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Status Woe

Contractors' illegal workers could put you in a legal pickle.

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This story appears in the April 2004 issue of Entrepreneur. Subscribe »

It was big news when federal agents swept through 60 Wal-Mart stores last October to arrest about 250 illegal immigrants contracted to work on Wal-Mart's cleaning crews. Wal-Mart-which relies on at least 100 vendors to supply cleaning crews for more than 700 stores across the country-says it can't be responsible for ensuring the workers it contracts from third parties are in the United States legally; the government, meanwhile, is investigating and could press criminal charges.

Wal-Mart's case hinges on whether it knew about these workers' status and hired them anyway, says Elizabeth Espin Stern, a partner with Shaw Pittman LLP in Washington, DC. "The law is that direct employers, not users of subcontractors, bear the burden of documenting the employment eligibility and identity of their workers," she says. "How the [case] is interpreted in terms of future policy is going to be critical."

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