) does not dispute that it violated the

NLRA, 29 U.S.C. § 151 ef seg. (2001) and

engaged in illegal layoffs. See Pet. App. at 6a.

2. Hoffman does not contest that one of the illegally

laid-off workers had indicated on his employment

application that he was not authorized to work in

the United States. See Pet. App. at 94a-95a, n.10.

3. In fashioning a remedy for Hoffman’s violation of

the law, Respondent, the National Labor Relations

Board (“the Board”), ruled that Hoffman was not

required to reinstate this undocumented employee.

See Pet. App. at 82a-83a.

4. The Board awarded the same type of backpay

relief that it routinely awards in other cases where

the NLRA is violated -- in this case, applying the

after-acquired evidence rule to limit backpay to

the period from the date of the unlawful layoff

until the date when the worker testified that he

was an undocumented immigrant. See Pet. App.

at 94a-95a.

As discussed below, reversing the relief granted, on

these facts, would provide law-breaking employers such as

Hoffman an unfair competitive advantage over those who

obey the law, a result that Congress specifically intended to

avoid.

SUMMARY OF ARGUMENT

The rule urged by Petitioner Hoffman would be bad

for business.

Fair competition would suffer if the decision below

were reversed. Amici are law-abiding employers who honor

labor and immigration laws, even as they strive to reform

these regulations to reflect better sound business policy.

Although many employers specifically object to backpay as

a remedy for unlawful discharge under the NLRA, amici

believe that as long as federal labor law recognizes backpay

as a remedy, it would be folly to carve out an exception that

exempts employers of undocumented immigrants from all

backpay liability. Such an exemption would grant an unfair

competitive advantage to outlaw “sweatshops” and other

scofflaw businesses that hire undocumented workers,

particularly in cost-sensitive, labor-intensive industries that

depend upon low-skilled workers. It would advantage law

breakers at the expense of law abiders. Eliminating backpay

liability would also unfairly absolve the employer, alone,

from responsibility, in a situation where both the employer

and the employee have engaged in unlawful behavior -- a

particularly inappropriate outcome in light of the significant

adverse impact such a holding would have on business

competition.

Fair competition was an objective of Congress when

it adopted the specific labor and immigration laws ct issue.

The agencies that implement these statutes and the federal

The decision below is consistent with these precedents. A

contrary ruling that exempts employers of undocumented

Given the framework of extensive government regulation of

the workplace, amici caution the Court to refrain from

endorsing the message that businesses violating federal laws

or regulations may compete unfairly with those who obey

them.

ARGUMENT

I. THE LEGAL ANALYSIS OF THE SOLICITOR

GENERAL IS CORRECT

Amici endorse the Solicitor General’s reconciliation

of federal labor and immigration statutes and their proper

application to the facts of this case. For the reasons set forth

below, amici contend that sound business policy also favors

the construction of the relevant statutes that the Solicitor

General advances.

Il. FAIR COMPETITION REQUIRES THE

UNIFORM APPLICATION OF REGULATORY

STANDARDS

Fundamental principles of economics and fair

competition weigh heavily against the creation of an

exemption for employers of undocumented workers from

ordinary backpay liability. Although estimates vary, there

may be as many as thirteen million undocumented persons in

the United States today, nearly all of working age,’ and the

NLRA should apply uniformly to all companies that employ

them.

2 Compare U.S. Immigration and Naturalization Serv., THE

TRIENNIAL COMPREHENSIVE REPORT ON IMMIGRATION, 56 (1999)

(estimating undocumented population at 4.6 to 5.4 million as of

1996), with Editorial, Limited Amnesty for Immigrants, CHICAGO

TRIBUNE, Aug. 6, 2001 (estimating undocumented population at six

million), and Cindy Rodriguez, For Labor Activists, Unlikely

Alliance, THE BOSTON GLOBE, May 2, 2001, at Bi (eleven million in

2000), and Aaron Zitner, Immigrant Tally Doubles in Census Count:

U.S. Has Twice As Many Undocumented Workers As Estimated, LOS

ANGELES TIMES, Mar. 10, 2001, at Al (thirteen million in 2000).

10

A. Regulation Imposes Costs That Must Be

Applied Evenly for Competition to Be Fair

Basic economics teaches that a firm with a lower cost

structure, over time, will be more successful than a firm with

a relatively higher cost structure (all other factors being

equal), in any price-competitive industry. With a lower cost

structure, the successful firm will choose between matching

the prices of the higher-cost firm (and achieving a lower

overall market share) or undercutting prices (and achieving a

higher overall market share). Either choice will result in

higher revenues/profits for the low-cost firm relative to the

high-cost firm.’

