The laws, however, are in a constant state of flux, either through legislative action or judicial appeals.

For example, in mid-November, Utah State Rep. Michael Morley, R-Spanish Fork, proposed a bill that would close a loophole in the workers' comp system that allows former employees to collect benefits when they are fit to work but unable to do so because of incarceration. The bill addresses wage compensation benefits only–medical and/or disability benefits would not be affected.

The law had the arguably laudable intent of not forcing employers to pay workers' comp benefits to people in prison. However, before giving the bill a favorable recommendation, the Utah House Business and Labor standing committee sought clarification on how a worker's status as an undocumented alien would play into the proposal.

Dennis Lloyd, general counsel for the Utah Workers' Compensation Fund, distinguished between medical and wage benefit payouts. “Individuals who are incarcerated, or of illegal status, could receive full benefits due to medical incapacity, but…someone who is able to work, but incarcerated, would not be eligible,” Mr. Lloyd said.

Rep. Morley told the committee that a worker who was fit to return to work after a temporary medical leave, but unable to do so due to immigration status, would also not be eligible for wage benefits.

Richard Burke, a member of the board of governors at the Utah Association for Justice, declared that the bill actually creates financial incentives for employers to hire illegal immigrants. “There are some unintended consequences,” he said, contending that the bill “discriminates against legal status…and creates incentives to hire illegal labor” because the employer will not have to pay some benefits.

Lawyers in California have already latched onto that idea. Suits have been filed against companies that hire undocumented aliens, using a provision of California law under which firms that knowingly hire illegal immigrants can be sued by a competitor who has suffered economic damages as a result.

Even when lawmakers expressly approve workers' comp benefits to undocumented workers, some opponents have found favor in courts that reject that benefit on causation grounds.

For example, the Kansas Supreme Court, while acknowledging that an illegal alien claimant was “legally entitled to…benefits” under the state's workers' comp statute, concluded that benefits could be suspended on the basis of the “fraudulent and abusive” act the claimant committed when misrepresenting their identity.

The Michigan Court of Appeals reached a similar conclusion in one of its cases, while Pennsylvania courts also have refused workers' comp benefits to undocumented workers on causation grounds.

On the other side, in the past year, the Maryland Court of Appeals approved comp benefits for an undocumented worker, noting that only one state court decision (by the Wyoming Supreme Court) has construed its workers' comp law to exclude illegal aliens.

Efforts to bring about a consensus and attack the problem at its source also are ongoing at the federal level.

In late February, The New Employee Verification Act was introduced by U.S. Rep. Sam Johnson, R-Texas. The legislation, which would create the nation's first mandatory employment verification system for all U.S. employers, is backed by a coalition of business leaders and human resource professionals.

According to its supporters, the act would enable employers to confirm quickly and accurately the legal status of prospective employees by checking identification data through their state's “new hire” reporting program, a system that is already widely used for child support enforcement.

For Americans, work authorization would be confirmed only through the Social Security Administration. For non-citizens, work authorization would be confirmed through the Department of Homeland Security, which has the databases on visa and immigration status.

Rep. Johnson said the new verification system would be superior to the federal government's existing program because it would rely on a more accurate, up-to-date database and would be entirely electronic, thereby eliminating susceptibility to fraud and identity theft.

He also said his bill would help safeguard workers' identities. Private sector companies, certified by the federal government, would verify work authorization and authenticate the identity of employees by using existing background-check and document screening tools. The identity would then be secured through a biometric identifier, such as a fingerprint or eye scan.

The bill also seeks to strengthen enforcement through enhanced penalties on employers and by referring mismatches found in Social Security numbers to the Department of Homeland Security for further investigation.

Joan Collier is a contributing editor with Florida Underwriter, an affiliate of National Underwriter.