On Jul 01 2009 by William A. Stock

Employer Enforcement and Immigration Reform: Is the Future Now?

Immigration reform is back on the Congressional agenda, and employers are facing significant new enforcement efforts led by ICE, the Immigration and Customs Enforcement bureau of the Department of Homeland Security.

Attorneys counseling employers need to understand the relationship between these two seemingly unrelated initiatives, as well as the preview they offer of life after immigration reform, should a significant overhaul of the Immigration and Nationality Act pass through Congress by the end of 2009.

Immigration reform, and in particular a path to legal status for the estimated 11 to 12 million residents currently in the US without lawful status, is a critical issue in several states vital to the Democrat’s control of Congress and the White House.  Tied together with the promise of immigration reform, however, are legislative and administrative efforts to increase pressure on employers to comply with the existing requirement to verify the employment eligibility of their workforce.

These two efforts are developing hand in hand because of a broad consensus in Washington that a major obstacle to passing a comprehensive immigration reform package is the perception that the immigration system is “out of control,” with millions of individuals able to come to the United States and reside here without status.  The perception is that the Administration must first show its commitment to enforcement of existing laws if it wants Congress to provide a path to legal status for those who have made their lives here.

Employers must be aware that the broad consensus in Washington continues to be that the ability to work in the United States is the magnet that draws immigrants to the United States, and that employers must be required to eliminate that magnet for individuals who enter or remain in the United States without status.  Since 1986, employers have been “deputized” as immigration enforcement agents, being required to verify the identity and employment eligibility of all new hires – whether US citizens or immigrants – by having new hires complete Form I-9 no later than the first day of employment, and by requiring new hires to show documentation of the new hire’s identity and employment authorization to the employer no later than the third day of employment.

The existing requirement that employers verify the identity and employment eligibility of their new hires is undermined by the broad availability of counterfeit identity documents. The current system also requires employers to accept a broad variety of state- and federally-issued identity documents because of resistance to introduction of a national identification system, so that many employers cannot recognize a document that is counterfeit. There also was relatively little enforcement of these requirements for over a decade prior to 2005, and employers generally only faced fines if  they violated the requirements.

One of the pillars of the comprehensive approach to immigration reform under discussion in Washington is  improvement and expansion of systems to allow better verification by employers of the identity and employment eligibility of their employees.  Currently, employers must only determine that documents presented by employees “reasonably appear” to be genuine and to belong to the employee.  In 1996, Congress authorized pilot programs to test electronic systems that would allow employers to check the validity of documents against government databases.  The current version of this software, known as E-Verify, checks the name, date of birth and social security number  information of new employees, as listed on the employee’s documentation, against the Social Security Administration’s records, as well as against a Department of Homeland Security database containing immigration and passport records.

There is a broad consensus in Congress that a key part to reducing the “jobs magnet” is to mandate all employers to use E-Verify.  The system has been broadly available for more than two years and is mandatory in three states, but up to now fewer than 150,000 employers have signed up to participate (less than one percent of all employers).  Both President Obama and the Senate (in approving a rider last week on the Department of Homeland Security spending bill) are expanding mandatory use of E-Verify to federal government contractors, a rule first proposed by the Bush  administration but delayed by President Obama when he took office.  In the absence of any strong advocate against a mandatory verification system, employers can expect that any version of a comprehensive immigration reform will have requirement that employers use a government database to check the “employment license” of every US citizen and other worker that they hire.

Another significant pillar of the comprehensive approach to immigration reform is increasing enforcement of the  employment eligibility verification requirement on employers.  This effort has begun already, as the Obama  administration wishes to demonstrate its commitment to enforcement against employers who violate existing requirements.  Earlier this month, U.S. Immigration and Customs Enforcement (ICE) announced a nationwide  initiative to audit employers’ Form I-9 employment eligibility verification records.  The announcement was followed by the issuance of Notices of Inspection to 652 employers across the country.  For comparison, only 503 Notices of Inspection were issued in all of fiscal year 2008.

This new strategy is confirmation of ICE’s intentions to pursue worksite enforcement actions against employers without the divisive raids used in 2007 and 2008.  While the raids were announced as efforts to ensure employer compliance, a review of arrest statistics shows that the raid strategy produced thousands of administrative arrests and deportation proceedings against workers, but only dozens of criminal arrests of employers.  Even the relative increase in criminal immigration arrests presented by ICE’s annual statistics (more than 500 criminal arrests in 2008) masks the fact that many of those arrests were of workers.  Those workers were charged with identity theft related misdemeanors, and even with some felonies until the Supreme Court held that aggravated identity theft charges could only be based on using another person’s social security number for employment where the person knew the number belonged to another person.

This nationwide Notice of Inspection effort is a first step in ICE’s long-term strategy to address and deter illegal  employment.  With a Notice of Inspection, ICE alerts a business that it plans to inspect their hiring records to see whether employees have proper employee documentation.  ICE can review information against Social Security and Homeland Security databases, and will inform employers if any of their employees are unauthorized and must be terminated.  Alternatively, ICE can identify those unlawful workers who may be able to provide information or even testimony about an employer’s hiring practices in order to build a case against the employer for knowingly hiring undocumented workers.

From early experience, it appears that employers will have to fear significant workforce disruptions as a result of  increased enforcement.  One of the early results of ICE’s enforcement activity was American Apparel Inc.’s public disclosure that it had to terminate 1,600 of its 5,600 factory employees because ICE informed them that their employment eligibility documentation did not match government databases.  American Apparel’s experience was  similar to another prominent raided employer: Swift & Company, a major meat processor, participated in an electronic verification program but still lost nearly 10% of its workforce when the government raided it.

Because enforcement of employment eligibility verification remains a high priority for ICE, and because employers can anticipate further mandatory verification steps from immigration reform bills being introduced into Congress this fall, attorneys should be alerting them to these issues and helping them bring their hiring practices into compliance.  Auditing company’s hiring practices and training their human resources professionals, as well as counseling them through the decision whether to begin participating in the E-Verify system, will give them a competitive advantage in the current enforcement climate.