Lessons from the Fischer Homes Case: Contractors May Be Criminally Liable for Subcontractors’ Failure to Properly Verify Employment Eligibility
December 5, 2006
A. Brian Albritton- Tampa
Federal law prohibits employers from hiring illegal aliens. Prior to hiring new employees, an employer must verify a prospective employee’s eligibility for employment and complete Form I-9. While a contractor or an employer is not required by law to verify the eligibility for employment of its independent (and sub) contractors, a recent federal criminal case teaches that contractors and employers cannot turn a blind eye to obvious illegal hiring practices among their subcontractors, nor can contractors avoid the application of the laws against hiring illegal aliens by using subcontractors.
Fischer Homes Indictment
In May 2006, a grand jury handed down indictments against four construction supervisors of the home building company, Fischer Homes, along with its subcontractor and the subcontractor’s owner, for harboring known illegal immigrants for commercial advantage and private financial gain. The offense is punishable by up to 10 years in jail.
The indictments arose after a two-year investigation by the Department of Homeland Security, Immigration and Customs Enforcement. According to court records, investigators learned in the investigation the following:
• Fischer supervisors admitted that they knew that many of their subcontractors’ workers were illegal aliens and they frequently referred to the workers as “Mexican workers” or “Mexican crews”
• as many as half the workers at one site were illegal aliens and it was “common knowledge” that there were illegal aliens employed by the subcontractors
• the subcontractors hired a coordinator to hire illegal aliens and house them in apartments, reportedly with the knowledge of Fischer supervisors
• Fisher supervisors communicated directly with the owner of the subcontractor who in turn hired illegal workers on their behalf
Fischer’s compliance practices did not insulate Fischer from liability for the actions of its subcontractors. Specifically, Fischer had agreements with its subcontractors whereby they promised not to use illegal aliens and Fischer verified the employment eligibility of its own employees. Prosecutors, however, charged that Fisher used subcontractors and other subsidiaries as ruse and buffer to keep from having to directly hire illegal aliens.
Lessons to Be Learned: Employers Cannot Turn a Blind Eye to Subcontractors’ Hiring Practices
The Fischer case further emphasizes the rule the contractor cannot “knowingly use contract labor to circumvent the law against hiring unauthorized aliens.” See DOJ’s Handbook for Employers: Instructions for Completing Form I-9 at p. 12. To “knowingly” circumvent the law against hiring unauthorized aliens is very broadly defined.
If an employer has either actual or even “constructive knowledge” that its subcontractors are disregarding the law governing verification of employment eligibility, the employer cannot turn a blind eye to those practices, simply because it does not have the responsibility for filling out I-9 forms. In fact, if an employer becomes aware or strongly suspects that its independent contractors are violating the law barring the hiring of illegal aliens, the employer has a duty to speak directly to the independent contractor regarding his or her suspicions and, when appropriate, demand corrective, concrete action be taken to ensure compliance with the law. Failure to comply with that duty in the face of evidence from which it “may be fairly inferred” that the subcontractor is violating the law can subject the employer/contractor to civil and criminal penalties.
Suggested Compliance Measures
To comply with the laws prohibiting the hiring of illegal aliens, an employer should consider measures in dealing with subcontractors, such as:
• informing subcontractors in writing of the employer’s policy of hiring only contractors who strictly adhere to the laws forbidding the hiring of illegal aliens and who comply timely and fully with employment verification procedures
• including provisions in agreements with subcontractors requiring them to abide by all laws governing the verification of eligibility of employment and permitting the employer to sever the subcontract with fault in the event of noncompliance
• meeting with the subcontractor where and when the company becomes aware of facts or circumstances (e.g., frequent rumors that employees are illegal aliens or evidence that the subcontractor does not fill out the I-9 forms) that suggest that the subcontractor may be disregarding or violating the law, document such meetings and complaints in writing, and require and document written affirmations of compliance from the subcontractor
• educating company personnel regarding this issue and reinforce in such education the employer’s policy and the fact that construction personnel can face personal civil or criminal liability for willfully turning a blind eye to immigration violations by subcontractors
These are just a few of the suggestions to ensure compliance with applicable federal laws to avoid what happened to Fischer Homes. However, it is important to make certain you are aware of all the laws regarding the hiring of illegal aliens – and the ramifications of not following them.
For more information, e-mail A. Brian Albritton at brian.albritton@hklaw.com or call toll free, 1-888-688-8500.