Last week, Michael Sivage Homes and Communities was putting the final touches on new language in its contracts that include requirements that the builder’s contractors and their workers comply with current immigration and hiring laws.

Owner Michael Sivage says his Albuquerque, N.M.-based company rewrote its agreements after he heard Jerry Howard, NAHB’s chief executive, warn builders during the trade group’s recent board of directors meeting about new workplace enforcement policies for the U.S. Immigration and Customs Enforcement division (ICE) of the Department of Homeland Security (DHS). The agency has been directed to shift its emphasis away from making mass arrests of undocumented workers and instead to go after companies that hire such employees.

DHS spelled out these new policy guidelines in an April 30 memo that asserted that “[e]nforcement efforts focused on employers better target the root causes of illegal immigration.” The memo also said the criminal prosecution of employers that violate current immigration laws “is a priority of ICE’s worksite enforcement program and interior enforcement program.” ICE will continue to seek out employers that want to comply with immigration laws by providing them with tools and training to minimize the risk of “unwittingly” hiring illegal workers.

“The message I took away,” says Sivage, “was that you have to have records, and that [the government] is going to hold builders and contractors to a higher standard. We’re taking this threat very seriously.”

Sivage's vice president of construction, David Murtagh, tells BUILDER that he’s been meeting personally with different contractors. “I told them, 'Don’t even think about sending [undocumented] workers to the jobsite'," says Murtagh who says some contractors “kinda looked at me funny." One responded half-jokingly: "'Then half the friggin’ homes in this country won’t get built.’”

The government’s new workplace enforcement rules arrive at a time when builders are currently starting fewer than half the number of housing units they did last year and dealing with a very different labor market. Builders suggest that the hordes of foreign-born trades and laborers, whether in the United States legally or illegally, who were commonly found on construction jobsites during the last housing boom have returned to their native countries as the housing bubble has deflated.

Matthew Chandler, a DHS spokesman, tells BUILDER that the new guidelines are the result of a wider-ranging review of the department’s policies that its director, Janet Napolitano, ordered 10 days after she took office. What these guidelines do, says Chandler, is “focus on employers who are knowingly engaged in egregious employment practices” by hiring and harboring illegal workers, trafficking in these workers, or not claiming them as employees to avoid paying taxes. ICE, he says, “will now build strong cases against employers who are creating and cultivating illegal workplaces.”

David Crump, NAHB’s director of legal research, notes that the guidelines also direct ICE to work closer with U.S. attorneys’ offices before taking action against employers or employees. “That, to me, indicates some dissatisfaction [by DHS] with what’s been going on in the field.”

Crump and Jenna Hamilton, NAHB’s assistant vice president of legal affairs, say that builders should be prepared for ICE to step up its scrutiny of I-9s, the forms that builders require contractors to file validating the legal status of their workers. Chandler adds that the best way for employers to protect themselves against prosecution is to enroll in e-Verify, which allows companies to check their employees’ resident status against the Social Security database. As of last week, more than 120,000 employers representing 468,000 workplace locations were enrolled in e-Verify, says Chandler, with another 1,000 employers per week coming on board.

What remains unclear is the government’s stance on what constitutes an “employee” and “employer.”

Hamilton says that NAHB and the Department of Homeland Security have been “in a constant battle” for the past two years over the relationship between builders and contractors in terms of worker status. The association has argued vigorously that builders are “first employers” that don’t hire the trades and laborers who work on their jobsites “and may not even see them.” (Hamilton also says that Stewart Baker, DHS’s former assistant secretary for policy under the Bush administration, told her that the government wants employers to assume the role of immigration cop because “it doesn’t have the resources” to investigate every jobsite itself.)

When ICE raided Fischer Homes’ jobsites in 2006, the government’s primary rationale was that the contractor who had hired illegal workers found on Fischer’s jobsites was a de facto employee of the builder, and so Fischer could be held liable for those illegal workers. (A judge dismissed this case six months after ICE raided Fischer’s sites.)

What worries NAHB is that this conflation of builder and contractor as one employment entity has carried over to the Obama administration, and might color any new workplace enforcement investigations. When he was running for president, Barack Obama favored immigration reform that would allow undocumented workers to apply for U.S. citizenship. But while he was a senator representing Illinois, Obama introduced legislation in 2007—S. 2044—that sought to close tax loopholes for businesses that were classifying certain employees as independent contractors.

If that legislation had passed, it would have repealed the Revenue Act of 1978 by requiring employers to treat misclassified independent contractors as employees instead and also eliminating the defense of “industry practices” as justification for misclassifying workers as independent contractors.

Chandler could not comment on whether DHS’s new directives resolve the government’s thinking about the relationship between builders and contractors. But Hamilton suspects that the administration will want builders to be far more active in preventing undocumented workers from appearing on their jobsites. “We wouldn’t be surprised by the blending of [monitoring] responsibilities,” she says.

John Caulfield is senior editor for BUILDER magazine.