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Business Law Today

The Immigration Crackdown on Employers
The government steps up work site enforcement
By Roger Tsai
After years of neglect, the federal government is once again serious about cracking down on employers who hire undocumented workers. For businesses like Kawasaki's, one of Baltimore's best-known sushi restaurants, the increased enforcement has forced their business into bankruptcy. The two owners allegedly hired 24 undocumented workers and provided them with housing in order to maximize profits and exploit illegal labor. In April 2006, the two owners were arrested and charged with money laundering and alien harboring, crimes that carry penalties of 10 years' imprisonment. Ultimately, the owners were forced to forfeit $380,000 in cash, two restaurant properties, and six vehicles.

Businesses like Kawasaki's represent a growing trend. In 2006, immigration officials conducted raids on large corporations such as Swift & Company, the third largest meat packing company in the United States; IFCO Systems, one of the largest pallet manufacturers in the United States; and Fischer Homes, the leading homebuilder in Indiana, Kentucky, and Ohio. In the past year, criminal work site arrests of employers and employees increased fourfold, and the numbers are likely to continue increasing in 2007. The White House plans on doubling the number of investigative agents and dedicating an additional $41.7 million toward work site enforcement.

The message is clear: regardless of the size of your company or the industry your business is in, it is increasingly likely that your business could be the target of a civil or criminal immigration investigation. More importantly, federal agents are shifting from civil fines toward tougher criminal charges such as harboring, money laundering, and alien smuggling to hold small business owners, human resource specialists, and even corporate executives accountable.

Swift & Company

Immediately after September 11, work site enforcement concentrated around high-security areas such as airports, nuclear power plants, and military bases. Now, federal agents are casting an ever-widening net over employers in low-wage sectors such as the construction, hospitality, and restaurant industries. Most recently, in December 2006, production at Swift & Company was brought to a grinding halt when federal agents raided six Midwest plants and arrested over 1,200 employees.

Swift & Company is a prime example of the problems facing employers. As John Shandley, vice president of Swift, stated to Congress, "employers like Swift who are trying to abide by the law are not the problem in the immigration reform debate—the current immigration system is the problem." Swift had gone well beyond the obligations required of employers by carefully scrutinizing documents and being one of the first voluntary participants in a new online program to verify workers called the "Basic Pilot" program. This diligence to ensure a legal workforce was used to such an extent that, in 2002, the Department of Justice brought a $2 million discrimination lawsuit against Swift for excessively scrutinizing documents of individuals who looked or sounded "foreign." Since federal immigration laws prohibit employers from considering foreign appearance, accents, or national origin in their hiring practices, Swift was accused of discriminating on the basis of nationality.

In February 2006, two employees of Swift were picked up on deportation charges and admitted to illegally working at Swift. This ultimately led to a string of investigations that resulted in the multistate immigration raid. In December 2006, armed federal agents surrounded and raided the Swift plants, and, within a day, Swift lost 40 percent of its labor force and over $30 million in production capacity.

I-9 Forms and Basic Pilot

The issue of enforcing who may lawfully work has been delegated to employers. Under the Immigration Reform and Control Act of 1986, all employers must verify the employment eligibility of their workers through the use of I-9 forms. Employers are required to complete each form, review original documents such as a Social Security card or driver's license, and retain the form. The problem with this strategy is that no employer can be a document expert on the over 20 documents that are acceptable to show work authorization. Ultimately, the federal government turned toward technology to provide a solution.

Since 2004, the Department of Homeland Security has offered a free online verification program to employers called "Basic Pilot," and, currently, 13,000 employers participate in the program. Once employers are registered, they enter the Social Security number and name of the employee into the Web-based program, and within seconds will get confirmation on work eligibility.

After the Swift raids, Department of Homeland Security Secretary Michael Chertoff said, "If you enter into Basic Pilot and you do it in good faith, that will protect you against criminal and civil liability." Using Basic Pilot does not create bulletproof liability protection, but an employer using Basic Pilot establishes a rebuttable presumption that the employer has not violated the immigration laws for that worker. One major flaw in the program is that it cannot detect when prospective workers are using fraudulent documents, as shown in the Swift raids.

