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The new Trump administration has pledged to step up immigration enforcement. As part of that effort, federal agencies next year may step up their investigation of unauthorized US companies and workers. triggering I-9 audits or raids in the workplace.
Industries such as construction, that depend on foreign-born workerscan find themselves in the spotlight, even for companies whose employees are authorized to work in the US
Complicating matters for general contractors is the fact that construction is unique in its labor structure. Often, different employees at the workplace on the same day may have different employers.
Layers of subcontracting work can create confusion or challenges in ensuring worker eligibility, especially for GCs working with multiple subcontractors on multiple projects.
Attorneys are not required to verify the work authorization of their subordinates’ workers, attorneys told Construction Dive. However, they can audit their subcontractors to ensure compliance.
“A contractor does not need to obtain I-9s for 1,099 workers, including subcontractors,” said Trent Cotney, partner and co-leader of the construction team in Adams & Reese’s Tampa, Florida, office. “The sub must maintain their own I-9s. However, if there is a determination that a 1099 was misclassified and should have been a W-2, then they may be liable for not maintaining the I-9s to the workers”.
A Form 1099 is required to pay a non-employee such as an independent contractor, while W-2s are used to pay full-time employees.
That said, contractors can still protect themselves with the right contract language, attorneys said.
“GCs should have strong provisions in their subcontractor agreements, requiring the subcontractor to comply with federal and state immigration regulations and E-Verify, requiring the subcontractor to have an experienced immigration attorney conduct a certification annual immigration compliance report and obtain indemnification from the subcontractor for any immigration violations,” said Shanon Stevenson, a partner at the law firm Atlanta-based Fisher & Phillips. “Any agreement that does not currently contain such clauses to protect GCs should be amended.”
Getting protections is important. Stevenson said employers who knowingly hire or continue to employ unauthorized workers could face civil fines, criminal prosecution or disbarment from future work on lucrative federal projects.
That definition “knowingly” is broad, he said, to include not only demonstrable knowledge, but knowledge that can reasonably be assumed to be inferred based on the circumstances.
A fine line to walk
In addition, contractors could require their subcontractors to comply with labor standards, said Laura Padin, director of work structure at the National Employment Law Project. For example, Padin said, contractors could require subcontractors to hire workers entitled to benefits such as workers’ compensation and unemployment insurance, or require subcontractors to provide all employees with fringe benefits such as health insurance, disability benefits or paid leave.
“Employment benefits such as workers’ compensation, paid time off, and employer-provided health insurance are especially critical in high-risk occupations so that workers who become sick and injured on the job have the financial support and medical they need to recover,” Padin said.
Still, there’s a fine line to walk. GCs should not review subs’ I-9 or E-Verify records, so they can avoid any finding of co-employment for those workers, Stevenson said.
They also shouldn’t misclassify an employee as an independent contractor to avoid the clearance process, he said.
“The government would view these actions as evidence that the GC knew the workers were not authorized to work,” Stevenson said.