This economic principle holds true whether the

successful firm achieves lower costs through greater

efficiency or by evading costs of regulatory compliance. As

one commentator has explained, the

[djirect benefits [of avoiding regulatory

compliance] may be retained with the [firm];

alternatively they may be passed on [to] the

customers in the form of lower prices. Either way

they may produce indirect benefits in terms of

product enhancement, increased market share, or

other factors that affect profitability.‘

> See, eg. Thomas G. Krattenmaker and Steven C. Salopp,

Anticompetitive Exclusion: Raising Rivals’ Costs to Achieve Power

Over Price, 96 YALE L.J. 209, 224 (1986) (noting that raising a

rival’s costs can be a particularly effective strategy that need not

entail either a short-term sacrifice in profits or classical market

power in order to succeed).

* Philip Saunders Jr., Civil Penalties and the Economic Benefits of

Noncompliance: A Better Alternative for Attorneys Than EPA's

BEN Model, 22 ENVTL. L. REP. 10003 (Jan. 1992).

11

When one firm gains a cost advantage by avoiding

regulations, other existing competitors will suffer a systemic

competitive disadvantage as a result, and will be forced

either to exit the market or to adopt similar illegal tactics to

replicate the lower cost structure of the successful firm in a

perverse “race to the bottom” scenario.

Federal and state regulations impose significant costs

on American companies that comply with the laws. By one

estimate, federal regulations imposed an $843 billion cost of

compliance on the American economy last year.’ If so, this

burden represents roughly eight percent of the Gross

Domestic Product, or $8,164 for every American househoid.°

Federal workplace regulations -- including the

NLRA, Immigration Reform and Control Act of 1986

(“IRCA”), Fair Labor Standards Act (“FLSA”),® and

Occupational Safety and Health Act,’ -- are estimated to

have imposed a cost on United States businesses of roughly

$779 per employee in 2000.'° Taking just unfair labor

* See W. Mark Crain & Thomas D. Hopkins, The Impact of

Regulatory Costs on Small Firms, RFP No. SBAHQ-00-R-0027, at 1

(U.S. Small Bus. Admin. 2001).

*. =

7 $ULS.C. § 1324a et seg. (2001).

* 29 U.S.C. § 201 et seg. (2001).

% 29 U.S.C. § 651 et seg. (2001).

‘© See Crain & Hopkins, supra, at 3. According to another study, in

2000 the direct cost to the United States economy of compliance

with the NLRA alone was between $3.95 and $30 billion. See

JOSEPH JOHNSON, A REVIEW AND SYNTHESIS OF THE COST OF

WORKPLACE REGULATIONS 19 (Regulatory Studies Program,

Mercatus Center, George Mason University, Working Paper Aug.

2001).

12

practice cases closed by the NLRB, in 1999, the most recent

year for which figures are available, employers paid more

than $58 million in backpay to 22,669 employees, or roughly

$2,600 per employee.'' On average, small businesses (firms

with fewer than twenty employees) face an annual burden

from workplace regulations of an estimated $829 per

employee, while large businesses (firms with more than 500

employees) face a cost of $698 per employee.’

Although amici seek to reform or eliminate many of

these regulatory burdens -- including specifically the

backpay remedy the Board may impose under the NLRA --

so long as such laws and regulations are in place, the costs of

regulatory compliance must be borne evenly for competition

to be fair. From an economic perspective, firms that avoid

the costs of workplace regulation become lower-cost firms

that, over time, will win in their competition against firms

that obey the laws and thereby become higher-cost firms.

Therefore, a precondition to any coherent set of workplace

regulations in a competitive market economy must be equal

application of the regulatory burden, in order to avoid

advantaging law-breakers over law-abiders.

Simply put, umeven entorcement creates unfair

economic advantages for those firms that, for whatever

reason, are not required to comply with this Nation’s

regulatory regime. Whether a regulation is wise or foolish,

so long as it is on the books, all employers should equally be

required to obey it as a precondition to participation in the

American economy.

'! See 64* Annual Report of the National Labor Relations Board, for

the Fiscal Year Ended September 30, 1999, at 113, Table 4.

12 See Crain & Hopkins, supra, at 3.

13

B. The Competitive Significance of Even

Regulatory Costs Is Well Documented

Congress, federal agencies, and the courts have

recognized, in a variety of contexts, the principle that uneven

enforcement of regulations will foster unfair competition.

All three branches of government have acted to shape

regulatory regimes so as to avoid unfair, discriminatory

exemptions such as Hoffman now seeks to create.

