On Apr 01 2009

Immigration Compliance in the New Age of Worksite Enforcement

For the last three years, Immigration and Customs Enforcement (ICE), a component of the Department of Homeland Security (DHS), has conducted a series of high-profile enforcement actions against employers, meant to emphasize their commitment to enforcement of the immigration laws.

This enforcement effort is in response to the failure of Congress to pass a comprehensive immigration reform bill that would have provided status to the approximately 12 million undocumented immigrants living in the United States. This enforcement effort (like the failure to pass immigration reform) results from the public’s perception that federal authorities have not done enough to enforce existing immigration laws.

The Obama Administration has pledged to continue vigorous criminal enforcement against employers. While the Bush Administration conducted a series of high-profile raids that resulted in significant criminal charges against employers as well as the apprehension of undocumented workers, Janet Napolitano, Obama’s Secretary of Homeland Security, has indicated a shift away from apprehension of the undocumented workers in large-scale raids to a clear focus on employers. The large-scale raids under the Bush Administration enraged the Latino community and religious leaders, immigrant advocates and civil liberties groups important to the Democratic base and they have stepped up pressure on Obama to stop them.1 In response, Janet Napolitano has charted a middle course, ordering a review of which immigrants will be targeted for arrest and emphasizing that she intends to focus even more on prosecuting criminal cases of wrong- doing by companies.2 Such action is consistent with her testimony during her confirmation hearing in which she stated that she expects “to increase the focus on ensuring that employers of unlawful workers are prosecuted for their violations.” Moreover, she pledged to subject employer violators to “appropriate criminal punishment” and to encourage employers to work with federal immigration agents “to establish sound compliance programs that prevent unlawful hiring.”

The federal government has also called for employers to use what they term “best practices” to enhance compliance. Through federal enforcement actions against companies using contracted labor, ICE has in fact enlisted corporations to reduce employment opportunities for unlawful workers. E-Verify, the electronic employment eligibility verification system, is also on the forefront of federal efforts to enhance compliance. The federal government has made every effort to expand the use of the E-Verify program which, to date, has not received widespread acceptance by employers. As described below, federal contractors will soon be required to use E-Verify and similar laws requiring E-Verify or conditioning certain benefits on the use of E-Verify are expected in the future. While Janet Napolitano has raised some concerns with regard to the E-Verify program as well as the underlying databases, every indication is that the Obama Administration will continue to push for widespread use of E-Verify, while at the same time pushing for improvements to the program.

The efforts have not been limited to the federal level. As the federal government stalled in its efforts to pass comprehensive immigration reform, states have stepped in to fill the void. According to the National Conference of State Legislatures, as of November 16, 2007, no fewer than 1562 immigration related bills have been introduced in various states and approximately 244 of those bills have become law.3 State legislatures have introduced almost three times more bills in 2007 than in 2006, and many of those bills target employers who do not properly verify the employment eligibility of their workforce. The volume of state immigration-related bills has continued to increase throughout 2008. As of June 30, 2008, 1404 immigration-related bills and resolutions were considered and 182 of these bills have become law.4 Many of these state laws
require employers or state contractors to use E-Verify.

This article looks at these trends and provides practical guidelines for employer compliance.

I. Increased Federal Criminal Enforcement Against Employers

Worksite Enforcement of I-9 Obligations

Under IRCA, all employers are required to verify the identity and work authorization of all individuals hired after November 6, 1986. In order to comply, employers must review acceptable I-9 identity and employment eligibility documents for each employee and complete Form I-9.

The Government’s traditional tools of enforcing the restrictions on employment of unauthorized workers were deportation of the workers and civil fines against employers who have accepted documentation that does not verify the employment eligibility of its workforce, or who have failed to request such documentation at all.5 The civil penalties administered by the former Immigration and Naturalization Service (INS) were relatively small, however. A failure to complete correctly the Form I-9 on which a new hire’s employment eligibility and identity are verified could bring a fine of $1000 per violation. If the employer knowingly employed an unauthorized worker (including by failing to complete an I-9 for a worker who was not authorized to work), the fine rose to $3000 per violation. The maximum fine possible per violation was $10,000, if the employer was a repeat offender. INS could also request that the U.S. Attorney bring misdemeanor criminal charges against any employer who engaged in a “pattern or practice” of hiring illegal workers.6 During the 1990’s, there was little incentive for INS to conduct investigations of employers. US Attorneys were reluctant to bring criminal charges in the face of heavy caseloads of drug and firearms-related crimes. When INS brought civil fine proceedings, employers could often defend themselves against charges of illegally employing foreign workers by pointing to properly- completed I-9 forms that were based on genuine-looking, but fraudulent, documents, so that the employer had satisfied its obligation. The fine levels were so low as to provide little deterrent effect, and INS focused its relatively limited enforcement resources on identifying and removing foreign nationals convicted of crimes in the United States, rather than employers of illegal workers. In those few instances where INS did conduct effective enforcement actions, public outcry against their tactics (such as arresting most of a restaurant’s cooking staff in the middle of lunch) let to a backlash against worksite enforcement, and it dropped to the bottom of the agency’s domestic enforcement priorities.

