The Impact of Foreign Workers on U.S. Employers

By Remmie Butchko, CIC

Georgetown Insurance Service, Inc.

Silver Spring, MD

 The U.S. is known as the “land of opportunity.” And because of this, people from around the world are attracted to live and work in America, seeking both high- and low-skilled jobs. The increase in labor creates more competition in the workforce and sometimes, foreign workers are hired over U.S. citizens. While it’s true that some of these workers may be more skilled, some may simply just be more willing to do the job for less money.

When it comes to hiring foreign workers, companies need to properly educate themselves on the proper steps to safe guard themselves. The rules to legally hire foreign workers are complex and have become even more restrictive, creating obstacles and potential pitfalls for many employers. We know the bottom line is always a top concern for businesses but because of this they sometimes – whether intentionally or unintentionally — hire workers who are illegal citizens. If your hiring process is too relaxed, it could open your company up to increased risk and scrutiny. The hiring of an undocumented worker, even unintentionally, could lead to fines, lawsuits, and reputational damage.

How can you stay informed and protect your business?  

  • Do your research and stay educated on the requirements essential to the hiring stage, including technology for legitimate identification, secure applications, and background checks. Many companies are using a technology called E-Verify in order to combat false identification. Not only is E-Verify fast and easy to use, it’s also free. This platform can help your business compare an applicant’s I-9 Form to specific data held by the Department of Homeland Security and Social Security Administration, diminishing your chances of hiring an undocumented worker.
  • Understand both your rights and the rights of your employees. In addition to federal laws, many rules pertaining to workers’ rights change frequently and vary state to state. It’s imperative 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 your business?  

As the saying goes, it’s better to be safe than sorry. Insurance companies offer valuable insight for employees. They can provide guidance on the 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 when it comes to hiring 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 you need. Depending on your business risk, you may need higher limits than what you originally planned for. While all businesses need workers’ compensation, disability, and unemployment coverages, it’s also extremely important to have adequate liability insurance and Employment Practices Liability Insurance (EPLI) to protect your financial future in the case of a lawsuit. While we recommend these insurance solutions to most businesses, it’s even more important for businesses that frequently hire foreign workers, such as companies in the construction industry. EPLI, for example, helps protect you from claims of discrimination, harassment, and wrongful termination, which can arise if undocumented workers are released from their jobs.
  • Ask them for recommendations. Your insurance agent most likely works with numerous other businesses and has lots of connections. Don’t be afraid to ask for a recommendation to other trusted business sources if you think it can help you strengthen your HR practices, assist with employee verification, or in the worst-case scenario, provide you the name of a good lawyer who has experience in this area.

How to Stay Proactive

As a business owner, you should have coverage in place BEFORE an incident or lawsuit occurs. Think of business insurance the same way you think of health insurance and pre-existing conditions. You enroll in health insurance not because you’re ill or unhealthy, but because you want to financially protect yourself in the future. The approach is similar – business insurance helps protect your company against potential lawsuits from undocumented workers in the same way.

To keep your body healthy, you make take preventive steps such as working out, eating healthy, and having regular physicals. By the same token, you can take preventive measures to protect yourself against potential fines and legal pitfalls that can occur when hiring illegal workers, such as tightening and reviewing your HR policies, keeping up to date on the latest rules and regulations, and utilizing E-Verify.

These preventative measures are your offense. Ideally your company procedures will put a stop to many potential problems and help you recognize an applicant as an undocumented worker before they’re hired. Your insurance solutions, such as EPLI and workers’ compensation, act as your defense. Just as a soccer team wouldn’t leave its goal unattended, you shouldn’t leave your business defenseless.

Despite your best efforts, there’s always the potential that an undocumented worker could be hired accidentally. Unfortunately, many companies won’t find out till years later that some of their employees are not legal citizens. You can’t circumvent the government-imposed fines, but you can have the right insurance solutions in place to help you avoid paying out of pocket for workers’ compensation or expensive legal fees.

Have questions? Contact us to speak with a licensed insurance professional.



Disclaimer: All data, information, and opinions provided on this article, newsletter, or blog is for informational and educational purposes only. While every caution has been taken to provide readers with the most accurate information and honest analysis, please use individual discretion before making any decisions based on the information in this article, newsletter, or blog. Georgetown Insurance Service, Inc. is not responsible if its readers happen to experience loss, injury, or damage resulting from its display or use. All information is provided on an as-is basis. This article, newsletter, or blog does not represent the thoughts, intentions, plans, or strategies of any specific Insurance Carrier, Georgetown Insurance Service, Inc. partner or affiliate.
Have questions? Contact Us to speak with a licensed insurance professional.

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