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This feature is a part of “The Dotted Line” series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.

Builders in Ohio will soon have a new hurdle to clear when it comes to hiring.

Starting March 19, all contractors on public works projects for state agencies and political subdivisions, alongside nonresidential contractors, will need to register for and use the federal E-Verify program. The system enables employers to confirm a new hire’s employment eligibility against federal records from the Department of Homeland Security and the Social Security Administration.

Attorneys told Construction Dive that E-Verify can ultimately help employers, but also comes with concerns.

“There’s no doubt that E-Verify is a better tool than just using your eyes to say, ‘Yeah, I think this is a good document versus a bad document,’” said Bruce Buchanan, Nashville-based senior counsel for law firm Littler Mendelson. 

There are also consequences for getting it wrong. Penalties in Ohio can reach up to $25,000 for failing to act on a final nonconfirmation, and a contractor can be barred from bidding on state contracts for up to two years for multiple willful violations, according to a JD Supra blog post from attorneys Alyson Waite and Margarita Krncevic of the Benesch law firm. 

In addition, if a contractor hires an employee it knows is unauthorized, that could lead to a permanent revocation of its business license.

Given those kinds of potential outcomes, as E-Verify matures and more states enact programs that mandate its use for builders, attorneys noted that being organized and showing good-faith compliance can go a long way.

E-Verify today

When Ohio’s law goes on the books, 25 states will have enacted some kind of E-Verify rule, said Yane Park McKenzie, an associate in the Atlanta office of law firm Troutman Pepper Locke. However, many of them bear subtle differences that require business owners to pay close attention — while a company may not have to enroll in E-Verify in one state, it may need to in another.

Take Florida, for example. Private employers in the Sunshine State with 25 or more employees are required to enroll in E-Verify. However, in neighboring Alabama all private employers, regardless of size, must use E-Verify, according to accounting firm OnPay.

To make matters more complicated, municipalities may also enact their own laws. Hernando County, Florida, for example, requires that all contractors and subcontractors doing business in the county must use E-Verify. 

McKenzie says she’s advised large contractor clients on using E-Verify nationally or going state-by-state.

Alexandra LaCombe, a Detroit-based partner at law firm Fisher Phillips, said that one of the most important messages that she tells clients is that E-Verify doesn’t replace the traditional I-9 process, the form used to document an employee’s work eligibility in the U.S. Rather, it complements it.

“Just because you’re enrolled in E-Verify and run people through E-Verify, doesn’t mean that you have to stop, or can stop, filling out I-9s,” LaCombe said.

Protecting your business

Ohio’s legislation comes amid an immigration crackdown by President Donald Trump’s administration and fierce backlash against enforcement actions by Immigration and Customs Enforcement officials. The effect is compounded by a persistent labor shortage in an industry that needs 349,000 workers to meet current demand.

For contractors, the effects have been stark — around 34% of construction trades workers are immigrants. In some trades, that share can climb as high as 61%, Ken Simonson, chief economist at the Associated General Contractors of America, told Construction Dive in January.

Builders should be aware that the Trump Administration’s immigration focus won’t wane, McKenzie added.

“The reality is that this administration is really coming down hard, and I think that for the remaining three years, they’re really going to go after employers for worksite compliance,” McKenzie said.

Regular internal audits can help, she said, alongside establishing an E-Verify lead to handle the process. It’s vital to appoint just one compliance leader to oversee E-Verify, rather than a different person for each project.

“I think that can lead to lower levels of compliance, or inconsistencies in documentation, things like that,” McKenzie said.

An additional shield could also come from making sure other companies, including staffing firms and subcontractors, do things by the book.

“A lot of construction employers sometimes use staffing agencies, and the staffing agency is also not a shield to protect the employer from total liability,” said Chris Caravello, a Denver-based associate for Fisher Phillips. 

Caravello advised that contractors use strong language in their contracts with staffing agencies to ensure that these firms are also performing regular I-9 audits, for example. If they don’t, it may be worth a contractor finding another vendor to ensure the firm, and any suppliers, are compliant.

Though the Ohio law, as written, should protect contractors from liability for their subcontractors, McKenzie suggested a similar flow-down provision for a subcontractor’s E-Verify compliance. On that note, she cautioned that a builder should not be reviewing a subcontractor’s I-9 forms because of potential privacy concerns. A contractor, McKenzie said, is responsible for I-9 compliance in its own business.

Littler’s Buchanan broached a similar point — by signing up for E-Verify, contractors don’t need to engage in having more knowledge about the documents workers submit, alongside privacy concerns.

“It literally allows the government to have a sneak peek type of thing into your workforce,” Buchanan said.

Green cards, for example, change frequently, and can lead to issues for builders who try to dig deep on their own when they don’t need to, Buchanan said. If an employer throws out documentation and the employee is a citizen, that could lead to discrimination charges.

“I am always concerned when [employers] think they have a good knowledge of these documents,” Buchanan said.

But making a good effort toward following the law can help a builder in the long run, said Asafu Suzuki, a Columbus, Ohio-based senior attorney at law firm Vorys, Sater, Seymour and Pease. While penalties may seem harsh, they are targeted toward what she called “bad actors.”

“Good faith compliance does tend to go a long way, especially as the laws are taking off and the state is also kind of learning as they go,” Suzuki said.