Reproduced with permission from Workplace Law Report, Vol. 5, No. 16 (April 20, 2007) pp. 545-550. Copyright 2007 by The Bureau of National Affairs, Inc. (800-372-1033)

By Andrew P. Galeziowski and Stephen H. Smalley

Aside from the steady flow of legal immigrants employed as educated professionals, the United States has experienced an incredible growth in its illegal immigrant population over the past several years. By most estimates, there are approximately 12 million persons illegally present in the United States. Many of these persons are presently employed filling low or unskilled jobs in many sectors of our economy, such as housekeeping, cooking, agriculture, landscaping, and construction. In many respects, these undocumented workers are an essential component of operating hotels, restaurants, cleaning services, retail, food processing, and construction companies. All of these foreign workers have a significant impact on the U.S. economy. As the influx of foreign workers in response to the tight labor markets of the 1990s demonstrated, immigration does respond to labor shortages.

Such influx of illegal immigrants is not a new phenomenon in recent U.S. history. Facing a perceived crisis of a burgeoning illegal population in the 1980s, a one-time legalization program was introduced to enable certain illegal aliens to regularize their status and become lawful permanent residents. To prevent a repeat of an increase in illegal aliens, Congress passed the Immigration Reform and Control Act (IRCA) in 1986 and required U.S. employers to complete I-9 Employment Eligibility Verification Forms to verify the employment authorization of new employees. In 1990, 14,311 employers were fined for I-9 violations. By 2000, there were a mere 178. The expanding economy of the 1990s seemed to translate into a greater tolerance for illegal workers. The growth in the illegal population continued after 2000, with millions of new illegal aliens arriving at a pace of over 800,000 per year.

In the recent five years, however, stricter enforcement of existing immigration provisions has increased and that trend is expected to continue into the foreseeable future. The events of Sept. 11, 2001, combined with an already weakening economy, contributed to increased scrutiny of legal and illegal immigration. The current national debate on immigration focuses on an important national interest in securing borders and preventing the entry of terrorists and criminals. The critical needs of commerce and the need for skilled and unskilled labor is also being debated to avoid the severe negative economic consequences that flow from such restrictive laws and policies.

Attempts to Reform U.S. Immigration Laws

Attempts to reform the current immigration system began a few years ago. On Sept. 5, 2001, President Bush and Mexican President Vicente Fox met to discuss the proposed “Guest Worker” nonimmigrant classification. These discussions were centered on ways to allow more low-level employees, primarily from Mexico, to legally work in the United States. However, progress on this front immediately stopped after the Sept. 11th tragedy, with a resulting radical shift towards debates about border security and tightening the U.S. immigration system. 2006 then saw the introduction of federal legislation designed to both enhance employment verification and border security, but also to address the labor needs of the business community. As many in labor intensive industries would argue, the real shortage of quality workers in the United States is in lower-level positions. Quality housekeepers, dishwashers, construction, cleaning, retail and maintenance personnel are difficult to locate.

In February 2005, President Bush told the nation he still plans to advance a proposal he made a year ago to grant temporary visas to illegal immigrants already in the United States though many members of the conservative base that helped re-elect him say they staunchly disagree. Bush’s plan would grant temporary work visas to foreign workers as long as U.S. workers cannot or do not want to fill the job. “Look, whether or not you agree with the solution or not, we have a problem in America when you’ve got 8 million undocumented workers here,” President Bush told the Washington Times in a recent interview. The president expressed confidence that he can persuade Congress to move on his immigration bill, despite opposition from some in his own party.

In 2006, both the U.S. Senate (S. 2611) and U.S. House (H.R. 4437) versions of comprehensive immigration reform bills required employers to verify the employment authorization of new hires through the Basic Pilot Program (in addition to the current Form I-9 verification). The Comprehensive Immigration Reform Act (S. 2611 passed by the Senate in May 2006) provided that employers cannot use contract labor knowing or in reckless disregard of the alien’s unauthorized status or that the contractor failed to use the Basic Pilot Program or Electronic Eligibility Verification System. Moreover, the Comprehensive Immigration Reform Act also included information sharing and reporting requirements mandating the supplier employer to provide the user employer with its EIN [employer identification number] and for the user employer to submit the EIN into the Pilot Program system.

