VISA SPOTLIGHT: WHAT EVERY EMPLOYER NEEDS TO KNOW ABOUT IMMIGRATION EMPLOYER COMPLIANCE LAWS

Most human resource directors and business owners don’t think of themselves as law enforcement officials. But in one important respect they are. Since 1986, American employers have been deputized to help enforce the nation’s immigration laws.

Under the Immigration Reform and Control Act of 1986 ("IRCA"), all employers must verify that every person that is hired is either a US citizen, permanent resident, or a foreign national with authorization to work in the US. All employers are further subject to civil and criminal penalties for knowingly hiring or continuing to employ aliens who are not authorized to work in this country. They are also potentially liable for "paperwork" violations if they fail to comply with various recordkeeping requirements, even if the employer has never hired an illegal immigrant.

To meet IRCA's employment verification requirements, the INS requires all employees to complete Form I-9, the Employment Eligibility Verification Form by the date employment commences. Within three business days of beginning the job (or on the first day of employment if a job will last less than three days), the employee must present identity and employment eligibility documents. The employee is given the choice to present various documents (such as a social security card or driver's license) from lists of "acceptable documents." The employer is then responsible for examining the documents to determine that they are genuine and relate to the specific employee.

Employers must keep I-9 Forms on file and available for INS inspection for all current employees hired since November 1986. For terminated employees, the requirement is the longer of three years or one year after employment is terminated. Copies of identity and employment eligibility documents are not required to be kept on file. If an employee has temporary employment authorization, a reverification of employment eligibility must be conducted prior to expiration of the employment authorization.

Concern by many members of Congress that employment verification requirements would lead employers to discriminate against U.S. workers who are "foreign" looking or sounding led to the inclusion of a key anti-discrimination provision in IRCA. Reverse discrimination against U.S. citizens is also prohibited. "Unfair immigration-related employment practices" such as refusing to hire a protected individual because of national origin or citizenship status or refusing to accept documents that are legally acceptable are prohibited. Generally speaking, employers may not use IRCA obligations as an excuse for discharging or not hiring a protected individual. The law does, however, provide an exemption from the anti-discrimination prohibition in cases when an employer gives preference to a U.S. citizen over an equally-qualified non-citizen. But such a preference might still violate Title VII of the 1964 Civil Rights Act and employers should be extremely cautious in such hiring practices.

While INS raids on workplaces receive a great deal of publicity, the INS has been quietly using IRCA’s employment verification rules to levy large fines against employers. The INS conducts an estimated 60,000 I-9 audits a year on employers around the country and has levied fines in excess of $1,000,000. One famous example involved the Disneyland theme park which paid a $ 260,000 fine for paperwork violations back in 1994.

Though fines as large as the one imposed on Disneyland are unusual, IRCA's penalties can, nonetheless, be quite serious. The INS employs 1300+ agents charged with spending a majority of their time on IRCA enforcement. In addition to complaint driven investigations, the INS randomly chooses to examine 2,500 businesses each year for IRCA violations. Fines range from $ 250 to $ 10,000 per violation and up to six months imprisonment for knowingly hiring or employing aliens lacking work authorization. Paperwork violations, like those committed by Disneyland, are penalized by fines of between $ 100 and $ 1000 per violation with a cap of $ 1000 per employee. Each mistake on an I-9 Form counts as a separate violation. For companies with sloppy compliance, the INS virtually has carte blanche to name their penalty. Companies violating the anti-discrimination provision are subject to fines of up to $10,000 per worker plus attorney's fees.

The best way for an employer to avoid IRCA problems is to establish a meaningful I-9 audit system. Such a program should include at least the following elements:

• education of all personnel officials on the purpose of IRCA and how to comply with its requirements
• establishment of a scheduling system to automatically remind an employer when reverification of employment authorization is necessary
• conduct of a thorough, periodic review of all employee I-9 Forms or, for large companies, a review of a random sampling of I-9s.

I-9 audits should review and evaluate the employer's current IRCA compliance procedures with respect to obtaining, completing and retaining I-9 Forms. If all I-9s are being reviewed, the I-9s should be compared to a tracking form listing all present and past employees to ensure that the verification process was never forgotten. Deficiencies in specific forms should be corrected and procedures enacted to ensure future compliance.

Finally, employers should pay special attention to I-9 issues in the settings of mergers and acquisitions. In cases where an acquiring company assumes successor liability, there is no requirement to complete new I-9s for employees of either company if the records of the acquired employer are maintained. But liability for the acquired company's errors is assumed and the prudent acquiring firm should reverify each employee with a new I-9. Furthermore, the acquiring company should consider requesting indemnification from the acquired company for inherited IRCA-violations and should conduct an I-9 review as part of its normal due diligence. In cases where the acquiring company does not assume any of the acquired company's liabilities, the acquiring company must get new I-9s. It should also review I-9s during due diligence and negotiate indemnification language as a precautionary measure in case successor liability is imposed by a court.

The laws regarding I-9s have not changed dramatically since IRCA was passed, but there have been a few notable changes. One of Sonny Bono’s last acts as a Congressman was to push through a provision which grants employers a 10 day period to correct paperwork violations if they are targeted by the INS. The anti-discrimination rules were also relaxed and individuals suing employers must now show that the employer intended to discriminate.

One final note – a diligent I-9 compliance system can prevent other problems. One recent example from our own practice involved a Fortune 500 company that recruited a top management official from England. The manager was working for another company in the US on a temporary visa. The Fortune 500 company failed to properly apply for a change in the manager’s visa status despite its assurances during the interview process and their failure to act rendered the worker illegal from the date of hire. When the problem was discovered six months later, the manager was promptly terminated and found himself in dire immigration straits. He promptly hired a lawyer and sued for an amount in the six figures. The Fortune 500 company should have discovered the problem through the I-9 process. It did not and will no doubt pay dearly.

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Disclaimer: This newsletter is provided as a public service and not intended to establish an attorney client relationship. Any reliance on information contained herein is taken at your own risk.