The Basic Pilot program is not currently mandatory but may be in the future. Both of the 2005 immigration bills considered in the U.S. House and Senate required the use of Basic Pilot for all employers, but neither bill was enacted as law.

Social Security No-Match Letters

Every year, hundreds of thousands of employers receive notification that their employees have incorrect Social Security numbers. Last April, seven managers of IFCO Systems, the largest pallet services company in the country, were arrested on criminal charges for failing to terminate workers after being repeatedly notified that more than half of IFCO's workers had invalid or mismatched the Social Security numbers. Because the Social Security Administration (SSA) is often the first government agency to give an employer notice of unauthorized employment, immigration agents often consider an employer's response to such notice in determining good faith compliance with immigration laws.

The SSA issues no-match letters when the employee name and Social Security number provided on the W-2 form conflict with the SSA's records. In 2003, the SSA sent 126,250 no-match letters to employers that corresponded to about 7.5 million incorrect W-2s. Many employers find the no-match letters confusing because they instruct employers not to fire a worker solely on the basis of the letter, but failure to follow up with the SSA may be deemed as constructive knowledge of unauthorized employment.

On June 8, 2006, the Department of Homeland Security issued a proposed regulation describing the steps an employer should take after receiving a Social Security no-match letter. Employers who receive no-match letters should not terminate an employee solely on the basis of the letter. Rather, employers must (1) attempt to resolve the discrepancy within 14 days, and (2) reverify employment authorization through the I-9 form within 63 days. If the employer completes a new I-9 form for the employee, it should use the same procedures as if the employee were newly hired, except documents presented for both identity and employment (1) must not contain the Social Security number or alien number and (2) must contain a photograph. While this is a proposed regulation, it represents the Department of Homeland Security's view of an employer's current obligations. It is critical that employers respond correctly, as failure to respond may indicate an employer's noncompliance.


With an estimated 12 million undocumented workers and only 300 agents tasked with finding them, it is unlikely that federal agents will raid your client's workplace tomorrow. What employers will see are stiff penalties against egregious employers in an effort to encourage self-policing by employers. The congressional debates on immigration reform will only cause worksite enforcement to intensify in 2007. As with the Immigration Reform and Control Act of 1986, which legalized millions of workers while imposing new obligations on employers, any new immigration reform bill will likely impose a higher standard of due diligence required of employers. The government's renewed enforcement efforts now make simple precautionary measures such as internal audits and strict compliance with I-9 related regulations more important than ever.
One hundred ninety-nine bills relating to work site enforcement have been introduced in 41 states. Below are the states that have passed legislation:

  • Arkansas: Act 157—March 1, 2007. Requires contractors and subcontractors to certify workers.

  • Colorado: HB 1343—Aug. 7, 2006. Makes Basic Pilot mandatory for public contractors.

  • Colorado: HB 1001—Oct. 1, 2006. Requires contractors to verify work status before applying for economic development incentive awards.

  • Colorado: HB 1017—Jan. 1, 2007. All employers in Colorado must complete an additional Affirmation of Legal Work Status within 20 days of hire.

  • Georgia: SB 529—July 1, 2007. Requires public employers, contractors, and subcontractors to use Basic Pilot on a phased basis.

  • Idaho: Exec. Order 2006-40—Dec. 13, 2006. Makes Basic Pilot mandatory for public contractors and state agencies.

  • Louisiana: SB 753—June 24, 2006. Allows state agencies to investigate hiring policies of contractors.

  • Pennsylvania: HB 2319—July 1, 2006. Requires violating contractors to repay loans or grants to the state and prohibits bidding for two years after violation.

  • Tennessee: HB 111—Jan. 1, 2007. Prohibits contractors from contracting with state agencies for one year after the discovery that the contractor employs illegal immigrants.

  • West Virginia: SB 70—June 18, 2007. Revokes contractor's license for immigration violations.

Tsai is an immigration attorney specializing in work site enforcement with the Salt Lake City-based firm of Parsons Behle & Latimer. His e-mail is rtsai@parsonsbehle.com.

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