The Fine Line Between Due Diligence and the Third Degree

Ulf Wolf & Steven Ferry

March 2008

As we all know, immigrants are now a vital part of the construction work force, making up about 20 percent overall, and more than that in the walls and ceiling trades.

It also goes without saying that a fair portion of these workers are not legally documented, representing a central problem for contractors who find themselves caught between needing the personnel to complete the job on time, and the threat of ICE (Immigration and Customs Enforcement) raids and penalties.

Such undocumented workers have been a factor in the construction work force for the last two decades, a situation stemming from the fact that most native-born Americans no longer view a career in construction as particularly desirable, thus creating a labor shortage.

One solution to this has been to skirt the law by hiring undocumented immigrants in the hope that one and all, especially the government agencies concerned, will turn a blind eye. This solution has, to a large extent, worked, and has brought short-term benefits to contractors, general contractors and owners, as well as to immigrants. However, this solution is now becoming its own problem.

Immigration Reform
Last year, legislation that would have legalized the current illegal workforce and provided for future guest workers, was considered by both houses of Congress. This reform, if passed, would have greatly benefited contractors.

However, immigration reform did not pass Congress, and at this point would appear to be a long shot. There is a presidential election this year, and it would be safe to assume that neither party wants to rock the immigration boat. Next year will see a new president, and a new Congress, who would most likely be equally loath to rock this boat. It is therefore conceivable that immigration reform may not even be back on the legislative agenda until 2010.

Meanwhile, the Department of Homeland Security is growing increasingly diligent about enforcing the laws that are on the books, as reflected in the increase of removals and worksite raids.

In fiscal year 2007, there were slightly more than 300,000 removals of illegal immigrants from the United States, an 84 percent increase since 2002. About one-third of these occur at the Southwestern border, after an immigrant is apprehended trying to enter the country illegally.

Worksite Raids
An increase in worksite raids around the country by ICE has led to a nearly tenfold rise since 2002 in the number of undocumented immigrants arrested at their workplace—from about 500 in 2002 to about 5,000 in 2007. (The Pew Hispanic Center estimates that 7 million to 8 million undocumented immigrants are in the U.S. workforce.)

New DHS Regulation
During the week of Aug. 17, 2007, U.S. Immigration and Customs Enforcement, the largest investigative branch of the DHS, issued an updated regulation related to the hiring of undocumented workers.

The updated regulation stated that an employer will be subject to various penalties if he or she knows that an employee does not have the proper U.S. employment authorization, and who fails to verify their workers’ Social Security information.

The proposed regulation brought immediate lawsuits by both the American Civil Liberties Union and the U.S. Chamber of Commerce, and on Aug. 29, U.S. District Judge Maxine Chesney, at a San Francisco hearing, granted a temporary restraining order blocking the regulation, and prohibiting the Social Security Administration from sending out the so-called "no-match” letters as planned. This restraining order was subsequently continued at a second hearing on Oct. 1, 2007.

On Nov. 24, 2007, the DHS/ICE finally abandoned its attempt to enforce the proposed "no match” rule, returning to the drawing board to re-draft the regulation in more acceptable, and legally watertight, terms.

This, then, is the current work-force climate. How are contractors coping with it, and what solutions have they brought to bear on the problem?

How do you walk the fine line between due diligence—obtaining all necessary I-9 information, as required by law—and violating a prospective employee’s privacy by questioning the surface appearance of the ID and Social Security card presented, in order to cover your legal back without going too far in the process?

Union Shops
The basic approach to the problem of whether or not you can legally hire someone seems to vary from union shops to open shops.

The closed union shop finds its crew from union halls, and relies, to a greater or lesser degree, on the union screening the employees before passing them on to the contractor.

As a New York contractor puts it, "Everybody is union, and we assume they’re okay.” However, he goes on to say, "Occasionally, we check for green cards, because the union sometimes makes mistakes.”

Another New Yorker echoes his colleague: "The undocumented worker issue does not affect us at all, because we have union labor. There’s no impact.”

A New Jersey contractor agrees on this issue: "We are a totally, 100 percent union shop. There is hardly any impact at all.”

Although, he, too, goes on to say, "Now and then we have to make sure that all the papers are in order. But that is the primary role of the union, to make sure that people coming on to the job site have sufficient, and correct, documentation.”

Another New Jersey contractor puts it this way: "The union is taking care of everything.”

The same view is held in Rhode Island, where one contractor tells us, "It is the union’s responsibility to get the proper information. When they first sign up with the union, the union should get their Social Security number and driver’s license number, so that when they are referred to us, we know they’re okay.”

He, too, adds, "But there are times when, for unknown reasons, they give the wrong Social Security number. When we suspect a problem we do a check on the Social Security number to make sure that it comes up with the correct name.”

An Illinois contractor relies on his union too, "We hire and employ all union labor, so we don’t have a problem. As far as qualified people go, I assume they’re all qualified when they are sent to us.”

Northeastern contractors, it seems, rely largely upon the unions to screen, or to at least help screen, their members as to legality before they pass them on as employees.

Moving west, however, this reliance diminishes.

A Minnesota contractor states that "the unions, over the years, have become quite cooperative and try to screen people somewhat, but it’s pretty loose.

"They should screen them well, but they don’t. They sign them up—and the new member has to provide the union with a Social Security number, which they then pass on to us. But in years past, we’ve run into problems. Once we had a couple of guys come to us with the same Social Security number.

"It’s the old battle of privacy rights, and how many questions you can ask; I know the unions struggle with this as well. But how pointedly can they question individuals that want to join the union, especially when there is a shortage of people?