Since the government perceived the tools previously used by INS to be ineffective, under its new enforcement strategy, ICE now uses the criminal tools at its disposal to charge employers with a variety of felonies related to immigration compliance. In many cases, employers can be charged with knowingly making false statements on an immigration-related form, the Form I-9.7 ICE uses circumstantial evidence (such as Social Security “no match” letters, which inform an employer that the Social Security Number provided by the employee does not match the Social Security Administration’s records) to prove “willful blindness” on the part of the employer to the employee’s unlawful status. In other cases, ICE has added a charge of “alien harboring” – a felony offense prohibiting anyone from “aiding or abetting” an unlawful alien to remain in the United States, with employing the person being charged as “aiding” them to remain in the United States.8 Managers at a number of companies have now been charged under that provision, and where employers have provided transportation to and from work for illegal workers, they have also been charged under the “alien harboring” provision that prohibits transportation of illegal workers within the United States.9

Beyond the criminal provisions in the Immigration and Nationality Act, the government has been using other charges that can be made out in a situation where the employer has relied on false documentation, such as criminal misuse of a Social Security Number;10 making false statements to government officials;11 and identity theft.12 The government has also pursued fraud, money laundering and tax evasion charges. US Attorneys will also use forfeiture provisions available under a variety of statues to try and seize business assets of the company and personal assets of the owners, on the theory that the illegal employment of workers resulted in the employer’s profits from a “criminal enterprise.”13

The penalties for many of these felonies are severe. For example, the maximum penalty for alien harboring is five years for each alien harbored, unless the crime is done for commercial advantage or financial gain, in which case the maximum penalty is ten years. Money laundering is a felony with a potential 20 year prison sentence.

The difference in approach is remarkable. Fiscal year 2002 worksite enforcement actions resulted in only 25 criminal arrests (including arrests of corporate officers, managers, human resource employees and contractors) and 485 administrative arrests of illegal alien workers. In 2007, the numbers grew to 863 criminal arrests and 4,900 administrative arrests. In 2007, ICE also collected over $30 million in criminal fines, restitutions and civil judgments in worksite enforcement cases.

The pace has only increased. In 2008, ICE made 5,184 administrative arrests and 1,103 criminal arrests tied to worksite enforcement. Of the individuals criminally arrested, 135 were owners, managers, supervisors, or human resource employees.14 As referenced above, the Obama Administration has stated that it is committed to increasing the focus on employers as opposed to employees and, at the same time, ensuring that employers of unauthorized workers are criminally prosecuted. Thus, these criminal prosecutions are expected to continue under the new Administration that has vowed to aggressively pursue employers.

ICE is also using new criminal enforcement tools heretofore unheard of in worksite enforcement. ICE is actively using wiretaps, undercover investigations, and confidential informants to investigate and pursue possible worksite enforcement violations. ICE has also exchanged information and coordinated with other federal agencies including the Internal Revenue Service (IRS), the Department of Labor (DOL) and the Social Security Administration (SSA). In addition, ICE has coordinated with state and local agencies including, for example, state and local police as well as sheriff departments. ICE has instituted hot-line numbers in which illegal workers can be reported.

Reviewing the many criminal enforcement actions brought in the last three years, one can identify a number of factors that suggest a company may be at risk:

• I-9 Forms are completed and I-9 documentation is reviewed without attention to detail
• Management is reluctant to question the authenticity of any I-9 documentation for inability to obtain needed workers
• Management allows employees to present new documentation inconsistent with original I-9 documentation without further inquiry
• The company has received Social Security no-match letters and does not question employees regarding discrepancies or otherwise investigate
• Management does not address rumors or complaints that there are unauthorized employees or unauthorized contractors,
• The pool of new hires comes mainly from the existing workforce including their friends and relatives
• Hiring decisions are not subject to review and made by those that may be sympathetic to those desperately seeking employment or willing to hire for personal gain
• The company ignores communications from agencies such as worker’s compensation or other benefit issuing agencies that advise the employer either that the submitted employee information is not valid or that a rightful holder of the social security card is being denied benefits because one of their employees is using the rightful holder’s information.

As detailed below, many of these risk factors can be addressed with the implementation of clear I-9 policies and practices.

Worksite Enforcement of H-1B Obligations

Not only has ICE aggressively pursued worksite enforcement actions against employers with unauthorized workers, but the Department of Labor (“DOL”) has been actively auditing H-1B employers to ensure that they are in compliance with all H-1B requirements, including, for example, requirements relating to LCA posting, payment of required wages, public examination files and any required non-displacement inquiries. H-1B employers should be attentive to their wage and hour obligations, ensuring that terminations are effective for purposes of avoiding back-pay claims, and comply with all wage, benefit, notice and non-benching requirements. Failures in these areas can result in significant back-pay awards, civil fines, and debarment.

Employers can expect to see increased enforcement in this area by an energized and invigorated DOL under the Obama Administration. Indeed, it was recently reported that 250 new investigators are being hired by the DOL—additional hiring that will increase the staff in the division by more than a third.15 President Obama’s new Labor Secretary Hilda Solis, has asserted that she will aggressively pursue violations stating “there is a new sheriff in town.”16

Just as the government has turned to criminal enforcement of I-9 requirements, the government has begun to pursue criminal enforcement actions against H-1B employers. As just one example, on January 22, 2009, the federal government filed a ten count criminal indictment against Vision Systems Group, Inc., an H-1B consulting company, in the United States District Court for the Southern District of Iowa.17 The indictment includes one count of conspiracy, eight counts of mail fraud, and one count of ‘Notice of Forfeiture’ in the amount of $7.4 million. In the indictment, the government alleged that Vision Systems submitted false statements and documents in support of their visa petitions which were mailed or wired to state and federal agencies. Allegations of such false statements include, for example: submissions of LCAs with false representations as to work location, submission of applications which omitted that the employee would be working at a third company as consultant, submission of LCAs listing a prevailing wage for Iowa when in fact the employee worked in another state, submission of documents falsely representing the residential address of employees, and submission of quarterly reports claiming to employ more workers in Iowa than were actually employed.

