To address labor shortages and a lack of qualified workers, many U.S. contractors have turned to hiring foreign-born workers, who now account for more than 30 percent of construction trade laborers nationwide. In some states, reliance on immigrant workers is even more pronounced, composing 42 percent of the workforce in California and nearly 41 percent in Texas, with New York and Nevada following closely at 37 percent, according to the U.S. Census Bureau’s most recent American Community Survey.
While the addition of foreign workers can help alleviate some contractors’ staffing woes, it also brings more stringent regulatory requirements, compliance concerns and enforcement exposure—from Form I-9 audits and worksite raids, to steep civil penalties for any immigration law violations.
An increase in enforcement actions by Immigration and Customers Enforcement (ICE) under the Trump administration has put the labor-scarce construction industry on high alert.
According to ICE, the agency opened 6,848 worksite investigations during fiscal year 2018, which is a dramatic increase over the 1,691 opened in 2017. The agency also initiated 5,981 Form I-9 audits in 2018 compared to 1,360 the year prior, and made 779 criminal and 1,525 administrative worksite-related arrests, compared to 139 and 172, respectively, in 2017.
During the last two years, businesses have been ordered to pay more than 7.8 million in judicial fines, forfeitures and restitutions.
So far, 2019 seems to be continuing the trend of increased enforcement, with raids resulting in smaller numbers of arrests happening from coast to coast and across all industries—and construction being one of the most impacted.
Inspections, Raids and Violations
Federal law requires employers to verify the identity and work eligibility of all individuals they hire, and to document that information using the Employment Eligibility Verification Form I-9. ICE has broad authority to conduct inspections, which begin with the issuance of a Notice of Inspection (NOI) and do not require any suspicion or even a search warrant.
After ICE serves the NOI to audit the company’s hiring records, employers are required to produce their I-9 forms within three business days for its employees and certain former employees, as well as any other additional documents ICE may request (lists of employees, quarterly wage and hour reports, etc.). This latter requirement is normally outside the I-9 inspection metric.
Once ICE begins its audit, a typical compliance review involves an ICE auditor verifying that the I-9 forms have been properly completed in compliance with the regulations. This includes reviewing the forms to ensure they were timely completed, are correctly and entirely filled out, and that the identity and employment authorization documents submitted to establish employment eligibility are legitimate. Due to the recent increase in enforcement, the turnaround period is slightly increased in certain jurisdictions.
A 2008 ICE memorandum provides that violations are classified as either “technical” or “substantive,” with the distinction being the seriousness of the error and whether it could have led to the hiring of an unauthorized worker. If the ICE investigators discover any technical violations, such as an unsigned form or the use of the Spanish version of the form, then ICE typically gives the employer 10 days to correct the violation.
Substantive violations, such as failing to timely prepare the form, can result in a warning, civil monetary fine, imprisonment (for egregious or intentional acts), or being rendered ineligible to receive future federal contracts. Keeping legal counsel close throughout the audit process is important, as they may be able to negotiate a reduction of any fines or penalties, or in the case of a fine, request a hearing before a federal administrative law judge within 30 days.
Compliance Programs and E-Verify
In the current administrative climate, employers must be proactive even before an audit so they are prepared in the event ICE pays a visit. The best way to prepare is by having an up-to-date I-9 compliance program that includes regular and systemic internal I-9 audits to identify and remedy any errors, as certain corrections may ameliorate fine exposure.
Additionally, employers should train responsible HR staff on how to complete an I-9, and which actions should be taken when they are made aware that an employee may need to address employment authorization concerns.
Some employers have considered the option to enroll in E-Verify, the online system for verifying a new hire’s eligibility. The system compares information provided in the employee’s Form I-9 to Department of Homeland Security and Social Security Administration data to verify employment eligibility. Note: Employers with federal contracts or subcontracts are already mandated to use E-Verify, and 20 states have enacted legislation requiring some or all employers to confirm legal work status when hiring new employees.
E-Verify has its detractors and supporters. For example, E-Verify adds an additional step to the I-9 onboarding process, requires an employer to follow technical rules with little room for error, and gives the government a “free peek” at the company’s immigration compliance practices.
Alternatively, supporters claim E-Verify brings a high degree of certainty that employees are authorized to work, and that the system brings greater integrity to an employer’s I-9 practices.
While Form I-9 audits can be time-consuming and a burden on resource allocation for employers, they are significantly less disruptive than workplace raids, which can result in an immediate loss of workforce, loss of business income and abandoned-project claims on performance bonds, among other direct and indirect expenses.