"None of this subject is really cut and dry. It leaves many of us questioning what our legal rights are, both as employers and employees.”

Moving further West, the reliance on unions all but disappears.

According to a Washington contractor, "The unions don’t do a thing. It’s not their responsibility. They’re not employing anyone, they’re only bringing people into the union. They’re not hiring.”

An Oregon contractor is actually unsure, "I don’t know whether the union pre-screens or not. I honestly don’t know, but I’m assuming they do. Though of course we have to check the social and driver’s license, and fill out the I-9 with every new employee.”

A California contractor adds, "We asked the union to help us screen, and they’ve begun doing that now. Not that they have to. I mean, they get a lot of dues, and if a guy doesn’t show up, I guess the dues stay with the union. So I’m not sure they really care.”

There’s a lesson here. Regardless of geography, one can’t assume the union employee is legal simply by virtue of being a union member. True, it appears that the farther east you travel, the more proactive the union is when it comes to screening, but even here, the burden of responsibility falls on the employer, not the union, to ensure the worker is fully, and legally, documented.

Open Shops
Open shops have no pre-screening luxury to fall back on. It’s completely up to them to obtain the correct I-9 information and to ensure legal crews.

The exception is that not all open shops deal with employees: Some rely on other subcontractors in turn.

As a Vermont contractor states, "We hire another company, and they take care of that. They bring whoever they want and it’s their responsibility to make sure they are legal. As long as we are given a federal ID number, we’re covered.”

A Massachusetts contractor follows the same rule, "We sub out our work to other contractors.”

Another way around the problem is to use agencies. A Florida contractor is quite happy with this solution, "I normally don’t have employees on my payroll. I’ve found the best way around the illegal worker issue is to have somebody else take care of that for us.

"The temp agency hires and screens the employees for me. Of course I pay a premium, but they take on the responsibility and liability of having employees, rather than me.

"I use Manpower quite often, and there are a couple of local companies here in Florida that will supply union employees when I’m on a union job. It works out quite well.”

But if you don’t sub out your work, or use agencies, it is up to you to screen your new hires, to walk the fine line.

So how well do our contractors screen new employees? Do they, as a rule, verify the I-9 information?

A Georgia contractor tells us, "We try our best to get green cards, tax IDs and proper identification from those who come to work here, but that’s about all we really do. Of course, we keep the I-9s on file, because a lot of the GCs require that now.”

A South Carolina contractor says, "The one thing I do, is check the Social Security card, and I make sure it matches the other IDs the employee candidate gives me.”

An Alabaman elaborates: "We’re becoming more diligent, though we don’t check them against the federal database. We just check them to make sure that they have everything.

"We copy the Social and IDs and fill out our I-9s, and keep everything on file. If nothing looks suspicious, we don’t go into any greater depth.”

A Tennessee contractor says: "We keep the I-9s on file. That’s all we do.”

A North Dakotan has a humorous take on the situation, "We’re so far North that illegal labor never makes it this far.”

Still, he goes on to say, "We check everything rather thoroughly. We don’t ever want to be caught in the middle of an illegal immigrant issue. If that were to hit the papers—especially here—it would most likely wreck our business.”

A Colorado contractor is not taking any chances: "I keep I-9s and all the documentation, but I’m only using American-born people.”

A Texan uses this approach: "If they look legitimate to us, then we believe they are legitimate. We keep files on every employee and all the I-9 documentation is in them, as best we can, with what we have, but without adding to the creation of a police state. We’ve done our due diligence.”

A Washington contractor views it this way: "Basically, anybody who comes through the door has to show proper ID and they’re hired under the assumption that it’s legit.”

A Possible Firewall
When it comes to covering your back legally, there are solutions in place that may create a firewall between you and potential problems.

A Virginia contractor who is worried about this whole subject says: "When you have people who might be illegal come in with state of Virginia driver’s licenses, where do you draw the line? How do you determine whether the documents they show you are real or not? Well, E-Verify is working quite well for us.”

He goes on to explain, "It’s a pilot program run by the Department of Homeland Security. When we hire somebody, their information goes into this Web-based program, and if there’s a no-match on Social Security, we are alerted right away. At that point, we have to give the employee notice in writing that they must correct the discrepancy.

"I know there have been lawsuits in Illinois over this, because the state passed a law prohibiting people from participating in the program. But in September of last year, the DHS sued Illinois in turn and asked the court to declare the Illinois law illegal.

"This law was supposed to go into effect on Jan. 1, 2008, but Illinois has now agreed not to enforce this law until the DHS suit is settled.”

"We still keep I-9s. But we received literature from E-Verify teaching us how to tell when a card may not be legit, things to look for. The program has not only educated us, but also put up a firewall against our possible violation of the law.

"As long as we verify everybody we hire, we’re protected.”

While not necessarily the magic bullet that will solve all hiring ills, E-Verify may be worth your while to look into. You can find it at

The program, a partnership between the Department of Homeland Security and the Social Security Administration, is voluntary and free.

Bottom Line
It is incumbent upon the contractor/employer to follow the law. That much is a given. Should you accept the offered I-9 documentation at face value? Or should you verify? That is entirely up to you.

Should you turn a blind eye when deadlines call for 10 more workers on the job right now, no matter what? Or should you run every applicant through E-Verify just to make sure? Again, that is entirely up to you.

Whatever you decide, however you plan to walk that fine line between due diligence and the third degree, you might want to keep on thinking about the long-term view.

It is your business on the line, after all.

Los Angeles–based Ulf Wolf, and Clearwater, Fla.–based Steven Ferry, write for the construction industry as Words & Images.