Staying Out Of Jail - Renewed Emphasis On Immigration Compliance

Tuesday, October 4, 2011 - 01:00

Immigration reform is likely to be a key issue in the upcoming presidential election. Already, some Republican presidential candidates are calling for a substantial increase in the enforcement of federal immigration laws, including those against employers hiring unauthorized aliens. Similarly, as a possible precursor to pursuing comprehensive immigration reform through Congress, the Obama administration has increased the number of criminal investigations and prosecutions of employers, owners, and managers who have allegedly violated immigration laws. Indeed, a growing number of owners and managers are facing jail time for hiring unauthorized aliens. Employers should ensure that they have a comprehensive immigration compliance plan in place to protect against the increasing likelihood of an enforcement action.

Civil And Criminal Sanctions Against Employers, Owners, And Managers

On April 30, 2009, the U.S. Department of Homeland Security ("DHS") issued a memorandum outlining the Obama administration's current approach to immigration enforcement. The memorandum instructed U.S. Immigration and Customs Enforcement ("ICE") agents to prioritize the criminal prosecution of employers, owners, and managers who hire unauthorized aliens. As noted in the memorandum, "ICE is committed to targeting employers, owners, corporate managers, supervisors, and others in the management structure of a company for criminal prosecution through the use of carefully planned criminal investigations." The memorandum signaled a significant departure from the enforcement approach taken by the Bush administration, which focused on the prosecution and deportation of unauthorized aliens.

President Obama's new focus on employers is apparent in the enforcement statistics. For example, I-9 audits have increased by about 337 percent from fiscal year 2008 to fiscal year 2010. Moreover, ICE has already exceeded these 2010 civil enforcement numbers this year, and did so in just the first nine months of fiscal year 2011. These audits can lead to substantial penalties. Civil fines range from $110 to $16,000 per incident. As the fines are per incident, even seemingly minor paperwork errors can become extremely costly in the aggregate. For example, ICE fined the clothing store Abercrombie & Fitch over $1,000,000 in 2010 for record-keeping violations, despite finding no evidence that the company hired any unauthorized aliens. Overall, civil fines increased by about 937 percent from fiscal year 2008 to fiscal year 2010.

In addition to civil penalties, employers, owners and managers may be subject to a myriad of criminal charges for hiring unauthorized aliens, including, by way of example, the following:

• Engaging in a "pattern or practice" of knowingly hiring unauthorized workers - a misdemeanor punishable by a $3,000 fine per worker and up to six months imprisonment (for the entire pattern or practice, not per worker).

• Harboring persons who are present illegally in the United States - when the offense is committed for commercial advantage, arguably including merely hiring an authorized alien, or personal financial gain, it is a felony subject to a fine and up to 10 years imprisonment.

• Making a false statement on an I-9 form - this may be a crime under three different federal statutes, each of which provides for fines and substantial prison terms.

Like with civil enforcement, DHS increased the number of criminal charges brought against employers, owners, and managers by approximately 45 percent between 2008 and 2010. Indeed, employers, owners, and managers are seeing specific examples of ICE's focus on criminal prosecutions. In February 2011, for example, the Sixth Circuit Court of Appeals upheld a 15-month prison sentence issued to a quality control manager at a cheese cutting and wrapping company in Tennessee. The manager, who was responsible for hiring at the company, admitted to an ICE agent that her company knowingly hired unauthorized aliens and that many of the company's employees submitted false employment-related documents.

Similarly, in March 2008, the Eighth Circuit Court of Appeals upheld prison sentences of well over two years issued to the owners of a restaurant. The owners were deemed to have knowingly hired and employed unauthorized aliens as evidenced by their unusual treatment of those workers, including transporting them to and from work, not maintaining I-9 forms for them, paying them in cash below minimum wage, not withholding income taxes from their paychecks and not paying unemployment insurance on their behalf.

Many of the currently reported cases may appear extreme from a factual standpoint as they involve arguably egregious conduct. However, under the criminal statutes, an owner or manager could be exposed to personal criminal liability for mere constructive knowledge of hiring an unauthorized alien. Further, although the number of investigations initiated by ICE are minimal compared to such agencies as the EEOC, there is a sharp trend upwards and, unlike most EEOC charges, ICE enforcement actions carry with them a significant risk of individual criminal prosecution.

On the other hand, employers also face risks if they are overly zealous in their attempt not to hire unauthorized aliens. That is, under federal immigration law, employers must accept work authorization documents that appear valid on their face. In general, employers cannot ask for more or different documents than given by the employee. Further, federal immigration law prohibits employers from discriminating against applicants or employees based on citizenship. The U.S. Department of Justice, Office of Special Counsel enforces the anti-discrimination provisions of federal immigration law. Employers who are found to have unlawfully discriminated against an applicant or employee based on his or her citizenship may face various possible penalties, such as civil fines, back pay awards and other injunctive relief.

