Employment Eligibility Compliance: How To Avoid Common Pitfalls

Monday, August 1, 2011 - 00:00

In the past two years, employers have witnessed an unprecedented surge in immigration enforcement at the worksite. The focus of this enforcement effort is not limited to investigating illegal employment but also identifying purely paperwork errors. As such, it is no longer enough just to be good corporate citizens and refrain from deliberately breaking the law. Instead, employers must become proactive in auditing one's own records and establishing a protocol to ensure strict compliance with paperwork requirements.

Background

I. Enforcing the Duty to Verify

In 1986, Congress enacted the Immigration Reform and Control Act (IRCA), which introduced for the first time civil and criminal penalties against employers who hire unauthorized workers. IRCA requires employers to verify the employment eligibility of each of their employees in the United States. By regulation, the results of the verification are recorded and the employer's attestation is made on a government form called Form I-9. Hence, the process is also commonly called the "I-9" process.

Enforcement against employers has steadily risen over the past two years. On April 30, 2009, Homeland Security Secretary Janet Napolitano announced that U.S. Immigration and Customs Enforcement (ICE) would redirect enforcement of immigration law away from the unauthorized workers and toward employers. ICE has implemented this new policy by increasing the number of worksite audits. According to a recent announcement from Secretary Napolitano, from January 2009 through the end of fiscal year 2010, which ended on September 30, 2020, ICE had audited more than 3,200 employers and imposed approximately $50 million in financial sanctions. Thus far in 2011, ICE has already conducted another 2,300 audits. These figures represent a sharp increase from the final year of the Bush administration, when ICE audited a total of 503 employers.

It is important to note that the majority of the fines imposed were for paperwork violations, not necessarily involving unauthorized employment. Often, employers are penalized for failing to fill in blanks, check boxes, complete the form on time or sign and date where required. For example, a recent nationwide retailer was fined over $1 million simply because its electronic I-9 record keeping system failed. There was no allegation of unauthorized employment.

On the other hand, employers also must become more aware of the antidiscrimination provisions under immigration law, enforced by the Department of Justice's Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC). These provisions prohibit an employer from verifying the employment eligibility in a discriminatory manner. U.S. citizens, lawful permanent residents, asylees and refugees are protected under such provisions. Disparate treatment of a protected class, or asking for more documents than required by I-9 regulation, can be deemed "discriminatory," even in the absence of malice against a particular person or group and has resulted in significant fines for the offending employers.

II. Proliferation of Technology

In 1996, through the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA), Congress authorized the "basic pilot." The U.S. Citizenship and Immigration Services (USCIS) administers the program, which verifies employment eligibility by cross-checking information with the Social Security Administration (SSA) or federal immigration databases. In December 2003, Basic Pilot was expanded from just six to all fifty states but remained voluntary.

The program has had tremendous growth in recent years. According to a 2005 Government Accountability Office (GAO) study, only 2,300 out of approximately five and a half million American employers used the system in 2004. The GAO further reported that about 15 percent of all queries required secondary verification through human intervention. Where such secondary verifications are necessary, the government's response may take as many as ten days. Today, rebranded as "E-Verify," the GAO reports that the system is responsive immediately over 98 percent of the time. Participation is over 270,000, which is more than 117 times the 2005 participation, but still only about three percent of the entire U.S. employer population.

The increase in participation may be due, in part, to increasing confidence in the program's accuracy and reliability. However, a greater influence likely is the growing list of government mandates. In September 2009, the Obama administration implemented an amendment to the Federal Acquisition Regulation (FAR) that requires most federal contractors and their subcontractors to use E-Verify. Employers who wish to extend the "optional practical training" period from 12 to 29 months post graduation for foreign students who earned degrees in science, technology, engineering and mathematics also must enroll in E-Verify. The federal government is not the only entity mandating participation. Increasingly (now up to 17), states are enacting theirn own laws requiring E-Verify enrollment as a condition for receiving a state contract or business license. On May 26, 2011, the Supreme Court upheld the legality of one such state law - Legal Arizona Workers Act - paving the way for more state mandates to follow.

III. Social Security No-Match

On April 6, 2011, the SSA announced that it would resume sending "Decentralized Correspondence" (DECOR) letters to employers advising that the name and Social Security number (SSN) of an employer do not match what's in the SSA's database. This is commonly known as "no-match" letters sent first to the employees, and then to employers in instances where there is no valid address for the employee. SSA had suspended the practice of sending no-match letters when a DHS regulation on no-match letters was the subject of litigation. The Obama administration rescinded the regulation in 2009.