Following this indictment, on February 11, 2009, as part of their extensive investigation into suspected H-1B visa fraud, mail fraud and conspiracy by Vision Systems, ICE agents arrested 11 individuals in seven states. Among the crimes charged against these individuals involved with Vision Systems were conspiracy, mail fraud, wire fraud and making false statements in an immigration matter.18

II. Administrative Measures — ICE Best Practices

While ramping up its criminal enforcement efforts, ICE has also encouraged employers to help it prevent unlawful employment by implementing what it refers to as “best practices.”19 In these “best practices,” ICE is encouraging employers to accept obligations beyond those required by the law, and that assist ICE in limiting employment opportunities to those who have lawful status in the United States. For example, under ICE’s best hiring practices, employers should voluntarily follow the protocol for dealing with Social Security Administration “no-match” letters set forth in a regulation that ICE has been enjoined from enforcing. According to these “best-practices” the employer should also develop an I-9 policy with the following features: a prohibition on discriminatory implementation of the policy; use of the USCIS’s “E-Verify” system for new hires (discussed below) to verify that documents presented were issued to a person with that name; provision for semi-annual I-9 audits by an external firm or internal auditor; a self-reporting program to provide ICE with information any time the employer makes a mistake in the I-9 process; and a “tip line” for employees with information about possible violations, with a protocol for responding for such tips.

ICE also recommends that employers establish an internal training program, with annual updates, on how to manage completion of Form I-9 and how to detect fraudulent use of documents in the I-9 process; permit the I-9 and any E-Verify process to be conducted only by individuals who have received training; and include a review of the completed I-9 and documents by a second person as part of each employee’s verification to minimize the potential for a single individual to subvert the process.

Most effective I-9 compliance policies will track ICE Best Practices to the extent feasible. Questions have been raised, however, as to whether the suggested “best practices” of enrolling in E-Verify and self-reporting of errors should be part of any current policies. In this era of increased criminal enforcement, query whether the suggested policy to notify ICE of any I-9 errors actually provides employer protection. In addition, many employers at this point are unwilling to sign up for E-Verify unless required under state or federal law for reasons discussed more fully below. A summary of key items to be included in immigration policies, modeled in part on these best practices is set forth below.

III. Private Measures to Increase Compliance — the “Wal-Mart Contract”

Through enforcement actions against companies using contracted labor, ICE has in effect enlisted large corporations in its efforts to reduce employment opportunities for unlawful workers. In 2001, ICE settled a criminal action against Wal-Mart. That criminal action asserted Wal-Mart had a practice of using contractors in an attempt to isolate itself from liability for unlawful employment of unauthorized immigrants. Normally, employers are allowed to rely upon the employment eligibility verification carried out by their contractors, and do not need to worry about the immigration status of the contracted employees. This protection, however, does not apply if the user of the contract services has knowledge that employees are actually unauthorized for employment. The Government asserted that Wal-Mart managers had knowledge of the unlawful status of many of the cleaning crews performing overnight cleaning services for contractors in Wal-Mart stores. While denying the government’s allegations, Wal-Mart agreed to a multi-million dollar settlement.20

As part of the settlement, Wal-Mart agreed that it would assume legal obligations under the settlement agreement not required by the Immigration and Nationality Act. In particular, Wal-Mart agreed to oversee the I-9 compliance of all of its contractors, as well as of its contractors’ subcontractors. ICE has actively encouraged businesses to follow Wal-Mart’s lead and impose contractual obligations on themselves and their contractors that go beyond the statute. Many small businesses doing business with prominent corporations have now received the “Wal-Mart Contract,” in which the contractor must agree to comply and utilize ICE’s “best hiring practices” in its own hiring, as well as agreeing to onerous employee eligibility verification requirements overseeing its own subcontractors. These requirements will be a further cost of doing business on these contractors, much as the onerous Sarbanes-Oxley accounting and financial control requirements have imposed costs on publicly-traded companies. These costs will include providing training to employees, hiring auditors, and possibly losing the services of US citizen subcontractors and employees until they can verify their identity with approved government documents.

The “Wal-Mart Contract” provisions are particularly onerous on companies using subcontractors to conduct operations in remote locations. These employers now need to develop procedures under which they can review the employment eligibility verification documentation of the employees of their subcontractors, even though they may never physically meet those subcontractors in a normal course of doing business.

IV. Federal Measures to Increase Contractor’s Compliance

On June 6, 2008, President Bush issued an Executive Order amending Executive Order 12989 requiring contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility of all persons hired during the contract term and all persons performing work within the United States on the federal contract. DHS Secretary Michael Chertoff subsequently designated E-Verify as the system of choice

Final regulations, required for implementation of the Executive Order, were originally scheduled to be effective January 15. There have been two extensions of the effective date and the rule will now be in effect no earlier than May 21, 2009. The rule was initially delayed so that briefing could take place in a lawsuit filed in federal court in Maryland requesting that the rule be declared invalid and that the court enjoin it from going into effect. In the latest delay, the litigants in that suit, including the Chamber and various business groups, have agreed with the Government to extend the applicability date to May 21, 2009 and ask the court to stay the proceedings to allow President Barack Obama’s Administration an opportunity to review the rule.

