[Note: The following article by Greg Siskind was recently published by Bloomberg]. 

In 1986, Ronald Reagan signed into law the Immigration Control and Reform Act. The new law is remembered for the so-called “amnesty” that allowed nearly three million immigrants illegally residing the country to gain permanent residency. The law had a flip side as well. It created a system requiring employers to act as deputies of the federal government by checking the identification and work authorization documents of all newly hired employees through the use of a new government form – the I-9.  The politically sensitive topic of how to deal with the future needs for immigrant workers was set aside during the 1986 legislative debate. 

The plan for legalizing millions of immigrants and, in exchange, making it a lot tougher for employers to hire illegal workers was supposed to provide a lasting solution to the immigration dilemma facing the country. But almost instantly it became obvious that illegal immigration was continuing and that IRCA was not having the intended effect of preventing unauthorized workers from finding employment.  And that’s likely because the immigrants legalized in the program had already been absorbed in to the economy. 

During the prosperous ‘90s, the public largely ignored the issue of immigration. But the prosperity of those years also led to faster job growth than the domestic supply of workers could match. And so the number of illegally present immigrants shot up to an estimated 12 million. Employer enforcement during the decade remained largely theoretical as the number of worksite raids and government audits of I-9 records remained very low.  

The 9/11 terrorist attacks and the economic downturn that followed marked the beginning of a new anti-immigrant wave in the country that led to efforts by Congress to impose strong new immigration enforcement laws. President Bush, like Ronald Reagan nearly two decades before, tried to push through an immigration reform deal that would legalized workers and also dramatically ram up immigration enforcement. But those efforts failed and the Bush Administration instead decided to address employer compliance first and then when illegal immigration was demonstrably under control, try again for legalization.

The result has been a dramatic crackdown on employers that is making headlines on a daily basis. The numbers tell the story. In federal fiscal year 2002, there were 25 criminal arrests and 485 administrative arrests associated with worksite immigration enforcement. In fiscal year 2008, there were 1,103 criminal arrests and 5,184 administrative arrests.

While people may think that immigration enforcement is something only of concern to construction companies and restaurants, all employers – including health care employers – need to be cognizant of the new enforcement environment and a variety of new laws and regulations.

Here are a couple of examples of employer compliance nightmares that have come across my desk in the very recent past: 

Example A 

Hospital X employs a Canadian nurse who entered the US five years ago on a TN visa. The nurse’s stay expired after a year, but the nurse didn’t bother to renew her authorized stay in the US and the hospital didn’t bother to ask about it. Consequently, the nurse was working four years illegally before the hospital discovered the problem when the nurse brought the matter to her employer’s attention. 

The hospital had an I-9 on file for the nurse, but it failed to re-verify the nurse’s immigration status as required under IRCA. So in addition to the nurse being in illegal status, the hospital had also violated the rule requiring re-verification of the nurse’s visa paperwork on her form I-9.  

The consequences are serious. First, had the hospital re-verified the I-9 in a timely manner, they would have been alerted to the need to file an extension of the TN visa, something that would have kept the nurse in status and working legally. Second, an IRCA violation would have been avoided. And finally, and perhaps most worrisome, the hospital may be liable to being found to have knowingly employed the nurse illegally under a theory of “constructive knowledge”.  The hospital is located in a state that now allows for the revocation of a business license for an employer that knowingly employs illegally present workers. So, at least in theory, the hospital’s license to operate could be pulled.

Example B 

Hospitals and health care employers are also frequently bought and sold in corporate acquisitions. Unfortunately, immigration is rarely addressed in the due diligence. However, an I-9 review conducted as part of that process can help identify visa transfers that must occur prior to closing or, in some cases, workers who will be rendered out of status by virtue of the transaction and which may not be transferred.