The aforementioned Senate immigration bill (S. 2611), the Comprehensive Immigration Reform Act (CIRA), contains many provisions aimed at securing the borders and increasing enforcement (Basic Pilot Program requirement and liability for contractors). However, perhaps CIRA provisions with the most far-reaching impact for employers are those that create avenues for undocumented workers to regain legal status through sponsoring employers. Undocumented aliens who have resided in the United States since April 5, 2001, would be eligible to apply for permanent resident status (and undergo a background check for criminal and terrorist activity). Undocumented aliens who have resided in the United States for at least two years at the time of the enactment of the act would be eligible to apply for permanent resident status after first “touching base” outside the United States by departing and then re-entering the United States through inspection. An undocumented alien who has resided in the United States for less than two years at the time the act is promulgated would be eligible for one of the 200,000 H-2C visas annually through a sponsoring U.S. employer. The H-2C visa would be employer-specific and valid for up to three years. H-2C visa workers would be eligible to be sponsored for permanent resident status through the existing employment-based permanent resident process and be subject to its lengthy process.

Employers sponsoring workers for H-2C visas would be required to perform prescribed pre-filing recruitment procedures for U.S. workers (advertisements and job bank posting among other methods) and attest to the recruitment methods undertaken, the recruitment results and the satisfaction of the prevailing wage requirements. While the H-2B visa program would still be available, the H-2C visa process would be more streamlined (electronic filing of applications) and would not require employers to prove a temporary need for the H-2C workers.

While the Senate easily passed its comprehensive immigration reform bill, many members of the House have strongly opposed the provisions creating a legal pathway for undocumented aliens to become eligible for permanent resident status and H-2C visas. The House’s immigration bill (H.R. 4437), the Border Protection, Antiterrorism and Illegal Immigration Control Act of 2005, is an enforcement-only bill authorizing a $2.2 billion expenditure to build a high-tech 700-mile fence along a 2,000 mile stretch along the U.S.-Mexico border and makes unlawful presence in the United States a felony rather than a civil offense.

As of the November 2006 midterm elections, neither bill had been passed by both houses of Congress. Thus, the 109th Congress failed to pass any comprehensive immigration measure. The 110th Congress appeared to be motivated to jump-start the debate as evidenced by the introduction of new laws in early January, including the Comprehensive Reform Act of 2007 introduced by Senate Majority Leader [Harry] Reid (D-Nev.) on Jan. 4, 2007. Sen. Reid indicated that comprehensive immigration reform was one of the Senate’s top 10 priorities and that it should include a path to earned legalization for undocumented immigrants.

The debate on immigration seemed to fall to the backburner temporarily, but the possibility of comprehensive reform passing was reinvigorated by the introduction of the Security Through Regularized Immigration and a Vibrant Economy (STRIVE) Act of 2007 in the House by Rep. Luis Gutierrez (D-Ill.) and Rep. Jeff Flake (R-Ariz.). STRIVE is similar in many respects to S. 2611 as introduced in the Senate in 2006. A mandatory Electronic Employment Verification System is included as are increased penalties and enforcement for noncompliance. The number of visas available under the H-2C visa program is increased to an initial cap of 400,000 per year and would adjust annually based upon market fluctuations. There is also an Earned Legalization program for undocumented workers.

It is unclear to many observers whether immigration reform will be passed in 2007. In the absence of a comprehensive reform bill passing, some critics believe that an employment verification/employer liability law will be passed. In addition, the trend of stepped-up federal investigations and enforcement of current immigration laws will continue as will the enactment of state and local provisions affecting immigration.

Regulatory Developments Related to Compliance

Aside from the basic legal compliance issues surrounding completion and maintenance of I-9 Employment Eligibility Verification forms, the related issue of the so-called “no-match” letter from the Social Security Administration (SSA) became a larger issue in 2002 and continues today. The no-match letter indicates to the employer that certain of its employees (referenced in the most recent Copy A of Form W-2 or the most recent Quarterly 941 sent to the IRS) have Social Security numbers (SSNs) that do not match the SSA’s database. Since many persons complete the I-9 form by using a state-issued driver’s license and Social Security card, the mismatching records may be in some instances an indication that the presenter is using a fraudulent Social Security card.

On June 14, 2006, ICE published a proposed rule in the Federal Register titled “Safe-Harbor Procedures for Employers Who Receive a No-Match Letter” (DHS Docket No. ICEB-2006-0004) seeking to amend 8 C.F.R. § 274a.1 to change the application of principles of constructive knowledge and establish safe-harbor procedures for employers who receive a no-match letter. No proposed effective date has yet been published.

