Have Government Investigators Made a Reservation at Your Property? – Hospitality Employers Targeted for Immigration Compliance Reviews

Hospitality employers have been clearly identified as a target of increasing government compliance enforcement. The Department of Homeland Security (DHS) has increased I-9 audits and confirmed that its five-year plan includes creating a culture of employer compliance via “aggressive criminal and civil enforcement.” The American Hotel & Lodging Association (AH&LA) recently reported that the U.S. Department of Labor’s (DOL) Wage and Hour Division (WHD) is planning an initiative targeting every hotel, motel and resort in the United States. The new initiative seems to have renewed zeal and a significantly higher level of commitment than past initiatives.

Discussed below are a few steps employers should consider taking over the next few months to prepare for immigration-related compliance issues and some of the contexts in which they might arise.

I-9 Compliance.  DHS’ Immigration and Customs Enforcement (ICE) department launched an I-9 audit initiative in April 2009 and over 2,000 audits were initiated over the succeeding 12 months. ICE has committed to aggressive enforcement, including hiring more auditors, in its 2010-2014 Strategic Plan.  How can employers prepare?

• Review your immigration compliance policies, or create one. This includes not only I-9s but also the handling of Social Security No-Match letters on which employers should follow-up with affected employees.
• Train employees responsible for I-9 completion. Also, employers should consider using electronic I-9 software to improve I-9 completion accuracy.
• Conduct a self-audit of I-9 records. Make sure you have I-9s for all employees, have retained I-9s for the proper period and are properly completing I-9s.
• Investigate complaints regarding improper procedures relating to immigration compliance. It is believed that many employers were selected for I-9 audits based upon employee complaints to government agencies.

E-Verify. E-Verify is an Internet-based system operated by the U.S. Immigration and Citizenship Services that allows employers to verify the employment eligibility of employees. E-Verify checks employee-provided I-9 information against records contained in Department of Homeland Security (DHS) and Social Security Administration (SSA) databases. Pursuant to the federal enabling legislation, E-Verify is voluntary for employers. However, several states have passed laws requiring some employers to use E-Verify and certain federal contractors are required to use E-Verify. What should employers do to ensure compliance?

• Confirm whether your state requires you to use E-Verify. Arizona, Mississippi and South Carolina have the broadest E-Verify requirements. As of July 1, 2010, Utah requires businesses with more than 15 employees to use E-Verify (or another status verification system, such as the Social Security Number Verification Service) to verify newly-hired employees. (Arizona’s law, which requires all employers in the state to use E-Verify, was challenged in a lawsuit and the U.S. Supreme Court agreed in late June to review the law’s constitutionality.) Other states (e.g., Colorado, Georgia) require certain state contractors to use E-Verify as well.
• Certain federal contractors are required to use E-Verify. The contract will carry the E-Verify requirement, so be sure to review any federal (or state) government contract to see if it requires the contractor to use E-Verify.
• Use the system properly. If you enroll, whether required or voluntarily, be sure to use the system properly. E-Verify users are being monitored for compliance and information may be shared with other government entities. In addition, Illinois has passed a law creating a possible cause of action for employees harmed by an employer’s improper use of E-Verify.

FLSA and H-2B workers. The H-2B nonimmigrant program permits U.S. employers to hire temporary foreign workers to perform nonagricultural labor/services to meet short-term seasonal or intermittent needs. The H-2B program is commonly used by hotels and hospitality employers in resort destinations to perform a variety of services (wait staff, housekeeping, etc.). As the workers are commonly sourced from distant locations (e.g., Jamaica or the Philippines), it has become commonplace for labor supply and recruiting companies to assist in locating qualified workers. Within the past several years, H-2B workers have brought actions under the Fair Labor Standards Act (FLSA) seeking return of travel and visa expenses as costs “primarily for the benefit of the employer.” Reports indicate that the DOL is specifically targeting H-2B employers in the hospitality industry – plus, indications are that the DOL will review H-2B employers for compliance with all applicable labor laws and review all employers at a particular property (e.g., if multiple employers operate at the same property). What can an employer do to limit its FLSA and other liability related to H-2B workers?

• For large management companies, identify properties that use H-2B workers and develop a single H-2B policy that considers all financial dealings with the H-2B worker, such as employee expenses incurred to relocate to the work location and deductions for housing provided to the H-2B worker.
• Review agreements with all staffing and recruiting companies and whether they charged any fees to the H-2B worker.
• Just as in other contexts, remember that even where a staffing company purportedly acts as the named “employer,” the ultimate user of the H-2B worker’s services might be charged with employer responsibilities and liability.

Get Ready! Numerous reports confirm the DHS’ I-9 and E-Verify enforcement initiatives and recent DOL statements showing a focus on hospitality employers. Many predict that audits and other enforcement activities will begin in earnest after October 1, the start of the government’s fiscal year. Employers still have time to review records, policies and procedures to prepare and limit potential liability.