The final rule, at least at the present without any changes from the Obama administration, requires contractors to verify work authorization through E-Verify of (1) all new hires who perform duties within the United States and (2) all persons assigned by the contractor to perform work within the United States on the federal contract. The final rule applies only to solicitations issued and contracts awarded after the effective date. In addition, the final rule requires that the contract contain language specifically requiring participation in E-Verify. Thus, the E-Verify requirement only applies to contracts awarded after May 21, 2009 that contain the FAR E-Verify clause. Note, however, that certain existing indefinite-delivery/indefinite-quantity contracts may be included if they are modified after the effective date.

The final rule requires the insertion of the E-Verify clause for prime federal contracts with a period of performance longer than 120 days and a value above the simplified acquisition threshold ($100,000). Subcontracts are also covered where such contracts flow from a prime contract that includes the E-Verify clause if those subcontracts are for services or for construction with a value over $3,000. The final rule exempts:

• Contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services;
• Contracts of less than the simplified acquisition threshold ($100,000);
• Contracts less than 120 days; and
• Contracts where all work is performed outside the United States.

V. State Measures to Increase Employers’ Immigration Compliance

Among many new state-level laws being enacted are bills which seek to address employment of illegal aliens by requiring employers to use E-Verify. A growing number of states have recently enacted legislation or issued executive orders requiring the use of E-Verify by employers doing business in those states. At this point, Colorado, Georgia, Minnesota, Mississippi, Missouri, Oklahoma, Rhode Island, South Carolina, and Utah require E-Verify for employers who have public contracts with state agencies or political subdivisions. Virtually all of these states also require public employers to use E-Verify. The Arizona and Mississippi statutes, which became effective, respectively, in January and July of 2008, are the most far-reaching of current legislation as they require all employers within the state to use E-Verify.

In addition to the many states that have already passed legislation or executive orders requiring E-Verify, dozens of states have legislation pending that would mandate the use of E-Verify. While the vast majority of states are currently introducing legislation that requires the use of E-Verify, because of concerns regarding inaccuracies in both the SSA and DHS databases, Illinois enacted legislation prohibiting employers from enrolling in E-Verify until such problems are resolved.

The status of such state statutes have been subject to litigation on preemption grounds. Challengers argue that such laws are inconsistent with the federal scheme of legislation that governs immigration. The focus has been on the Immigration Reform and Control Act of 1986 (IRCA), which was the first federal law prohibiting the employment of unauthorized workers.21 IRCA provides that “the provisions of this section preempt any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ, or recruit or refer for a fee for employment, unauthorized aliens.” IRCA requires employers to complete Form I-9, Employment Eligibility Verification Form, for employees hired after November 6, 1986. Once this form has been completed, including a review by the employer of acceptable documentation of identity and employment eligibility, and maintained for required periods, the employer’s responsibility to verify the employee’s authorized work status under IRCA is complete.

Much of the current litigation against the state statutes focuses on whether the legislation is an impermissible interference with federal law or whether the legislation qualifies as a “licensing or similar law” which is not preempted by IRCA. Opponents also argue that many of the state statutes which require E-Verify impermissibly make a program that is clearly voluntary under federal law into a mandatory program.

The Arizona and Oklahoma statutes, for example, are currently being challenged in federal court. Opponents argue that the statutes are preempted by federal law and that they violate the constitutional rights of employees and employers. On September 17, 2008, the Ninth Circuit affirmed a district court decision upholding the Arizona statute; although the plaintiffs filed a petition for panel rehearing and rehearing en banc, the petitions were denied by the Court on March 9, 2009. On June 4, 2008, the United States Court for the Western District of Oklahoma entered a preliminary injunction which postponed enforcement of the employment-related portions of Oklahoma’s law including all E-Verify requirements; Oklahoma’s appeal of the preliminary injunction remains pending with the Tenth Circuit.

The Department of Homeland Security (DHS) has also brought an action to enjoin enforcement of the Illinois law prohibiting the use of E-Verify. On March 11, 2009, The United States District Court for the Central District of Illinois declared the Illinois law invalid under the Supremacy Clause.22 As thus preempted by federal law, the Court permanently enjoined Illinois from enforcing the law. As of this time, it is not clear if the decision will be appealed.

VI. E-Verify Enrollment – Advantages and Disadvantages

In order to use E-Verify, an employer must register online with DHS and accept the electronic Memorandum of Understanding (MOU), an agreement between the employer, the SSA and DHS that details the responsibilities of each with regard to E-Verify.23 By entering into the MOU, the employer agrees, among other things, to process all employees hired after enrollment through E-Verify.24 Under the federal contractor regulation, federal contractors will generally be required to screen new hires as well as existing employees who are assigned to the contract through E-Verify. Employers may also have another company or “designated agent” complete the E-Verify process for the company’s employees. There are a number of such companies that advertise this service for employers.

An employer (or designated agent) must screen the employee through E-Verify after an offer of employment is accepted and after the Form I-9 is completed. E-Verify must be completed no later than three business days after the employee’s actual start date unless (1) there is no social security number available for the employee, in which case the employer must wait until that number is available or (2) the employer is a federal contractor required to run existing employees assigned to a contract through E-Verify. Note that while the E-Verify screening can occur before the start date, an Employer needs to be cautious so as to avoid discrimination. If an employer screens prior to the start date, especially where there is no written evidence of an offer, there is a risk of allegation that an employer unlawfully used E-Verify to pre-screen applicants.

