On Oct 22 2006 by William A. Stock

“The ICE-Man Cometh” Part Two: Proposed Legislative and Regulatory Changes to Strengthen Workforce Enforcement

Note: This is the second of a two-part article examining what all employers need to know about the new “interior enforcement strategy” being implemented by the Department of Homeland Security. Part One authored by William A. Stock appeared in the September 20, 2006 edition of The Legal Intelligencer.

The Senate and House of Representatives have passed dramatically different bills to address the issue of immigration reform. The House bill, HR 4437, focuses solely on border security and enforcement while the Senate bill, S 2611, takes a far more comprehensive approach to immigration reform including an expansion of employment and family-based immigration, the creation of a guest worker program and a fair and reasonable approach for handling the undocumented aliens presently in the United States. Despite their significant differences, both the House and Senate bills seem to agree that the flood of undocumented aliens into our country must be brought under control and that, in order to achieve this goal, a new, tougher worksite enforcement program must be put in place that will dissuade employers from hiring or continuing to employ noncitizens who are not authorized to work in the United States.

The present worksite enforcement program was instituted by the Immigration Reform and Control Act of 1986 (IRCA). Under IRCA, employers are required to verify the employment eligibility of all new hires and may face civil penalties, and, in certain circumstances criminal penalties, for failing to perform such verification or for knowingly employing or continuing to employ unauthorized workers. As William Stock discusses in his companion article, “The ICE-Man Cometh” Part One, while the Immigration and Naturalization Service (INS) did not aggressively investigate and prosecute apparent violators prior to the September 11th attacks, the Department of Homeland Security (DHS), which supplanted INS, acting through U.S. Immigration and Customs Enforcement (ICE), has significantly ratcheted up its efforts to enforce IRCA using a number of criminal tools, including bringing “alien harboring” felony charges against companies and individuals employing unauthorized aliens.

While ICE raises the bar on enforcement, there are legislative and regulatory changes in the wind that may further heighten it. On the legislative front, the separate bills passed by the House and Senate mentioned above each contain provisions that, if enacted, would sweep away the familiar Form I-9 system and the current enforcement mechanisms in favor of a more rigorous system, thereby placing a much heavier burden on employers planning new hires. The inspection of documents that establish identity and work authorization and the completion of a Form I-9 will be replaced by more onerous requirements imposing on employers not only the obligation to confirm the eligibility of new hires, but to maintain detailed information relating to all employees. More strikingly, civil and criminal penalties will be dramatically increased for employees failing to abide by the new verification system, and administrative appeals by persons found to have violated the law may be significantly curtailed.

Both the Senate and House bills require that the Social Security Administration (SSA) and DHS establish an automated database comprised of the Social Security Numbers (SSN), Alien Numbers and corresponding information relating to the employment authorization of individuals. Employers must access this database to confirm the employment authorization of employees no later than three days after the date of hiring. A verification or nonverification of an individual’s identity and employment eligibility will be assigned as a code by the database. If a nonverification code is received, there is an initial opportunity to amend and confirm verification. Under the House bill, if proper identity and eligibility to work cannot be confirmed, the employer may terminate the employee; if it does not terminate the employee, it must report nontermination to DHS, which creates a rebuttable presumption that the employer has violated the unlawful employment provisions. The Senate bill mandates both termination of the employee and disclosure to DHS of the terminated employee’s whereabouts if there is failure to obtain a verification code from the database. Also, should the Senate bill become law, it will no longer be sufficient to determine a document is genuine on its face. Rather, employers will have to determine if a document is genuine under a totality of circumstances test, whereby a reasonable person would conclude the document’s genuineness. The Senate bill also decreases the culpable mental state required to find a violation, penalizing employers for hiring employees with both knowledge and reckless disregard that an employee is an unauthorized alien.

In addition, both bills require employers to verify existing employees’ authority to work. An employer’s failure to access the new verification system to confirm employees’ work authorization will subject the employer to increased monetary sanctions up to $5,000 for the first offense and will strip an employer of a good faith defense in an enforcement action involving the employment of unauthorized aliens. Under both bills, criminal penalties for a pattern of abuse have been increased to one year imprisonment and a $500,000 fine.

