E-Verify & I-9 News

Tomorrow, the Department of Homeland Security (DHS) will publish a proposal to rescind the controversial Social Security No-Match Rule while promoting greater participation in E-Verify, IMAGE, and other government programs. DHS had previously announced its intention to rescind the rule in early July amidst support for the E-Verify federal contractor rule.

The Social Security No-Match regulation, originally introduced in 2007 and amended in 2008, established certain mandatory steps and obligations for employers following receipt of a “no-match letter.” These letters, often labeled “Employer Correction Requests,” inform employers of a mismatch between an employee’s W-2 information and the social security records. The regulation also established a “safe harbor” for employers from evidentiary use of no-match letters against them. Implementation of the rule was challenged in federal court, leading to a suspension of no-match letters and enjoinment of the rule.

In tomorrow’s proposal, DHS outlines the basis for its policy change, including a detailed description of E-Verify improvements, new worksite enforcement and community outreach efforts that it will be implementing in the near future. In particular, DHS’s worksite enforcement strategy now includes a restructured process for worksite administrative fines, a debarment policy that prevents employers from receiving Federal contracts when they are in violation of worksite laws, and a Document and Benefit Fraud Task Forces (DBFTF) cooperative to combat the vulnerabilities exploited by identity and document fraud organizations.

An advance copy of the rule can be viewed here.  Comments can be submitted for 30 days following publication of the rule.

The Associated Press is reporting that Federal prosecutors have filed criminal charges against Yamato Engine Specialists, a manufacturing company in Bellingham, Washington, where 28 people were arrested during a raid by ICE in February. According to the AP, the company is being charged with conspiring to encourage undocumented workers to remain in the United States between 2006 and 2009. Prosecutors also charged two employees with allowing undocumented workers to file false employment forms with the government.

According to the original warrant application made available to us, ICE initiated the investigation against Yamato based on its arrest of two gang members who purportedly worked at the company. In August 2008, ICE subpoenaed the company for all I-9 forms, which showed that several employees had incorrectly presented themselves as lawful permanent residents by using another person’s alien registration number (A-Number). Other employees were shown to have presented A-Numbers and Social Security Numbers which had never been assigned.

Yamato maintains a press release on its web site indicating that it requires all prospective employees to present government required documents to prove that they are entitled to work in the US. Yamato also claims that their policy has been to hire people only if they meet the legal requirements for employment.

The Colorado Division of Labor has announced that it will adopt new employment verification rules to implement the provisions of a Colorado law, which went into effect on January 1, 2007. The Colorado law (§ 8-2-122, C.R.S., HB 06S-1017) requires that all public and private employers who transact business in Colorado affirm, in written or electronic copy, that it has (1) examined the legal work status of the new employee; (2) retained file copies of the employee’s identification and work authorization documents; (3) not altered or falsified the documents presented by the employee; and (4) not knowingly hired an unauthorized foreign worker.  The employer must make the affirmation within 20 days after hiring the new employee.

Note that this requirement is separate from the 2006 Colorado law requiring state contractors to participate in E-Verify or the Colorado Department of Labor Program. Information about that law can be found here.

The proposed rules include all of the provisions listed above while also defining in detail various audit procedures and applicable fines for noncompliance. Here is a quick overview concerning these points. You can also visit the Colorado Department of Labor and Employment web site, which contains the entire rule along with a fact sheet, guide, and sample attestation forms. Also, take note that they are holding a public hearing on August 31st for interested parties.

Types of Audits

• Every employer may be subject to a compliance audit to ensure that employers are fulfilling their obligation. Compliance audits may originate from complaints, random selection, etc.
• Complaint-based audits will be conducted after the Division of Labor receives written complaints which are verified as legitimate. This could include examining the information, interviewing the complainant, interviewing other parties, etc.
• Random audits will be conducted based on a reasonable statistical selection procedure. Employers who have been subjected to a random audit shall not be subjected to a second or subsequent random audit within two years from the date the previous random audit was closed.

Audit Process

• Employers who have been selected for an audit shall be notified in writing. The employer shall be given at least ten business days to respond in writing with copies of the affirmation forms and copies of the identity and employment authorization documents for each new employee hired on and after January 1, 2007 and still in their employ as of the date of the audit letter sent.
• Employers may be granted time extensions at the discretion of the Division of Labor.
• Employers shall be notified whether their documentation submission has fully complied with the law and of any additional action required by the employer. Employers who are subject to a fine by the Division shall be notified in writing of the fine, and shall be notified of their legal and appeal rights.
• Employers who have been found to be in violation of the employment verification law in a previous audit may be re-audited.