Employers should carefully consider whether to participate in E-Verify. Indeed, as of March 4, 2009, the USCIS reported that only about 112,000 employers nationwide had enrolled in E-Verify.25 Even where there are state statutes mandating E-Verify, there has been reluctance by employers to enroll. In Arizona, for example, although the statute requiring E-Verify was effective January 1 and widely publicized, Arizona newspapers reported that, as of May 27, 2008, only about 20,000 of Arizona’s 150,000 employers had enrolled.

E-Verify relies on government databases with high error rates. An independent evaluation of the program commissioned by DHS found that the Basic Pilot/E-Verify database “is still not sufficiently up to date” to meet the requirements for “accurate verification.”26 Even though there have been some improvements, there are still significant error rates. In May 2008, USCIS implemented a system-based and data-source enhancement to address the high number of mismatches and faulty data regarding foreign born US citizens. This system reduced those mismatches only by about 39% resulting in continued mismatches for foreign born US citizens that require follow up through USCIS or the Social Security Administration. As further evidence of the high error rate of the databases, Intel, one of the largest U.S. employers, found that 12% of its 1,360 workers hired between January and July 2008 were initially rejected. Intel challenged the 143 rejections and all of the workers were found to be legal U.S. residents, the company said in a letter to the federal government.27 Indeed, in her January 30, 2009 Immigration and Border Security Action Directive, U.S. Department of Homeland Security (DHS) Secretary Janet Napolitano directed a review of the E-Verify system noting “E-Verify has encountered criticism both for false negatives (persons who are authorized to work but who nonetheless receive a tentative non-confirmation from the system) and for false positives (unauthorized aliens who receive a confirmation because they have borrowed or stolen the identity of an authorized worker).” 28

The Department of Homeland Security’s own Privacy and Integrity Advisory Committee, in a letter to DHS Secretary Janet Napolitano, noted significant concerns with regard to privacy and fraud and recommended that the program not be expanded until these concerns are addressed:

“E-Verify. The Committee recommends that DHS eliminate or significantly reduce fraud vulnerabilities in the current E-Verify system. At a minimum, such reductions should occur before further expanding the mandated use of the system. The Committee has made recommendations on improving employer authentication in its Report No. 2008-2. The lack of procedures for authenticating the eligibility of employers to use the system creates a significant opportunity for fraud, which could result in legal residents and citizens becoming victims of identity theft.”29

Nor does the use of E-Verify provide full protection from claims of discrimination. Although the MOU provides that “no person or entity participating in E-Verify is civilly or criminally liable under any law for any action taken in good faith on information provided through the confirmation system,” this provision does not fully insulate an employer against claims and charges of discrimination. In fact, as part of its participation in the program, an employer must post an anti-discrimination notice issued by the Office of Special Counsel for Immigration – Related Unfair Employment Practices, Department of Justice (DOJ) in an area visible to prospective employees. In addition, the MOU language does not fully insulate an employer as such claims are often heavily based upon facts. Thus, an employer may be faced with fighting a discrimination charge or claim and incur substantial attorneys fees in defending itself to show that its actions were based in good faith upon E-Verify rather than upon some other discriminatory basis alleged by the complainant. The likelihood of such actions also increases when one considers the database errors referenced above.

In addition, the provisions in the MOUs which allow for the federal government and designees to conduct site visits, have full access to employment records, and to interview employees cause concern among many. By entering into such an MOU, the employer is waiving its Fourth Amendment rights and allowing the government free access to employment records.

Although an employer who verifies work authorization under E-Verify is presumed to have not knowingly hired an unauthorized alien, participation in E-Verify does not provide a safe harbor from worksite enforcement. An example of protection afforded to an employer by participation in E-Verify is the December 12, 2006 worksite enforcement action by the United States Immigration and Customs Enforcement (ICE) at Swift meat packing plants around the country. Although ICE raided the company and found over a thousand illegal workers, because E-Verify had actually confirmed that the employees were authorized, Swift and its management did not face the now common criminal charges and the government instead proceeded against the individual employees on criminal grounds such as identity theft and reentry after deportation. New photo tool enhancements to E-Verify have been instituted in an effort to deal with the situation that occurred at Swift. It is unclear, however, whether employers will be able to effectively use this tool and whether they will continue to be afforded the same treatment and protection from criminal action that those at Swift received.

It is also important to emphasize that to the extent that E-Verify provides any greater protection than that afforded by an employer following the standard I-9 process, such protection only extends to those employees queried under the E-Verify system. E-Verify currently only allows employers to verify the employment of hires following enrollment and it does not allow for verification of contractors or reverification of current employees. The only exception will be under the Federal Contractor rule described above. Therefore, E-Verify will not provide any protection with regard to past hires (except for employers assigned to qualify federal contracts) or contractors.30 All employers are, therefore, well advised to follow consistent I-9 procedures and to audit I-9 records for all current employees for compliance with IRCA. Such advice also applies to those who choose to sign up under E-Verify especially as those employers, through the MOU, agree to site visits, employee interviews and the production of employment documentation.

Lastly, in considering whether to enroll, employers must review the ever changing landscape of state and federal legislation and executive orders regarding E-Verify. This includes the particular legislation that applies to its worksites, challenges to such legislation and the impact of either participation or non-participation in E-Verify under that legislation. For example, even though Arizona currently has legislation mandating the use of E-Verify, many employers are currently resisting enrollment in E-Verify not only because of the pending litigation but because there is no penalty under the statute for failure to enroll. Rather than providing a penalty for non-enrollment, the statute encourages enrollment by providing a rebuttable presumption that the employer did not intentionally or knowingly employ an unauthorized worker should the employer participate in E-Verify. Employers are also relying on the fact that the statute also preserves the good faith defense to unauthorized employment if the employer complies with its I-9 requirements under IRCA.