The proposed regulation does not impose compulsory obligations, but rather a prescribed procedure for employers to follow to secure a safe-harbor defense to a finding of “constructive knowledge” of unauthorized employment. ICE’s proposed regulation defines constructive knowledge as “knowledge which may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know about a certain situation.” The proposed rule adds two specific examples where an employer may have constructive knowledge: (1) receiving written notice from the SSA that the combination of the name and Social Security number submitted for an employee does not match SSA records; or (2) receiving written notice from the Department of Homeland Security (DHS) that an immigration status document or employment authorization document (EAD) presented by an employee as proof of work authorization is assigned to another person or that there is no DHS record of the status document or EAD being issued to that employee.

The “safe-harbor” provisions of the proposed regulation provide a two-step process for employers to undertake and that the employer will reach safe-harbor if it checks its records and takes other action to obtain SSA verification within 14 days of receiving a no-match letter. It also provides safe-harbor to the employer who re-verifies work authorization if the discrepancy is not resolved within 63 days. If the employer does not do either, ICE will deem the employer to have “constructive knowledge” that the employee in question is not authorized to work.

The 14-day safe harbor would allow a defense to constructive knowledge if the employer attempts to resolve the discrepancy within 14 days by checking its records to determine if the discrepancy results from a clerical error. If discrepancy is due to a clerical error, the employer is to correct the error and verify with SSA that the corrected information matches SSA’s records. If the employer does not find a clerical error during its internal audit, it is required to ask the employee to confirm the accuracy of the information in the employer’s records. If the follow-up with the employee does not resolve the discrepancy, the employer should ask the employee to visit the local SSA office and present documentation necessary to resolve the discrepancy then receive the corrected information from the employee and verify the new information with the SSA.

Under the second step of the process, if within 60 days of receiving notice, the employer does not verify with SSA a name or Social Security number match, it must take reasonable steps within three days to verify work authorization such as by conducting an I-9 re-verification or completing a new I-9 form as though the employee were commencing new employment. If the employee can provide sufficient documentation (presenting documents that are not the subject of the no-match letter), the employer has reached a safe harbor–and would retain the re-verified I-9 form or the new I-9 form (together with previously completed I-9).

Perhaps the most critical issue presented is whether an employer can continue to employ the employee after he or she has presented new or different I-9 documentation. Interestingly, the proposed regulations provide that “…if the employee is verified, then even if the employee is in fact an unauthorized alien, the employer will not be considered to have constructive knowledge of that fact…” In other words, an employer may accept a new I-9 documentation with valid identity and work authorization documents and continue the employment. As a follow-up question, is the employer better served by terminating the employee’s employment for misrepresentation rather than continuing the employment after the employee has presented new I-9 documentation? Stated in a different way, can the employer defend a suit or challenge from a terminated employee by advocating that failure to terminate would have exposed the employer to immigration enforcement liability? The answer to both is “probably not” and employers should proc
eed cautiously if they seek to discipline employees where the employer does not have actual knowledge that employee is not authorized to work.

Following the publication of the proposed Safe-Harbor regulation, a 60-day comment period ensued wherein numerous agencies and advocacy groups including the Equal Employment Opportunity Commission (EEOC), the American Immigration Lawyers Association, and various industry groups weighed in. The EEOC expressed its concern that absence of clear and explicit guidance in the safe-harbor procedure together with the 60-day time limit will create circumstances in which employers will have incentives to take actions that violate Title VII of the 1964 Civil Rights Act and/or IRCA’s applicable nondiscriminatory provisions. EEOC advised that if an employer is found not to have complied with the safe-harbor procedures, it may decide to terminate employees upon receipt of no-match letters for reasons that violate Title VII’s prohibition against national origin discrimination. EEOC suggested that ICE adopt a thorough step-by-step process that allows employers to act affirmatively after receiving a no-match letter without cr
eating exposure to unwarranted liability under EEO laws.

The proposed 14-day and 60-day (actually 63) time limits in the proposed regulation seem unrealistic given that the employer must gather and review all of the documentation applicable to the discrepancy issue and then take other necessary steps to gain safe-harbor. In addition, the Social Security number was never intended to serve as an enforcement mechanism. In fact, pursuant to USCIS regulations, a Social Security number is not required for employment of aliens. It is convenient for payroll systems and submitting W-2s to SSA, but a Social Security card is merely one of the documents a new hire may present during the I-9 verification process. Furthermore, there are many reasons for a no-match letter other than the lack of employment authorization. Most importantly, as EEOC points out, the proposed regulation will promote discrimination and expose otherwise diligent employers to liability for national origin discrimination. “Safe-harbor” is a misnomer if the employer has to choose between exposure to unautho
rized employment liability and national origin discrimination liability. Most likely, amendments to the proposed regulation will be implemented before the regulation takes effect, if at all.

