On September 4, 2025, federal agents executed the largest immigration raid in U.S. history. This raid took place at Hyundai and LG Energy Solution’s $4.3B EV battery plant construction site in Georgia. This raid led to the detention of 475 workers. Most of them are South Korean nationals. This enforcement action halted construction on a project tied to the CHIPS Act and Inflation Reduction Act. This is exposing deep vulnerabilities in subcontractor labor compliance. For federal contractors, this incident signals a new era of aggressive enforcement. This has heightened risk and the urgent need for strategic adaptation.
What Happened in Georgia?
Federal agents from ICE, DHS, DOL, FBI, DEA, and ATF raided Hyundai’s Metaplant America site. They were targeting unlawful employment practices among subcontractors.
- 475 workers detained, many on expired visas or unauthorized employment status
- Construction halted on a $4.3B battery facility
- Diplomatic fallout with South Korea
Hyundai stated none of its direct employees were detained, but the raid exposed compliance gaps in its subcontractor network.
Federal Contracting Implications
This raid isn’t just a headline, but it’s a compliance wake-up call.
Labor Compliance Risks
- Violations of the Immigration Reform and Control Act (IRCA) and Form I-9 requirements
- Increased scrutiny from DHS and DOL, especially for CHIPS Act and IRA-funded projects
- Risk of debarment under FAR Subpart 9.4 for repeated labor violations
Subcontractor Oversight
- Contractors must ensure E-Verify usage, visa status tracking, and audit readiness
- ICE now targets fixed job sites with high foreign-born labor concentration
Foreign Investment Meets Federal Incentives
The Hyundai-LG battery plant is a cornerstone of U.S. industrial policy. But federal support comes with strings.
CHIPS Act & IRA Exposure
- Projects funded under these acts must meet Buy American and labor compliance standards
- Violations can jeopardize access to billions in federal subsidies and tax credits
Trade & Diplomatic Risk
- South Korea’s backlash may chill future foreign direct investment
- Federal contractors tied to international joint ventures must now factor in geopolitical risk
Legal & Insurance Fallout
Labor violations don’t just trigger audits; they trigger lawsuits and insurance claims.
Legal Exposure
- Contractors face employment practices liability (EPL) claims for discrimination, wrongful termination, and retaliation
- Violations may lead to False Claims Act investigations if tied to federal funds
Insurance Tightening
- Carriers may exclude coverage for undocumented labor claims
- Construction defect claims may rise due to halted projects and workforce gaps
Strategic Takeaways for Federal Vendors
It’s about every contractor operating in federally funded sectors.
- Conduct internal I-9 audits and subcontractor compliance reviews
- Monitor DHS and DOL enforcement trends and upcoming FAR updates
- Align hiring practices with Buy American and Trade Agreements Act provisions
Policy Signals & What’s Next
The Trump administration has signaled that more raids are coming.
- Expect mandatory E-Verify proposals and broader use of electronic verification systems
- Contractors should prepare for multi-agency audits and public scrutiny
Final Thoughts
The Georgia raid is more than a local disruption. It’s a national inflection point. Federal contractors must now operate with sharper compliance tools and a clear understanding of how immigration enforcement intersects with industrial policy.