Employers, therefore, are caught in a bind when navigating federal immigration laws. It is increasingly important to avoid hiring unauthorized aliens, yet overzealous immigration policies or practices could lead to discrimination claims. A comprehensive immigration compliance plan greatly assists employers and managers who are stuck in this quandary.

Recommendations

It is more important than ever for employers to establish a comprehensive immigration compliance plan in order to protect against the increasing wave of enforcement actions brought by the federal government. Such a plan not only helps prevent companies from hiring unauthorized aliens, but also demonstrates the employer's good faith efforts to comply with the law to the extent there is ever a criminal investigation of the employer, owner or managers.

Below are programs and practices that many employers are adopting as part of an overall immigration compliance plan.

• E-Verify: E-Verify is a no-cost Internet-based system established by the DHS and the Social Security Administration ("SSA") to electronically verify the work authorization of new hires. E-Verify developed somewhat of a negative reputation during its pilot program due to the unreliability of the program. However, in recent years, there have been substantial improvements to the system. It is now required for federal contractors and for all employers in a growing number of states, including Alabama, Arizona, Georgia and others. Additionally, depending on political pressures, either through Congress or by state-by-state action, the program may eventually be mandatory for all employers nationwide. There are currently over 250,000 employers enrolled in E-Verify, including an increasing number of employers that voluntarily choose to join the program.

The E-Verify system provides several benefits to employers that participate in the program. For example, participation creates a rebuttable presumption that an employer did not knowingly hire unauthorized aliens, and an employer is protected from civil or criminal liability for actions taken in good faith reliance on the information provided by E-Verify. Therefore, participating employers have some insulation from claims under immigration and anti-discrimination laws. Moreover, the system may help employers improve efficiency in the employee verification process as it verifies most work authorizations instantly and places the principal burden on employees to correct any discrepancies in their work status.

• IMAGE: The ICE Mutual Agreement between Government & Employer Program ("IMAGE") is a relatively new voluntary program that encourages employers to work with ICE to help ensure a legal workforce. The program is currently being pushed hard by ICE but, to date, very few employers have volunteered for the program. To become "IMAGE certified," ICE will audit an employer's I-9 forms and verify the work authorization of all employees. The employer must also agree to follow other requirements, including using E-Verify and adopting a written employment eligibility policy. In exchange, ICE agrees that participation in the program could lead to a waiver or mitigation of fines for I-9 paperwork violations and will keep ICE from conducting any surprise I-9 inspections for at least two years.

Many employers think that the risks and costs of submitting to a voluntary ICE audit and the other obligations of the IMAGE program outweigh its potential benefits. However, for employers that are concerned about cleaning the slate of any past violations and protecting against future violations, the IMAGE program may be a helpful tool.

• Electronic I-9 Programs: Many vendors offer electronic I-9 programs to complete and maintain the required verification information electronically. These programs can be helpful and may limit the likelihood of errors in the I-9 process, provide reminders of reverification deadlines, automatically delete I-9 forms that do not need to be retained and permit the easy retention and retrieval of required I-9 forms.

• Immigration Policies: Stand-alone I-9 compliance policies can be a useful part of an immigration plan. The policy should describe the employment verification process to all those involved in hiring and clearly delineate the responsibilities of each individual. The policy should also set forth the procedures for dealing with discrepancies (e.g., if an employee presents a facially invalid verification document), including who should be notified of potential problems. Once an employer adopts a formal I-9 compliance policy, however, it is important that all employees involved follow the policy. Otherwise, ICE could use non-compliance with a company policy as evidence against the company.

In addition, some employers state on their job applications that any material misrepresentations in the hiring paperwork is against company policy and grounds for termination and/or denial of employment. Such a policy may provide employers additional non-discriminatory justification for terminating an employee who is later found to have misrepresented his or her work status and/or prior work history.

• I-9 Compliance Reviews: Many employers engage outside counsel to audit the I-9 forms and payroll records ICE would review in the event of an audit. Such compliance reviews not only catch errors prior to any ICE audit, but also give the company an opportunity to identify and correct any systematic errors in the hiring and verification process. Some companies choose to conduct these audits internally. However, any problems found in the audit should be timely corrected. Otherwise, the audit itself could create a knowing violation of the law.

Summary

Overall, immigration compliance can be a difficult process. Employers must balance their legal obligation to ensure that their employees have work authorization with business needs and concerns about illegal discrimination. However, the "sticking your head in the sand" approach is not the answer and, increasingly, may lead to substantial sanctions against the company, as well as its owners and managers. Instead, employers should adopt a comprehensive immigration compliance plan and ensure that the plan is followed by everyone involved in the hiring process. Outside counsel can be a valuable resource in establishing a plan that both protects the company from ICE and fits with the particular business needs of the company.

Doug Towns is a Partner and Jeff Glaser is an Associate, both in the Labor and Employment Practice in Jones Day's Atlanta office. The views in this article are the personal views of the authors and do not necessarily reflect those of Jones Day or its clients.

Please email the authors at dtowns@jonesday.com or jlglaser@jonesday.com with questions about this article.