VII. Summary of Corporate Compliance Policy Considerations and Issues31

A. Developing Corporate Best Practices Immigration Policies and Policy Statements

Companies should consider creating Corporate Immigration Policy Statements. Such statements serve several purposes, including:

1. Making certain that all employees in all offices are aware of a uniform policy and follow a uniform policy.

2. Eliminating the necessity of developing new policies every time an issue is raised.

3. Being able to advise employees of policies when employees ask questions regarding issues such as sponsorship for permanent residence and payment of attorney’s fees.

4. Forcing officials to reflect on issues that may not otherwise be the subject of review.

5. Making certain that all relevant employees are aware of fines and penalties to which the institution may be exposed for failing to follow relevant laws and regulations.

6. Having a self-serving document to illustrate good faith attempts to comply with all relevant immigration laws.

7. Instilling a climate of corporate compliance to avoid having employees violating immigration laws, which actions may be imputed to the company.

B. Policies should be delineated in the following areas:

1. Avoiding the hiring of foreign nationals without authorization to work for the employer.

a. The company will only hire foreign nationals with authorization to work for the company.
b. Any employee who has knowledge of a foreign national not having authorization to work in the U.S. must reveal such information to management.
c. Any employee who accepts a document that is known to be a counterfeit document for verifying identity or employment authorization of a prospective hire will be terminated.

2. Termination of foreign national employees who are found to be without authorization to work.

a. Policy regarding termination of foreign national employees who are found to be out of status.
b. Developing a system to track status expiration dates of foreign national employees.

3. I-9 compliance:

a. Time of completion of I-9.
b. Policy with respect to employees who do not have all necessary documents at the time of completion of I-9.
c. Policy regarding acceptable documents.
d. Policy regarding updating of I-9 form.
e. Policy regarding retention of I-9 forms.
f. Policy regarding retaining copies of documents.
g. Policy regarding where I-9 forms are kept.
h. Policy regarding aliens with questionable authorization to be employed.

4. Policy regarding contractor compliance:

a. Whether to adopt “Wal-Mart contract” or other procedures with regard to contractors and subcontractors.

5. Policy regarding avoiding national origin and citizenship discrimination:

a. Questions that may and may not be asked on employment applications or at interviews. b) Policy regarding action to taken if the company has suspicion or reason to believe that an employee may not have employment authorization.

6. Policies Regarding Employment of Foreign Nationals in H-1B Status:

a. Wage requirements.
b. Public examination file documentation.
c. Documentation of “actual wage.”
d. Dealing with strikes or work stoppages.
e. Termination of H-1B employees.
f. Early departure penalties.
g. Payment of return cost of transportation.
h. Leaves of absence.
i. Changes in hours.
j. Changes in pay.
k. Retention of public examination file.
l. Payment of attorney’s fees.
m. Payment and non-reimbursement of USCIS worker training fee.
n. Short-term placements and transfers of H-1B employees.
o. Payment of benefits to H-1B employees.
p. Provision of required documentation in the event of a DOL investigation.
q. Choice of prevailing wage source. r) Policies regarding date of commencement of employment/payment of wages.
r. Policies regarding non-payment of wages during leaves of absence, suspensions, disciplinary actions, etc.
s. Policies regarding use of bonuses to meet required wage obligations.
t. Policies regarding deductions to be taken from salaries.
u. Policy on “volunteering”.
v. Policies regarding withdrawal of labor condition application.
w. Policies regarding notification to USCIS and/or formal termination letter.
x. Policies regarding retention of documents.
y. Policies regarding extended severance pay.
aa. Policy on use of portability.

C. Participation in Government Programs

1. U.S. Immigration and Customs Enforcement (“ICE”) has developed two programs in which employers can enroll with the goal of avoiding immigration violations. IMAGE is purely voluntary. E-Verify may be required by federal or state law.

a. E-Verify enables businesses to check employee information the against a national data base of social security and DHS records.
b. ICE “Mutual Agreement between Government and Employers (“IMAGE”).
(www.ice.gov/partners/opaimage)

i) Employers must first agree to an I-9 audit by ICE and ensure the accuracy of the wage reporting by verifying the social security numbers of their existing labor forces utilizing the social security number verification system.
ii) Employer must then commit to the “Best Hiring Practices” listed at III, below.
iii) ICE provides training and education to IMAGE partners on proper hiring procedures, fraudulent documentation detection and anti-discrimination laws.

