Is Your Roofing Business at Risk? New I-9 Crackdown Explained!

Immigration reform is coming whether you like it or not, whether you love Trump or hate him. And that's what we're here to talk about today. So I'm joined with Philip Siegel, who is an attorney who's been practicing for over 30 years in construction law and has seen what's happened under different administrations. In hindsight, Philip has shared with me how under Obama and Biden's presidency, the i9 audits virtually vanished, but under the Trump presidency of yesteryear, now, as of this recording, he's being inaugurated as we speak. Things could change because they've changed in the past. So in this interview, we're going to share with you what you need to know to be prepared and proactive and how this might impact your labor force or potentially even fines or disrupting government jobs, which we're about to talk about. Roofing sales is personal development in disguise, and the reward for growth is life changing. I hope my content helps you create a richer life and bank account. So, Philip, thank you so much for being with me today.

My pleasure, Adam. Thanks for having me.

All right, so you've been on the channel before. You actually helped me navigate a lot of the flsa, the Fair Labor Standards Act. You're working with quite a few members inside the Roofing and Solar Reform Alliance. And for those that don't know you yet, can you give a crash course of who you are and why folks are going to want to pay very close attention to what you have to say?

Sure. Well, again, I'm Phillip Siegel. My firm is Hendrick, Phillips, Salzman and Siegel. We are a boutique construction law firm with a national practice. We happen to have a particular focus representing roofing contractors for over a 40 year period. My partner, Stephen Phillips, was general counsel to the National Roofing Contractors Association. I'm a frequent speaker at NRCA events and various state trade associations in the roofing industry. My practice focuses while the firm handles all aspects of construction, I focus on labor and employment law, hence our prior discussions on the misclassification issue. And what I hope to bring to your audience today is a little bit what may be coming in the immigration arena.

Yeah. Excellent. Thank you. And there's. So I recently did a video, which is how we ended up talking. I did a video on the potential changes to immigration law under Trump's presidency. What's going on in Missouri? And you reached out. You're like, hey, you know what? I've handled a lot of these i9 audits. So what I'd like to turn our attention to is if you could briefly explain first, for those who are unfamiliar with the government forms, what i9 means and what the history of these i9 audits has been under various presidential candidates in history.

Yeah. So, Adam, we start with in 1986, we had the Immigration Reform and Control act that Congress passed. And in their wisdom, they created a mechanism by which employers would be the gatekeepers in terms of who was in the country legally and who is not. And this is done through use of the form. The Form I9 has two primary purposes. If it's completed correctly, it's one, verifying the identity of the individual who's been hired. And step two, more importantly for our discussion, it's verifying the work authorization status of that new hire. And employers are obligated to have an employee complete section 1 no later than the first day of hire. And which is basically the section of the form where the employee identifies themselves and their immigration status. We move to section 2. The employer has the responsibility of completing section 2. And in completing section 2, the employee is producing documentation that verifies their employment status. The form itself comes with instructions. It identifies which documents are acceptable for i9 purposes. The way the form is created. When we jump to section two, if you look at the form, there's a list a document that an employee can produce. That individual that produces a list a document is verifying through that one document both their identity and work authorization status. If they don't have a list a document, the form explains, the employee must produce an original unexpired list B and a list A C document, list B proving identity, list C proving work authorization status. And the employer again is obligated to complete section two within the first three days of hire. And if the employee is able to produce documentation that appears reasonably genuine on its face, the employer is obligated to accept it. The form is completed and then kept in a safe place. And we could talk about what the record retention rules are, but if in that process the employee and this has already been, this is already a person that's been hired, it's after hiring. This is not a screening mechanism. But after that person's been hired, if they can't produce that documentation, they're not able to show they're able to work legally, you must terminate that employee.

And how does this relate to subcontractors? Because I know many folks listening are saying, hey, well, you know, I've got. I use subcontractors as installers, for example, And I know that the foreman or the gentleman who's technically owns or owns the business as the sub, he's legal. Like, how deep does this unravel in terms of the liability that a roofer has when it comes to subcontractors?