Employers can discover SSN mismatches through a variety of means besides a letter from the SSA.For example, some employers run the Social Security Number Verification Service (SSNVS), a free online system provided by the SSA, to reconcile their payroll records. In addition, the Internal Revenue Service (IRS) may inform employers of discrepancies when employers file their quarterly federal tax return. The IRS and other federal agencies also conduct investigations of identity theft and require an employer's cooperation. State unemployment agencies sometimes notify employers of a mismatch, as do health benefit providers and background check companies also.

Regardless of how employers find out about a mismatch, employers cannot ignore knowledge of a mismatch. ICE officials have made clear that if the employer fails to act, ICE may consider the inaction as evidence of constructive knowledge if unauthorized employees are discovered on the workforce. On the other hand, employers who do attempt to resolve mismatches face strong opposition from organized labor and immigrant rights interests, and are frequently accused of violating labor or antidiscrimination laws. In some cases, the National Labor Relations Board (NLRB) has compelled employers to reinstate employees terminated because of record mismatches with back wages, regardless of whether or not the employees are eligible to work in the United States.

It is therefore crucial that employers navigate between the ICE enforcement interests on one hand and labor and civil rights interest on the other when it comes to resolving Social Security record mismatches.

Recommendations

More than ever, employers need to make certain that they adhere strictly to the employment eligibility verification requirements imposed by federal and state laws, as well as the antidiscrimination laws. To adapt to the new age of enforcement, employers should do the following:

1. Identify which in-house resources are responsible and train them well: The employer should identify the appropriate personnel within the organization that will be responsible for employment eligibility verification, and ensure adequate training. The responsible staff should have access to resources (such as the employer's immigration or employment counsel) whenever issues or uncertainties arise in the verification process.

2. Establish accountability and avoid needless penalties: Many of the penalties result from unintended paperwork errors that could have been avoided. Errors and omissions can be avoided even if the human resources staff simply uses a checklist to make sure every blank is filled and box checked and institute a reverification reminder so work authorization does not lapse. There must be a designated person or persons responsible for compliance and accuracy within the organization.

3. Look backward and forward: Do not assume that since your company does not intentionally hire unauthorized workers that you do not have I-9 violations and liability. Look backward by conducting an internal audit of all the I-9 forms before ICE conducts its audit. Also, look forward by developing internal policies and protocols with the assistance of competent immigration and employment law counsel that address I-9 completion, document review and retention, I-9 policy for employees acquired as a result of a merger or acquisition, and tracking I-9s that require updating or re-verification.

4. Avoid "discriminatory" practices: U.S. immigration law does not require discriminatory malice to find an employer liable for discriminatory practices. Any kind of disparate treatment, if based on national origin or citizenship status, can be deemed discriminatory. Also, avoid demanding more or different documents from an employee in the initial I-9 or re-verification process if the employee has satisfied the documentary requirements under the I-9 regulation. (The lists of acceptable documents are printed on the back of the I-9 form.) The practice of "document abuse," or asking for more documents than required by law, is itself a form of discrimination.

5. In the event that the employer discovers an SSN mismatch between the government's record and payroll record, take immediate action to reconcile the mismatch. However, do not jump to the conclusion that the employee is not authorized to work until the employee is given a reasonable opportunity to explain the discrepancy. Do not confuse the government's inefficiency for the employee's lack of cooperation.

Conclusion

Employers must comply strictly with I-9 and verification requirements. With an emphasis on technical compliance, employers can no longer afford to make careless errors. At the same time, vigilant compliance without regard to the antidiscrimination provisions of U.S. immigration law also has resulted in substantial penalties for employers. Therefore, employers today must have a robust internal compliance program that addresses both verification and antidiscrimination concerns, that looks backward and forward to make sure that I-9s on file are compliant, and that future I-9s are completed properly.

Patrick Shen is a Partner and Director of Global Compliance at the Fragomen firm. More observations and insights from Fragomen's compliance team may be found by visiting http://www.fragomen.com/blogs. Blake Chisam is a Partner and Director of Government Relations at Fragomen, Del Rey, Bernsen & Loewy, LLP, a law firm specializing in business immigration and corporate immigration compliance.

Please email the authors at bchisam@fragomen.com and pshen@fragomen.com with questions about this article.