On Nov 15 2007

Immigration Enforcement Goes Private: Sarbanes-Oxley for Human Resources?, The Legal Intelligencer

Last week, the U.S. Citizenship and Immigration Services (USCIS), a component of the Department of Homeland Security (DHS), released a "revision" of Form I-9, Employment Eligibility Verification Form.

This form is used by all employers in the United States to record the employer’s verification of the identity and employment eligibility of all individuals whom they hire.

Although this revision does nothing substantive (except to make the instructions on which documents may be accepted by an employer conform to regulations enacted in 1997), the promulgation of the new form highlights the DHS’ commitment to enforcing the restrictions on employment of foreign nationals who do not have authorization to be employed in the United States.

For the last two years, Immigration and Customs Enforcement (ICE), another component of DHS, has conducted a series of high-profile enforcement actions meant to emphasize their renewed 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 about 12 million undocumented immigrants living in the United States. This enforcement effort results from the public’s perception that federal authorities have not done enough to enforce existing immigration laws.

In particular, the failure to enforce the restrictions of employment of immigrants without proper authorization is perceived to be a powerful magnet attracting immigrants trying to make a better life. Given the problem of a broken immigration system that gives migrants no legal pathway to enter the United States to take available jobs, increased enforcement of sanctions on employers for hiring unlawful workers has became the “simple” solution to the current situation of undocumented workers.

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 work force, or who have failed to request such documentation at all. Since the government perceived these tools 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, i.e; Form I-9. 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.

While ramping up its own enforcement efforts, ICE has encouraged employers to help it prevent unlawful employment by implementing what it refers to as “best practices.” In these best practices, ICE is encouraging employers to accept obligations beyond those required by the law that assist ICE in limiting employment opportunities to those who have lawful status in the United States.

For example, after ICE’s best hiring practices, employers should volunarily follow the protocol for dealing with Social Security Administration no-match letters set forth in a regulation that ICE has been enjoined from enforcing. 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’ “E-Verify” system for new hires 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 to 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 E-Verify program processes 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.

While implementing such a policy may not protect an employer if large numbers of unauthorized workers are found in the work force, ICE hopes with these “best practices” to encourage a change in culture among employees doing hiring. This change in culture would be similar to the change in the culture of financial reporting and auditing created by the Sarbanes-Oxley Act, and requires human resources to conduct a similar policy development initiative and implementation oversight process as was developed on the financial side.

To help encourage employer compliance, ICE has 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 that Wal-Mart had a practice of using subcontractors 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 subcontractors, and do not need to worry about the immigration status of the subcontracted 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 multimillion-dollar settlement.

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 practice” 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 U.S. 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.

It remains to be seen whether the government’s continued enforcement of these immigration-related hiring requirements will be effective in deterring employers from hiring individuals who have no immigration status. It is certain, however, that the broad availability of high-quality fraudulent documentation makes it difficult for employers to be assured that their work force is in valid status, because many unauthorized immigrants can present valid-appearing documents seeming to verify their status as permanent residents, employment-authorized immigrants or U.S. citizens.

In the short term, employees must be aware of the new world of enforcement, both public enforcement by ICE and private enforcement by companies, which has changed the landscape with respect to compliance requirements in hiring. Employers should carefully review their hiring practices, ensure that the staff conducting their I-9 verification process are well-trained, and that their policies conform with the new “best practices” imposed by ICE over and above mere statutory compliance.

William A. Stock is a partner in the Philadelphia office of Klasko Immigration Law Partners, LLP, an immigration boutique. He and his partners have litigated several successful challenges to delayed government processing times in federal court. He can be reached at wstock@klaskolaw.com.