Employer Fines

• An employer who, with reckless disregard, fails to submit the documentation required by the employment verification law, shall be subject to a fine of not more than $5,000 for the first offense and not more than $25,000 for the second and any subsequent offense
• An employer who, with reckless disregard, submits false or fraudulent documentation, shall be subject to a fine of not more than $5,000 for the first offense and not more than $25,000 for the second and any subsequent offense.
• The exact amount of a fine levied will depend upon the totality of the circumstances and a variety of factors, which may include, but not be limited to:
  (A) The size of the employer;
  (B) The employer’s good faith efforts to comply with the employment verification law;
  (C) The extent of the employer’s documentation deficiencies;
  (D) Results of previous audits of the employer and history of compliance;
  (E) The employer’s cooperation level and timeliness of responses; and
  (F) The seriousness of the violations observed.

Today, ICE announced that Shipley Do-Nut Flour and Supply Company, a houston-based doughnut and catering company, was ordered to pay a criminal fine of $250,000 and forfeit $1.334 million to ICE for harboring undocumented workers.  The charges stemmed from a criminal investigation initiated by ICE in January 2008 which included interviews with former employees and a full audit of the company’s I-9 forms and SSA No-Match letters.

According to the press release, ICE agents administratively arrested 27 undocumented workers who lived in company-provided housing located at or near the warehouse. The agents also recovered 42 No-Match letters, which ICE claims placed the company “on notice” that the workers did not have valid Social Security numbers. The company subsequently plead guilty to the charges in September 2008.

In light of the government’s recent I-9 Audit initiative, state farm bureaus in Washington and Oregon are planning I-9 training sessions to teach farmers and other seasonal employers the proper procedures for completing and retaining I-9 forms.  Employment eligibility verification can be particularly challenging for seasonal employers who often rely upon foreign workers and experience high and frequent turn-over rates.  According to Dan Fazio, the Director of Employer Services at the Washington Farm Bureau, at least one of his members received a notice of an audit this past month, which raises the stakes for all agricultural employers.

The Washington Farm Bureau web site reports that their scheduled August session is already sold out. The Oregon Farm Bureau has not officially announced their training, but interest parties can check out their web site.

Additional information and background of this story can be found in this article, as reported by the Associated Press.

Two counties in Michigan recently passed resolutions requiring certain local contractors to use E-Verify for all new hires. According to a local news article, Macomb county will require all contractors doing at least $20,000 worth of business with the county to use E-Verify. The resolution will only apply to service contracts and is scheduled to go into effect on September 1, 2009.

In a similar move, Oakland County, Michigan passed a resolution last week which will mandate every future services contract (including both new and renewing contracts) to include an E-Verify (or other DHS employment eligibity system) requirement for new hires starting October 1, 2009. The resolution also specifies that the county will not enter into future contracts with organizations that do not comply. The official press release from the county Board of Commissioners is available here.

According to the sources mentioned above, there’s support for similar measures being adopted by other Michigan counties as well as the state government. The patchwork of E-Verify mandates continues…

Today, former Congressman Bruce A. Morrison testified before the Virginia Small Business Commission, urging the Commonwealth of Virginia to reject requests to make E-Verify mandatory for all U.S. employers in the state. Speaking on behalf of the Society for Human Resource Management (SHRM), Mr. Morrison noted that while E-Verify has provided a fairly reliable option for employers wishing to participate in a pilot program, it remains inadequate for the task of verifying all new hires. In particular, he offered the following criticisms of the E-Verify system:

• The SSA database is flawed, with a 4.1% error rate in SS records

• The error rate will hamper the ability of legal workers to obtain jobs

• E-Verify remains a paper-based system as employers must still complete the I-9 form and analyze one or more of 25 documents establishing identity and/or work authorization

• E-Verify is unable to detect many forms of document fraud and identity theft

Mr. Morrison also advocated the need for a federal solution to employment eligibility verification, noting that dozens of states have already enacted a confusing and complex patchwork of E-Verify legislation – a problem particularly acute for multi-state businesses. Mr. Morrison wrapped up his comments with an endorsement of the New Employee Verification ACT (NEVA) which was re-introduced in Congress earlier this year.

Mr. Morrison’s entire statement is available here.