Sorry, had to go offline for a little while. The employer sanctions provisions contain two exemptions
. The first, a "grandfather" clause exempts from its provisions the continuing employment of unauthorized aliens hired on or before November 6, 1986, the date of the law's enactment. The second exempts "independent contractors" from the employment verification and sanctions provisions, provided the service provider falls within the strict definition of independent contractor. This includes "individual entities who carry on independent business, contract
to do piece work according to their own means and methods, and are subject to control only as to results."
Indicia of independence include:
Who supplies tools/materials;
Whether services are available to public;
Whether work is done for other clients;
Whether there is an opportunity for profit or loss as a result of the labor; and
Who determines order, sequence, and time work is done.
Lastly, while you are not obliged to confirm the work authorization of anyone you hire as an independent contractor, if you know or have reason to know that an independent contractor is not authorized to work in the U.S., you can nevertheless be held liable.
If this woman is an illegal, you can report her to the UCIS's ICE division. You can find the local numbers here: http://www.criminalgovernment.com/docs/rel/aliens.html.