In an asset acquisition of Hospital X, an I-9 audit reveals that there are a dozen doctors on H-1B visas employed by the hospital. Hospital X is a non-profit employer affiliated with a local university and the H-1B physicians are exempt from the H-1B cap as a result. But the acquiring employer is a for-profit entity and the new employer does not want to assume any liabilities from the selling company. Unfortunately, the new employer may not be eligible to file transfer applications. And at the moment of the signing of the closing documents, the twelve doctors are potentially illegal aliens. Aside from the immigration mess, one can reasonably foresee litigation from some seriously damaged physicians.

Health care human resource managers need to be cognizant of a number of developments in the immigration employer compliance arena. The following is a roundup of the hot topics in the field. 

I-9s 

Effective April 3, 2009, USCIS will be requiring employers to complete a new Form I-9. The form was originally set to take effect on February 3, 2009, but the new Obama Administration issued a 60 day moratorium on the implementation of all new rules. The new I-9 is largely similar except that it removes certain kinds of expired documents from the list of acceptable forms of proof of employment authorization. The new form can be found online at http://www.uscis.gov/I-9.  

A big trend emerging in I-9s is the switching over to electronic I-9 systems from the traditional paper formats. USCIS began permitting the use of electronic I-9 systems when it issued a regulation in 2004 allowing for such systems for the first time. There are now more than a dozen electronic I-9 vendors offering systems that involve either the installation of software on a company’s computers or a web-based subscription setup. For a list of vendors and contact details, email me at gsiskind@visalaw.com.  

There are a variety of benefits that make electronic I-9 systems worth considering including:

• The systems generally prevent employees and employers from signing out of a form until it s properly completed

• Some of the systems are “intelligent” and ensure that the answers in the form are consistent (such as allowing only the appropriate document to be provided for Section 2 by the worker based on the status they listed in Section 1)

• Some systems allow for certain sections of the form that are the same from applicant to applicant to be pre-filled to save time.

• Some systems have help buttons located by each question to help employees and employers figure out how to properly compete the form

• Employers with multiple sites can more easily monitor I-9 compliance at remote locations

• Reverification is automated and employers are less likely to incur liability for failing to update an I-9. Some systems send emails when it is time to re-verify. Some of the systems also track visa and I-94 expiration dates.

• Employers can integrate the system with E-Verify so that the entire process is automated

• Using an electronic I-9 system reduce the risks of identity theft from the robbery of paper I-9 records (something I have recently had reported by more than one client)

• An electronic I-9 system can make it easier to respond quickly to an ICE audit.

• Electronic I-9 systems can be integrated with payroll and employee database systems which can make it easier to determine when I-9s can be purged.

• Instructions can appear in multiple languages making it easier for employees with weak English skills to complete the form.

• Electronically retained I-9s are more easily searchable and can save time over having to track down a specific employee’s paper I-9.

There are some disadvantages worth noting. First, the systems are not 100% secure (though the law requires vendors to incorporate security measures). The systems don’t totally stop identity theft since a person can present doctored identification and employment authorization paperwork. Paper I-9s are free (aside from costs for storage, training, etc.). And like any web-based software product, there are risks if an employer goes out of business. An employer should be sure to have back ups on their own system to avoid problems.

E-Verify 

You may have seen advertising from the Department of Homeland Security touting the E-Verify electronic status verification system (formerly called the Basic Pilot Program). E-Verify is a free, Internet-based system that confirms the legal status of newly hired employees. The system, a creation of the 1996 Immigration Act, compares Social Security Number and DHS immigration databases to the employee’s name and other Form I-9 information. The system is fast – it takes just a few seconds to process – and will either confirm an employee’s authorization to work or issue a tentative non-confirmation.  

The controversy in the system largely centers around the accuracy of the databases. A recent report indicated that a high percent of naturalized US citizens show up in the system as being unauthorized to work, though DHS claims they have much improved the system.  Many employers are reluctant to use the system because they agree to allow DHS and the Social Security Administration to make unannounced inspection visits.

E-Verify has been in the news a great deal over the last few months. The authorization for the program expired last September and Congress only saw fit to authorize it for six more months. As of the writing of this article, it is not clear whether the program will be extended beyond its March 6, 2009 authorization date.  

