H-2B: Work in the Shadows

It happened in Long Island, N.Y., about four years ago. The man’s name was Carlos. (It wasn’t, but we’ll call him that.) He’d been in the United States for more than a dozen years, was married with American-born children attending local schools, and by most accounts was a dependable, hard-working family guy who’d never committed a crime in his life.

Well, that’s not exactly true. Carlos had one crime under his belt: He and his wife immigrated to the U.S. illegally. They crossed the Rio Grande one night and made their way to New York, where Carlos’ nephew helped them settle.

Carlos found work at a small construction company that framed houses. He was one of three employees; two of them, including Carlos, had nothing – no green cards, social security numbers or driver’s licenses. And no safety violations caused Carlos to fall from the roof on that unseasonably warm April afternoon.

It was an accident, plain and simple. Because he was building a one-story house, Carlos didn’t fall from a great height. But it was enough to cause serious injuries, including a broken back. He had to be air-lifted to Stony Brook University Medical Center.

The construction company didn’t sustain physical injuries, but the employers are now bankrupt and out of business – all from Carlos’ accident. They still owe large amounts of back taxes and assessed employment fines. They are also facing criminal charges brought by the New York State Department of Labor.

For Carlos, it will be a lengthy time before he’s able to do any kind of carpentry, and he will never do the type of work he did before the accident. He is walking again, but with a pronounced limp.

As an illegal alien, Carlos doesn’t benefit from any worker’s compensation insurance, mandatory New York disability insurance, state unemployment or federal unemployment tax paid. No federal or state income, social security or Medicare taxes were withheld from his paychecks. Carlos was paid in cash – completely off the books. Now, his family lives on the little income his wife generates from cleaning houses, supplemented by charity.

The lives of both Carlos’ family and his employer’s family have essentially been ruined by an unfortunate fall. Both were decent, honest working folks. They meant well, but didn’t have the foresight to do things correctly. Or maybe it was the circumstances and a lack of know-how?

It’s estimated that there are between 15 million to 25 million illegal aliens living and working in the U.S. today. Nobody knows the actual number. One thing we can be sure about – all of them are working illegally without the protection of various instruments like worker’s compensation and unemployment insurance. And the people who hire illegal workers are putting their businesses, assets and future earning power at risk. They may even put their own liberty in jeopardy if criminal charges are leveled. In the construction industry, most large contractors require worker’s compensation from smaller sub-contractors, eliminating many illegal workers. On Long Island, however, landscapers are the largest group of employers hiring illegal aliens. And with modest crews, most are independent and work for homeowners and commercial businesses that make no such demands.
 
So, to avoid putting your personal business and lifestyle at risk, try adhering to the following rules:

• Hire people with documentation, such as a social security card, driver’s license, passport or green card.
• Put every employee on the books.
• Collect federal and state taxes, social security and Medicare taxes.
• Have protection such as workers compensation, disability insurance and whatever else your state requires. Do this for everyone you hire.

These are the best solutions. But here’s the real problem, exactly as told to me by one of my landscaping clients:

“Patrick, I have no choice. I can’t get enough people to work for me. (Illegal workers) are dependable. They do their work and never give you a hard time. I can leave them alone on a job and when I come back it will be done. For me it’s not an elective. I want to put them on the books, but I can’t because they don’t have a social security number. I’m going to keep them working off the books and pay them in cash. I really have no choice.”

Of course there are a number of employers that will deliberately hire people off the books to save money. Some will do it out of greed. Some do it to survive in a tough business climate. However, a great many, like my client above, will do it simply because they can’t find enough quality workers.

This is quite a dilemma, and the blame lies directly with a federal government that refuses to deal effectively with the H-2B situation. But I can offer some sort of solution.
 
Let me first say that it is not a good solution. There are no good solutions. The main thing is that it will bring about some protection by putting illegal workers on the books, paying the taxes and bringing them under the protection of workers compensation and other programs mandatory under current labor laws.

It’s important to understand that this is not a solution from a pro- or anti-immigrant author. As an accountant and financial advisor (who works daily with landscapers, contractors and a variety of business owners) I am a realist. I believe we must face this situation and deal with it as best as possible. Burying our heads in the sand is no longer an option.

Here is the alternative for employers hiring an illegal worker:

Have the employee apply for a TIN (Tax Identification Number) through the Philadelphia Internal Revenue Service office. The number is issued automatically. Even though the immigrant may be here illegally, they still receive this number. It’s not a social security number, but it looks like one – three digits, then two, then four. Now, put the employee on the books using that number. Collect social security, federal and state withholding, and all the taxes required. Put the employee on workers compensation.

Are you legal now? Certainly not!

However, you’re safer than just distributing cash off the books. It’s afforded a level of protection that didn’t exist before. I would also recommend that, before taking this step, you consult with an attorney familiar with your state and local laws.

How does this affect the employee?

First they should consult with an immigration attorney to see if it’s suitable for their situation. Employers are more likely to retain an employee they can put on the books and avoid the risks of getting caught by the IRS. There’s also the risk of injuries to a worker and ensuing liability. This way, employers have workers compensation and other required instruments in place.

Yet getting a TIN proves a worker is in the country illegally. This will bar issuance of a legal visa for five years (10 years if you’ve been in America longer than six months), which will be a problem if there’s a visa pending; perhaps something like an H-2.
 
This has not been a concern for those I have spoken to. They will not go back to their homelands just to apply for a visa that may not be issued for decades, if at all. Most have risked their very lives to get to America and will not return voluntarily.

Each party must make their own decisions, and I strongly recommend consulting with a knowledgeable immigration attorney before making this decision.

It’s true – an employer’s safest bet is to only hire workers who are here legally and put them on the books. But if you are going to continue employing illegal immigrants, at least this method is better than just paying them under the table and absorbing all the risk.