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A sweeping immigration law signed by Florida Gov. Ron DeSantis earlier this month seeking to stamp out illegal workers from the Sunshine State could disrupt the construction industry by making it harder to hire low-wage workers and is sure to drive up the cost of development, experts say.

There are plenty of nervous people. Ive gotten [a lot] of calls on this issue, said Peter Dyga, president and CEO of the Associated Builders and Contractors Florida East Coast Chapter trade association. Is it going to have an impact on the labor market? Of course, it is.

The legislation, formally known as SB 1718, is the latest in Gov. DeSantiss right-wing agenda as the Republican mounts a presidential run, which hes expected to announce later this month.

The main provision causing angst among Florida construction executives is a mandate for businesses with 25 or more employees to use the federal governments E-Verify system to confirm workers immigration status.

While its always been illegal to hire undocumented workers, employers have typically been able to turn a blind eye. Prospective workers are required to fill out an I-9 employment eligibility verification form and provide documentation to prove their identity, such as a passport or drivers license. Employers were free to hire those applicants if their certificates appeared legitimate.

As long as it looks kosher, companies could take them without fear of repercussions. Hey, we did our job The documentation looked real; the photo looked like the person who presented it to me. It was valid on its face, said Scott Bettridge, chair of the law firm Cozen OConnors immigration practice, who represents construction companies.

Some employers dont want to know, the attorney added.

Finding people to fill low-paying, labor-intensive jobs, such as work on construction sites, has long been a headache for construction companies. Undocumented workers who account for 5.2 percent of Floridas workforce, according to a 2020 Center For American Progress report often filled that void. Employers faced few consequences for taking advantage of that workforce. Punishment typically came in the form of a fine, which contractors accepted as the cost of doing business.

But the calculus is likely to change. In addition to paying a fine, which could be as much as $1,000 a day, first-time violators of the newly enacted legislation could be put on one-year probation. Repeat offenders could have their Florida state contractors license suspended or revoked, representing existential threats to construction companies.

The penalties are some of the strongest in the country, according to Bettridge. Texas also requires employers to use the E-Verify system, but the sanctions are not as stringent. In addition, Florida counts the agricultural and hospitality sectors as two of its major industries, which also rely the most heavily on undocumented workers. All three industries employ the highest share of illegal workers, according to a 2016 Pew Research report.

The law does not go into effect until July 1, but it already appears to be warding off undocumented workers. Videos on Twitter and TikTok have gone viral, purporting to show once-busy construction sites now empty. One video shows a worker at a Wynwood construction site warning his colleagues in Spanish about the impending new law: Its going to be impossible for you to work without papers.

These changes are sure to hike up costs for developers. There are a lot of factors contributing to the inflationary costs and tight labor markets. Will this further tighten it? Yes, Dyga said. Then itll be up to the developers to figure out if financially doing that product is worthwhile.

Higher-cost labor would represent another blow to the real estate industry, which is already battling skyrocketing prices due to overall inflation and interest rate hikes. While the lending market has slowed nationwide, South Florida remains resilient, a region where developers still nab sizable loans to move projects forward. But the newly enacted legislation could potentially slow the pace of development.

Despite lobbying for the measure and signing the bill into law, not everyone blames DeSantis. Dyga faults the federal government for not giving the record number of undocumented immigrants crossing the southern border work permits as their cases move through the court system.

Still, the new legislation is intended to cast out illegal immigrants from Florida by making it inhospitable for them. Beyond the requirement for companies, the law requires hospitals that accept Medicaid to collect the immigration status of patients and report the health care cost of illegal immigrants to the state. It also prevents Florida from issuing IDs and drivers licenses to undocumented people and voids those issued by other states.

So far, developers are staying mum about the new law. Commercial Observer reached out to dozens based in South Florida, but none agreed to comment.

Julia Echikson can be reached at jechikson@commercialobserver.com.

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Florida Immigration Bill Likely to Hurt Construction Labor Market - Commercial Observer