Undocumented workers and the businesses that knowingly or unknowingly employ them are coming under the microscope. The president has implemented two immigration bans is challenging “Sanctuary Cities” that do not help federal immigration enforcement, has instructed government agencies to become more aggressive in enforcing immigration laws and is already reviewing proposals to strengthen the border wall. Plus, the E-Verify program for verifying worker status is likely to become mandatory.

Further, employers that try to do it right by using the H-2B program have been dealt a stiff blow. The Returning Worker Program, which dramatically extended the stingy 66,000 nationwide cap on H-2B non-immigrant workers, has not been renewed. The H-2B cap already has been reached for 2017, so the hope for help there is gone.

According to a Pew Research Study, unauthorized immigrants represented 15 percent of workers in construction jobs in 2014. The national unemployment rate is presently at 4.7 percent, almost at a 10-year low. If all the undocumented workers vanish, it will be difficult to find replacements.

Making things more risky for businesses, fines are up. Knowingly hiring undocumented workers carries fines between $539 and $4,313 per worker on a first offense. Failing to properly complete the Form I-9 carries a fine of $216 to $2,156 per document. Employers found to engage in a pattern or practice of hiring or recruiting undocumented workers may be penalized up to $3,000 per undocumented worker and receive six months in jail.

Develop an I-9 Compliance Program

Labor compliance is not just about making sure to follow the I-9 directions; it is about making sure a business is not letting applicants get by with shoddy documentation or no documentation—and requiring extra proof if it suspects someone is undocumented. At the same time, the company cannot impose requirements above and beyond what the I-9 requires, which can result in a lawsuit by the government or an applicant.

To protect against these issues, funnel I-9 issues through one person within an organization and make sure that person is trained to properly handle completing I-9s. The government finds, on average, five errors in each I-9 when it does an audit, and each error can result in a fine. Create and maintain an internal I-9 compliance policy and mandate that it be followed by all hiring supervisors to ensure consistency in handling I-9s. This will even be helpful to protect business owners from liability if the person responsible for handling I-9s does not follow the policy. (Note, there is a new I-9 form for 2017 that must be used with all new hires.)

A good I-9 compliance policy will:

• control who completes the I-9 paperwork;
• mandate the timing to complete the I-9;
• outline the correct procedure (and clarify incorrect procedures, such as asking for additional information, accepting suspect documents or preferring certain documents over others);
• arrange for the retention of I-9s;
• mandate the re-verification of temporary
• employment authorizations with a procedure to follow up according to a calendar; and
• establish an annual I-9 self-audit.

Many businesses try to avoid the I-9 and other issues by treating individuals who should be employees as independent contractors. They assume doing so will protect them from violations, but that is a fantasy. The government also will pursue business owners who intentionally circumvent the I-9 rules by trying to treat undocumented workers as contractors. It may be wise to require all contractors to ensure I-9 compliance for their employees and provide access to their I-9s on request for verification.

Conduct an I-9 Self-Audit

It is wise for business owners to conduct an I-9 self-audit on a regular basis to be sure their records are in top shape for an audit. This is especially true for business owners who delegate the responsibility to complete I-9s to another employee. A second set of eyes with the goal of making sure the forms are perfect will usually reveal some errors.

In addition to examining each form to be sure it is correctly filled out, employers should check whether I-9s on former employees are properly retained, how no-match communication from the government has been handled, and whether re-verification procedures are on schedule. If errors arise, initiate correction procedures immediately.

Prepare for an Audit or Raid

Audits are conducted both by U.S. Immigration and Customs Enforcement (ICE) and, on a cursory level, by the Department of Labor. In either case, employers are entitled to three days’ notice before an I-9 audit. Raids are a different story. ICE may appear with a warrant without any notice, and the agents will not care about interrupting business operations.

Upon receiving notice of an audit, immediately contact the company’s employment or immigration lawyer, which can protect the firm from inadvertently making mistakes with the auditor. Then work with the lawyer to conduct an I-9 audit immediately and correct any errors before the audit begins.

If ICE appears for a raid, immediately contact counsel and ask them to come to the site. ICE will not wait for the lawyer to arrive if it has a search warrant, so it will be necessary for the business owner to examine the warrant. Carefully review it to ensure it is genuine. If ICE agents exceed the warrant’s authority, ask to speak to the agent in charge and raise the issue. Don’t be afraid to stand up for your rights.

If a business is concerned a raid might happen, keep a current copy of all I-9 records and related documents on a flash drive to give to the agent in charge. This may help minimize the time the agents spend at the facility.

Provide Guidance for Workers

If a business is audited or the subject of a raid, government representatives may want to speak with employees about company procedures and their status. Management can provide guidance to all employees to help them avoid issues with government officials, but do not single any employee out for advice. Doing so suggests the firm thinks there is a problem, and it can be used against the company.

Years ago, the Maryland Court Appointed Special Advocates created a guide for citizens that spread across the country. That advice still warrants consideration. Individuals who have concerns when faced with an ICE raid should:

• stay calm and not run away;
• exercise their right to remain silent;
• refuse to sign any document without showing it to a lawyer;
• carry all legal identification documents at all times, implying fake or illegal documentation should not be carried; and
• identify a well-qualified immigration attorney who can represent the employee if issues should arise and keep the lawyer’s contact information handy at all times.

Impact on the Construction Industry

If a construction project is interrupted by labor raids, investigations and ultimately the removal of a vital portion of the labor force, the project will be delayed and damages will flow. From the owner’s perspective, it is imperative to make sure all labor immigration issues are borne by its original contractor, thus ensuring they have no role in the process, except to the extent required by law.

Whether such issues are contractually delegated to a general contractor, it is a best business practice for general contractors to always be aware of applicable provisions in their prime contracts with owners relating to liability associated with delays caused to a project for any reason. In the context of this discussion, general contractors should be additionally vigilant to protect against liability associated with delays resulting from disruptions caused by a lack of labor due to immigration issues caused by subcontractors and their labor force. General contractors may attempt to draft accordingly within their prime contracts to remove liability in the event of immigration issues being the sole cause of a labor impact and related delay. As owners do unto general contractors, general contractors must do unto subcontractors by contractually requiring subcontractors to accept as much of the responsibility as possible for labor immigration issues.

In protecting themselves from a general contractor’s attempt to pass through liability associated with labor immigration concerns, subcontractors should make every effort to ensure immigration-related delays are not a specifically enumerated breach or event of default, or that they should not give rise to special liability to the general contractor. It would be most advantageous to subcontractors to have the ability to simply cure the impact of a diminished workforce by quickly providing new labor, thus avoiding the possibility of termination or liquidated damages. Because subcontractors typically contract with or
employ the direct labor on a construction project, to the fullest extent possible they should contractually place the burden of providing accurate information of laborer citizenship status on the actual laborers or labor source if a broker is involved.

Michael Kelsheimer is a partner at Gray Reed & McGraw LLP, focusing on the employment law needs of Texas businesses and executive employees, and the author of TexasEmployerHandbook.com. For more information, email mkelsheimer@grayreed.com. J.P. B. Vogel is a partner at Gray Reed & McGraw LLP, serving as chair of the firm’s Construction Industry Group, and a contributor to TexasConstructionLawBlog.com. For more information, email jpvogel@grayreed.com.