What Are the Penalties for Hiring Illegal Workers?

workersOf the many issues driving the 2016 presidential race, illegal immigration may be the most contentious. Illegal immigrants are often assumed to be taking American jobs and lowering wages for native-born citizens, but this assumption has been called into question by new research.

A symposium published in the Southern Economic Journal not only suggests that illegal immigrants raise wages for everybody else, it presents evidence that current immigration laws preventing these undocumented workers from getting driver’s licenses raise our car insurance rates.

But even as attitudes toward illegal workers soften, hiring someone with no legal right to work in the U.S. remains very much illegal. Companies that hire illegal immigrants are forced to pay under the table. Unfortunately, employers willing to hire illegal workers often do so to get away with paying unethically low wages. But legally speaking, doing so is very risky. If the situation is bad enough, it could even result in the effective end of a business altogether.

So, what are the legal penalties for hiring illegal workers?

First of all, let’s define what counts as hiring an illegal worker.

It might seem straightforward enough, but there’s more to the law than a prohibition on employers hiring undocumented workers directly. Under federal law, it is illegal to do any of the following:

  • Hire illegal immigrants.
  • Recruit illegal immigrants.
  • Collect a fee for referring illegal immigrants to work.

What if a business hires contractors who use illegal immigrants? That business can still be found liable under Federal law. In fact, there are several criminal and civil penalties for doing so—an important reason businesses should do their research before hiring outside contractors.

It’s also illegal for employers to fail to verify a work authorization. If employers do not fill out an I-9 form three days after an employee is hired, they could be subject to punishment under Federal law.

Now that we’ve got that cleared up, what are the legal repercussions of hiring undocumented workers?

The penalties for hiring illegal immigrants can be quite severe, including criminal and civil fines, revocation of a business license, or even jail time. Of course, the severity of punishment varies from case to case. Generally speaking, first offenders are usuallyfinedanywhere from $250 to $2,000 dollarsper illegal employee. It’s easy to see how an employer could be driven out of business if a significant portion of their workforce incurs such fines.

For second offenses, the fine is anywhere from $2,000 to $5,000 per illegal employee. A judge may weigh the circumstances of a previous offense when considering punishment for the second one. Getting caught again would likely result in jail time.

After three or more offenses, the fine is raised to an astronomical $3000 to $10,000 per illegal employee. If a pattern of knowingly hiring illegal workers can be demonstrated, extra fines may be incurred, as well as up to six months jail time.

Severe punishments and the RICO Act.

If an employer knowingly hires ten or more illegal immigrants in one year, they may be considered to be “harboring” them—a crime which can lead to a solid ten year term in Federal prison.

Large employers could also be hit with a lawsuit under the Racketeer Influenced Corrupt Organizations (RICO) Act. Under that legislation, it is entirely possible for a business to be sued by its workers for hiring illegal immigrants.

For example, the legal, documented workers of a computer company could file a class action lawsuit brought under the RICO Act against their employer. In one such instance, the suit alleged that the employer knowingly hired illegal immigrants and thus drove wages down for everybody else at the company. The suit was successful, and the employer paid thousands in damages.

What about stolen identities?

Of course, not every company which employs illegal workers does so knowingly. If an employer can prove they made a good faith effort to verify the individual’s work status — which includes checking social security numbers and making sure they’re valid—leniency is usually granted in favor of the employer. Criminal and civil penalties may be dropped altogether if a compelling case can be made on behalf of the business in court.

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