Until DHS or SSA provide additional guidance on the no-match issue, employers should tread carefully when developing disciplinary workplace policies for unresolved no-match letters as suggested in the proposed regulation. And should the employer decide to institute such policies, they should be carried out in non-arbitrary, consistent and nondiscriminatory manner.

States Act When Congress Has Not

As the debate in Congress over comprehensive immigration reform continues, many states and local governments have begun introducing immigration legislation. The laws range from statewide provisions to local ordinances and their subject matter includes employment eligibility verification, public benefits, education, English-only requirements, housing and driver’s licenses. In 2006 alone, numerous states introduced legislation to arguably enhance IRCA’s prohibitions on unauthorized employment. This included Arizona, Colorado, Georgia, Missouri, Mississippi, and Pennsylvania. In general, these laws purport to impose sanctions on employers who knowingly hire or continue to employ unauthorized workers. Several bills also require certain employers (typically government contractors) to participate in the federal Basic Pilot employment eligibility verification program.

Colorado has so far passed the most far-reaching immigration laws affecting immigration in 2006. House Bill 1017 (HB 1017), effective Jan. 1, 2007, requires a Colorado employer to affirm that it has examined a candidate’s legal work status, retained copies of the employee’s work documents, has not altered or falsified the new employee’s documents, and has not knowingly hired an unauthorized foreign national. Employers must keep copies of all documents provided by an employee used to prove work eligibility, and sign an attestation confirming under penalty of perjury that the employer has not knowingly hired an illegal worker. Employers found in violation can be fined up to $5,000 for a first violation, and up to $25,000 for subsequent violations.

The bill forces Colorado employers to retain an extra attestation on file for new workers verifying their work eligibility in addition to the federal I-9 form. It appears that verifying Social Security numbers of newly hired employees and participating in the DHS’ Basic Pilot may be the only acceptable ways for an employer to make a legally sufficient attestation.

Colorado House Bill 1343 (HB 1343) imposed new requirements on anyone contracting with the state of Colorado or any local government in Colorado after Aug. 9, 2006, to certify that it has verified the legal status of all new hires using the federal government’s Basic Pilot Program. The bill covers any “public contract for services” between a state agency or political subdivision and a contractor for the procurement of services.

Yet another Colorado provision, House Bill 1001 (HB 1001), effective Oct. 1, 2006, requires employers seeking to qualify for a grant, loan, or performance-based incentive from the Colorado Economic Development Commission to verify the work authorization and prove the legal status of all employees. Employers in violation of this provision would be required to repay the award and would be ineligible for an economic development incentive for five years.

On its face, the Colorado law appears to go beyond federal employer-sanctions law. Federal law permits employers to accept documents presented for I-9 purposes without independent verification as long as they reasonably appear genuine on their faces. The Colorado law does not permit this exception. Colorado employers must examine the documents submitted by each newly hired employee to make sure they are accurate and not fraudulent.

Also in 2006, the Georgia passed the Security and Immigration Compliance Act (Senate Bill 529 or SB 529). Among other things, it requires employers who contract with the state to register and participate in the Basic Pilot Program, and it removes certain income tax and tax withholding benefits from Georgia employers who hire people not authorized to work in the United States. The Georgia Labor Commissioner and the Department of Transportation are charged with promulgating rules to effectuate this law, including implementing a state work authorization program. The law will be phased in as follows: (1) July 1, 2007, for every public employer and contractor, including every subcontractor, who has 500 or more employees; (2) July 1, 2008, for every contractor, including every subcontractor, who has 100 or more employees; and (3) July 1, 2009, for every contractor, including every subcontractor, who has 99 or fewer employees.

Among the other states that enacted legislation related to employment were:

  • Pennsylvania–House Bill 2319 prohibiting the use of illegal immigrants on public projects;
  • Louisiana–Senate Bill 753 allows state agencies to investigate a contractor’s hiring practices if the employment of unauthorized immigrants is suspected; and
  • Tennessee–House Bill 111: employers can be barred from contracting with the state for one year for knowingly employing undocumented workers.