2. In choosing whether to participate, employers should consider:

a. IMAGE covers all members of a company’s workforce and does a more extensive scrub of records to determine if a worker is in the country illegally or is using fraudulent documents.
b. Becoming an IMAGE partner provides confidence that the employer has a legal workforce and therefore should not suffer a loss of workers in the event of an ICE investigation or raid.
c. Neither program will necessarily detect imposters using stolen or borrowed identities.
d. ICE does not guarantee it will first communicate with cooperative employers about alleged problems rather than opening covert investigations to build criminal cases or otherwise raid the workforce.
e. An employer may be required to participate in E-Verify as a federal contractor or due to state law.
f. Government (and E-Verify MOU) has stated that E-Verify does not provide protection against worksite enforcement actions; participating employers have been raided and any protection afforded generally relates only to those employees queried under the system.
g. E-Verify participation may vary in scope, entire company or certain worksites may participate.
h. Significant concerns have been raised with regard to the databases underlying E-Verify.
i. E-Verify does not provide full protection against discrimination claims.
j. Under the E-Verify MOU, the employer agrees to inspection of I-9s and personnel records as well as employee interviews thereby waiving possible protections under the Fourth Amendment.
k. The E-Verify system does not adequately handle all types of employment eligibility and difficulties/inability to receive a positive response may arise in certain situations including for example, H-1B portability.
l. Difficulties have been reported in obtaining confirmation of employment authorization for certain students as the SEVIS system is not linked to E-Verify.
m. Privacy and fraud considerations have been raised related to the E-Verify program as there is a current lack of procedures for authenticating the eligibility of employers to use the system.
n. USCIS may share information from the E-Verify system with ICE for enforcement purposes.
o. There is a presumption of compliance for those employees screened through the E-Verify system.
p. Use of E-Verify and/or IMAGE may result in a more stable workforce.

3. U.S. Immigration and Customs Enforcement (“ICE”) List of “Best Hiring Practices”
(www.ice.gov/partners/opaimage)

a. Develop a protocol for dealing with Social Security Administration “no-match” letters. b. Develop policies to ensure that the company’s I-9 process is not discriminatory.
b. Semi-annual I-9 audits by an external firm or a trained employee not otherwise involved in the I-9 process.
c. Use E-Verify.
d. Permit the I-9 and E-Verify process to be conducted only by individuals who have received training, and include a secondary review as part of each employee’s verification to minimize the potential for a single individual to subvert the process.
e. Establish an internal training program, with annual updates, on how to manage completion of form I-9 and how to detect fraudulent use of documents in the I-9 process.
f. Establish a protocol for assessing the adherence to the “Best Practices” guidelines by the company’s contractors and subcontractors.
g. Establish a self-reporting procedure for reporting to ICE any violations or discovered deficiencies.
h. Establish a tip line for employees to report activity relating to the employment of unauthorized aliens and a protocol for responding to employee tips.

D. Avoiding Violations Relating to H-1B Employees

1. Violations that DOL looks for:

a. Proof that employer hired “cheap foreign labor”.
b. Proof that employer fired U.S. workers who were more highly paid.
c. Proof that employer understated H-1Bs’ qualifications in order to underpay them.
d. Proof that employer did not post appropriate notices.
e. Proof that employer benched H-1Bs without paying.
f. Proof that employer did not pay the promised wage or deducted hidden employer business expenses from the employee’s wage.
g. Proof that employer did not list actual work locations on LCAs and/or H-1B petitions.
h. Proof that any dependent employer did not comply with non-displacement obligations and/or recruitment obligations.
i. Proof that employer did not amend petition and/or file new LCA for work locations outside area of intended employment that do not qualify for short term placement.

2. Avoiding Labor Condition Act (“LCA”) Liabilities.

a. LCA training.
b. LCA audits.
c. Keeping all necessary documentation in the public examination file.

3. Changes in Employment Relationship

a. Delay in commencement of employment:

i. Foreign nationals brought from outside of the U.S. on H-1B visas must be put on the payroll on the earlier of the date that they present themselves for employment or 30 days after arrival in the U.S. 20 C.F.R. 655.731(c)(6)(ii).
ii. If the foreign national is in the U.S. and the change of status has been applied for, the employment relationship may not commence until the effective date of the change of status. From that date, the employment must commence on the earlier of the date that the employee presents herself as ready for employment or 60 days after the effective date of the change of status to H-1B. 20 C.F.R. 655.731 (c)(6)(ii)
iii. Delay in obtaining a social security number should not delay commencement of the H-1B’s employment.
iv. Delay in getting a visa does not require any action since rules regarding H-1B compliance only apply during periods that the foreign national is in the U.S.

b. Change in hours of employment:

i. Changes in hours and schedules do not require any action on the part of the employer unless hours fall below full time.
ii. In that event, a separate part time labor condition application and H-1B petition would be required.

c. Change in job duties:

i. An insignificant change in job duties does not trigger a requirement of any immigration filing.
ii. A material change in job duties does require a new H-1B petition.

d. Change of wage:

i. Reduction of the H-1B’s wage to an amount less than the higher of prevailing wage and actual wage is a violation.
ii. Across the board wage reduction to all employees does not create a violation unless the foreign national’s wage is reduced below the higher of actual or prevailing wage.

e. Change of location of employment:

i. Change of location of employment in the same “area of intended employment” (roughly defined as normal commuting distance) only requires a notice posting at the new location.
ii. Change of location to an area outside of the area of intended employment for more than 30 days in a year requires a new LCA and H-1B petition. 20 C.F.R. 655.735(c).
iii. The 30 day period is increased to 60 days if the H-1B continues to maintain an office at her permanent work site, spends a substantial amount of time at the permanent work site and the H-1B’s residence or place of abode is located in the area of the permanent work site. 20 C.F.R. 655.735(c).

f. Change of Employer:

i. The new employer must file a new H-1B petition.
ii. If the change of employer is the result of a corporate re-organization, merger, acquisition, or the like, no new H-1B petition is required assuming the new employer assumes all the liabilities of the previous employer and the new employer updates the public examination file with various information required by DOL regulations.

g. Discipline or Suspension:

i. The DOL position is that the employer who removes an employee from payroll for work-related reasons (other than because of a condition related to the employee as in H below) is in violation of DOL’s regulations and subject to sanctions, including a back pay award.
ii. The DOL position would require the employer to terminate the H-1B petition if at any point the employer decides not to pay the required salary.

h. Leave of Absence:

i. DOL policy depends on whether the leave is employer or employee-requested.

