Legal Pitfalls of Hiring Undocumented Immigrant Workers (2024)

Before 1986, employers didn't risk much in hiring undocumented immigrants. The worst that could happen was simply losing the foreign-born worker through deportation. Beginning in 1986, though, the worksite became an enforcement site for immigration law, with employers required to check the work authorization of everyone they hire, on pain of penalties and even criminal prosecution for not complying. (See Hiring Foreign Workers in the U.S.: First Things to Know for a general discussion of U.S. employers' responsibility for verifying work authorization, and 8 U.S. Code § 1324a for the underlying law.)

How Does the Immigration and Customs Enforcement Agency Enforce Laws Against Hiring Undocumented Foreign Workers?

The federal agency responsible for immigration worksite enforcement is Immigration Customs and Enforcement (ICE). It's priorities tend to shift with the political winds. For example, while at one point it claimed to focus its enforcement efforts on worksites that represent "critical infrastructure" (such as airports, nuclear plants, and defense facilities) and employers who abuse and exploit undocumented workers, at other times it clearly acts against any an all ordinary businesses (restaurants, landscapers, construction companies, food processing plants, small manufacturers, and so forth). They can be charged with "harboring" illegal aliens; that is, for knowingly preventing their detection.

ICE provides a telephonic tip reporting system for people to report instances of illegal immigration activity, so employers should ensure they are following all immigration laws in their hiring practices.

As an employer, you should conclude that you are in legal peril if you knowingly employ undocumented immigrant workers. That's the case even if your business is not a large facility or part of the United State's "critical infrastructure," but just a small business trying to get by, and even if you treat all your workers fairly.

What If You Didn't Know Your Foreign-Born Worker's Papers Were No Good?

Employers are required to confirm the work authorization of every new hire at the time of hire, using Form I-9 for the purpose. You are not, however, expected to be an expert on the various documents that establish work authorization.

In fact, an employer can be penalized for discrimination for checking documents too zealously or insisting on a particular document, such as a green card. The way the rules put it, you should accept documents from the I-9 lists of acceptable documents that "reasonably appear on their face to be genuine and to relate to the person presenting them."

If that standard doesn't strike you as crystal clear, you are not alone. Still, if you are acting in good faith and following the I-9 procedures, you should be safe from liability if ICE discovers that one of your workers has presented invalid or fraudulent documents. A formal I-9 compliance policy is a good way to demonstrate your good faith. You might also want to check out ICE's IMAGE program, through which ICE becomes "your workforce compliance partner" (though surely this partnership will not suit every employer).

If any information comes your way, subsequent to hire, that suggests a particular worker might not be authorized to work in the United States, you should look into it. The reason for this is that employers can be held liable not only for actual knowledge of a worker's undocumented status, but also for "constructive knowledge"; that is, basically, for having reason to know.

Having reason to know a worker is undocumented might be, for instance, receiving notice from the Social Security Administration (SSA) that someone on your payroll is using a Social Security number (SSN) that doesn't match the name for that number in the SSA database. Again, though, you must be careful how you proceed with such information and avoid jumping to conclusions. SSA database discrepancies don't always mean unauthorized workers, as the SSA "no-match" letters themselves explicitly state. Hasty action on partial information could lead to a discrimination claim.

Another issue that can be tricky for employers is when a foreign-born employee has a work permit card (an Employment Authorization Document or EAD) that expires. They might falsely believe that the person has lost status and become undocumented again. However, because U.S. Citizenship and Immigration Services (USCIS) is often backed up in renewing EADs, it sometimes extends them via a letter, or simply a blanket extension, for example affecting everyone with TPS. If you have trouble interpreting the documents or letters the employee shows you, consult an attorney. (Also see Why Employees With TPS Might Legally Work Past Expiration Date on Work Permit.)

Can You Avoid the Whole Problem By Hiring Independent Contractors?

You are not obliged to confirm the work authorization of anyone you hire as an independent contractor. If, however, you know or have reason to know that an independent contractor is not authorized to work in the United States, you can nevertheless be held liable. Also, the laws on who is considered an independent contractor are strict; the U.S. government is wise to employers trying to use this category of worker as a way of avoiding various tax and immigration-related responsibilities.

Penalties and Fines for Hiring Undocumented Immigrants

Your business and its owners could be subject to civil and criminal penalties for hiring undocumented immigrant workers. Civil penalties range from a minimum of $375 per unauthorized worker for a first offense up to a maximum of $1,600 per worker for a third or subsequent offense. If you are found to have engaged in a "pattern and practice" of hiring undocumented workers, then you can be fined up to $3,000 per employee and/or be imprisoned for up to six months.

Consult an Employment Law Attorney

When in doubt, an employment-law attorney can help you figure out your obligations and whom you can safely hire.