Immigration Crackdown Equals Compliance Headaches

A government crackdown on employing illegal immigrants is stepping into high gear this fall, opening yet another front in the compliance battles Corporate America must fight.

After years of pursuing undocumented workers, the Obama Administration has shifted its enforcement focus to the businesses that hire them. U.S. Immigration and Customs Enforcement, a unit of the Department of Homeland Security, issued 652 notices of inspection to U.S. companies in July—more than ICE issued in all of last year. Homeland Security officials say those audits will continue to increase both in number and in scale. ICE is also getting more money to fund its operations, including $34 million designated for worksite enforcement against illegal immigration.

Roach

In business sectors prone to using undocumented workers—agriculture, retail, construction, hospitality—”they’re missing something if they’re not scared to death about this,” says immigration lawyer Tom Roach of Roach Law.

ICE officials won’t release the identities of companies currently being audited, although some companies have disclosed investigations themselves. One example is American Apparel, the California-based clothing manufacturer and retailer. ICE has asked American Apparel to hand over its Form I-9 employment records, after agency inspectors weren’t able to verify the employment eligibility of approximately 200 employees due to discrepancies in their work records.

Another 1,600 of American Apparel’s 5,600 factory workers don’t appear to be authorized to work in the United States, the company says. The notifications follow a previously disclosed ICE inspection conducted in January 2008.

Peter Schey, an immigration lawyer who has been representing American Apparel in ICE’s I-9 inspection, says the company’s principal compliance challenge is the same one many other businesses face: identifying invalid employment documents.

“Unfortunately, companies like American Apparel do not have access to the government’s files that establish whether individuals are legally authorized to work in the United States, nor have they historically had access to reliable methods to discern the authenticity of identification documents presented by job applicants,” he says.

To land a job, a worker only needs to produce a driver’s license and a Social Security card; both documents can be easily fabricated or obtained under false pretenses. So even if an employer complies with all immigration laws and rules, it can still get in trouble, experts say.

In business sectors prone to using undocumented workers—agriculture, retail, construction, hospitality—“they’re missing something if they’re not scared to death about this.”

—Tom Roach,

Immigration Lawyer,

Roach Law

The agricultural sector, where it’s estimated that 50 to 70 percent of all employees are undocumented, is most at risk, says Roach, who is representing a client under an ICE investigation.

Thankfully, companies do have a safe harbor: As long as an employer has completed the vetting process properly, “they are not going to be charged with knowingly employing someone illegally,” says Howard Shapiro of law firm Mitchell, Silberberg & Knupp.

But if an employer processes a worker’s documentation improperly—“which is often the case,” Shapiro adds—fines for technical violations alone can range from $100 to $1,100 for each faulty I-9. Technical violations can include something as simple as a name mis-spelling, or a photo identification that doesn’t appear to match the applicant.

Knowingly hiring or continuing to employ an unauthorized worker can cost a company up to $11,000 per violation. “For a large employer, that can quickly add up—a few thousand forms, a few thousand employees, at a few thousand a head, can be a significant fine,” Shapiro says.

Presenting false documents also generally leads to the termination of the unauthorized employee, which can quickly become a major headache. “From a business perspective, if an employer loses a significant percentage of its workforce, even though the employer did nothing wrong, that can have a very strong effect on them,” says Shapiro.

Recent Case

ICE has not specified precisely what steps it will pursue against companies that hire illegal workers, or how severe criminal sanctions might be. But legal and compliance experts are turning to a recent case for some valuable insight.

In August, federal prosecutors charged Yamato Engines Specialists, a Bellingham, Wash.-based manufacturer of car engines, with conspiring to encourage undocumented immigrants to remain in the United States from 2006 to 2009. The company faces a maximum fine of $500,000.

E-VERIFY

Mandatory Employment Authorization Verification:

(a) MAKING BASIC PILOT PROGRAM PERMANENT.—Section 401(b) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (division C of Public Law 104–208; 8 U.S.C. 1324a note) is amended by adding before the period at the end of the last sentence the following, “except that the basic pilot program described in section 403(a) shall be a permanent program.”

(b) MANDATORY USE OF E-VERIFY PROGRAM.—

(1) IN GENERAL.—

(A) REQUIREMENT FOR EMPLOYERS.—Subject to paragraphs (2) and (3), every person or other entity that hires one or more individuals for employment in the United States shall verify through the basic pilot program by section 403(a) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (division C of Public Law 104–208; 8 U.S.C. 4 1324a note) (referred to in this subtitle as the “E-Verify program”), that each such individual is authorized to work in the United States.

(B) REQUIREMENT FOR TELEPHONE VERIFICATION.—The Secretary establish a toll-free telephone system that an employer may use to verify employment eligibility through the E-Verify program.

