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What's the Penalty for Employing Illegal Workers?

November 01, 2016

Written by Complete Payroll

illegal workers referee

Employing workers who are not authorized to work in the United States can result in serious penalties for employers. The Immigration Reform and Control Act (IRCA) of 1986 makes it illegal for employers to knowingly hire, recruit, or refer unauthorized workers for employment. The IRCA also prohibits employers from continuing to employ individuals whom they know or reasonably should know are not authorized to work in the United States.

What makes someone an illegal worker?

An illegal alien is someone who is living in the United States either

(1) without the correct legal documentation or

(2) by violating the terms of their documentation, like overstaying their visa.

Also, all workers - both citizens and noncitizens - in the United States are required to fill out the I-9 Form. The Employment Eligibility Verification I-9 Form is essentially how employers verify an employee's identity and their eligibility to accept employment in the United States. (The I-9 was most recently updated in October of 2019.)

What happens if I break the rules?

The Immigration Reform and Control Act (passed in 1986) prohibits employers from knowingly hiring, recruiting or referring illegal aliens for work in the United States. And this even applies to employers who learn an employee is not eligible for work in the United States after being hired.

Knowingly hiring an illegal worker will result in fines ranging from $250 to $2,000.

Unknowingly hiring an illegal worker can also result in penalties. If your worker provides a fake Social Security Number and fradulently fills out the Employment Eligibility Verification I-9 Form, you as the employer are still liable and will be subject to fines ranging from $250 to $5,500.

Most fines are broken down this way...

  • First offenders can be fined $250-$2,500 per illegal employee.
  • For a second offense, the fine is $2,000-$5,000 per illegal employee.
  • Three or more offenses can cost an employer $5000-$25,000 per illegal employee. A pattern of knowingly employing illegal immigrants can mean extra fines and up to six months in jail for an employer.

Both the size of fines and the number of inspections has risen in recent years. In 2019, ICE delivered 6,000+ "Notice of Inspections" and reached $ 14.3 million in fines, penalties, and forfeitures.

How do I avoid hiring an illegal worker?

Here are some things you can do to protect yourself...

  • Always make sure all new employees complete the I-9 Form.
  • Employers are required to make a "good faith effort" to ensure illegal aliens didn't produce a fake SSN, complete a fraudulent I-9 Form or commit identity theft to work in the United States. A "good faith effort" includes checking the SSN and verifying the numbers are valid.
  • Run a background check.
  • Consult with an attorney that specializes in labor law.

Employers who need assistance navigating employment eligibility verification requirements or who have questions about immigration compliance, get in touch with us. Someone from our team would be pleased to help you.


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DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.

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