The thing is, we have used an underpaid workforce since Jamestown. But I didn’t want to get into that discussion when I addressed the increase in worker documentation audits by the Department of Homeland Security (DHS) at a recent Good Morning, SLO. I didn't want to talk about the $1 apple. I was happy to point out, however, that if one of your competitors is paying workers under the table, at less than minimum wage, then they are also not paying their share of payroll tax and probably not paying for workers comp insurance. Unfair competition, I’d say.
The Department of Homeland Security and other agencies have focused on the little guy for the past 3 years. Documentation investigations, which precede I-9 audits, have increased 8-fold since 2007. 170 business owners have been arrested in 2010 alone. Arresting the owners only started as a supplement to fines a few years ago. The first to be arrested were the owners of the fence company that built the fence between the USA and Mexico. I love it! Yes, the company that built the fence was using undocumented workers. I can just see the sign on the fence: ABC Fence Co, San Diego. And then in small print, in Spanish: If you can get over this fence we’ll give you a job. No questions asked.
So the feds are going to the source of the jobs: the broader the enforcement the better the compliance. As long as we have these laws we might as well enforce them.
It is to the file cabinet or binder of I-9s that the DHS will head if they come to your business. So the I-9 form is the place to start in making sure your workers are properly documented. The fines for failing to do so range from $110 to over $10,000 per worker, so it behooves you to learn how to do this right. By the employee’s third day.
You have the list of acceptable documents on the back of the I-9, and the instructions tell you whether to place the information in List A, B or C on the form. You don't have to be a forgery expert, but you do have to review the originals and you when you sign the form you are attesting that they appear genuine to you.
Few employees carry their social security card or other documents with them, so I recommend telling the applicant when they are hired, what to bring with them on their first day: Whatever info you need to complete the W-4, and the I-9. Give them the list of acceptable docs: you may not tell them to bring their social security card and driver’s license or any other specific document. If you want the social security number for the W-4, that’s fine. And the driver’s license and proof of insurance for driving on company business, also fine. But don’t confuse these requirements with the I-9.
You could be guilty of discrimination: just ask Catholic Healthcare West. Seems they had a habit of asking for more documentation from only the more swarthy looking applicants.
What if you use independent (1099) contractors? Has DHS put any enforcement requirements on companies that prefer not to hire full-time, regular help?
ReplyDeleteNot to my knowledge. The reporting form for the EDD requires a social security number but has no mention of requiring confirmation or attestation that it is valid.
ReplyDeleteThere are at least 6 agencies who have criteria for determining who is an independent contractor and who is an employee: EDD, Workers Comp, IRS, Dept of Labor, CA Labor Commissioner, and INS (DHS). The DHS, however, lists no worker documentation or ID criteria.
The EDD and IRS are all over this issue: it is a popular way to avoid paying payroll taxes. I have assisted an employer with an audit by the EDD because one of her contractors applied for unemployment when the employer ended the contract! It took way too much time and effort by an employer who had done (almost) everything correctly.