The Undocumented Side of Hiring

By Peter Comodeca

Nov. 9, 2011

For employers across the country, hiring undocumented workers creates a greater risk of exposure to fines, negative publicity and potential criminal sanctions.

The federal government’s more aggressive posture toward the hiring of illegal workers will make it more expensive for companies to ensure that their workers are legally in the United States. Additionally, the costs of responding to a government review of company hiring practices can be very high.

It is the responsibility of all employers to guard against hiring undocumented workers. Familiarity with federal regulations and enforcement practices will minimize the hiring of undocumented workers and mitigate the dollar impact when undocumented workers are inadvertently hired.

The federal agencies responsible for workplace enforcement are the Department of Homeland Security and Immigration and Customs Enforcement. The primary document reviewed by those agencies is the Form I-9, which, under federal law, must be used to verify the identity and employment eligibility of every employee. Thus, Form I-9 must be maintained for all employees.

The Department of Homeland Security has statutory authority to issue subpoenas and Form I-9 notices of inspection. Subpoenas can be issued pursuant to a random audit, a government investigation of a particular industry or in response to a complaint by workers or whistle-blowers.

The Form I-9 subpoena can apply to hourly and salaried employees and usually seeks company payroll records. The subpoenaed information allows the department to confirm that each employee on the payroll has a Form I-9 and to review each I-9 for discrepancies.

After reviewing the documents, the department will issue to the employer a report that identifies deficiencies in the forms. The company is given the opportunity to correct data inaccuracies or incomplete information.

A finding of suspect documentation generally indicates that the employee is not authorized to work in the United States. It is then up to the individual employee to satisfy the government by providing valid documentation.

Employees who cannot do so must be terminated by the company. Some discrepancies found in the forms do not automatically result in termination, but generate either a request for more documents or an interview of the employee by the government. An example of such a discrepancy would be failure to reflect a name change resulting from marriage or divorce.

In responding to an I-9 audit, companies should notify employees confidentially that they are the subject of further government investigation. A company should limit the assistance provided to those employees identified by the government as not authorized to work in the U.S. to avoid the perception that it tacitly approves the hiring of unauthorized workers.

Those employees should be advised to consult their own counsel and that they can contact the Department of Homeland Security if they wish. In many cases, undocumented employees fail to show up for work after being advised of the government findings.

The hiring of undocumented workers can result in civil fines, exclusion from federal contracts and criminal sanctions against companies and individuals who knowingly hire or continue to employ undocumented workers. Fines can range from $110 to $14,050 per employee per violation.

The amount of the fine is determined by a statutory formula that considers the size of the business, the employer’s good-faith efforts to comply with the law, the seriousness of the violation, the number of unauthorized workers, the percentage of Forms I-9 with violations and the employer’s violation history.

Companies are not insulated from liability by using a staffing agency or having background checks performed by third parties. Personnel managers must be familiar with the procedures that staffing and background check agencies use when pre-screening employment candidates.

The company should also review the liability and damage limitations included in staffing and background check contracts. The costs of responding to an I-9 audit can be significant even if no fines are assessed.

To the extent a company relies on the pre-screening efforts of others, the contracts with such agencies should provide for a shared liability in the event that undocumented workers make it through the pre-employment screening process.

Peter J. Comodeca is a partner at the Cleveland-based law firm Calfee, Halter & Griswold.

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