United States: How Trump's Immigration Crackdown Could Impact Construction

The construction industry's utilization of undocumented workers has always been carried out with somewhat of an unspoken agreement. Often several times removed from a general contractor via layers of subcontractors, the employment of foreigners without proper work credentials has taken on a "don't ask-don't tell" quality and has managed to survive, regardless of what immigration enforcement policy has thrown at it.

But that could all change soon.

During the 2016 presidential election campaign, then-candidate Donald Trump made the deportation of undocumented individuals central to his platform. Now, President Trump has continued that narrative but has stressed to the public that any crackdown would focus first on the deportation of violent criminals.

Last month, he signed an executive order empowering U.S. Immigration and Customs Enforcement (ICE) to hire 10,000 additional officers to track them down and round them up. However, sooner or later, individuals who have committed no other crime than to live and work in the U.S. without proper documentation are bound to be caught up in the stepped-up enforcement action. That will, in all likelihood, include those working in the construction industry.

So how will the heightened enforcement impact contractors? The answer extends beyond enforcement issues, as the labor shortage and other workforce management practices are likely to come into play.

Heightened scrutiny of business practices

"The rule changes that have come through executive order should not affect the construction trade at all, but the uptick in enforcement definitely could," said attorney Gregory Palakow with law firm Archer in New Jersey. Although not immediately, the construction industry could start to feel the impact over the next several quarters as immigration sweeps also ensnare workers, he noted.

Businesses that are suspected of employing undocumented workers could also come under increased scrutiny, Palakow said, but that isn't something particular to Trump or the Republicans. "That is not a political type of thing," he said. "More people were removed and deported from the U.S. than ever before [during President Barack Obama's administration]. Employers were also subject to a great amount of visitation and fines and raids."

Former federal trial attorney for the U.S. Department of Homeland Security Clete Samson, now with Kutak Rock in Omaha, added, "The construction industry is the second leading industry for relying on unauthorized workers."

A November 2016 report from the National Bureau of Economic Research found that the construction workforce was comprised of 13% undocumented workers between 2011 and 2013 — significantly higher than the 4.9% national average.


"They say to themselves, 'If I don't employ these individuals, my competition down the street will.'"

Clete Samson

Attorney with Kutak Rock


That fact means that contractors will most likely be targeted by ICE in the form of raids and other enforcement actions in the coming months and possibly years. If ICE takes on as many new employees as are specified in Trump's order, "they'll need something to do," Samson said. "They're going to be accountable for arrests, deportation and removals."

When ICE focuses on employers, it's most often in the form of a paperwork check to ensure that they are collecting required employee documents — like social security cards, birth certificates or other proof of work authorization — and then checking to make sure those documents are legitimate, according to Samson.

These I-9 audits, referring to the identity-verification form employers must have on file for all employees, can result in a civil fine of more than $2,000 for failure to comply, and Samson warned that employers should double-check and ensure that they have complete, valid I-9s on file for each worker.

Employers also need to take a hard look at their independent contractor relationships and make those connections airtight, according to Samson. A misclassification of independent contractors as employees could lead to fines, penalties and additional taxes from the Department of Labor or Internal Revenue Service.

If an employer finds itself with a fresh crop of workers with questionable documentation, that could open up a can of worms with ICE. In many cases, federal agencies share information, so one investigation could mean another agency will be knocking on the door soon, according to Samson.

It's just as likely, however, that employers who have been operating in a world where undocumented labor is commonplace will continue to risk the civil penalties, both out of habit or, as Samson said, as a cost of doing business. "They say to themselves, 'If I don't employ these individuals, my competition down the street will.'"

The labor shortage's role in the issue

Add on a skilled-worker shortage that has been growing over the last several years, and construction companies are feeling the presure.

"Post-recession, there was massive skilled labor drain, then costs were 30% higher than pre-recession," said Jesse Fowler, president of Tellus Design + Build in Costa Mesa, CA. Even though workers have slowly crept back into the industry, "There's still a general concern about hiring across labor pools," he said.

His company's solution is to "try to gather as many good [documented] guys as we possibly can and take good care of them," but he said that some of his competitors would be out of luck — and could even lose their businesses — if the labor board or ICE came knocking at their doors and insisted on seeing the required employee paperwork.

Elliott Dube, an expert on construction labor and law issues with Bloomberg BNA, said that the builders he has spoken with recently are becoming "increasingly nervous" at the prospect of expanded immigration enforcement and more deportations.

Many construction companies have been dealing with the skilled labor shortage, in part, he said, by increasing their reliance on skilled labor from outside the country. "Builders, at this point, might be getting more apprehensive. They see it as their way of plugging the leak being taken away from them," he said.

In areas where demand is the highest, Dube said, companies have reported that they needed to turn down jobs because they couldn't find adequate documented workers. At the same time that these companies are expressing frustration with Trump's immigration efforts, he said, there's also optimism that he will cut down on regulations like the federal blacklisting rule and the Department of Labor's proposed overtime regulation changes.

"We have long championed allowing more people with construction skills to legally enter the country as a way to provide temporary relief for construction firms."

Brian Turmail

Executive director of public affairs for the AGC

There is also the faction of contractors who don't see deportation as a bad thing, but as a way to level the playing field. "They see the competition using undocumented workers and being able to submit lower bids on projects because they're able to pay less," Dube added.

However, Fowler said it can be difficult to find legal workers who want the toughest construction jobs. "Nobody wakes up and says, 'I want to hang drywall,'" he said.

One thing is for sure: the Southern California construction industry, where Tellus operates, would suffer if any big changes come to the market that could artificially raise prices higher than they already are. "If anyone loses just one guy to a crackdown by immigration, that's a 10% to 25% increase [in labor prices]," he said.

What's next in the undocumented worker controversy

So is there a legal solution?

At the end of the day, Palakow said, a guest-worker program would be beneficial to everyone. Obama proposed such a program early on in his administration, but Palakow said he used up the majority of his political capital on the Affordable Care Act and couldn't rouse enough support for the initiative, which would have been a way for people to legalize their work status in the U.S. but not create a path to citizenship.

The Associated General Contractors of America has long advocated for a guest-worker program as well. "In general, we have long championed allowing more people with construction skills to legally enter the country as a way to provide temporary relief for construction firms struggling to find qualified workers while federal, state and local governments work to rebuild the domestic pipeline for recruiting and preparing new construction workers," said Brian Turmail, executive director of public affairs for the AGC.

Dube said many of the companies that are concerned about the possibility of an impending crackdown by ICE are also talking about the culture change that needs to happen to make construction an attractive career with young people.

"If [students] aren't putting themselves on the path to enter the skilled trades, then contractors have to find another source," Dube said. "Contractors might be looking at potentially skirting the law and getting undocumented labor to meet their needs."

Previously published in Construct Dive.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.