So that's a great question. And the subcontractor is going to be responsible for, for collecting and properly maintaining, completing and properly maintaining the i9 of its employee. Now, your audience member who's a roofing contractor who's subbing out the work, does that mean they've got nothing to worry about in terms of the legality of the subcontractor's employees? Not necessarily. If your audience member, your roofing contractor who's hiring that sub, happens to know the subs labor is illegal, then your audience member is on the hook. Adam, what started the immigration hoopla back in the early 2000s was commonly known as the Walmart case. And in that case, and this really was the precipice of all the immigration issues we're dealing with now, some 20 years later, what Wal. In those Walmart cases, Walmart had engaged separate, independently established janitorial crews to clean their stores at night. It happened that the Walmart managers knew that the employees working for the cleaning company were illegal and Walmart got dinged on that. And if any of your members have done any work with Walmart, the immigration requirements are extensive. And because it flows from that case, the point I'm making is even a Walmart got dinged because it knew that it's cleaning vendors saw cleaning vendors employees were illegal. But if you don't know it, you know, the ostrich and head in the sand defense is not going to work. But if you don't know it because you're keeping away from it, you wouldn't want to have any business reviewing your subcontractor's i9s. You ought to have a contract calls them in the subcontract that obligates them to comply with I9 requirements. But you don't want to know anything more other than you've obligated them to comply. But short of that one instance, Adam, if there's no argument that you had no actual knowledge, no constructive knowledge, you're not going to be responsible if a separate subcontractor happens to be employing illegal labor.

Yeah, gotcha. Thank you for that. Now, as we dive into this topic, if I'm looking off to my other monitor, I see a document called top or this is a report. So it says top US Industries relying on illegal immigration. And it's categorized by industry, and I'm going to go through A few construction, agriculture, hospitality, wholesale trade, transportation and warehousing, manufacturing, mining and extraction, et cetera. The lion's share of the illegal immigration workforce is the construction industry, according to this chart, at 1.5 million workers, with 47% of the total undocumented immigrants being in California, Texas and Florida, which I know Texas and Florida are huge markets for the folks that I serve. And what I'd like to dove into now since obviously the in I'm always weary of statistics in this space based on who's publishing this, whether they're left or right leaning and what the agenda is. So regardless, I believe that most of us would likely agree that agriculture and construction would be the lion's share of illegal immigrants in our workforce. And according to this, construction actually outweighs agriculture 1.5 million workers to 244. So anyway, share your comments below on your thoughts on that. That's why I'm not sure if that's totally true, but I do think construction is a high probably the highest trade category. So, Philip, can you just bring us through the history of what you shared with me about the i9 audits, why the government might do this, and the trends that you've seen from Obama to Trump to Biden and now what we might Predict here in 2025 and beyond?

Well, you know, again, picking up on my comment on the law and how employers have been charged this responsibility to be a basic gatekeeper. You know, Trump has been very open about, you know, his immigration policy and what he tends to do with people who are here illegally, knowing that employers are off, are often the gatekeeper and charged with verifying someone's ability to be here and work legally in the United States, you would expect an increase in the number of i9 audits. And in fact, recanting my own personal history dealing with i9 audits, there was a period of time under the Obama administration, I go back to the Walmart, that was several years ago. I9s and audits were so hot at that time. But you had Obama come into Office and the i9 audits. And again, I'm doing this on a national level, so I'm hearing from contractors across the country that work really slowed down to a trickle. What happened noticeably between 2016 and 2020? I made the comment that I really didn't realize how much that work had picked up until it vanished when President Biden came into office. Because between 2016 and 2020, I would say I was handling several i9 audits over the course of of a quarter I mean, you know, several over the course, more than several over the course of a year. It was readily keeping me busy throughout the year, not necessarily handling several at once, but there was always an i9 audit that was keeping me busy throughout the year. And again, that work really came to a stop when Biden came into office. And Adam, I can't tell you the last time I did an i9 audit now, but before the flip of the calendar, because I have been discussing with our clients the idea of, hey, anticipating that we are going to see an increase in i9 audit, not only because of my past practice, but the president is telling us he's going to pursue deportation. The low hanging fruit, Adam, are employers and the i9 forms. Because when you go through an i9 audit, if you're employing people illegally, even though You've got an i9 form and they produce documents that look legitimate, you're going to learn, not surprisingly perhaps, that those documents weren't legitimate. They were awesome frauds. The government is going to know. And the worst case situation and i9 audit is you're told you're employing people illegally and you're going to have to terminate. And that could be a significant part of your workforce. And really, that's the worst surprise you want to avoid?

Sure.

So companies, in following some of my advice, I'm advising, hey, it's a good time to conduct a self audit right now. Where do you stand not just on these substantive violations that would result in you having to terminate people, but, but the technical errors too. I mean, if you're a bigger company, you don't get if you go through an i9 audit, I could talk about the process if you want, but if you're dealing with technical errors like you didn't put the date in the correct format, those can cost you money if they're not corrected timely. You get some big companies and you're making the same mistake on every i9 form. It could take time to fix those errors and a significant investment of human resources to fix those errors. I'm suggesting now's a good time to get ahead of this and have control over it rather than be bound to the government's timeline when you're under audit.