To take one typical example, companies that fail to

comply with the Nation’s extensive environmental laws

plainly obtain an economic benefit from doing so --

sometimes achieving a considerable advantage over their

competitors.'? To avoid such an unfair advantage and

maintain a “ ‘level . . . economic playing field,’ ”'* Congress

delegated to the Environmental Protection Agency (“EPA”)

and the courts the eer to recover from a violator aay

economic benefit obtained.” As a result:

A cornerstone of the EPA’s civil penalty program is

recapturing the economic benefit that a violator may

'S The EPA estimates that the cost of compliance with its regulations

has risen from $30 billion (0.9 percent of GDP) in 1972, to as much

as $185 billion (2.8 percent of GDP) in 2000. See Environmental

Protection Agency, ENVIRONMENTAL INVESTMENTS: THE COST OF A

CLEAN ENVIRONMENT 2-1 (1990) (all figures in 1990 dollars). See

generally Richard B. Stewart, Symposium, E£nvironmentai

Regulation And International Competitiveness, 102 YALE L.J. 2039,

2062-63 (1993).

'* United States v. Mun. Auth., 150 F.3d 259, 263-64 (3d Cir. 1998)

( nprvend itted).

'S For example, the Clean Water Act, 33 U.S.C. § 1319(d) (2001), like

other environmental laws, directs that sanctions against violators

shall be based, in part, on any economic benefits “resulting from the

violation.”

14

have gained from illegal activity. Recapture helps

level the playing field by preventing violators from

obtaining an unfair financial advantage over their

competitors who made the necessary expenditures

for environmental compliance. '®

Within this framework, courts and the EPA regularly fashion

remedies to protect fair competition from violators of the

environmental laws.'’

'© Calculation of the Economic Benefit of Noncompliance in EPA’s

Civil Penalty Enforcement Cases, Notice, 64 Fed. Reg. 32,948 (June

18, 1999). See also EPA Science Advisory Board, Notification of

Public Advisory Committee Meetings, 66 Fed. Reg. 19,770, 19,771

(Apr. 17, 2001) (identifying types of economic benefits a violator ~

may obtain).

'’ For example, in Mun. Auth., 150 F.3d at 262, a milk processor that

made nearly 1,800 illegal discharges of wastewater because it

“viewed the concomitant reduction in earnings as too high a price to

pay for compliance with the Clean Water Act,” was sanctioned with

a fine that recouped the ill-gotten gain in order to “achieve the

leveling of the playing field intended by Congress.” Jd. at 267.

Other courts, in varying contexts, have similarly imposed penalties

designed to remove any competitive advantage gained from violating

environmental regulations. See, e.g., United States v. Mac's Muffler

Shop, Inc., Civ. A. No. C85-138R. 1986 WL 15443, at *10 (N_D.

Ga. Nov. 4, 1986) (Clean Air case removing economic benefits of

non-compliance); Chesapeake Bay Found. v. Gwaltney, 611 F. Supp.

1542, 1558 (E.D. Va. 1985) (same, under Clean Water Act).

Similarly, the EPA will waive a range of civil and criminal penalties

for firms that promptly disclose environmental violations pursuant to

voluntary self-audits, but the Agency retains “full discretion to

recover any economic benefit gained as a result of noncompliance to

preserve a ‘level playing field’ in which violators do not gain a

competitive advantage over regulated entities that do comply.” EPA:

Incentives for Self-Policing: Discovery, Disclosure, Correction, and

Prevention of Violations, Notice, 60 Fed. Reg. 66,706, 66,712 (Dec.

22, 1995) (final policy statement).

15

Other examples of this principle at work appear

throughout the federal regulatory regime.'* The impact on

competition from uneven regulatory burdens is even

reflected in the history of the Fair Labor Standards Act

(“FLSA”).'? First enacted in 1938, this law sought to

eliminate price competition based on unacceptable labor

conditions by removing from the channels of interstate

commerce goods produced by paying wages of less than

twenty-five cents an hour, requiring more than forty-four

hours of work per week without overtime pay, or utilizing

child labor.”” As originally enacted, however, the FLSA did

not apply to a company as a unit, but instead specifically to

those employees within a company who were engaged “in

commerce or in the production of goods for commerce,” as

defined in the Act.”’ As a result, the application of the FLSA

'® For example, Section 5 of the Federal Trade Commission Act, 15

U.S.C. § 45(a)(1), exists to protect consumers from unfair trade

practices, but the Federal Trade Commission acknowledges the need

for uniform enforcement to prevent injury to competitors as well.

See, e.g., Letter from James C. Miller II, FTC Chairman, to the

Hon. John D. Dingell, Chairman, U.S. House Committee on Energy

and Commerce entitled “FTC Policy Statement on Deception,” n.58

(Oct. 14, 1983) (available at http://www.ftc.gov/bcp/policystmt/ad-

decept.htm). Indeed, in 1992, FTC Chairwoman Janet C. Steiger

identified the need to safeguard “truthful competition” through

uniform enforcement of the law as a core objective of the

Commission’s consumer protection program. See Press Release,

Chairman Steiger Stresses Uniform Law Enforcement ‘o Protect

Both Consumers and Competition (Mar. 8, 1992) (available at

' 29US.C. § 201 et seg. (2001).

