How Insurance Can Protect Construction Contractors Hiring Foreign Workers

Companies should be proactive in understanding their rights by obtaining the proper coverage before potential problems arise, especially with foreign employees

The United States is proudly known to the world as the “land of opportunity”. Consequently, foreigner workers from all corners of the globe are attracted to live and work in the U.S., seeking both high- and low-skilled jobs. It is important that all companies remain cautious and informed when hiring foreigner workers. The rules to legally hire foreigners have become complex and restrictive, which creates obstacles and potential pitfalls for employers. Employers are understandably concerned with their bottom line, and at times — intentionally or unintentionally — hire workers who are not legal citizens.

The construction industry is one of the top sectors that employ foreign workers. If your hiring process is too relaxed, it could open your company up to increased risk and scrutiny. Hiring an undocumented worker, even unintentionally, could lead to costly fines, potential lawsuits and possible reputational damage.

What contractors can do to educate and protect themselves

Stay informed and up-to-date on the requirements essential in the hiring stage, including technology for legitimate identification, secure applications and background checks. Many companies are using a new technology called E-Verify in order to combat false identification. Not only is E-verify fast and easy to use but it is also free. This simple technology can help your business prevent hiring undocumented workers by comparing an applicant’s Form I-9 to data held by the Department of Homeland Security and the Social Security Administration.

Understand your rights AND your employees’ rights. In addition to federal laws, many rules pertaining to workers’ rights change frequently and will vary by state. It is essential to understand that non-U.S. citizens are often entitled to the same benefits as American citizens.

How can your insurance agent help you protect yourself?

As the saying goes, it’s better to be safe than sorry. Insurance companies offer value to employers, as they can advise on best HR practices as well as preventative measures to avoid potential lawsuits. Companies should be proactive in understanding their rights by obtaining the proper coverage before potential problems arise, especially with foreign employees. 

Talk to your agent to customize your plan. Your agent can help you figure out not only what the proper coverage looks like for your business but also how much coverage is enough. Depending on the risk associated with your business, you may need higher limits than originally thought.

While all businesses need worker’s compensation, disability and unemployment coverages it is also extremely important to have adequate liability insurance and Employment Practices Liability Insurance (EPLI) to help secure your financial future in the case of a lawsuit.

While we would recommend these insurance solutions for most businesses, it is particularly important for contractors who frequently hire foreign workers. EPLI, for example, will help protect you from claims of discrimination, harassment and wrongful termination. These claims are often cited by undocumented workers if they are released from their jobs.

Ask them for recommendations. Your insurance agent most likely works with a number of businesses and has many connections. Don’t be afraid to ask them to recommend trusted business sources that could help you strengthen you HR practices, provide assistance in the employee verification process, or in the worst-case scenario, provide you the name of a good lawyer who has experience in this area.

The best defense is your offense

As a business owner, you should have coverage in place before an incident or a lawsuit occurs. Think about your business insurance in the same way you would view health insurance and pre-existing conditions. Once a claim is filed or a lawsuit is in progress, you cannot backtrack and obtain the coverage.

You enroll in health insurance not because you are ill or unhealthy but to protect yourself financially in the future. Think about your approach to insuring yourself against potential lawsuits from undocumented workers in the same way. To keep your body healthy, you may take preventive steps such as working out, eating healthy and having regular physicals. In the same way, you can take preventive measures to protect yourself against potential fines and legal pitfalls that can occur when hiring an undocumented worker. Those measures include tightening and reviewing your HR policies, keeping up to date on the latest rules and regulations, and utilizing E-Verify.

Think of these preventive measures as your offense. Ideally, your company procedures and process will block the majority of potential problems and help you recognize an applicant as an undocumented worker. Your insurance solutions, such as EPLI and workers’ compensation, will act as your defense. Just as a soccer team wouldn’t leave their goal unattended, you shouldn’t leave your business defenseless either.

Despite your best efforts, there is always the potential that an undocumented worker could be hired accidentally. Many companies won’t find out till years later that some of their employees are not legal citizens. While you can’t do much to circumvent the government-imposed fines, having the right insurance solutions can help you avoid paying out of pocket for workers’ compensation or expensive legal fees (typically $30,000 or more).

It is best to make the investment to acquire insurance to protect your business before problems arise.

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