From what I have been able to find I would still say no. I have emailed others more knowledgeable than I and will let you know if they say different.
UPDATE - what they have said:
In theory, it should not be a threat to the exemption. However, this will depend on several factors, namely,
- The type of exemption. A church will have a better stance than say a hospital.
- The facts. Did the organization know they were employing an undocumented individual? What did they do about it when they found out?
- How was it discovered? By the IRS, the organization, who?
- Do they continue to break the law? Continued disregard for the law may jeopardize the exemption.
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