20 See Fair Labor Standards Act of 1938, ch. 676, § 2, 52 Stat. 1060

(1938).

21 See id.

16

depended on the activities engaged in by particular

employees, so that directly competing firms could receive

different treatment under the Act depending on the structure

of their workforces and their methods of production. A 1944

critique of the Act noted that this unequal coverage allowed

the excluded segments of an industry to compete unfairly

with those that were subject to the law’s requirements.

Congress eliminated this unfair anomaly when it

subsequently amended the FLSA to extend its provisions

uniformly to every “[e]nterprise engaged in commerce or the

production of goods in commerce.’

As these examples underscore, all branches of

government have widely recognized the impact on business

competition from uneven regulatory burdens, and they

should be avoided absent a clear statutory mandate.

C. The Even Application Of Labor

Regulations Is Particularly Significant In

Competitive, Labor-Intensive Industries

with Low Profit Margins

Price-competitive, labor-intensive industries are

particularly at risk from any uneven application of regulatory

burdens. Basic rules of economics, again, teach that unequal

regulatory burdens will have the most severe impact in

highly competitive industries with low entry barriers,

#2 Harry Weiss, Economic Coverage of the Fair Labor Standards Act,

58 Q. J. ECON. 460, 472-73 (1944).

% 29U.S.C. § 203 (2001). Congressional action was required because,

unlike the NLRA, the statutory provisions of the FLSA required the

disparate treatment. The NLRA, to the contrary, does not exempt

employers of undocumented workers from its scope, see 29 U.S.C. §

152(3), and Congress has expressed its intent that the law should be

applied uniformly to avoid unfair competition.

17

operating in price-sensitive markets where consumers base

purchasing decisions primarily on price. In such industries,

small cost variances can spell the difference between a firm’s

success or failure.

The anti-competitive impact of uneven regulatory

burdens will thus be felt with special force in the very

industries that typically employ large numbers of immigrants

and low-wage workers. These tend to be low-profit

industries that are highly competitive and labor-intensive,

where low profit margins create huge incentives to gain

every possible cost advantage.* In these markets,

competitors such as amici, who play by the rules, will suffer

at the hands of those who obtain even a small cost advantage

through unequal regulatory burdens.

The garment industry is a typical industry. As the

General Accounting Office has observed, the strong

** A Congressional commission in the early 1980’s noted that

undocumented workers were concentrated in agricultural, textile,

service and other low-wage industries. See Closing the Back Door -

The Need for Employer Sanctions, in STAFF REPORT OF THE SELECT

COMMISSION ON IMMIGRATION AND REFUGEE POLICY a to

Immigration Policy & The National Interest Apr. 30, 1981). More

recent economic studies show that the largest percentages of

immigrants, legal and illegal, work in low-skill jobs in the textile,

manufacturing, agriculture, construction, and wholesale and retail

trade industries. See George J. Borjas, et al, How Much Do

Immigration and Trade Affect Labor Market Outcomes?, in

BROOKINGS PAPERS ON ECONOMIC ACTIVITY, No. 1, at 9 (Brookings

Institute 1997). See also Statement of Ann L. Combs, Assistant

Secretary of Labor for Pension and Welfare Benefits, et al., before

U.S. House Subcomm. on Labor, Health and Human Services and

Educ., Comm. on Appropriations (May 23, 2001) (available at

http://www.dol.gov/_sec/media/congress/052301workpro.htm) (low-

wage industries such as agriculture, garment, healthcare, services,

restaurants, and hotels/motels continue to employ unmigrants).

18

incentives to gain even the smallest cost advantage has led

some unscrupulous garment employers to skirt the law:

Regarding economic factors, many of the experts

we spoke with [noted] . . . the intense price-

competitive dynamics of the garment industry . . . .

The low domestic start-up costs allow easy

contractor entry, ensuring manufacturers a large

number of contractors bidding against each other

for work. This competition is further heightened by

the ability of retailers and manufacturers to import

low-priced garments and the typical presence of an

immigrant and primanly undocumented workforce,

often with limited employment opportunities.”°

Similar economic pressures exist in meatpacking and

agriculture, which are also low margin, labor-intensive

industries facing great pressure to control costs.”* Like the

garment industry, they are also industries where large

numbers of undocumented workers are employed,”’ and thus

> U.S. General Accounting Office, GARMENT INDUSTRY: EFFORTS TO

ADDRESS THE PREVALENCE AND CONDITIONS OF SWEATSHOPS 9-10

(Nov. 1994).

** See Alan Barkema, et al., The New U.S. Meat Industry, in FEDERAL

RESERVE BANK OF KANSAS CITY, ECONOMIC REVIEW 33, 37 (2001)

(available at http://www.kc.frb.org/publicat/econrev/PDF/2q0 | bark.

pdf).

