Compliance Alert: Joint Employers, I-9s and E-Verify

After the National Labor Relations Board’s (NLRB’s) decision in Browning-Ferris Industries, which found a subcontractor to be a joint employer in the collective bargaining context, employers are concerned that this expanded definition could apply to other compliance areas. Are they now liable for their subcontractor’s contingent employees who have not completed I-9s?

Immigration and Customs Enforcement (ICE) will generally request I-9 forms for all workers present during an audit, treating all as employees, even if the company classifies some workers as independent contractors. Some companies that use staffing agencies may be especially concerned about their potential liability, particularly if they believe they may be considered a joint employer with their staffing agencies.

Doreen Dodson

Doreen Dodson, a senior partner based in the St. Louis office of law firm Polsinelli, represents employers with workplace compliance issues, including I-9 audits. Dodson spoke with SHRM Online about the impact of the Browning-Ferris decision on employment eligibility verification, what HR should do if workers under joint employer status are identified and the considerations for requiring staffing firms to use E-Verify.

SHRM Online: How does the NLRB’s Browning-Ferris decision impact employers in the verification context?

Dodson: It should cause employers, in the I-9 verification context, to carefully review their vendors and individuals whom they believe are independent contractors. With respect to I-9s, there are regulations specifically defining independent contractors for whom no I-9 is needed, so long as the requirements are met.

SHRM Online: What is that definition?

Dodson: The I-9 regulations define independent contractors as individuals or entities who carry on an independent business or contract to do a piece of work using their own means or methods and who are subject to the control of the employer only as to results. ICE, in making the distinction between employee and independent contractor, reviews whether the services of the contractor are available to the general public; whether the contractor supplies his/her own tools and materials; if the contractor has other clients; and if the contractor decides the order, sequence and hours of work.

SHRM Online: What if workers are found to be under joint employer status? Should HR ask the contingent workers to complete an I-9 form?

Dodson: If an employer performs its analysis using the guidance above, as it should if it is concerned it may be a joint employer, it may still face a difficult decision. If it controls an individual who is not on its payroll, completion of an I-9 is certainly a strong indication of employee status. Payroll is not the determining factor, and the failure to complete an I-9 for a vendor or individual who does not meet the regulatory test for independent contractor can mean an employer may incur fines and penalties. Employers should carefully conduct an individual analysis, and consider its industry and the specific terms of the vendor or individual contract.

SHRM Online: Why should employers be cautious about requiring staffing agencies to utilize E-Verify?

Dodson: If an employer demands that a staffing agency utilize E-Verify, it can implicate the I-9 anti-discrimination provisions of the I-9 law in several ways. First, if the staffing agency employees are existing employees, whose I-9s were previously processed manually, requiring an additional I-9 processing through E-Verify could be a violation of the anti-discrimination provision of the I-9 law. Second, a staffing agency may not designate certain hiring sites for E-Verify, based on the national origin or citizenship status of employees hired at those sites. Using E-Verify at certain sites may create the appearance of a discriminatory practice and lead to complaints by employees.

A recent technical assistance letter provided general guidelines for situations where a client may require its subcontractor to use E-Verify for new hires. It first reiterates required compliance with the anti-discrimination provisions, but also states that if E-Verify is used selectively for new hires to meet clients’ demands for reasons “wholly unrelated” to the worker’s citizenship or national origin, it likely will not violate the anti-discrimination provisions. The staffing agency must have specific written documentation of the client’s legitimate reasons for the request, wholly unrelated to the citizenship status or national origin of the workers, in order to protect itself from a complaint of discrimination.

Roy Maurer is an online editor/manager for SHRM.

Follow him @SHRMRoy

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