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You may be liable for wage claims from contractor’s illegal workers

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in Compensation and Benefits,Human Resources

You might think outsourcing jobs to an independent contractor saves money. But if you insist on exercising any significant control over how, when and where independent contractors do their job, you may end up paying dearly in the end if your organization is deemed the true employer.

That's especially true if the contracting company you hire isn't strict about whom it hires or how it pays workers. In fact, you could find yourself under fire for allowing undocumented aliens to work on your premises and be liable for underpaying those illegal workers.

The Labor Department says employers can't violate minimum wage and overtime laws with a person just because he or she is undocumented. Violating one law (immigration) doesn't give you the right to violate another (FLSA).

Recent case: A group of undocumented janitorial workers sued Wal-Mart, arguing that the contracting company they worked for didn't pay the federal minimum wage or overtime. Wal-Mart asked the court to dismiss the case, saying it wasn't the official "employer" and that undocumented aliens didn't have standing to sue.

The court disagreed. First, it said that because Wal-Mart controlled so many details of the maintenance work, including their hours and duties, the retail giant really served as a co-employer. Second, the court said the workers' immigration status was irrelevant as to whether they could file an FLSA claim. (Zavala, et al., v. Wal-Mart, No. 03-5309, DC NJ., 2005)

Bottom line: Your organization can be held responsible for FLSA violations if your contracting company hires illegal workers. Require proof that contractors' I-9 forms are in order and all employees are paid at least minimum wage, plus required overtime.

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