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Clients often ask, “What’s the risk of not complying with immigration law?” In essence, what they’re asking is how much it will cost if they don’t get it right.  So, I thought it might be helpful to look at some recent immigration-related penalties to illustrate what’s at stake.

The penalties will of course be fact-dependent, and, as you know, the good faith of the employer can have an enormous impact, but generally speaking, sentences for employers range from up to six months in prison for knowingly hiring an illegal worker to 10 years for harboring one.  Also, other charges and additional penalties can be tacked on for crimes like tax evasion, money laundering, bank fraud and false statements that stem from what began as an immigration-related investigation.  Immigration violations also carry significant civil fines of up to $16,000 per worker.

But jail time and fines are not the only significant penalties.   Asset forfeiture, debarment, and reinstatement requirements can also be added on, and there is also the indirect damage from lost productivity, attorneys’ fees and negative publicity.

To put these penalties in real terms, see these examples from recent cases:

As predicted in my May 2011 blog on the U.S. Supreme Court’s decision upholding Arizona’s E-Verify mandate, several states have followed suit and mandated E-Verify participation.  At the start of this year, E-Verify requirements became effective in Georgia, Louisiana, South Carolina and Tennessee, and all employers in Alabama must implement E-Verify by April 1, 2012.

The number of immigration-related bills introduced across the country in 2011 is astounding.  In 2011 alone, state lawmakers in all fifty states and Puerto Rico introduced over 1,600 immigration-related bills.  Of those bills, as of December 7, 2011, 42 states and Puerto Rico had enacted over 300 new immigration-related laws or resolutions.   

Of most importance to employers and businesses are the states that enacted laws in 2011 regarding E-Verify participation.  According to the National Conference of State Legislatures, 17 states now require E-Verify for public or private employers.   

While this list will not remain current for long, employers operating in at least the following states should pay attention to state E-Verify requirements:

• Alabama (passed in 2011) (effective April 2012)
• Arizona
• Colorado
• Florida (2011)
• Georgia (2011)
• Idaho
• Indiana (2011)
• Louisiana (2011)
• Mississippi
• Missouri
• Nebraska
• North Carolina (2011)
• Oklahoma
• South Carolina (2011)
• Tennessee (2011)
• Utah (2011)
• Virginia (2011)

While many states this year enacted laws requiring E-Verify use, a few states moved in the opposite direction.  In January 2011, Rhode Island repealed a 2008 executive order requiring use of E-Verify.  And, Minnesota’s 2008 executive order requiring some state agencies and contractors to use E-Verify expired in April 2011. 

E-Verify: Georgia

This blog is the first in a series to focus on individual states’ E-Verify requirements.  First up – Georgia. 

Effective January 1, 2012, E-Verify is mandatory for all employers with 500 or more employees in Georgia. (Georgia H.B. 87).  The Georgia law will eventually require all employers with more than 10 employees to use E-Verify.  The law kicks in for employers with 100-499 employees on July 1, 2012, and for those with 11-99 employees on July 1, 2013. 

Similar to those in the Arizona law (Arizona S.B. 1070), the penalties in Georgia include restrictions on the ability to get new or renew business licenses or other required business documents. 

1. EVERY employer has immigration-related compliance obligations.
2. Enforcement against employers has dramatically increased in recent years.
3. Enforcement has increased for violations associated with the H-1B visa program.
4. A Form I-9 Notice of Inspection (“NOI”) is not a “friendly audit” or “client review” – ICE considers the NOI an important tool in its enforcement strategy and employers should handle an NOI with the appropriate caution.
5. The following industries are high on ICE’s priority list for inspection: (a) critical infrastructure, (b) heavy manufacturing, (c) chemical plants, (d) defense contracting, (e) transportation, (f) janitorial, (g) food, (h) construction, (i) agriculture, (j) hospitality, (k)companies with large numbers of low skilled workers, and (l) companies that are potential targets for terrorist activity.
6. Penalties for immigration-related violations can be painful and can include: (a) financial sanctions (Abercrombie & Fitch - $1Million; Pilgrim's Pride - $4.5 Million settlement; IFCO Systems - $20.7 Million settlement); (b) debarment; (c) prison time; and (d) forfeiture of assets.
7. Any one Form I-9 can carry almost an infinite number of errors.
8. Employers can be penalized for Form I-9 paperwork violations regardless of whether or not they actually employed an unauthorized worker.
9. Participation in E-Verify alone is insufficient to satisfy an employer’s immigration compliance obligations – participation in E-Verify also triggers additional compliance requirements.
10. Employers should conduct a Form I-9 audit and training annually.

