Work Permit in the United States: Key Implications for Businesses and Legal Hiring

The work permit in the United States is a critical document for both employees and companies. While it’s often associated with immigrants seeking employment, its implications for businesses are substantial. Understanding how it affects recruitment, compliance, and tax obligations helps organizations operate legally and maintain a solid reputation in the U.S. market.

For employers, verifying and managing work authorization is not just a bureaucratic formality — it’s a legal responsibility that directly impacts every stage of the hiring process.

What is a Work Permit and Why It Matters for Companies

A work permit, officially known as the Employment Authorization Document (EAD), is issued by the U.S. Citizenship and Immigration Services (USCIS) to prove that a noncitizen is authorized to work in the country.

For companies, this document represents legal assurance that an employee meets immigration and labor requirements. Employers must verify work authorization through the Form I-9 (Employment Eligibility Verification), which must be completed and stored for every hire.

Failure to comply with these verification requirements can lead to severe penalties, including fines and legal action by the Department of Homeland Security (DHS).

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Legal Responsibility in Hiring

Every company operating in the U.S.—regardless of its size—must ensure that it hires only individuals authorized to work. This involves three key obligations:

1. Requesting the proper documentation, such as a passport, Green Card, or valid EAD.
2. Verifying authenticity through official systems like E-Verify, when applicable.
3. Maintaining updated I-9 records for all employees during their employment and for at least one year after termination.

Noncompliance may result in fines ranging from $375 to over $16,000 per employee, depending on the severity and recurrence, in addition to reputational harm.

Impact on Human Resources Management

Immigration compliance has become an essential component of human resources operations. Properly verifying work permits ensures that a company:

• Maintains a fully authorized workforce.
• Avoids conflicts with federal authorities.
• Reinforces its corporate credibility as a responsible employer.
• Minimizes operational risks from audits or investigations.

For companies hiring international professionals—especially in technology, healthcare, or engineering—understanding the nuances between work visas (like H-1B or L-1) and EADs is crucial for sustainable and lawful hiring.

Fiscal and Administrative Implications

A valid work permit also affects a company’s tax and payroll management. Only employees with legal authorization can be officially included on payroll and reported to the Internal Revenue Service (IRS).

This ensures that:

• Employers can accurately report federal and state taxes.
• Employees can obtain a Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) to declare income.
• Labor laws on minimum wage, overtime, and social security contributions are properly applied.

Ignoring this can trigger IRS investigations or penalties for unauthorized employment or tax evasion.

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Work Authorization and Business Growth

From a strategic standpoint, maintaining compliance in employment authorization builds trust among partners, investors, and regulators. Demonstrating transparency and legal hiring practices strengthens a company’s position in the U.S. market.

For foreign entrepreneurs looking to establish a business in the U.S., understanding the work permit system is essential. Founders without a valid visa or work authorization cannot legally perform compensated work for their own company until they obtain the proper immigration status.

This is especially relevant for those setting up an LLC or Corporation, where defining roles and eligibility early helps avoid complications later.

Best Practices for Businesses

1. Verify documents before signing employment contracts.
2. Keep digital and physical copies of Form I-9 for all employees.
3. Monitor expiration dates on work permits and renew them proactively.
4. Train HR teams on immigration compliance and the use of E-Verify.
5. Apply verifications uniformly to avoid discrimination claims.

These practices not only ensure compliance but also reflect ethical and inclusive hiring standards.

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Risks of Hiring Without Verifying Work Authorization

The Department of Homeland Security (DHS) and Immigration and Customs Enforcement (ICE) regularly audit businesses to identify unauthorized employment. Hiring individuals without valid work authorization can lead to:

• Significant financial penalties.
• Suspension or loss of business licenses.
• Civil or criminal liability.
• Reputational damage and loss of client trust.

For this reason, verifying work permits should be a standard and documented part of every hiring process.

In Summary

The work permit in the United States is more than an employee requirement — it’s a pillar of corporate compliance. Businesses that manage work authorization responsibly protect their operations, uphold their reputation, and strengthen their long-term foundations.

At Openbiz, we help you form and manage your business in the United States with complete legal and administrative compliance.
Our team guides you through the fiscal and operational steps needed to structure your company properly and hire talent within U.S. regulations.
Contact us today and take the next step toward building a solid, compliant business in the U.S.

Frequently Asked Questions About the Work Permit in the United States

1. What happens if an employee loses their work permit?
They must file a replacement request with USCIS using Form I-765. Until approval, they cannot legally work.

2. Can a company sponsor an employee’s work permit?
In some cases, yes—especially when linked to a visa or adjustment of status. However, the EAD itself is typically obtained individually.

3. What should an employer do when a work permit expires?
Employment must be paused until the worker provides a renewed permit. Continuing without authorization can result in fines.

4. What’s the difference between an EAD and a work visa for employers?
An EAD allows a person to work for any employer, while a work visa ties them to a single sponsoring company.

5. How long should a company keep work authorization records?
Employers must retain I-9 forms throughout the employee’s tenure and for at least one year after termination.

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