Legal Tips for GCs on Managing Subcontracts Amid Immigration Plans

The incoming Trump administration is set to intensify immigration enforcement, and general contractors (GCs) in the construction industry, which relies heavily on foreign-born workers, may face new challenges. Federal agencies are expected to increase their investigations of U.S. businesses and unauthorized workers, potentially leading to more I-9 audits or workplace raids.
For GCs, the complexity of the construction industry adds another layer of difficulty. Construction projects often have multiple layers of subcontractors, with workers from various employers on-site at the same time. This unique structure complicates the task of ensuring worker eligibility, particularly when subcontractors are involved in multiple projects.
Though GCs are not required to verify the work authorization of subcontractors' employees, they can audit subcontractors to ensure compliance, according to legal experts.
“A contractor does not need to obtain I-9s for 1099 workers, including subcontractors,” said Trent Cotney, partner at Adams and Reese in Tampa, Florida. “The subcontractor is responsible for maintaining their own I-9s. However, if it’s determined that a 1099 worker should have been classified as a W-2 employee, the contractor may be liable for failing to maintain I-9s.”
Contractors can still mitigate risk with the right contract language.
“GCs should include provisions in subcontractor agreements that require compliance with federal and state immigration regulations and E-Verify,” said Shanon Stevenson, a partner at Fisher & Phillips law firm in Atlanta. “These agreements should also include indemnity clauses to protect GCs from any immigration violations. If current agreements lack these protections, they should be amended.”
Employers that knowingly hire unauthorized workers could face significant penalties, including civil fines, criminal prosecution, and the possibility of being banned from future federal contracts, Stevenson said.
“The definition of 'knowingly' is broad,” she added. “It includes not just actual knowledge, but also situations where it could be inferred from the circumstances.”
GCs should also be mindful of labor standards, says Laura Padin, Director of Work Structure at the National Employment Law Project. Contractors may require their subcontractors to hire workers entitled to benefits like workers’ compensation, health insurance, or paid leave, which are especially important in high-risk occupations.
However, GCs must tread carefully. Stevenson advises against reviewing I-9 or E-Verify records of subcontractors to avoid co-employment issues. Additionally, GCs should not misclassify employees as independent contractors to bypass the authorization process.
“The government could view such actions as evidence that the GC knowingly employed unauthorized workers,” Stevenson said.
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