Most employers know it is against the law to hire or continue to employ an unauthorized worker in the United States.  However, company owners, executives and managers continue to be charged with a myriad of immigration-related offenses, including “bringing in and harboring certain aliens.”  Although harboring carries the most severe criminal penalties, it is also one of the most misunderstood immigration-related offenses.  So, just what does harboring include?

• transporting, moving, concealing, harboring or shielding from detection an alien with knowing or reckless disregard of the fact that the alien has come to or remains in the United States in violation of law.  8 U.S.C. § 1324.
• hiring illegal aliens, securing apartments for them, paying for rent and utilities, providing transportation to and from jobs, and maintaining counterfeit immigration documents.  U.S. v. Tipton, 518 F.3d 591 (8th Cir. 2008).
• providing shelter, obtaining employment, providing transportation to and from work, and arranging sham marriages for illegal aliens.  U.S. v. Lopez, 521 F.2d 437 (2d Cir. 1975). 
• failing to maintain Form I-9s for illegal aliens, advising illegal aliens where they can purchase fake documents and not including illegal aliens on payroll records.  U.S. v. Ye, 588 F.3d 411 (7th Cir. 2009). 
• falsifying information on the Form I-9 for illegal aliens, knowingly hiring illegal aliens who presented counterfeit documents and arranging for illegal aliens to fraudulently obtain security badges by falsely certifying information.  O’Hare Airport Staffing Agency
• providing housing, utilities and meals for illegal aliens.  Hi-Tech Trucking
• in response to the receipt of a Social Security No-Match letter (see May 16, 2011 Blog), advising illegal aliens to change their social security numbers in order to continue working at the company. Agriprocessors

What does harboring not include?

• merely giving an illegal alien advice on how to avoid attracting the attention of immigration authorities.  U.S. v. Ozcelik, 527 F.3d 88 (3d Cir. 2008).

The Circuits are split as to whether the conduct must “substantially facilitate an alien’s remaining in the United States” in order to be considered harboring.  According to the Third Circuit, harboring includes conduct that tends “to substantially facilitate an alien’s remaining in the United States illegally” and to prevent the authorities from detecting his or her unlawful presence.  United States v. Ozcelik, 527 F.3d 88 (3d Cir. 2008).  According to the Seventh Circuit, the Second, Fifth and Eighth Circuits have “explicitly” or “implicitly” taken the same position as the Third.  However, the Seventh Circuit has held that the relevant federal law does not require a specific quantum or degree of assistance to an illegal alien in order to constitute concealing, harboring or shielding.  U.S. v. Ye, 588 F.3d 411 (7th Cir. 2009).  “Congress could not have been clearer: it said that concealing, harboring, or shielding from detection an alien is unlawful conduct, regardless of how effective a defendant’s efforts to help the alien might tend to be.”  Id. 

Employers must focus on implementing, reviewing and auditing their immigration compliance programs, including their Form I-9 process.  Employers should also ensure that additional services such as housing, transportation, meals, and utilities are not provided to employees who are not authorized to work in the United States.

I’d like to thank Ashley B. Matthews, Summer Associate, for her contribution to this blog entry.

Last month the SSA began sending “no-match” letters to employers after a four year suspension as a result of DHS’s attempt to implement safe-harbor procedures for employers who receive a no-match letter.  Unfortunately for employers, although the no-match letters are being distributed again, there remains no consensus among the various government agencies regarding what employers are supposed to do with the no-match letters.

Here’s the breakdown:

• SSA
  • “A no-match between an employee’s name and SSN in the employer and SSA’s records DOES NOT mean that the employee lacks work authorization, nor does it make any statement regarding a worker’s immigration status.”  
  • The no-match letter itself also states that it does not imply that the employee intentionally provided incorrect information and that it is not a basis, in and of itself, to take adverse action against the employee
• DHS
  • “Receipt of a No-Match letter, when considered with other probative evidence, is a factor that may be considered in the totality of the circumstances and may in certain situations support a finding of ‘constructive knowledge.’ A reasonable employer would be prudent, upon receipt of a No-Match letter, to check their own records for errors, inform the employee of the no-match letter, and ask the employee to review the information.  Employers would be prudent also to allow employees a reasonable period of time to resolve the no-match with SSA.”
  • ICE routinely requests that employers provide copies of no-match letters as part of a Form I-9 audit.
• DOJ Civil Rights Division
  • Employers should not “[u]se the receipt of a no-match notice alone as a basis to terminate, suspend or take other adverse action against an employee.  Instead, employers should “[g]ive the employee a reasonable period of time to address a reported no-match with the local SSA office.”
• Anyone else care to chime in?