Yeah, and you had mentioned the being under audit on a big project and the consequences that that could have. Elaborate on that.

Okay, so when I look back on where the companies were working that were targeted for an i9 audit, I can put a bulk of them, they were either doing public work, typically on a federal project. There were state projects that had federal funds. And so the federal government knew that there was a construction project ongoing. And then those projects, it seems ice was swooping down and every trade on site was subject to an i9 audit, not targeting any one specific company, but targeting the project. The other project is the highly visible project. I am just thinking about, you know, here in Atlanta, we were building Mercedes Benz. That project got hit with i9 audits. Wage an hour, Davis Bacon, I mean, everything. It also happens to be sitting off the expressway. So those highly visible projects, in my experience were more targeted than others. But the biggest problem that we were dealing with in 2016-2020 and we were able to massage somewhat through it. But the worst case scenario is a contractor working on a public project directly with the. You got a roofing contractor contracted directly with the owner. And I make that point because they would have had to provide a payment and performance bond on a public project. And now I swoops down on the project. You go through the i9 audit and you're having to terminate your. Just to make my point. Your whole crew you had out at that project and then some. You're leaving you with the inability to staff that project and get it done timely. What follows is your contract is terminated. The owner makes a call on the performance bond. The performance bond surety steps in, pays money to complete the project, and then they're turning around and they're calling on the personal owners, directors, whoever was at the roofing contractor that signed that general indemnity agreement that said, hey, we're going to pay you back surety. It's if you end up spending any money under the performance bond. And those dollars can get significant when we're talking about big projects and you're losing 50 men at any one time. And yeah, that may sound like a big number, but that I can tell you from experience. You mentioned Texas. It was a Texas roofing contractor I represented that had that worst case situation. Not to pat myself on the back. We were able to negotiate for a phased termination to avoid that worst case scenario. But Adam, we lucked out and that we were dealing with a reasonable investigator. Not every investigator is going to be reasonable.

Yeah, yeah, that makes sense. So a lot of folks don't think that this is something they really need to worry about. They feel insulated. Talk us through what might trigger in i9 audit and what like the. The basic steps for a contractor to prepare should this happen to them?

Sure. So beyond those public projects and that highly visible project, you know, it can be random, but I'll give you two other instances. One, again, I've been, I'm not going to say it anymore. Where I've been doing it, how long I've been doing it. But you'll have a competitor call it in. They, they think they're losing work to you because you're not paying people minimum wage because they're illegal and you don't have to pay. You're. You're taking advantage of illegal labor. So you'll have a competitor call it in. And then ICE shows up. That's one. Number two, and this isn't published anywhere. But I have come to this conclusion based on my own significant experience, and that is if your company, if you're an audience member, your roofing contractor is an E Verified participant. And I don't want to spend too much time on that process. But if you're a participant, you know the process. And if you're getting back, a lot of. You're, real quickly, you're getting the i9. You've already accepted the documents. Before you go to E Verify, you've already determined the documents look legitimate. You go to the E VERIFY system and just to cut through the, make it quicker, you're getting a notice of non confirmation. The system is telling you the documents are not legitimate. The person's not authorized to work. If you start getting a lot of those. In my experience, those companies tend to be targeted for an i9 because ICE believes there's word on the street among your new, these non authorized workers that this particular company is lackadaisical in their review of documents. And you are accepting documents that shouldn't be accepted. The people on the other side of the E Verify system see all these notices of non confirmation. Now they're worrying what the hell you're doing over there. And now you're subject to an i9 audit. What that looks like, Adam, is, you know, often it's two people, but they show up with the badge. There's a form letter. The letter explains you have 72 hours to produce the i9. Let me tell you, I've been with a client out of town and, and I've asked for two, like a day or two extra. Never have we been given any leeway there. Oh, wow, you got three days to produce them. And, and that's why I say to, to get ahead of this one. You know, Adam, you can. What do you do when that happens? Well, you accept the letter, you do very little talking, and then you call your, your attorney and, and you start working toward getting the i9s produced. And now, before you do that, this goes to the point I made earlier. Rather than avoiding, rather than going through three days of a fire drill, making sure you've got an i9, it's completed correctly, nobody's employed illegally. On the face of things, there are no technical errors. That's why I'm suggesting now's a good time to self audit and do it at a reasonable pace. Otherwise, you're going through that fire drill, you're correcting what you can, you're sending it in, and then what happens? Back in 2016, 2020, ice was all over the map in terms of how quick it took to get a response. I had one that took over eight months. I had another one. We were heard back within 30 days. When you hear back, I mean, there's a number of responses you can get, but typically it's telling you where you've got technical errors, it's telling you, giving you a list of employees that it's determined are not authorized to work. And it's asking you to go back to those employees to re. Verify their eligibility. What happens then, Adam? You'll have these employees who realize, oh, shoot, I've been caught, and they don't show up to work anymore. So that's also where we tend to lose a lot of the workforce. And that's just because they. Well, I'm just repeating myself. They know they got caught. They. Because you've got that ICE letter, you're going back to the employee and say, hey, you're on this list. I need you to go through the i9 process again with me. The documents you gave me last time, I can't rely on anymore because the government told me they're no good. And you have that meeting. You say, come back tomorrow with the documents. You can imagine what happens. They're onto the next job, which, by the way, invites that competitor calling. Because I'll have the guy who calls me and says, philip, I went through this process. He wasn't authorized to work, but he's working down the street. You know, what can I do about that?

