Immigration Reform and Household Employers

On November 20th, President Obama outlined his executive action regarding undocumented immigrants living in the United States, with a specific focus on providing approximately 5 million immigrants with the opportunity to become legally authorized to work in this country. While many specific details have not yet been announced, President Obama set forth the requirements that an undocumented individual needs in order to qualify for work authorization. The individual must:

• have over 5 years of U.S. residency and be currently living in the U.S.
• have children who are U.S. citizens or legal residents
• formally register through a government immigration process
• pass a criminal background check, and
• pay taxes

What is the relationship between immigration reform and household employers, particularly those who are currently employing an undocumented worker?

A key provision of the president’s executive action is that all undocumented employees who apply for the change in immigration status will be required to file tax returns and pay taxes. This of course means they will have to identify their employer, and if the employer has been paying “off the books,” this action will expose their illegal activities (hiring an undocumented worker and not paying taxes) to both the IRS and the U.S. Citizenship & Immigration Service. It is likely that enforcement of the law and penalties for non-compliance will be increased due to the anticipated revenue these new taxpayers will be generating, with households potentially being a specific target due to the large amount of undocumented workers in the household employment industry.

Another possible result of this executive order is that nannies that are granted new immigration status may look for a career change, since they will be legally allowed to work anywhere they wish. Many nannies choose their career because they love the job, but others choose it out of necessity, if they find an employer who pays off the books so the nanny’s undocumented status isn’t exposed. But if that status changes, some nannies may look to work elsewhere. Therefore this immigration reform could open up remarkable opportunities for high-quality nannies, which in turn could lead to increased wages in that industry.

As always, GTM recommends that household employers follow federal and state employment laws by paying their nannies or other employees legally, and avoid the risk of paying high fines and even jail time for not being in compliance.

Read more about hiring a foreign nanny or other employee, and contact GTM’s Household Employment Experts at (888) 432-7972.