At just 20 years of age, Carla Chavarria sits at the helm of a thriving graphic design business, launching branding and media campaigns for national organizations. Some of her projects are so large she has to hire staff.
Still, Chavarria has to hop on buses to meet clients throughout Phoenix because Arizona won’t give her a driver’s license. The state considers her to be in the country illegally, even though she recently obtained a two-year reprieve from deportation under the Obama administration’s deferred action program.
She may not drive, but along with thousands of other young people who entered the country illegally, Chavarria has found a way to make a living without breaking the law.
Although federal law prohibits employers from hiring someone residing in the country illegally, there is no law prohibiting such a person from starting a business or becoming an independent contractor.
As a result, some young immigrants are forming limited liability companies or starting freelance careers—even providing jobs to U.S. citizens—as the prospect of an immigration law revamp plods along in Congress.
Ever since 1986, when employer sanctions took effect as part of the immigration overhaul signed by President Reagan, creating a company or becoming an independent contractor has been a way for people who are in the country illegally to work on a contract basis and get around immigration enforcement.
How is this possible? Though the issue is complex, the answer boils down to how labor law defines employees, said Muzaffar Chishti, an expert on the intersection of labor and immigration law at the Migration Policy Institute.
For example, employees often have set hours and use equipment provided by the employer. Independent contractors make their own hours, get paid per project by submitting invoices and use their own tools. Also, someone who hires an independent contractor isn’t obligated by immigration law to verify that person’s legal status.
It was as easy as downloading the forms from the Internet, opening up a bank account and turning in paperwork to the state along with a $50 fee. Proof of citizenship is not required. Regulations vary, but similar procedures exist in other states. In California, the fee is a bit higher and there’s an annual minimum tax of $800, but the process is similar to Arizona’s.
It’s unclear how many entrepreneurs there are like Chavarria. Immigration experts say anecdotal evidence suggests interest in such businesses has grown in recent years as more states have adopted tougher illegal-immigration laws. But research is scant.
Indications of a trend could be found, however, in a Public Policy Institute of California report on the effects of Arizona’s 2007 mandatory E-Verify law, which forced businesses to use a federal system intended to weed out people working in the country illegally.
The study found that 25,000 workers living in Arizona illegally became self-employed in 2009. That was an 8% jump over the number a year earlier. They probably formed limited liability companies, created their own businesses or even left employers to become independent contractors.