Supporters of the program attempted to push through a measure that would have mandated E-Verify be used by employers receiving stimulus money in the giant package approved by the Congress in February 2009. In fact, such a provision passed in the House only to be stripped out in conference.  

President Bush issued an Executive Order in 2008 mandating a high percentage of federal contractors – estimated at 167,000 employers – use E-Verify as a condition of their government contract. The regulation implementing that order has been challenged in the courts and the implementation date for the rule has now been pushed back to May 21, 2009. The rule covers contractors with contracts worth at least $100,000 and their subcontractors with contracts worth at least $3,000.  

While DHS has not released a breakdown by industry of how many contractors are to be affected by the new rule, hospitals and health care companies will no doubt be affected in large numbers. Many, for example, have significant contracts to provide health care services to federal employees.

State laws 

Over the last two years, nearly two dozen states have passed employer sanctions laws. And the pace of state lawmaking activity in this area has not slowed this year with a number of additional states considering such legislation.  

The laws themselves are the subject of great controversy since many argue that the Constitution preempts states from regulating immigration. And, indeed, many of the tougher laws are now the subjects of battles in the courts.  Nevertheless, employers need to assume that the laws are going to survive.  

The laws vary, but there are a few common themes:

• Barring employers that knowingly hire unauthorized immigrants from doing business with the state

• Revoking E-Verify use by all employers, just contractors or just public employers

• Subjecting employers to fines or jail time for knowingly hiring unauthorized workers

• Creating a private right of action against employers for workers displaced by an unauthorized immigrant

   For an overview of activity in each state, see the attached chart.

No match rule 

In August 2007, the Bush Administration released a rule describing the obligations of employers who receive letters from the Social Security Administration that employees’ names do not match the Social Security Numbers on record at the SSA or who receive a letter from DHS after an I-9 audit indicating that their workers may not be authorized to work. The rule provides a “safe harbor” procedure for employers to avoid a finding of having constructive knowledge that an employee is unauthorized to work by virtue of having received a no-match letter.  

Almost immediately after the rule was released, a lawsuit was filed jointly by a group of organizations that included the US Chamber of Commerce, the American Civil Liberties Union and the AFL-CIO. A California US District Court judge agreed that DHS failed to meet administrative law requirements in the way it issued the rule and he enjoined the agency from implementing the regulation.  DHS attempted to address the judge’s concerns and re-issued a final regulation last fall, but the judge has not dropped the injunction (arguing that it wanted to give the new President an opportunity to weigh in). A final decision in the case could come this spring.  

Assuming the Obama Administration is interested in proceeding with the regulation (and there is no indication that it is not interested in issuing the rule), employers will be required to:

• Within 30 days, check its records to see if the error was the employer's fault

• If this doesn’t resolve the error, the employer must notify the employee within 30 days and the employee should attempt to correct the problem.

• If 90 days pass without a resolution of the discrepancy, the employer must have the employee complete a new Form I-9 (without a social security card being used to prove employment authorization).

• If the discrepancy is not resolved and the employee’s identity and work authorization are not verified, the employer must either terminate the employee or face the risk that DHS will find constructive knowledge of lack of employment authorization.   And an employer in this instance would face potential enforcement action from DHS.

Some experts believe as many as 4,000,000 workers could be working under false social security numbers, a number of whom are likely working for the nation’s health care employers.

Conclusion 

Recent statements by Secretary of Homeland Security Janet Napolitano indicate that the new President will continue President Bush’s tough policies on employer compliance with the nation’s immigration laws. Even if a major immigration reform bill passes legalizing millions of illegally present immigrants, this will likely be paired with even tougher employer enforcement rules. The nation’s health care employers have so far not been in the headlines, but they are far from immune from being subject to tough enforcement measures. And the environment is likely to get even tougher.

State Immigration Employer Compliance Laws

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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.