While the Senate and the House struggle to find common ground on comprehensive immigration reform, ICE has issued proposed regulations to implement significant changes in the existing worksite enforcement program. Specifically, ICE proposes to amend its regulations relating to the unlawful hiring or continued employment of unauthorized aliens by lowering the threshold of “constructive knowledge” and by establishing safe harbor procedures for employers who receive “no match” letters from the SSA or similar letters from ICE. No match letters are sent out by the SSA to employers who submit earning reports (W-2 forms) in which the combination of employee name and SSN do not match SSA records. ICE sends out similar letters after it has inspected an employer’s I-9 forms and has been unsuccessful in its attempts to confirm in agency records that an immigration status document or an employment authorization document presented or referenced by the employee in completing the I-9 form was actually assigned to that person.

The proposed rule would amend the definition of “knowing” as it relates to “constructive knowledge” by adding two more examples of information available to an employer indicating that an employee could be an alien who is not authorized to work in the United States:

  1. written notice from SSA that the combination of name and SSN submitted for an employee does not match SSA records; and
  2. written notice from DHS that the immigration status document, or employment authorization document, presented or referenced by the employee in completing Form I-9 was assigned to another person or that there is no agency record that the document was assigned to anyone.

The proposed rule also provides that whether DHS will actually find that an employer had the requisite “constructive knowledge” will depend on the totality of relevant circumstances.

Additionally, the proposed regulations describe the steps that if taken in a timely fashion after receiving a no match letter would provide the employer with a “safe harbor,” from a DHS finding of “constructive knowledge” that the employee was not authorized to work in the United States. This proposed safe harbor would allow a defense to a claim of “constructive knowledge” if the employer attempts to resolve the discrepancy brought to its attention by an SSA no match letter within 14 days by checking its records to determine whether the discrepancy results from a clerical error. In the case of a clerical error, the employer is to correct the error, inform the SSA, verify with SSA that the corrected information matches SSA’s records and memorialize the verification. In the event the employer does not detect an error in this internal check, it is required to ask the employee to confirm the accuracy of the information in the employer’s records. If this check does not resolve the discrepancy, the proposed regulations suggest that a reasonable employer should ask the employee to visit an SSA office and present documentation necessary to resolve the discrepancy. With respect to corrected information it receives from the employee, the employer should verify such information directly with the SSA. To avail itself of this safe harbor, the employer must complete the steps outlined above within 14 days.

The proposed regulations also provide a second step, 60 day safe harbor provision. If, within 60 days of receiving notice in the form of an SSA no match letter or similar documentation from ICE, the employer does not verify with SSA a name match/SSN match, it must take reasonable steps within the next three days to verify work authorization and identity such as by conducting I-9 re-verification. If the employee can provide sufficient documentation within this additional time period, then the employer has reached a regulatory “safe harbor.”

If the discrepancy referred to in the no match letter is not resolved, and if the employee’s identity and work authorization cannot be verified using a reasonable verification procedure such as that described in the proposed rule, then the employer must take action to terminate the employee. If not action is taken, the employer faces the risk that the DHS may find it has constructive knowledge that the employee is an unauthorized alien and, by continuing to employ the alien, violates the statutory prohibition on continuous unauthorized employment.

It is important to note that the proposed safe harbor procedures only protect an employer that follows those procedures from the risk of being found to have constructive knowledge that an employee is not authorized to work in the United States. Following the proposed safe harbor provisions does not preclude the DHS from finding that an employer had actual knowledge that an employee was not an authorized alien. Moreover, even if the employer takes the steps set forth in the proposed regulations and the discrepancies in the no match letter are satisfactorily resolved, that, in and of itself, according to the DHS, does not demonstrate that the employee is authorized to work in the United States.

ICE’s proposed regulations are harbingers of the new burdens employers are likely to face as our government seeks to halt the flow of undocumented aliens into the United States in search of employment by imposing a significantly more sweeping enforcement program to reduce or eliminate such employment opportunities. In anticipation of heightened worksite enforcement activities, employers should re-examine very closely the procedures they have in place for creating and maintaining Forms I-9 and for otherwise ensuring I-9 compliance, and for avoiding the unlawful hiring or continued employment of unauthorized aliens. In addition, as suggested by William Stock in Part One of the Article, this is a good time for employers to conduct their own internal audit of the Forms I-9 for current employees, to properly correct errors identified in the audit process and to ensure that all staff involved in hiring are trained in the employers’ procedures for verifying employment eligibility of new hires without violating IRCA’s antidiscrimination provisions. Clearly, the best strategy for all employers in the face of ICE’s new “interior enforcement strategy” is to carry out its “due diligence” now before the ICE-man comes.