Verifying a job applicant’s legal right to work for you is so much more complicated than scanning a passport or ID card.
Not only are governments cracking down on organizations that employ individuals illegally, but the digital world has made it significantly easier for candidates to submit fraudulent documentation. Unfortunately for businesses though, the government still holds them fully responsible even if an applicant lies about their legal status.
There are three costs an employer now has to consider when it comes to verifying someone’s identity and legal right to work:
- Direct compensation,
- The risk of fines or punishments for making mistakes, and;
- The opportunity cost of having your employees conduct identity verification checks manually.
To better understand how these costs play out in real terms, Willo conducted an analysis across four global markets: USA, Canada, UK, and EU.
At first glance, it seems fairly inexpensive. But the total cost could be well into the six figures and could even land executives behind bars.
1. Direct costs of manual ID verification
Identity verification starts with the applicant self-attesting that they are legally allowed to work in the country.
Then the HR department has to confirm the applicant’s documents, make and store secure records for the organization, and submit the relevant government form confirming the applicant’s attestation (each country has a slightly different document).
All risk is assumed by the filing party, but every market we analyzed allows organizations to forward that risk to a third-party verification service.
Using average salaries for each market (taken from sources like Glassdoor and Talent.com) with an estimated 15-20 minutes per verification, the total compensation cost per check is as follows:
- USA: $9.38-$12.38 USD
- Canada: $8.44-$11.14 CAD
- UK: £4.06-£5.36 GBP
- EU: €8.13-€10.73 EUR
Normalized to USD, the average manual identity verification check across all four markets costs $8.56 in salary and total compensation costs. This is on top of an estimated $75+ USD per month for secure file storage, based on typical plans available from platforms like Dropbox and Box.
By contrast, Willo’s digital identity verification service costs as low as £2 / $2.50 USD per check.
2. Risks: fines, punishments, and even jail time
Every jurisdiction carries fines for employing someone illegally, even if you didn’t know about it (e.g. an applicant falsified their documents and you believed they were authentic).
Direct fines: Fines range from $250-$2,500 per person, per infraction, across the four jurisdictions.
However, fines are progressive—the per-person fine can climb to $50,000-$100,000 if courts notice a pattern of consistently employing people who don’t have the legal right to work in your country.
Additional fines: This is on top of privacy-related fines, which can easily climb into the millions of dollars for larger organizations if you don’t store employee identity records securely.
Other penalties: Depending on the jurisdiction, you could also face significant other penalties, including…
- Bans from bidding on public contracts.
- Bans from receiving government support for businesses.
- Bans from being allowed to hire temporary foreign workers.
- Being forced to shut down your company’s operations in a specific jurisdiction.
- Jail time, if a pattern continues or individuals knowingly mislead authorities.
Whoever files the government paperwork assumes the risk. If you do it manually, that means the organization takes it on. If you work with Willo, we provide secure storage for all files benefiting from AES-256 encryption.
3. Opportunity costs: what your time could be doing
Even if there were no fines or penalties, HR teams don’t need to be doing this manual work when a cost-efficient digital solution exists.
A recent study found that the majority of both HR and C-Suite leaders want HR to be more strategic, yet three-quarters of both groups agree HR work is still primarily administrative.
That’s the real impact of 15-20 minutes per candidate—a high-quality employee is stuck doing manual work rather than strategically contributing.
And if you hire at any volume, it’s even worse. For example, if that HR Coordinator has to process:
- 2 hires per month, that ends up taking an entire business day per year just on manual ID verification.
- 10 hires per month amounts to a week’s worth of admin work per year.
- 40 hires per month amounts to an entire month’s worth of admin work per year.
And that’s if everything goes well. If you have to re-do any documentation or re-verify anything, it adds even more time (which has direct cost implications as well).
The same study also found that manual work like this is a leading cause of talent burning out and heading for the door: 62 percent are considering exiting HR due to a variety of reasons, burnout being one of them.
There is a solution. A large majority—83 percent—of HR leaders cited lacking the right HR technology as a challenge heading into 2024. That means bringing in the right tools to remove mundane, administrative tasks from HR’s plate could help them focus more on the strategic side of the equation.
A huge problem with a $5 solution
Identity verification is a necessary task, but it can easily spiral out of control—costing significant time and money, and adding risk to the organization.
The good news is that governments around the world are now allowing digital identity verification and third-party outsourcing, meaning you can offload the risk and save time. This is where a solution like Willo can help. Not only is it less expensive than direct salary costs but it also saves you a lot of time, ensures files are held securely, and provides a better candidate experience.
You can even embed identity verification in your candidate screening process, meaning you don’t even interview people who aren’t legally eligible to work for you — providing a cleaner candidate experience and helping you focus your resources on the talent you can actually hire.
