The CONSTRUCTION INDUSTRY EMPLOYEE VERIFICATION ACT (“the Act”) became Pennsylvania law on October 7, 2019 and takes effect on October 6, 2020. The Act requires that all Pennsylvania-based construction companies utilize the E-Verify system for Forms I-9 (Employment Eligibility Verification). Those who run construction and trades businesses have a little less than one year to get their houses in order and become users of E-Verify. The companies which do so will be better positioned in this tight employment market, since only individuals who can verify their ability to work in the United States will be legally employable. Those who do not comply may have to contend with Pennsylvania Department of Labor and Industry (DOLI) oversight, and ultimately could have their professional licenses suspended or revoked.
What may be most surprising to construction trade professionals is that the Act applies to nearly every conceivable business engaged in the construction trades:
"Construction industry." The industry which engages in the erection, reconstruction, demolition, alteration, modification, custom fabrication, building, assembling, site preparation and repair work or maintenance work done on real property or premises under a contract, including work for a public body or work paid for from public funds.
(The Act, Section 2. Definitions)
Another surprising piece of the Act may be that it applies to all but one-person operations:
"Construction industry employer." As follows: (1) An individual, entity or organization in the construction industry, which: (i) transacts business in this Commonwealth; and (ii) employs at least one employee in this Commonwealth. (2) The term includes a staffing agency that supplies workers to a construction industry employer.
(The Act, Section 2. Definitions)
It is critical that businesses affected by the Act consider the effects of E-Verify on their recruiting and employment now, instead of after it takes effect. This is a big change because it not only adds an additional step to employee onboarding processes, it adds another enforcement layer to an already challenging employment compliance environment. Employers are already subject to enforcement actions on the Federal level, such as, but not limited to: Social Security Administration Requests for Employer Information, Immigration and Customs Enforcement (ICE) worksite enforcement, Office of Fraud Detection and National Security (FDNS) administrative site visits, Form I-9 Audits, and U.S. Department of Labor investigations. With the implementation of the Act, it is no longer only the federal government that construction employers need to consider in managing hiring, employment, and terminations. Pennsylvania construction sector companies will also need to consider DOLI enforcement.
All employers, regardless of the industry, are required to verify an individual’s authorization to work in the United States. This is accomplished by completing Form I-9, Employment Eligibility Verification with every new employee upon hiring. However, because there are no annual reporting requirements for Forms I-9 (such as tax filings and Worker’s Compensation reporting, amongst many others), businesses will sometimes fail to verify employment authorization of new hires. Companies must complete Form I-9s in good faith and keep the documents in accordance with a proper and consistent policy, even though the forms do not have to be regularly submitted to any government authority. Consequently, the first time many companies think about their Form I-9 compliance is when the government is requesting documents and threatening to assess penalties.
Ostensibly, the Act is meant to ensure that all Pennsylvania construction and trades companies are employing authorized workers and providing mandated employee protections. The Philadelphia Inquirer notes that “[t]he building trades pushed for the law, as is standard building trades practice, believing it will lead to more work for their members” and cites to reports which suggest that 15-25% of all Philadelphia construction workers are undocumented and unprotected by standard worker programs like unemployment insurance. (See New Pa. law requiring immigration checks on construction workers shows labor’s identity crisis, The Philadelphia Inquirer, by Juliana Feliciano Reyes, November 25, 2019.)
For any company fitting within the definition of “construction” in the Act (as noted above), the next year is going to require careful, deliberate adaptation to these new regulations. Construction businesses, unless they already utilize E-Verify, are required to act – they cannot “do nothing”, they cannot continue to employ unauthorized workers, and they will have to compete with companies who are also having to adapt to employing only authorized workers.
Companies which recognize the importance of maintaining compliance can take substantive steps during this intervening year to be ready for when the Construction Industry Employee Verification Act becomes effective on October 6, 2020:
- Verify or re-verify the status of the workforce. (NOTE: This action should be done with the assistance of legal counsel);
- Enroll in E-Verify, designate company officials who are going to use the system and verify compliance, and develop expertise to ensure compliance is maintained (NOTE: In most circumstances, you cannot use E-Verify to check the status of already employed workers);
- Take stock of the company’s recruiting, hiring, employee documentation, and termination policies and protocols. Assess whether policies and procedures serve organizational needs and place the company in the right place to recruit and retain high-quality authorized workers;
- Look at job descriptions and compensation levels to identify organizational changes that may make the company more competitive in hiring and retaining employees with authorized status; and
- Take a serious look at compensation practices to make sure that the company is in compliance with state and federal law regarding wage and hour.
Attention to these issues can place companies in a better position to deal with regulatory challenges. Such companies will be far less likely to see ICE worksite enforcement or Department of Labor (DOL) Wage and Hour investigations. Should ICE, DOL, or any other agency show up, the companies who are proactive will be ready to demonstrate compliance. Using this time period to a construction company’s advantage can place forward-looking organizations in a better position than their competition to employ the best workers available.