Staff Management and New Hampshire Insurance Company v. Pascuala Jimenez, 839 N.W.2d 640

Background

Claimant Pascuala Jimenez, an undocumented longtime Procter & Gamble line supervisor, suffered work-related hernias on Sept. 13, 2007 and underwent surgery Nov. 14, 2007; pain continued and doctors later opined she had not reached MMI and required further surgery.
Jimenez returned to work intermittently (including Dec. 26, 2007–Jan. 22, 2008) but was later terminated after employer’s E-Verify audit indicated lack of authorization to work.
Jimenez filed for workers’ compensation in 2009 seeking healing period (running) benefits from the date of injury; deputy commissioner awarded running healing period benefits from Sept. 13, 2007 to MMI and medical expenses; commissioner and district court affirmed.
Employer (Staff Management) appealed, arguing undocumented status barred benefits, the running award lacked substantial evidence, the start date contradicted hearing stipulation, and benefits should not run while claimant worked.
Iowa Supreme Court affirmed that undocumented workers fall within the statutory definition of “employee,” that the employment contract is not void or preempted by federal law for purposes of healing period benefits, and that substantial evidence supports a running award — but held benefits cannot be paid for periods when the claimant actually worked.

Issues

Issue	Jimenez (Plaintiff) Argument	Staff Management (Defendant) Argument	Held
Whether undocumented worker is an “employee” under Iowa workers’ comp statute	Undocumented workers meet the broad statutory definition and are covered	Undocumented status removes employee status; statute/IRCA make contract void	Court: Statute’s broad definition unambiguously includes undocumented workers; exclusions do not mention them, so covered
Whether an employment contract with an undocumented worker is void (no contract of service)	Employment relationship is a valid contract of service and not illegal; denying coverage would undermine worker protections	IRCA or illegality renders the contract void, barring benefits	Court: Contract is not void; enforcing coverage aligns with IRCA’s intent to preserve labor protections
Whether federal law (IRCA) preempts healing period benefits	IRCA does not preempt these benefits; healing period is compensation, not a civil sanction or back pay	IRCA/precedents (Hoffman) preempt or bar certain awards to undocumented workers	Court: No preemption of healing period benefits; distinctions between healing benefits and back pay/rehab make Hoffman inapplicable
Whether running award was proper as to scope and timing (start date, substantial evidence, and periods claimant worked)	Running award from Sept. 13, 2007 to MMI supported by medical testimony; stipulation amended during hearing; but benefits should exclude periods when claimant actually worked	Argued lack of evidence for running award, hearing-stipulated start date Jan. 1, 2009 controls, and benefits should not run while claimant worked	Court: Substantial evidence supports running award and amended start date to Sept. 13, 2007; however, benefits must be excluded for periods claimant returned to work (award reversed in that respect)

Key Cases Cited

Renda v. Iowa Civil Rights Comm’n, 784 N.W.2d 8 (Iowa 2010) (deference principles and agency interpretive authority)
Waldinger Corp. v. Mettler, 817 N.W.2d 1 (Iowa 2012) (agency lacks interpretive authority over chapter 85)
Dowling v. Slotnik, 712 A.2d 396 (Conn. 1998) (undocumented workers covered by state workers’ comp; IRCA not intended to strip labor protections)
Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002) (limits on back pay awards to undocumented workers under IRCA)
Mycogen Seeds v. Sands, 686 N.W.2d 457 (Iowa 2004) (limits on parties’ ability to stipulate conversion dates; commissioner’s duty to apply law to facts)
Schutjer v. Algona Manor Care Ctr., 780 N.W.2d 549 (Iowa 2010) (effect of refusing suitable work on entitlement to temporary/healing benefits)