Who pays the penalty for hiring illegal workers?

February 19, 2009: 5:47 PM ET

If you work with outside staffing agencies, both sides have some responsibility for ensuring that your workers are legal.

Sharon Rider, Lake Charles, La.
If a small business needs temporary help and uses a staffing firm to obtain hourly workers, who will be subject to penalties if the workers turn out to be illegal aliens? Is it the small business or the staffing firm?

By Adriana Gardella, Fortune Small Business Senior Editor

Both may be liable. "Immigration law generally imposes sanctions on those who knowingly employ unauthorized workers," says labor and employment lawyer Michael Thompson of Lehr Middlebrooks & Vreeland in Birmingham. So, depending on who knew - or should have known - that the employees lacked proper authorization, there could be liability for the business owner, the agency, or both.

There are also cases where neither will be liable. "If the proper employment documentation is presented by an employee who subsequently is found to be illegal, no one will be held liable as long as the employer acts to remedy the situation when advised," says Frida Glucoft, chair of the immigration practice at Mitchell Silberberg & Knupp in Los Angeles.

But that doesn't mean you can bury your head in the sand. "One of the regulations related to unlawful employment expressly extends enforcement beyond the direct employer to anyone who acts with reckless and wanton disregard for the legal consequences of permitting another individual to hire an unauthorized alien," Thompson cautions. He notes that in one well-known case, U.S. Immigration officials investigated Wal-Mart (WMT) because its contractors had hired cleaning crews that included unauthorized workers. In 2005 the retail giant settled the matter with the government for $11 million and agreed to create an internal program to ensure that its contractors comply with immigration laws.

So how can you avoid landing in a Wal-Mart-like bind? Thompson urges you to create a written agreement with any employment agency you use. "It should contractually obligate the agency to comply with all applicable employment verification procedures and, to the extent permitted by law, require it to defend you and hold you harmless against any claim or cause of action related to unauthorized employment."

Thompson also advises you to work only with reputable staffing agencies and to take appropriate action to investigate claims that they are assigning undocumented aliens to work at your firm.

This column provides general information only and is not intended to replace the services or legal advice of an attorney. Always consult a lawyer regarding any specific legal concerns, as laws vary from state to state.

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Related links:

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