The incoming Trump administration has promised to step up immigration enforcement. As a part of that effort, federal agencies next year may ramp up their investigation of U.S. businesses and unauthorized workers, triggering I-9 audits or workplace raids.
Industries like construction, which rely on foreign-born workers, may find themselves in the crosshairs, even for firms whose employees are authorized to work in the U.S.
Complicating matters for general contractors is the fact that construction is unique in terms of its employment structure. Often, different employees on the jobsite on the same day can have different employers.
Layers of subcontracting work can create confusion or challenges to ensuring worker eligibility, especially for GCs working with multiple subcontractors across multiple projects.
GCs aren’t required to verify the employment authorization of their subs’ workers, lawyers told Construction Dive. Still, they can audit their subcontractors to ensure compliance.
“A contractor does not need to obtain I-9s for 1099 workers including subcontractors,” said Trent Cotney, a partner and construction team co-leader in the Tampa, Florida, office of Adams and Reese. “The sub is required to maintain their own I-9s. However, if there is a determination that a 1099 has been improperly classified and should have been a W-2, then they may have liability for not maintaining I-9s on the workers.”
A 1099 form is necessary for payment to a non-employee such as an independent contractor, while W-2s are used when paying full-time employees.
That said, contractors can still protect themselves with the right contract language, lawyers 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 an annual immigration compliance certification and obtaining indemnity from the subcontractor for any immigration violations,” said Shanon Stevenson, partner at Atlanta-based law firm Fisher & Phillips. “Any agreements that do not currently contain such clauses to protect GCs should be amended.”
Getting protections in place is important. Employers that knowingly hire or continue to employ unauthorized workers could face civil fines, criminal prosecution or debarment from future work on lucrative federal projects, Stevenson said.
That “knowingly” definition is broad, she said, to include not only provable knowledge but that which one can assume could be fairly inferred based on the circumstances.
A fine line to walk
Additionally, contractors could require their subcontractors to adhere to labor standards, said Laura Padin, director of work structure for the National Employment Law Project. For example, Padin said, contractors could require subs to hire workers entitled to benefits like workers’ compensation and unemployment insurance, or require subs to provide all employees with additional benefits like health insurance, disability benefits or paid leave.
“Employment benefits like workers’ compensation, paid leave and employer-provided health insurance are especially critical in high-risk occupations so that workers who get sick and injured on the job have the financial and medical support they need to recover,” Padin said.
Still, there is a fine line to walk. GCs should not review the I-9 or E-Verify records of subs, so they can avoid any finding of co-employment of those workers, Stevenson said.
They should also not misclassify an employee as an independent contractor to avoid the authorization process, she said.
“The government would view these actions as evidence that the GC knew the workers were not authorized to work,” Stevenson said.