Missouri’s legislature is currently considering perhaps the most extreme of all state provisions affecting employment. Senate Bill 348 would essentially require mandatory employer participation in the Basic Pilot Program. Additionally, the current version of the bill includes provisions prohibiting employers from deducting wages paid to illegal workers as a business expense and denying business licenses to companies that hire illegal aliens.

Developments in Immigration Enforcement

The I-9 system puts employers at the forefront of preventing illegal immigration. However, the reality seems to be that most illegal workers have no problem obtaining falsified documents designed to satisfy the I-9 requirement and even avoid detection through the Basic Pilot Program. Although I-9 enforcement activities have been somewhat rare historically, with an increased ICE budget and enactment of new laws, I-9 enforcement will likely increase and become more regular.

ICE’s new interior immigration enforcement strategies include strong worksite enforcement to deter illegal employment, and detection and apprehension of individuals or organizations that engage in identity theft and counterfeiting operations. This vigorous enforcement program has resulted in an increase in worksite raids, arrests and federal charges related to the illegal employment of unauthorized workers. Enforcement and government raids have continued to escalate since 2003. In October 2003, the government completed its “Operation Rollback” investigation by arresting approximately 300 undocumented workers at 60 Wal-Mart stores across the country. It is important to note that the workers arrested were members of cleaning crews hired by outside contractors and were not direct Wal-Mart employees. Wal-Mart agreed to pay a record $11 million to settle a civil investigation by U.S. authorities into allegations it knowingly hired floor-cleaning contractors who employed illegal aliens.

During the 2006 fiscal year, ICE arrested 718 persons during worksite investigations and apprehended another 3,667 illegal workers, tripling enforcement figures from 2005. Employers pursued by ICE have generally had high incidences of mismatched employee Social Security numbers on their payrolls and have received numerous “no-match” letters from SSA requesting resolution of the discrepancies. For instance, in April 2006, ICE arrested seven managers of IFCO Systems North America on charges related to violating immigration laws and apprehended nearly 1,200 unauthorized workers. The company had received numerous “no-match” letters from the SSA in the past.

This enforcement trend appears to increase. By the end of the first quarter of the new fiscal year, ICE already reported 395 arrests and the apprehension of close to 1,550 illegal workers. In December 2006, ICE and several other federal agencies participated in “Operation Wagon Train,” a raid of seven Swift Foods facilities in six states that resulted in the apprehension of 1,282 unauthorized workers, despite the fact that Swift had been participating in the DHS’ optional electronic employment verification Basic Pilot Program. ICE investigators discovered that numerous Swift employees had engaged in identity theft and thereby passed the Basic Pilot Program verification. In April 2007, ICE arrested 13 managers and employees from “Quality Service Integrity Inc.” (QSI), a sanitation / cleaning service contractor operating at the Cargill Meat Solutions Plant in Illinois, on criminal charges of aggravated identity theft. ICE also apprehended 49 illegal aliens during that worksite enforcement operation.

Based on the sheer volume of illegal immigrants present in the United States, widespread or comprehensive enforcement of U.S. immigration laws is not currently possible.

Lessons for Employers

The last few years have brought increased changes to the nonimmigrant and immigrant categories. This is a clear trend towards a higher level of government enforcement of immigration law compliance. Though certain laws governing immigration changed, the country’s immigration policy continues to be impractical. The current laws are not likely to satisfactorily improve the traditional goals of a prudent immigration policy, including: (1) security; (2) protection of U.S. workers; and (3) the free flow of persons to assist in continued economic growth and activity (especially in light of the projected decrease in the workforce).

Regardless of whether any legislative changes or reforms occur, the recently increased budget for I-9 enforcement and comments of government leaders show that enforcement will increase and employers are thus well-advised to shore up I-9 procedures. To avoid exposure in this area, a comprehensive I-9 policy should be implemented. Employers should maintain a standard written I-9 compliance policy to be followed by all hiring managers or other personnel with hiring authority. The procedures for employment eligibility verification should be applied consistently and uniformly to every new employee. A central company policy will help to assure I-9 compliance is handled uniformly and correctly throughout various locations and among different hiring personnel. Even if errors are found by an ICE audit, a written company policy can be used as proof in a good faith defense when an employer is faced with fines and sanctions.

An employer should designate one person who will have ultimate authority over the employer’s immigration compliance program. Ideally, an employer should conduct regular audits of its I-9 compliance (at least annually) to be prepared for a possible government investigation. By implementing clear policies and providing management training, the employer will minimize its liability for immigration violations. If faced with a government investigation, the employer should contact an experienced immigration attorney to provide guidance in auditing its records.


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