I understand, even what I don’t condone. I get it. You are in a sanctuary city, where your Mayor appreciates the risks you take to help people who have broken the law. Like mine, your ancestors might have been immigrants, and had the laws been what they are today, we could have also been undocumented. Maybe you simply see the opportunity to pay lower wages, taxes, and other costs. Besides, “everyone else” is doing it. Right?
Remember what your mother asked when you wanted to go to that party, wear a certain style, or do something “cool” that she didn’t approve of? “If everyone else was jumping off of the bridge, would you jump, too?” With the popularity of bungee jumping and other extreme sports today, maybe there is a modernized version of that question, but I generally agree with your mom (and mine). Don’t follow what you think is the herd, based on what they claim they are doing. Some of them are misrepresenting the situation to make themselves seem braver or smarter than they feel. Others don’t understand what they are doing. A few are going to find themselves in deep trouble. Why?
- It is a crime to knowingly hire, employ, or harbor undocumented workers. See Immigration and Nationality Act Section 274A and 8 U.S.C 1324(a). Yes, the undocumented worker has probably and knowingly violated laws, too. But also as your parents told you, “two wrongs don’t make a right”.
- You are risking penalties assessed by the Department of Homeland Security. You could be subject to both civil and criminal penalties, such as: a $250.00 to $2,000.00 fine for each undocumented worker; a $2,000.00 to $5,000.00 for each undocumented worker, if you were fined previously; a $3,000.00 to $10,000.00 for each undocumented worker, if you were directed to cease and desist your hiring practices more than once; a $100.00 to $1,000.00 fine for each failure to maintain the required I-9 authorization and other employment documentation for your workers (regardless of whether they have authorization to work in the United States); or imprisonment for up to six months.
- You are risking tax penalties and interest, if you are not withholding taxes on your undocumented workers. It’s counterintuitive, but undocumented workers are required to pay income taxes, which means you are required to withhold them. But won’t that basically be an admission of guilt in hiring illegally? Yes. See Reason #1 again.
- You are risking a “wage and hour”, or overtime, claim that you can’t easily disprove or defend. There are federal and state laws that protect undocumented workers. In New York State, for example, there is the Domestic Workers Bill of Rights that protects all workers, regardless of whether they are authorized to work in the United States. As the employer, you are held to a higher standard, presumed to have more power, and expected to know the law better than your employees. This includes knowing–and complying with–recordkeeping laws. If you do not maintain accurate employee and payroll records, there is a good chance that whatever your employee asserts will be accepted as fact–even if they lie. The courts and administrative agencies will often take the position that you are getting what you deserved because you knowingly hired an undocumented worker and failed to keep accurate records.
- You are risking a workers’ compensation (“WC”) claim that you can’t easily disprove or defend. The good news used to be that the sole remedy for a work-related injury is WC–if you have WC insurance to cover your workers. This means your injured employee can’t sue you in court (unless you failed to secure WC insurance), and that is still the case. The bad news is that the cost of WC claims often exceeds the cost of civil judgments or settlements, and the WC claims can remain open for decades. Once a claim is established as compensable under WC, your injured employee is entitled to lifetime medical treatment for the injuries sustained while working for you. If you don’t have insurance, you will be liable for this treatment, lost time (which might include projected future lost earnings), penalties, and your own defense. Depending on the site of injury and the severity, you could owe hundreds of thousands of dollars!
- If you don’t have WC insurance covering an undocumented worker, you are risking huge penalties assessed by the New York State (“NYS”) Workers Compensation Board (“WCB”). Under Section 26-a of the NYS WC Law, and as noted in Reason #5 above, you are responsible for any underlying claim against your uninsured business. Yet you can also be assessed a $2,000.00 fine for every 10-day period during which you failed to provide insurance for each employee. So, if you had one employee for six months and failed to provide WC insurance for those six months, you could easily owe $36,000.00!
- The money you think you are saving can be depleted by one claim. You are at especially great risk if your employees perform manual labor while working for you, and let’s face it. That’s usually the type of work undocumented workers do. You hire one to assist you for the day with a project that is too big for you to handle alone or that is past the deadline date. You agree to pay $200.00 for the day. He strains his back and now might need surgery for a spinal issue that had been dormant until the day he worked for you. His average weekly wage (“AWW”), which will be the basis of his WC pay, is determined to be $1,000.00, based on a five-day work week. You owe $666.67 per week for every week he can’t work, plus his treatment expenses. The emergency room bill was $5,000.00, and his current treatment is costing an average of $500.00 per month. He is out of work for one year, and although his active treatment will end after three months, he is entitled to lifetime benefits that are projected to cost $1,200.00 per year. (It could be more if he has surgery.) He is 40 and has a life expectancy of 86. You just accumulated a claim that could cost you nearly $100,000.00.
- You will probably be held personally liable for claims and penalties, even if you formed a separate corporation or limited liability company (“LLC”). This might seem counterintuitive, too, but the government got wise to the scheme that had entities close and reopen under new names with the same ownership after claims were filed or penalties were assessed. Now, laws such as NYS WCL Section 52, allow the government and the courts to “pierce the corporate veil” under certain circumstances. Ensuring employees are protected from losses from work-related injury and wage theft are among those circumstances, and as an officer of the entity, you will be personally liable for such losses. You could also go to jail.
- You might be contributing to your undocumented workers’ likelihood of deportation. For more than a decade, the Department of Homeland Security, or Immigration and Customs Enforcement (“ICE”) has been raiding more small businesses than in past decades, and it should come as no surprise that the number of such raids is expected to increase again under the current administration. If you truly want to help your employees, empower them to become legal citizens or otherwise authorized to work in this country.
NOTE: This post is a general overview of the potential consequences for employers–including domestic employers, homeowners, parents, and elderly or disabled persons–who hire undocumented workers. It is not legal advice, and there is certainly no guarantee that any of the activities detailed above will occur or generate a similar or specific result. Past success is never a guarantee of a future outcome. If you require information or advice applied to your unique situation, please make an appointment to discuss it with an attorney. Don’t rely solely on what you read on the Internet.