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

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2002
- **Citation:** 535 U.S. 137

## Text

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 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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0462%3A10. Public record. Not legal advice.