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Contractors run legal, financial risks

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Posted: Sunday, November 21, 2010 12:23 am | Updated: 12:18 am, Thu Sep 12, 2013.

Contractors who use illegal-immigrant labor take both legal and financial risks, experts say.

Besides federal immigration laws, the contractors are breaking state labor laws, says Jeffrey Zimskind, a business immigration attorney with Stevens & Lee.

Undocumented workers are subject to the same regulations that govern legal residents concerning minimum wage, overtime and breaks, he says.

"If someone ... hires someone they know to be unauthorized, pays them less than minimum wage, in cash, without reporting it, they're like a little bacteria culture of potential liability," Zimskind says.

The contractors also can be liable if an illegal, uninsured worker causes damage to a building during construction.

All individual independent subcontractors are legally required to buy liability insurance, which protects them financially if they cause damage, says Chris Beiler, a commercial agent with Beiler-Ardrey Insurance Agency Inc., Gap.

"You can circumvent the law, and that's what [companies that hire illegal, uninsured workers] are doing," Beiler says.

Liability insurance costs vary, but an individual drywaller might pay around $500 per year, he says. A typical policy would offer $1 million in coverage.

If an undocumented, uninsured worker caused damage, the contractor who hired him would have to pay for it, says Beiler, who worked in the local building industry for nine years.

Landisville drywall contractor Kevin Eberly says he was on a job site where illegal immigrants broke a water pipe. "Within minutes, they were gone," he says, and the incident was not reported.

But Beiler says a lack of worker's compensation coverage is a far more serious risk. While a typical liability claim might total a couple thousand dollars, a serious on-the-job injury can result in six-figure medical bills.

"The potential for loss is greater," he says.

Individual independent subcontractors currently aren't required to carry their own workers' compensation policies, Beiler says. But an increasing number do have coverage, and he expects it eventually will be required.

If an uninsured drywaller - whether legal or illegal - got hurt on the job, responsibility for the medical bills would essentially go uphill, Beiler says.

If the drywall contractor has workers' compensation coverage, that policy would pay. If not, the builder's policy would have to pay, even if the builder did not know the worker's immigration or insurance status, Beiler says.

In Pennsylvania, illegal immigrants are entitled to workers' compensation medical benefits, and in some cases, additional weekly indemnity (monetary) benefits.

Illegal immigrants generally do not have health insurance. Some workers' inability to speak English could amplify job-site hazards.

"Job sites can be dangerous," Manheim drywall contractor Bob Smoker says. "To not be able to communicate properly would be a problem."

Brownstown drywall subcontractor Michael Zehr says he worked on a job site where an illegal immigrant got hurt. He says a supervisor took the worker to the emergency room instead of a doctor's office, because it was "free."

mschweigert@lnpnews.com

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