2” The U.S. Department of Labor estimates that thirty-seven percent of

all farmworkers in the U.S. are not legally authorized to work in this

country. See U.S. Department of Labor, A PROFILE OF U.S. FARM

WORKERS: DEMOGRAPHICS, HOUSEHOLD COMPOSITION, INCOME,

AND USE OF SERVICES 1-5 (1997). The Immigration and

Naturalization District Director estimated in 1999 that out of 220

meat packing plants in lowa and Nebraska, twenty-five percent

employ illegal immigrants. See Harry Valetk, “/ Cannot Eat Air!”

(continued...)

19

industries where any uneven enforcement of the labor laws

can create a huge competitive advantage.

The Second Circuit recently recognized these

dynamics in a case arising in the building services industry,

another price-sensitive sector with a low-wage, largeiy

immigrant workforce. In Commercial Cleaning Services,

LLC v. Colin Service Systems, Inc.,” a Connecticut building

services company alleged that a much larger competitor had

“obtained a significant business advantage over other firms

in the ‘highly competitive’ and price-sensitive cleaning

services industry,” by employing undocumented workers at

less than the prevailing wage and failing to pay taxes or

worker compensation insurance premiums.” Writing for the

Second Circuit, Judge Leval reversed the district court’s

dismissal, concluding that the small firm had stated a RICO

claim that by “illegally hiring undocumented alien labor,

[defendant] was able to hire cheaper labor and compete

unfairly . underbid/ ding] the plaintiffs and tak[ing]

business from them.””°

In short, the adverse consequences for business

competition that would follow from a reversal in this case

are real and direct. Petitioner argues that reversal is

warranted nonetheless because an affirmance would

“reward” illegal entry and document fraud, and encourage

(continued...)

An Economic Analysis of International Immigration Law For The

21” Century, 7 CARDOZO J. INT’L & Comp. L. 141, 164 (1999).

% — F.3d —, 2001 WL 1426953, No. 00-7571 (2d Cir. Nov. 15,

2001).

2% Id. at*1.

Id. at *5.

undocumented workers to stay.” As unappealing as this

outcome may be (including to amici Employer

Organizations), the result plainly is the lesser of two evils.

However the Court rules, a wrongdoer will benefit: reversal

rewards a rogue employer who violated the labor laws, while

affirmance benefits an undocumented immigrant who

worked in this country illegally. But, only a reversal will

cause substantial competitive harm, while affirming the

limited backpay remedy approved by the court below will

have no similar adverse economic effect.””

The rule approved by the D.C. Circuit takes account

of the wrongdoing by both sides, and fashions a remedy that

effectively balances the equities without absolving either

employer or employee. The relief ordered by the court does

not include reinstatement to the illegally discharged worker,

and grants him only limited back-pay. This is precisely the

type of balancing approach this Court has taken in other

labor cases, where employers have claimed they should be

"Pet. Br. at 24-25. See also Brief of Amici Curiae Equal Employment

Advisory Council et al. at 5-6.

2 Some have argued that affirming the en banc decision will

encourage future illegal immigration by creating a “windfall” for

Brief of Amici Curiae Equal Employment Advisory Council et al. at

18-19. However, amici Employer Organizations are unaware of any

evidence that the possibility of earning backpay for wrongful

discharge under the NLRA has ever attracted illegal ummugrants to

America, and find the suggestion fanciful. Cf Patel v. Quality Inn

South, 846 F.2d 700, 704 (11th Cir. 1988) (“We doubt, however,

that many illegal aliens come to this country to gain the protection of

our labor laws. Rather it is the hope of getting a job -- at any wage --

that prompts most illegal aliens to cross our borders”). The

“windfall” to employers who avoid backpay liability by hiring

undocumented employees, on the other hand, is beyond dispute

21

excused from all liability for an illegal discharge because of

an employee’s own wrongful behavior.

For example, in McKennon v. Nashville Banner

Publ’g Co., an employer argued unsuccessfully that its

discovery of a worker’s past wrongdoing, after the worker

had been discharged and sued under a federal anti-

discrimination statute, should extinguish all liability for the

discharge. Justice Kennedy disagreed on behalf of an

“rejected the unclean hands defense where a private suit

serves important public purposes.””> The Court ultimately

held that, in light of “both the deterrence and the

compensation objectives” of the employment statute, “(i]t

would not accord with this scheme if after-acquired evidence

of wrongdoing that would have resulted in termination

operates, in every instance, to bar all relief for an earlier

violation of the Act.””* Rather, this Court approved the very

after-acquired evidence rule that the Board applied in this

case, and which Hoffman now strains to evade.

513 U.S. 352 (1995).

* See id. at 355-56.

> See id. at 360 (quotations and citation omitted).

%* Id. at 359.

