Risk & Business Magazine JGS Insurance Spring 2020 | Page 26
WORKERS' COMPENSATION
WORKERS’ COMPENSATION AND
UNDOCUMENTED WORKERS
T
he Pew Research Center
estimates that 7.5 million
workers in the United States
are undocumented. Most are
concentrated in the agriculture,
construction, and hospitality industries
with about 10 percent, of restaurant
workers being undocumented.
To be clear, an undocumented worker
can be a person who entered the United
States illegally or a person who entered
the United States legally but who lost
their legal status usually by overstaying
their visa. Recent studies show about 62
percent of newly illegal immigrants, many
who come to seek work, overstayed their
visa and 38 percent had crossed a border
illegally.
So why do workers that are illegally in this
country receive workers’ compensation?
Well, when a person is at work, they are
at risk to work-related hazards. This is
precisely why workers’ compensation is
in place—to indemnify employees. But,
how can you say a person is an employee
if they are undocumented? If that person
comes in regularly to perform duties that
benefit the company, they can be labeled
as an employee and are entitled to workers’
compensation.
The rationale is that it is unfair for an
employee who is working on the job
to suddenly have an accident and not
receive compensation for the injury they
have suffered. Often, employers will try
to terminate their employment. In all
states, with the exception of Wyoming,
BY: ERIC P. WOKAS, CSP ARM
RISK CONTROL CONSULTANT
JGS INSURANCE
26
an employer cannot use the fact that a
person is undocumented to bar them from
workers’ compensation.
IF THAT WERE THE CASE,
THE INJURED WORKER’S
IMMIGRATION STATUS
WOULD BECOME THE ACTUAL
CAUSE OF THE LOSS IN
EARNING POWER, AS OPPOSED
TO THE WORK-RELATED
INJURY.
Likewise, health, safety, and wage laws
protect all employees regardless of
their immigration status. Therefore,
undocumented workers have rights to
information regarding their health and
safety rights. They also have the right
to refuse unsafe work if they reasonably
believe it would create a hazard to them or
their coworkers.
Since 1986, federal laws have required
employers to complete an Employment
Eligibility Verification Form (I-9) to
verify all workers’ identities, as well
as their authorization to work in the
United States. Some employers also use
a free supplemental program, called the
E-Verify program, that feeds workers’
I-9 information into a variety of federal
databases to confirm that new hires are
authorized to work in the United States.
Congress created it as a way to deny jobs
to illegal immigrants and deter them from
coming to the United States. Currently
only 8 states, Pennsylvania being one
of them, require E-Verify on almost all
businesses. Some other states require
E-Verify for public employees only. New
Jersey and 28 other states have no E-Verify
requirement.
Some workers get around I-9 requirements
by working “under the table.” In that case,
the employer won’t report them for tax
purposes. They can also buy fake green
cards and fake Social Security cards in
their own names from illicit vendors or
steal or borrow work documents belonging
to a US citizen or legal permanent resident.
Employers skirt culpability by accepting
fake documents that they are not legally
required to verify. Other methods
may include misclassifying workers as
independent contractors or subcontracting
to separate businesses that do the actual
hiring—all the while claiming they did
what the law requires to verify their
workers’ employment authorization.
Under federal and state laws, employers
can be fined for hiring illegal immigrants.
Depending on the severity of the violation,
employers can pay fines as high as $10,000
for every undocumented worker. Hence,
this may backfire on the employer.
The underground labor market is one in
which illegal hiring is widespread. It even
includes some of the biggest names in
American business. Yet the risk of running
afoul of immigration authorities is low.
This “don’t ask, don’t tell” system has
allowed employers to benefit from cheap
immigrant labor. However, employers
should not fool themselves. In almost all
cases, undocumented workers are entitled
to the same benefits as your documented
employees. The risk of not providing
benefits can cost a company a lot more in
fines and reputation. +
Eric Wokas has over 25 years of experience as a risk management consultant working for various
major property/casualty insurance carriers including Continental, Zurich and Gerling as well as
Aon an international insurance brokerage firm. At JGS Insurance Eric continues to assist clients
in development and implementation of practical solutions in reducing risk.