Are Your Employees Legal…and What About Your Independent Contractors?

Heads up employers! In case you don’t know, federal law requires you to complete a Form I-9 for all new hires.

I. Employees?  This form must be completed within three business days of the hire and this must be done for every new employee, even those whom you know to be U.S. citizens. There are no exceptions.

And remember this, the employer must retain copies of these completed forms either for three years after the date of hire or for one year after employment is terminated, whichever is later. The forms must also be available for inspection by authorized U.S. Government officials from the Department of Homeland Security, Department of Labor, or Department of Justice. Failure to comply with the law’s completion and retention requirements can result in significant fines.

Any employer that is required to complete and retain a Form I-9 may electronically verify an individual’s authorization to work in the U.S. through use of the federal E-Verify program. It’s important to keep in mind though that the E-Verify process does not replace the Form I-9. And though you are not required to do so, you may want to also retain copies of all identification documents presented by your new hires.

Now, for private employers in Tennessee with six or more employees (including those employed outside of Tennessee), the Tennessee Lawful Employment Act (TLEA) requires you to either register and use E-Verify or request and retain a copy of one of the following identity/employment documents from every newly hired employee:

  • A valid Tennessee driver’s license or photo ID
  • A valid driver’s license or photo ID from another state where the license requirements are at least as strict as those in Tennessee
  • A birth certificate issued by a U.S. state, jurisdiction or territory
  • A U.S. government issued certified birth certificate
  • A valid U.S. passport
  • A U.S. certificate of birth abroad
  • A certificate of citizenship
  • A certificate of naturalization
  • A U.S. citizen ID card
  • A lawful permanent resident card
  • Other proof of immigration status and authorization to work in the U.S.

Make note of the date January 1, 2017 because beginning that day, the TLEA will require employers with 50 or more employees to use the E-Verify system to determine the eligibility for employment of all new hires.

II. What about your independent contractors?  Well, the TLEA also requires covered employers to keep a copy of one of the above documents on file for their “non-employees.” In other words, this addresses any individual, other than an employee, who is paid directly by the employer in exchange for the individual’s labor or services. There’s no getting around this…this is the law in Tennessee. But bear in mind, this requirement does not include an outside entity that operates as an LLC or corporation.

Finally, it’s very important to remember to retain copies of all verification documents obtained from both employees and non-employees. This includes E-Verify confirmations when that process is used. A failure to do so can result in penalties and possibly the suspension of a business license.

As an employer, you face a wide range of legal and financial risks every day. But by paying attention to the details, the verification of eligibility for both employment and contractual services should never result in negative exposure for your company.

– Written by Dan Gilmore, Founder and Attorney at Law at Squire Strategies

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