7 See id. at 362-63. See also ABF Freight Sys., Inc. v. NLRB, 510 U.S.

317 (1994) (employee’s false testimony under oath in NLRB

wrongful discharge proceeding does not absolutely bar award of

reinstatement with backpay); see id. at 325 (Kennedy, J. concurring)

(noting that “[ojur law must not become so caught up in procedural

niceties that it fails to sort out simple instances of right from wrong

and give some redress for the latter”). See NLRB v. Apollo Tire Co.,

Inc., 604 F.2d 1180, 1884 (9* Cir. 1979) (Kennedy J., concurring)

(enforcing NLRB order that imcluded backpay for wrongfully

(continued...)

22

However distasteful it may seem to award limited

backpay to an undocumented worker, the blanket immunity

Hoffman seeks would be far more destructive, creating a

new incentive to hire undocumented workers that does not

currently exist and resulting in unfair business competition to

amici.

Ill. FAIR COMPETITION IS A CONGRESSIONAL

GOAL OF THE LABOR AND IMMIGRATION

LAWS

Reversing the court below would not just be bad for

business competition, it would be contrary to the intent of

Congress when it crafted the Nation’s labor and immigration

laws. Congress has made plain its desire to maintain fair

business competition through both the NLRA and IRCA, the

specific statutes at issue here.

From the earliest days of the NLRA, this Court has

underscored that both the public’s right and the Board’s duty

under that Act “extend not only to the prevention of unfair

practices by the employer in the future, but to the prevention

of his enjoyment of any advantage he has gained by violation

of the Act.””® One of the ways that Congress acted to avoid

the potential for any unfair advantages under the NLRA was

to impose from the outset a definition of an “employer”

subject to the law that does not differentiate those who

(continued. ..)

were inapplicable to workers who are illegal aliens, we would leave

he'pless the very persons who most need protection from

exploitative employer practices such as occurred in this case”).

** National Licorice Co. v. NLRB, 309 U.S. 350, 364 (1940) (emphasis

added).

23

employ undocumented workers from others.*? Congress

preserved this uniform application of the NLRA even as it

acted to strengthen immigration control by imposing through

IRCA separate sanctions on employers who knowingly hire

undocumented workers.

In 1986, IRCA made it illegal for employers to “hire .

: . an alien knowing the alien is an unauthorized alien.”

IRCA sought to limit illegal immigration and to protect the

domestic labor market, but it did not seek to diminish labor

law protections or to create uneven regulatory burdens.*’

Rather, Congress and successive Administrations had been

concerned about the deleterious impact on competition that

employers who hired undocumented workers caused, and

saw IRCA, in part, as necessary to remedy this problem.

Many years of consideration and study preceded the

adoption of IRCA. In 1978, Congress created the Select

% See 29 U.S.C. § 152(3) (2001) (exempting certain employers from

NLRA coverage, not including employers of undocumented

workers).

® 8U.S.C. § 1324a(a)(1)(A) (2001).

*! The legislative history of IRCA reveals that Congress never intended

the new sanctions to weaken labor protections:

It is not the intention of the Committee that the

employer sanctions provisions of the bill be used to

undermine or diminish in any way labor protections in

existing law, or to limit the powers of federal or state

labor relations boards, labor standards agencies, or

labor arbitrators to remedy unfair labor practices

committed against undocumented employees for

exercising their rights before such agencies or for

tne tn eathutel ‘ by existing lew.

H.R. REP. No. 99-682, pt. 1, at 58 (1986), reprinted in 1986

US.C.CAN. 5662.

Commission on Immigration and Refugee Policy (“SCIRP”)

to evaluate strategies that would address the problem of

illegal immigration into this country. The impact of illegal

immigration on fair business competition was never doubted.

Testifying before SCIRP in 1980, one Carter Administration

official explained that “employers who comply with

statutory labor standards face unfair competition and are

forced to compete with firms in the same industry who

provide their employees less than the [labor law] requires.’”*”

The official further noted that employers had obvious

economic incentives to hire undocumented workers, because

they are typically paid substandard wages and do not

complain about instances of economic exploitation due to the

fear of detention and deportation.*? Subsequently, President

Reagan appointed the Administration Task Force on

Immigration and Refugee Policy, chaired by Attorney

General William French Smith, which reviewed the SCIRP

recommendations and made recommendations that would

form the basis for the Administration’s overall immigration

policy. In 1981, President Reagan announced an

immigration and refugee policy that closely tracked the

SCIRP recommendations.“

“Statement of Joe Razo, Director, Concentrated Enforcement

Program, Division of Labor Standards Enforcement, U-S.

