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Employee vs. employer civil RICO
December 13, 2005 by Ross Runkel at LawMemo

If an employer conspires with a recruiter to employ and harbor illegal workers, does that violate RICO?

The US Supreme Court will decide this question in Mohawk Industries v. Williams (No. 05-465), certiorari granted 12/12/2005, decision below: Williams v. Mohawk Industries (11th Cir 06/090/2005)

Williams and other hourly employees alleged that the employer's widespread and knowing employment and harboring of illegal workers allowed the employer to depress wages for its legal hourly employees and to discourage workers compensation claims - all in violation of the federal RICO statute. The trial court denied the employer's motion to dismiss; the 11th Circuit affirmed; the US Supreme Court granted certiorari to review the 11th Circuit decision.

Plaintiffs alleged that the employer conspired with recruiting agencies to hire and harbor illegal workers.

The key issue is whether plaintiffs alleged an "enterprise" that has a "common purpose."

• The 11th Circuit concluded that the "enterprise" is the association-in-fact between the employer and the third-party recruiters.
• As for the "common purpose," the complaint alleged that the recruiters and the employer share the common purpose of "obtaining illegal workers for employment by [the employer]" with the same objective of reducing the wages paid to the employer's hourly workers
• The 11th Circuit said, "Because the complaint clearly alleges that the members of the enterprise stand to gain sufficient financial benefits from [the employer's] widespread employment and harboring of illegal workers, the plaintiffs have properly alleged a 'common purpose.'"

The 7th Circuit reached a contrary conclusion on similar facts, concluding that the entities in the enterprise did not have a common purpose (the employer wants to pay lower wages and the recruiters want to be paid more for services rendered). Baker v. IBP (7th Cir 02/04/2004).

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