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Workers’ Comp Claims by Unauthorized Immigrant Workers Can Put Contractors in Double Bind

Workers Compensation for Illegal Immigrants
the one minute takeaway
Many unauthorized immigrants find work in the construction industry, which can create worrisome exposures for employers. For starters, employers may be responsible for paying workers’ comp benefits if these workers – authorized or not – are seriously injured on the job. And that, in turn, may lead to more legal problems with immigration authorities. Understanding the risks and managing them can save money and credibility.

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By Ronnie Uribe and Art Long

The construction industry is the second largest U.S. employer of unauthorized immigrants. Some 13 percent of its workforce is comprised of non-resident, non-legal workers – substantially higher than the 5 percent found in the labor market overall.

Unauthorized or not, workers’ compensation is required to be provided to all employees. In fact, some states actually make a point that non-resident, undocumented workers are not to be excluded.

But here’s where things get a little murky. If such an employee is injured seriously enough to result in a workers’ comp claim and the employer begins initiating benefit payments, the letter of one law is being met. But it may, in the process, reveal to an entirely different government agency, the United States Citizenship and Immigrations Services (USCIS), that another law is not being met. If the individual’s employment eligibility can be documented through the USCIS Form I-9 process, problems can be averted. Otherwise, fines and penalties for employing illegals may be assessed.

In border states like Texas and California, construction employers, particularly the primary contractors, are very aware and cautious about potential issues posed by hiring undocumented workers. They are, after all, ultimately responsible for injuries on their work site. To that end, they tend to do a thorough job of the I-9 vetting to ensure their workers are eligible to work. (Employers further away from the border, however, may not do as thorough a job.)

While general contractors are less likely to hire such workers, their subcontractors and those in the third tier may not be as careful. That doesn’t mean, though, that general contractors don’t face risk exposures.

In one instance, a contractor hired a painting subcontractor who hired a third-tier team. One of the third-tier firm’s workers was an unauthorized immigrant who used a cleaning substance that burned him and several other employees. There was no contract between the subcontractor and the third-tier team, and the contract between the subcontractor and the lead firm was poorly executed. As a result, the general contractor was responsible for paying the injuries.

Whether employees are legal or not and working for the general contractor or a sub or a third party, there’s a case to be made that everyone on a job site is the responsibility of the main contractor. Employers need to be aware of all the different issues that can arise in the event an unauthorized worker is injured. The legal liabilities aside, getting tied up with immigration authorities can put a business’ credibility and future contracts at risk.

HUB International’s consultants are available to work with you in trends and developments that may impact your risk posture today and in the future.