Department of Labor, Before the Select Comm'n on Immigration and

Refugee Policy, at 1-2, Feb. 5, 1980, in STAFF REPORT OF THE

SELECT COMM’N ON IMMIGRATION AND REFUGEE POLICY; App. E,

SUPPLEMENT TO THE FINAL REPORT AND RECOMMENDATIONS OF

THE SELECT COMM’N ON IMMIGRATION AND REFUGEE POLicy 243

(Apr. 30, 1981).

© Id.

“ See Bernard D. Reams, Jr. and Mary Ann Nelson, /mmigration

Reform And The Simpson-Rodino Act: A Legislative History Of The

Immigration Reform And Control Act Of 1986 (P.L. 99-603) With

(continued. ..)

25

IRCA was the legislative response to this situation. It

was adopted, inter alia, to reduce illegal immigration by

eliminating the “magnet” -- employment opportunities for

undocumented workers -- that Congress believed attracted

many illegal immigrants to the United States.*° As a Reagan

Administratien official explained regarding a legislative

precursor to IRCA, the Act would protect the welfare of low

income workers because “{i}llegal immigration . . . depresses

the wages and working conditions of low-skilled workers in

this country.“° Congress shared this goal for IRCA,

explaining that the new law would address “both

unemployment and less favorable wages and working

conditions.”

This specific concern for low-wage workers voiced

by Congress and the Administration, viewed from the

perspective of an employer rather than a worker, is precisely

a concern to protect fair business competition. The wages

and working conditions of illegal immigrants threaten those

of legal workers because law-abiding employers face unfair

competition from those who hire illegal workers and then

evade the rules governing the terms and conditions of

employment. Congress recognized this inescapable fact. As

Congressman Dan Lungren explained, rogue employers hire

undocumented workers:

(continued...) |

Related Documents And Secondary Sources, 22 INT’L J. LEGAL

INFO. 12, 15 (1994).

S See H.R. REP. NO. 99-682(I) (1986), reprinted in 1986

U.S.C.C.AN. 5649.

“ HR. REP. 98-115 (1) at 96 (Statement of Robert W. Searby, Deputy

Under Secretary for Int’] Labor Affairs, Dep’t of Labor) (Mar. 16,

1983).

“7S. REP. 99-132 at 5 (1985).

26

specifically so that they can exploit them... .

[This] is unfair to the competitors in those

industries, other employers, who follow the law and

are undercut in their competitiveness by the fact that

those are breaking the law and taking advantage.*®

Congress sought to prevent such unfair business

competition through IRCA in two ways: by imposing

sanctions directly on employers who seek to gain an unfair

cost advantage through the use of undocumented workers;”’

and, by increasing enforcement of laws governing the

workplace, to remove any unfair cost advantage that might

otherwise be gained by employers who hire undocumented

workers and then disregard the NLRA and other laws

governing the workplace.*’ Congress sought to increase

labor law enforcement so as “to deter the employment of ~

unauthorized aliens and remove the economic incentive for

employers to exploit and use such aliens.””'

“8 See 132 CONG. REC. H10584, H10595 (Oct. 15, 1986) (remarks of

Rep. Lungren). Rep. Lungren, the Ranking Member of the

Immigration Subcommittee of the House Judiciary Committee, made

his comments immediately prior to the final vote on IRCA on

October 15, 1986. See also NANCY HOMEL MONTWEILER, THE

IMMIGRATION REFORM LAW OF 1986, 514 (BNA 1986).

” See 8 U.S.C. § 1324a (2001) (imposing penalties escalating from

$250 to $10,000 on *ny employer who knowingly hires unauthorized

workers).

*° See Immigration Reform and Control Act of 1986 § 111(d); Pub. L.

No. 99-603, 100 Stat. 3359. Section 111(d) appropriated funds to

the U.S. Department of Labor to enforce existing labor laws,

including the FLSA, and thereby facilitated the Labor Department's

pursuit of backpay awards for “unauthorized aliens.” Seé29°U-S.C.

§ 216(b) (2001).

*! IRCA § 111(d).

27

The federal regulatory agencies responsible for

administering the labor and immigration laws also have

recognized that avoidirg an unfair competitive impact is one

of the congressional objectives underlying these statutes.

For example, the Immigration and Naturalization Service

(“INS”) and the United States Department of Labor, in a

1998 joint memorandum of understanding, recognized that

“{ljabor law enforcement . . . helps foster a level competitive

playing field for employers who seek to comply with the

law.”°* The Equal Employment Opportunity Commission

similarly has recognized that the enforcement of

antidiscrimination laws against employers of undocumented

workers furthers fair business competition.”

*2 Memorandum of Understanding Between the Immigration and

Naturalization Service Department of Justice and the Employment

Standards Administration Department of Labor, November 23, 1998,

reprinted in 227 DAILY LAB. REP. E (Nov. 25, 1998). See also

Statement of John R. Fraser, Deputy Administrator Wage and Hour

Division Employment Standards Administration U.S. Department of

Labor Before the Subcommittee on Immigration and Claims of the

House Judiciary Committee (July 1, 1999) (available at

-//www. .gov/judiciary/ 701. (“Labor law .. .

helps foster a level competitive playing field for employers who seek

to comply with the law”).

