Will Immigration Reform Change the Construction Industry?

Published February 25, 2014 by Whirlwind Team

immigration reformImmigration reform, the resolution of which has long been a contentious issue throughout the United States, may finally see movement from Congress in the relatively near future. The construction industry as a whole does not seem to agree on the outcome; opinions differ as to whether immigration reform will save the construction industry or damage it.

In either case, changes are coming. Below is a breakdown of opinion on whether reform will help or hinder your business. There are also some guidelines to help you prepare for new rules and regulations including methods of effective and efficient administration and compliance.

Pro: Immigration Reform Saves the Industry

Those who feel reform will help construction generally think it will either boost the number of available skilled and unskilled workers or bring those who are currently taking advantage of a cash economy into taxpayer status.

Construction suffers from a skilled labor shortage as do many other industries. The prospect of a larger legal labor pool seems as though it may resolve this problem. In addition, it alleviates the concern of legal action if undocumented workers are found in the workforce. Reform may also offer newly legal workers access to a wider array of jobs and higher pay with a chance of advancement.

Stan Marek, President and CEO of the Marek Family of Companies, has written that current law, rather than effectively monitoring immigration status, has simply pushed the issue underground. This results in undercounting the actual number of illegal workers in the United States.

According to Marek’s article, the method of monitoring companies and their workforce is to audit the I-9 Employment Verification Form that is required for each employee. Those found to be here illegally were to be terminated. However, they were not required to be deported. Marek states that these workers then went into the so-called “cash economy,” working for subcontractors or labor brokers who pay in cash. Left out are payroll tax deductions and worker benefits such as accident insurance and safety training.

Marek feels that bringing those in the cash economy into legal worker status could result in more young people considering a trade rather than college because benefits would be restored and it would encourage the industry to become less dependent on illegal labor, thus rebuilding the middle class.

Con: Immigration Reform Will Destroy Construction

On the other side of the table are those who state that the construction industry can only remain competitive by taking advantage of those with illegal status by paying low wages in order to bid lower prices and win more jobs.

The fear is that, without lower labor costs, there is no other viable way to cut costs and offer a competitive bid. Instead, companies would be forced to offer higher wages as well as pay for benefits. Reform could potentially increase labor union ties as well.

Another consequence could be rising building and housing costs, creating a better market for existing home sales and depressing the opportunities for new construction thereby bankrupting the industry.

The Potential Impact of the Senate Reform Bill

There is no doubt that immigration reform is a highly complex issue. Attempting to find a workable compromise that appeals to all sides may be well-nigh impossible. But change will come and the construction industry will be hit with more regulation and higher expectations of compliance.

Wendy Padilla-Madden, an attorney for the corporate law firm Balch and Bingham, LLP, wrote for ConstructionBusinessOwner.com about S.744, a bill passed by the Senate and called the Border Security, Economic Opportunity, and Immigration Modernization Act. Padilla-Madden spells out three changes that would most impact U.S. construction businesses:

  • Legalization and the opportunity for citizenship over a 13 year path for most undocumented immigrants in the U.S. The number she stated is 11 million.
  • The possibility of a guest worker program for low-skilled workers.
  • Mandatory implementation by employers across the country of E-Verify.

This means more workers and higher regulatory scrutiny, a somewhat double-edged sword. According to Padilla-Madden, the bill does not provide much leeway for companies to claim they were unaware of illegal immigrants working for them.

Preparing for Change

To maintain compliance with current law as well as to prepare for further regulations, your business needs the following practices to be in place:

  • A written hiring and employment eligibility verification policy.
  • Adequate training and compliance programs across the company.
  • The use of trained individuals to conduct the E-Verify and I-9 process.
  • Secondary checks and internal audits. Audits are preferably performed by a disinterested party.
  • A protocol for responding to notifications and discrepancies found in audits.
  • Appropriate non-discrimination practices.
  • Flow-down protocols to ensure contractors and subcontractors are also compliant.
  • Establishment of a tip-line and protocol for responding to tips from employees.
  • Documentation and audit trail maintenance.

Immigration reform will eventually occur. Keeping abreast of the issue and thoughtfully debating the potential impact to the construction industry is a must for every business owner. However, while the debate continues to rage, your best course of action is to be prepared for additional regulation by putting processes and policies in place now. When the changes come, you can incorporate them smoothly into an already existing framework.

* Image courtesy of freedigitalphotos.net

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