Yeah. So what kind of financial exposure or risk does a contractor have if they get audited and they are found to have been employing folks who are not legal?

Okay? So it's important that I distinguish between a technical issue, which is really just a paperwork issue, and. And then a substantive violation, which could have potentially resulted in you employing someone illegally. 1. I'll say technical violations are a lot cheaper than substantive violations, which can get into the thousands. And that's per i9 form. So again, I'm not necessarily looking for the work myself. I'm trying to advocate for the industry. When you do that self audit, one practice pointer here. The person responsible for completing the i9s with your workforce should not be the auditor because that person may unknowingly be making the same mistake on every i9 and they could have been doing it for years so someone else has to come in and do it. But if you're doing that self audit, you're catching and correcting these issues ahead of time and at an easy pace. But it is the penalty is at the technical level and it also depends on how many times you've been subject to an audit. Cause if you're keeping making the same violation and it's subsequent audit, the dollars ramp up. It can go from hundreds of dollars per form to thousands of dollars per form depending on the company's histories with an i9 audit and whether the violations are technical or substantive. But where the dollars get really significant, it's when it's the same error made repeatedly and often unknowingly because it's the same person that's completed the i9 form for years and they didn't know they weren't doing it. Right.

Yeah. Philip, thank you for sharing all this with us. You know, the best way to predict the future is to look in the past. And if we look in the past and see what's been done under various presidencies, we can only predict what might happen now. Especially as the time of this recording is January 20th. Trump is being sworn in. He is signing executive orders. He declared a state of emergency at the border. And you're right, one would very easily predict that an i9 audit would be a low hanging fruit sweep. That would be a beneficial thing for their initiatives. So be prepared, be prepared. As we close, there's two things I'd like to end with. One is just your best advice to help folks just be mindful of what's happening. And, and then two, if you just want to share the best way for folks to get in touch with you should they need help in any area of law that you practice.

Well, I would suggest step one, let's, you know, the sky's not falling. I don't want to come off that way. But Adam, there's going to be an increase in I9 audit, but I, I don't think that's a gamble. You could bet on it. I would suggest making sure that in terms of verifying that you've got an i9 for every current employee, if you happen to be a company that's employed someone continuously since before 1986, they don't need an i9 because they've been employed before it became law. But rare is that instance otherwise. From the step one, let's make sure we've got an i9 for all current employees. If we don't and then going through that process we see we're missing one, then go ahead and get one completed. Don't backdate anything but go ahead and complete it. Now if it's you find this out and the employee has been with you more than three days on the face of the form, it's going to show you completed it late. What I tell our clients is to create a one or two sentence memo that says conducted a self audit foundation missing i9 completed i9 at that time, original signature and date. Keep it with the i9 and I think you're going to pass any fine in that instance. At least that's been my experience. So making sure You've got an i9 on all current employees. If you want to take it a step further, the next step would be making sure that i9 is completed correct and completely and correctly and then you know that's address and then you got a step three, making sure you're properly making corrections or providing information that was omitted and there is a proper way to do it under the law. Adam, for those your audience that would like to talk about it further with me or have any questions or like to have me assist with the audit, the best place to reach me my email address pjshps la w.com my direct line 404-469-9197 perfect.

And we'll put all this information in the description below. Philip, thanks for helping us prepare. Thanks for helping bring shed some light on all the changes that we're seeing in the construction industry. For those who haven't done it yet, if you don't have an attorney, reach out to Philip and his team. He's helped quite a few of our members navigate the employment law which obviously this falls under with the Fair Labor Standards act, the changes that went into effect March 11th of 2024. So Philip, thank you for joining us today and we'll see you guys.