Practice Areas

Undocumented Workers: Much More Than Just an I-9 Liability for Employers

Last month, the U.S. Citizenship and Immigration Services (USCIS) released a new I-9 form to be used by employers.  The I-9 form is the form employers are required to use for verifying that their employees are authorized to work in the U.S.

Employers must use the new form (available in English and Spanish, the latter of which is generally for translation purposes only) beginning May 7, 2013 for all new hires and re-verifications.  Employers who already have completed I-9 forms for current employees do not need to fill out new versions of the I-9 forms for those employees.

Employers who do not complete, or do not correctly complete, an I-9 form on behalf of each employee within the first three days of employment face possible penalties of $110 to $1,100 for each violation. In addition, an employer who signs an I-9 form containing false statements may be charged with perjury.

While paperwork violations, resulting in the monetary penalties above, are fairly common, they can usually be remedied or mitigated if they’re corrected via a well-documented self-audit before any government inspection takes place.

More problematic is the practice of some employers – mostly small operators, startups, and those in the restaurant industry – to hire workers without papers, by simply not completing an I-9 form for that worker and paying the employee “off the books.”  Employers who do so can be fined as much as $10,000, and even face jail time, for “knowingly” employing unauthorized workers under the Immigration and Nationality Act.

The potential liabilities don’t end there though.  That’s simply the start of it.

Many employers assume that workers without papers are workers without rights.  While this is true in some contexts and jurisdictions, it’s not true in all contexts and jurisdictions, particularly when it comes to the application of wage-and-hour laws under federal and New York law.  Undocumented workers can, and very often do, sue their employers for wage-and-hour violations, despite a popular misconception, by even the most well-intentioned employers, that undocumented workers will be too afraid to file suit given their immigration status.  That employers typically pay undocumented workers a flat rate and in cash and usually don’t maintain time records for those workers only makes the scenario that more enticing to plaintiffs’ lawyers looking to extract large settlements.  It should come as no surprise then that some plaintiffs’ lawyers in the NYC area have set up websites soliciting undocumented workers as potential clients in wage-and-hour actions.

So what should employers with undocumented workers do to minimize their liability?  Clean house and fire all undocumented workers immediately?  While a quick fix, that course of action could actually create further liabilities for employers (e.g., discrimination claims).  The best course of action will vary based on the particular facts and circumstances at issue with the individual employer, but it will almost always involve some form of I-9 self-audit, together with a legal strategy to bring an employer into compliance on I-9 and wage-and-hour requirements.  The issuance by the USCIS of the new I-9 form and the upcoming May 7 deadline present the perfect opportunity for employers to inconspicuously conduct those audits and minimize any liabilities.