ILLEGAL IMMIGRATION
David A. Bego
President and CEO
Executive Management Services, Inc.
THE IMMIGRATION ISSUE
Before we enter this program, let us remember
that no matter our position on this extremely
sensitive issue, the United States is a nation
of laws for the people and by the people.
FEDERAL AND STATE
CAUSE
1.
2.
3.
Supply –
Mexico has an abundance of workers that have no jobs,
nor easy access to social services, health care or schools.
Demand –
U.S. has available jobs and easy access to social
services, healthcare and schools.
Enforcement –
Lack of enforcement of current laws results in mass
immigration.
FEDERAL AND STATE
ISSUES/IMPACTS
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Social responsibility for fellow man
12-14 million illegal immigrants present in the U.S. (approximately 5% of the
population)
Illegal Immigrants:
 constitute approximately 6% of the U.S. workforce
 are an integral part of the service and agricultural industries
 are a drain on social services, health care and schools
 in many cases do no pay income taxes, unemployment taxes, FICA
 may have criminal backgrounds
According to polls, a majority of American citizens do not want to provide
amnesty to illegal immigrants
U.S. cannot financially afford to deport 12-14 million people
U.S. cannot build enough walls to stop the flow of illegal immigrants; no wall
in history has kept people in or out
Businesses take advantage of the inexpensive labor
IMPACT ON BUSINESS
• Provides source of low-wage workers
• Depresses wages and benefits for legal American
workers
• Places businesses who utilize illegal immigrants in
a position of breaking Federal and State laws and
being subject to penalties and fines
• Encourages “misclassification of workers”
• Encourages “unionization of workers”
• Artificially deflates true costs/pricing
BUILDING SERVICES SCENARIOS
LEGAL EMPLOYEES
• Protect Contractor and Company from fines and
penalties
• Provide jobs for legal Americans
• Provide for healthy wage and benefit growth
• Provide increased revenues to State and Federal
coffers
• Provide for true costs/pricing
• Provide an even playing field
BUILDING SERVICE SCENARIOS
ILLEGAL IMMIGRANTS AS EMPLOYEES OF
CONTRACTORS/VENDORS
• I-9 system is insufficient –forgeries and lack of detailed
information make it extremely unreliable
• Suppress wage rates
• Provide for artificially low costs/prices
• Place Contractor, and Companies who purchase its service,
in violation of Federal and State laws and subject to
intervention
• Subject Contractor and Company to fines and penalties
• Place potentially dangerous individuals in building service
positions
• Rob revenues from State and Federal coffers
BUILDING SERVICE SCENARIOS
MISCLASSIFICATION OF WORKERS
“INDEPENDENT CONTRACTING”
1.
2.
3.
What is it? Contractor hires people who are paid by the job or piece
work.
Violates Federal “independent contractor” laws because:
 people are supervised
 supplies and chemicals are provided
 uniforms are provided
 quality is supervised
 people are not susceptible to profit or loss
 days and hours of work are dictated
May violate minimum wage and overtime laws
BUILDING SERVICES SCENARIOS
MISCLASSIFICATION OF WORKERS (cont.)
“INDEPENDENT CONTRACTING”
4.
5.
6.
Provides unfair advantage to ethical Contractors and
artificially skews costs/pricing due to:
a.
Not withholding FICA, SUTA, FUTA
b.
Not paying liability insurance or workers
compensation (payroll based)
c.
Not paying overtime
No background checks required – they’re not employees
Large percentage are illegal immigrants – same issues as
noted earlier
BUILDING SERVICES SCENARIOS
ILLEGAL SUBCONTRACTING
What is it?
Contractor wins master contract and then
subcontracts with a subcontractor who uses illegal
immigrants, independent contractors, or both.
Same scenarios are now in place as reviewed
previously.
BUILDING SERVICES SCENARIOS
IMPACT ON PRICING AND DELIVERY OF SERVICES
• Employee Availability
 Contractors who utilize legal employees have difficult time finding
them
 Contractors who utilize independent contractors and/or illegal
immigrants have ready supply of people available
• Wages
 Wage scales are depressed by utilization of illegal
immigrants/independent contractors
o Illegal immigrants will accept lower wages to find employment
o Independent contractors will accept less because taxes and
FICA are not deducted from checks or they are paid in cash
• Often these people are required to clean at high production rates
COST ANALYSIS – CLASS A OFFICE SPACE
250,000 SQ FT
COST/PLUS WORKSHEET – CLASS A OFFICE SPACE
250,000 SQ FT
BUILDING SERVICE SCENARIOS
LEGAL IMPLICATIONS
• Places Contractor and Company in violation of Federal and State Laws
• I-9 system is unreliable due to forgeries and lack of detailed
information
• Increased enforcement by Federal and State government
• Federal and State governments are putting emphasis on employers to
make sure employees are legal
• Contractors and Companies are subject to fines and penalties
• Misclassification of workers – “Independent contracting is illegal!”
• Minimum wage and overtime laws may be violated
BUILDING SERVICE SCENARIOS
KEYS TO ASSET MANAGEMENT
1.
2.
3.
4.
Insist on Contractors who utilize their own employees
and do not independent contract as defined by U.S. law.
Insist Contractors provide legal employees through
extensive social security background checks.
Utilize Contractors who perform extensive national
background checks.
Don’t depend on contract language; it will not protect
you if illegal immigrants or independent contractors are
discovered by the government.
BUILDING SERVICES SCENARIOS
PRICING
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Artificially reduced prices
Use of independent contractors result in non-payment of:
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SUTA
FUTA
FICA
Income taxes
Liability insurance
Workers comp insurance
Company utilizing independent contractors has 20-25% advantage in pricing
Illegals will work for $1-1.50/hour less
Combine illegals with independent contracting and the advantage becomes 4050%
Result – Pricing can be 30-50% below true market
POTENTIAL SOLUTIONS
FEDERAL/STATE GOVERNMENT
1.
2.
3.
4.
Pass a fair immigration reform bill requiring all
immigrants to have work visas and legitimate social
security numbers.
Enforce current Federal and State laws with respect to
illegal immigrants, independent contractors and
availability of social services.
Provide a finite amount of time for illegal immigrants to
become American citizens.
Penalize businesses who utilize illegal immigrants or
misclassify workers as independent contractors.
POTENTIAL SOLUTIONS
BUSINESSES: CONTRACTOR/BUILDING MANAGER
• Contractors
 Utilize only legal Americans and do not independent contract
 Educate customers on costs of being ethical and legal
• Building Managers
 Educate your customers on, “Why it costs more to be legal.”
 Only do business with Contractors who use their own employees as
defined by U.S. law
 Only use Contractors who do extensive SSA and background checks
 Don’t depend on contract language – request copies of SSA and
background checks for each Contractor employee
 Be wary of Contractors who subcontract
CONCLUSIONS
IS IT WORTH IT?
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To suppress wages and benefits for legal Americans
To encourage unionism
To violate State and Federal laws
To defraud government of income
To allow potential criminals in your buildings
To provide the demand for more illegal immigrants to enter
To overtax social programs
To increase taxes to fund social programs
To under-fund social security system
To increase liability and workers comp rates because many do not pay
fair share
• To encourage terrorism
• TO PUT YOUR COMPANY AND YOUR JOB AT RISK!
Businesses need to self-police
themselves and abide by Federal and
State laws
After all, we are a “Nation of Laws”