A. If the leave is employee-requested, such as maternity, there are no requirements placed upon the employer.
B. If the leave is employer-generated, the employer would be required to pay full salary during the leave period.

ii. CIS policy is not dependent upon whether the leave is employer- or employee-initiated.

A. With CIS, the issue is whether there is an expectation of continuing employment at the conclusion of the leave of absence. If so, the employee is in valid status

i. Resignation or Termination:

i. It is advisable – although not required – to notify DOL to terminate the labor condition application since the employer’s liability under the LCA continues for a period of one year after the earlier of the end date of the LCA or the termination of the LCA.
ii. USCIS regulations state that an employer “shall” notify CIS when the H-1B employment relationship ends. 8 C.F.R. 214.2(h)(11)(i)(A).
iii. Upon termination prior to the expiration date of H-1B status, the employer is required to pay the employee’s return costs of transportation to her home country.

1
Spence S. Hsu, DHS Signals Policy Changes Ahead for Immigration Raids, The Washington Post (March 29, 2009).
2
Id.
3
NCSL Immigrant Policy Project, “2007 Enacted State Legislation Related to Immigrants and Immigration,” available at http://www.ncsl.org/programs/immig/2007immigrationfinal.htm (last visited March 10, 2009).
4
NCSL Immigrant Policy Project, “State Laws Related to Immigrants and Immigration,” available at http://ncsl.org/programs/immig/immigreportjuly2008.htm (last visited March 10, 2009).
5
Immigration and Nationality Act of 1952, as amended (hereafter “INA”) §274A, codified at 8 USC §1001 et seq.
6
While the fines increased as of March 27, 2008, the increase was not dramatic. Currently, employers who fail to properly complete the required I-9 documentation face a maximum civil fine of $1,100 per employee while those found to have knowingly hired and continued to employ an unauthorized worker could pay a civil fine of up to $3,200 per employee for a first time offense and a civil fine of up to $16,000 per employee if an employer has more than two offenses. If an employer engages in a pattern and practice of failing to comply with IRCA’s employer sanctions provisions, such criminal conduct could result in criminal fines of $3,000 per unauthorized employee and a prison term of not more than six months.
7
18 USC §1546(a).
8
INA §274(a)(1)(A)(iv). Prior to 1986, “alien harboring” could not be predicated merely on the act of employing an unauthorized worker; that proviso was eliminated in 1986.
9
INA §274(a)(1)(A)(ii).
10
42 USC §408(g)(2).
11
18 USC §1001.
12
18 USC §1028.
13
Most commonly the Racketeering Influenced and Corrupt Organizations Act, codified at18 USC §1961 et seq.
14
U.S. Immigration and Customs Enforcement Worksite Enforcement November 25, 2008 News Summary at http://www.ice.gov/pi/news/factsheets/worksite.htm (last visited March 10, 2009).
15
Melanie Trottman, U.S. Steps Up Wage-Law Enforcement, The Wall Street Journal (March 25, 2009).
16
Id.
17
United States of America v. Visions Systems Group, Inc., Criminal No. 4:09-cr-004 (S.D. Iowa Jan. 22, 2009), AILA InfoNet Doc. No. 09021362.
18
See U.S. Immigration and Customs Enforcement February 12, 2009 News Release at http://www.ice.gov/pi/nr/0902/090212desmoines.htm (last visited March 10, 2009).
19
Available at http://www.ice.gov/doclib/pi/news/newsreleases/articles/wse_advisory_v27.pdf (last visited March 21, 2008).
20
Press Release on the settlement at http://www.walmartfacts.com/articles/2293.aspx (last visited March 21, 2008).
21
IRCA’s employer sanctions regime is set out at INA §274A.

22
United States of America v. The State of Illinois, No. 07-3261 (U.S.D.C. Central Dist. Illinois March 12, 2009).
23
The registration page for E-Verify is at https://www.vis-dhs.com/EmployerRegistration.
24
Note that there are some limited exemptions for certain classes of federal contractors, such as institutions of higher education, who need only screen through E-Verify those employees who are assigned to the federal contract.
25
USCIS Update, “USCIS Adds Passport Data in E-Verify Process for Foreign-Born Citizens” March 4, 2009 (AILA InfoNet Doc. No 09030468).
26
Findings of the Web-Based Basic Pilot Evaluation (Westat, Sept. 2007) (hereafter “Westat 2007”), http://tinyurl.com/2tddqs (last visited March 10, 2009)
27
“Use of Federal Database for ID Checks Hits Some Bumps” USA Today, February 26, 2009 at UShttp://www.usatoday.com/news/nation/2009-02-05-immigration_N.htm (last visited March 10, 2009)
28
Department of Homeland Security Press Release “Secretary Napolitano Issues Immigration and Border Security Action Directive” at http://www.dhs.gov/ynews/releases/pr_1233353528835.shtm (last visited March 10, 2009)
29
Draft February 2, 2009 Letter from DHS Data Privacy and Integrity Committee to Secretary Napolitano and Acting Chief Privacy Officer John W. Kropf AILA InfoNet Doc. No. 09020362 (last visited March 10, 2009).
30
Employers may wish to develop contractor compliance policies along the lines of the “Wal-Mart contract.”
31
This section incorporates portions of H. Ron Klasko’s article “Employer Best Practices for Avoiding Immigration Violations” and updates the information in light of recent developments.