(2) INITIAL ENTITIES REQUIRED TO USE E-VERIFY.—The following entities shall satisfy the requirement in paragraph (1)(A) not later than two years after the date of the enactment of this Act:

(A) FEDERAL AGENCIES.—Each department and agency of the Federal Government.

(B) FEDERAL CONTRACTORS.—A contractor that—(i) has entered into a contract with the Federal Government to which section 2(b)(1) of the Service Contract Act of 1965 (41 U.S.C. 351(b)(1)) applies, and any subcontractor under such contract; or

(ii) has entered into a contract exempted from the application of such Act by section 6 of such Act (41 U.S.C. 356), and any subcontractor under such contract.

(C) LARGE EMPLOYERS.—An employer that employs more than 250 individuals in the United States.

(3) SCHEDULE FOR OTHER ENTITIES.—

(A) THREE YEARS FOR EMPLOYERS OF 100 OR MORE.—Entities that employ 100 or more individuals in the United States shall satisfy the requirement in paragraph (1)(A) not later than three years after the date of the enactment of this Act.

(B) FOUR YEARS FOR EMPLOYERS WITH 30 OR MORE EMPLOYEES.—All entities that employ 30 or more individuals in the United States must satisfy the requirement in paragraph (1)(A) not later than four years after the date of the enactment of this Act.

(C) FIVE YEARS FOR ALL EMPLOYERS.—All entities that employ one or more individuals in the United States must satisfy the requirement in paragraph (1)(A) not later than five years after the date of the enactment of this Act.

(4) VERIFYING EMPLOYMENT AUTHORIZATION OF CURRENT EMPLOYEES.—Every person or other entity that employs one or more persons in the United States shall verify through the E-Verify program by not later than five years after the date of the enactment of this Act that each employee of such person or other entity is authorized to work in the United States.

Source

Senate Version of the Verification Act (July 23, 2009).

Similar to American Apparel’s situation, the case stemmed from a previous immigration raid where 28 employees were arrested for working illegally. Following the raid, nearly all of those arrested were given work permits, which will continue in effect as long as the government continues its investigation of Yamato.

Morton

In addition, two employees of the family-owned company pleaded guilty Aug. 18 to federal charges of knowingly hiring the undocumented workers. Under plea agreements, they each face up to five years probation. The case is the first such action under the Obama Administration. John Morton, the Department of Homeland Security’s assistant secretary for ICE, said in a statement that the guilty pleas “demonstrate the commitment of ICE special agents to investigating leads, uncovering the facts, and holding criminal employers accountable.”

Still, some anti-immigration groups say efforts under the new administration are all bark and no bite. “Stepped-up enforcement would be a good thing if they were actually doing stepped up enforcement, but it sounds more hype than actual enforcement going on,” says Ira Mehlman, national media director for the Federation for American Immigration Reform.

“It seems that under this administration, they’re more concerned that the paperwork is done properly than whether illegal aliens are actually allowed to continue working,” Mehlman adds. “They’ve made it very clear that, unless you are a serious criminal, they’re really not all that interested in enforcing the law.”

Shapiro

Shapiro also says that, “what they do with the employees is a good question.” Right now, he says, regulators appear to be leaving that decision up to the employers.

E-Verification

Government contractors have another compliance burden to face: Starting Sept. 8, they are required to use the “E-Verify” system to confirm that new hires and current employees working on federal contracts are authorized to work in the country. (The requirement also will apply to most subcontractors.) E-Verify is a Web-based system that allows employers to check the Social Security and visa numbers submitted by workers against government databases.

Legislation making its way through Congress would expand the E-Verify system to all employers, requiring them to use it to confirm that their employees are eligible to work in the United States. At least in theory, that should simplify the burdens for employers, although some groups still want to see tweaks to the bill (Secure America Through Verification and Enforcement Act).

Angelo Amador, director of immigration policy at the U.S. Chamber of Commerce, testified July 23 at a House hearing on E-Verify that the requirement should apply only to new employees, not existing ones. “Reverifying an entire work force is an unduly burdensome, costly proposition, and unnecessary given how often workers change jobs in the United States,” Amador said. He added that businesses with less than 50 employees should also be exempt.

Mehlman

More than 141,000 employers are currently enrolled in the program on a voluntary basis, “which would seem to indicate that a lot of employers want to comply with the law,” Mehlman says. “They’re not document experts, and they shouldn’t be. There’s never been any real reason why we shouldn’t have some electronic verification system.”

While E-Verify needs improvements in certain areas, the Obama Administration is moving in the right direction, Mehlman says. “If the employers are not hiring people who are here illegally, that is going to be disincentive to come, and a disincentive to remain,” he says. “So there’s no argument that they need to go after the employers, but there’s no reason why they can’t also focus on the people who are here illegally.”

Shapiro agrees. “Deporting a couple of thousand of people doesn’t really fix anything, but having more employers being more vigilant in their compliance matters may create less of a magnet,” he says.