°° See EEOC Enforcement Guidance on Remedies Available to

Undocumented Workers Under Federal Employment Discrimination

Laws, Number 915.002, in EEOC COMPLIANCE MANUAL § 622,

App. B (Oct. 26, 1999) (exempting employers of undocumented

workers from backpay liability under federal anti-discrimination

laws would “allow employers to profit from their own

wrongdoing”); id. at n. 27 (backpay “level{s} the competitive playing

field” among businesses) (quoting A.P.R.A. Fuel Oil Buyers Group,

Inc., 320 NLRB 408, 414 (1995)). In 1996, President Clinton signed

Executive Order 12989, barring employers that knowingly hire

illegal immigrants from receiving federal contracts. See Economy

and Efficiency in Government Procurement Through Compliance

(continued...)

28

Courts, too, have taken into account the

congressional intent to promote fair competition, in

construing and applying the labor and immigration laws.

Indeed, this principle appears in Sure-Tan, Inc. v NLRB,™*

which recognized the necessity of applying the NLRA

uniformly -- even when undocumented workers are involved

-- in order to avoid the adverse impact on competition from

undocumented immigrants who would otherwise not be

subject to the standard terms of employment. Justice

O’Connor observed for the Court in Sure-Tan: “If an

employer realizes that there will be no advantage under the

NLRA in preferring illegal aliens to legal resident workers,

any incentive to hire such illegal aliens is correspondingly

lessened.”°> While the Court focused on the impact on the

labor market (“acceptance by illegal aliens of jobs on

substandard terms as to wages and working conditions can

seriously depress wage scales and working conditions of

citizens”), its reasoning underscores the need for uniform

enforcement of the NLRA to avoid incentives for employers

to compete unfairly by hiring undocumented workers.

After enactment of IRCA, the Second Circuit

similarly looked to the competitive impact to reconcile the

provisions of IRCA with those of the NLRA. In NLRB v.

A.P.R.A. Fuel Oil Buyers Group, Inc.,*’ the court reviewed

the legislative histories of both statutes in fashioning a

(continued. ..)

with Certain Immigration and Naturalization Act Provisions, 61

Fed. Reg. 6,091 (Feb. 13, 1996) (Exec. Order No. 12,989).

* 467 U.S. 883, 893 (1984).

Id. at 893.

Id. at 892 (quotations and citations omitted).

134 F.3d 50 (2° Cir. 1997).

29

remedy that ensures “employers who comply with IRCA do

not suffer a competitive disadvantage for their obedience to

the law.”** Other courts have likewise reconciled IRCA and

the NLRA in order to achieve the legislative goal of a level

competitive playing field, lest “[uJnscrupulous employers .. .

be encouraged to hire undocumented workers for the

competitive advantage that an environment relatively free of

labor safeguards may offer.”°°

The decision of the court below is entirely consistent

with these precedents in its efforts to protect fair business

competition. Amici urge affirmance of the en banc decision

of the D.C. Circuit, because it properly interprets the

provisions of the NLRA and IRCA in a manner that

promotes the even application of regulatory burdens. To

reverse this result would create economic incentives for ~

saady employers to violate the law, and subject law-abiding

companies to the unfair competition that Congress, the

courts, and thé administrative agencies have consistently

sought to avoid.

CONCLUSION

For the foregoing reasons, and in the interest of full

and fair business competition, the en banc decision of the

D.C. Circuit should be affirmed.

8 Id. at 57.

Local 512, Warehouse & Office Workers’ Union v. NLRB, 795 F.2d

705, 718-19 (9" Cir. 1986). See also Contreras v. Corinthian Vigor

Ins. Brokerage, Inc., 25 F. Supp. 2d 1053, 1056 (N.D. Ca. 1998)

(“permitting employers to circumvent labor laws with regard to

undocumented aliens . . . creates an unacceptable economic incentive

to hire undocumented workers by permitting employers to underpay

them”); Patel, 846 F.2d at 704.

30

Dated: New York, New York

December 10, 2001

Respectfully submitted,

Michael J. Wishnie

Counsel of Record

Muzaffar Chishti

161 Avenue of the Americas

Fourth Floor

New York, New York 10013

Tel: (212) 998-6430.

Fax: (212) 995-4031

David A. Schulz

Jeffrey H. Drichta

Daniel L. Dovdavany

CLIFFORD CHANCE

ROGERS & WELLS LLP

200 Park Avenue

New York, New York 10166

Tel: (212) 878-8000

Fax: (212) 878-8375

Attorneys for Amici Curiae