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We can’t comment on the various news reports that have been coming over the television regarding enforcement actions against alleged illegal immigrants, but we can tell you that we’ve been getting a number of reports in from clients that this has been actually happening.
Multiple clients have had ICE (U.S. Immigration and Customs Enforcement) special agents showing up at their offices requesting copies of installer records. Keep in mind that for 35 years we’ve been diligently warning clients never to let government agents into their offices, and that you’re not required to do that. The exceptions to that rule happen to be in regard to the special agents from the criminal division of the IRS, and ICE.
Initially, there were reports indicating there would be a potential pause in ICE enforcement in agriculture, hotels and restaurants — ostensibly due to concerns that labor shortages were going to be creating problems in those industries — but that guidance was quickly reversed, and the Department of Homeland Security stated that there are going to be no industries carved out of enforcement oversight. What is particularly concerning is that there are growing indications that construction is going to be an industry that is specifically targeted to meet the administration’s deportation goals.
One national client reported that ICE showed up at their staging area and literally pulled away a dozen installers. A number of other clients are reporting that their installers are disappearing over the weekends, though it’s unclear whether they’ve been taken into ICE custody or have abandoned their job either out of fear of ICE showing up or to self-deport.
Keep in mind, you do not need an I-9 (or use E-Verify) for a properly classified independent contractor installer. But you do need a W-9. And we’re talking about properly classified independent contractor installers, which required your on-boarding process to not only contain a very strong written agreement with the installer, but for you to adhere to a number of protocols that will allow you to build a brick wall around your independent contractor relationship. That brick wall is not only state specific, but to some degree is product specific, depending on the products that you’re selling and how they’re being installed.
Reclassification of independent contractor installers is the number two liability in our industry, only behind telemarketing class actions. But it’s one thing to deal with an attorney general or a class-action lawyer on a reclassification attack — it’s something else entirely when you’re being investigated for criminal activity by ICE.
Wow! What a mess!
Things are getting more interesting every day. What are the Penalties to the contractors who get caught with undocumented workers?
The penalties are all over the board, and the potential fine depends on a number of factors, including (i) is this an initial or repeat violation, (ii) can it be argued that the violation was not deliberate but was made in error, (iii) how many undocumented workers were involved in the violation, etc. Civil penalties can range up to $3000 per undocumented worker, but if the government can make a case that you were engaged in a pattern and practice of hiring undocumented workers on purpose, you could be looking at potential fines up to $250,000 with possible proposed criminal charges against those who were in charge of the hirings. If the government can argue that there are corresponding violations in the I-9 paperwork, the I-9 fines alone can range from a few hundred dollars per violation to almost $28,000 for repeat violations.