Where does this guidance (or lack thereof) leave employers? Employers cannot ignore no-match letters especially considering that no-match letters have formed the basis for multiple criminal investigations by ICE and prosecutions for harboring or knowingly hiring unauthorized workers.  However, employers cannot terminate employees based on the receipt of a no-match letter alone. Well, that clarifies it.

To make matters worse, approximately 1.6 million letters mailed by the SSA to employees included an incorrect Spanish translation that read, “Your employer may take action against you based on this letter,” rather than “Your employer may not take action against you based on this letter.” The SSA is still considering whether it will re-mail corrected letters to those individuals who received the incorrect Spanish translation.

Last week, Howard Industries, Inc., a manufacturer of electrical transmission and distribution equipment, pled guilty to conspiracy to violate immigration laws and agreed to pay a record $2.5 million fine.     

The plea comes approximately 2 1/2 years after an immigration raid on the company’s transformer manufacturing plant in Laurel, Mississippi, when nearly 600 people were arrested.  In addition, in December 2009, the company’s former HR Manager pled guilty to conspiring to violate immigration laws and admitted that he routinely hired people whom he knew were not authorized to work in the United States.  The HR Manager will be sentenced on Thursday, March 3, 2011 and faces a maximum of five years in prison on each count and a fine of $250,000.

According to the criminal complaint against Howard Industries, the company knowingly hired people unauthorized to work in the United States and, in the process, knowingly accepted false identity documents.  Specifically, the charge states that, as part of the conspiracy, the HR Manager:

• hired unauthorized workers presenting false identity documents and completed the I-9 Form with false information;
• submitted SSNs to the SSA to verify employees’ numbers and then disregarded the results if they came back as invalid;
• instructed employees to obtain alternative identity documents which he knew were false;
• falsely attested, under penalty of perjury, on the I-9 Form that he had examined the documents presented and determined them to be genuine; and
• assured Spanish-speaking workers that he would warn them of any possible immigration raids.

Clearly there was some wrong-doing on the part of the company, and this was not simply a case of an HR Manager gone rogue.  And of course, as the criminal complaint states, the company “is legally responsible for the actions of [the HR Manager] as his employer.”

So, what lessons can employers learn from Howard Industries?  How could Howard Industries have avoided this criminal fine, guilty plea, negative publicity and considerable litigation expense (including the additional recent lawsuits stemming from these actions)

A few suggestions for employers to ponder:

• Never allow one HR manager to be responsible for all employment actions and I-9 Form compliance.
• Conduct routine internal audits of I-9 Form compliance, including cross checks by more than one employee.
• Conduct routine internal reviews of the hiring process.
• Ensure the company is following the appropriate re-verification process for I-9 Forms.
• Conduct appropriate follow up in response to Social Security No-Match letters and IRS discrepancy notices.
• Ask experienced immigration counsel to conduct regular comprehensive I-9 Form audits.
• Know your workforce and do not turn a blind eye to when something seems amiss.

Although lately, much of the focus of immigration enforcement—and of this blog—has been on the hiring or continued employment of unauthorized workers, an employer’s exposure to immigration enforcement activity does not end there. 

On December 7, 2010, the U.S. Department of Labor (“DOL”) announced that Peri Software Solutions Inc. (“Peri”) and its owner have been debarred from the H-1B visa program for one year and ordered to pay $638,449 in back wages and interest and $126,778 in civil money penalties.  Pursuant to its consent order with the DOL, Peri must pay back wages for failing to compensate H-1B workers as required under DOL regulations, and civil fines for failing to provide notice of its intent to employ H-1B workers and for suing former H-1B workers “for early cessation of employment."

In August 2010, the DOL announced a nearly $1 million settlement with Smartsoft International Inc. (“Smartsoft”), a computer consulting firm based in Georgia, for back wages owed to H-1B workers.  According to the Wage and Hour Division’s determinations, some employees were not paid at the beginning of employment, were paid only part time despite full-time employment agreements, and were paid less than the prevailing wage applicable to the geographic area where the work was performed.  The DOL settled with the company after it contested these conclusions and requested a formal hearing.           

The Peri and Smartsoft cases illustrate a current trend of increased penalties and enforcement activity for violations associated with the H-1B visa program. Under the H-1B visa program, employers can temporarily hire foreign workers, such as computer programmers, engineers and financial analysts, in professional occupations.  However, the program carries very specific obligations, including pay rates and notice requirements.  For example, employers must continue to pay an H-1B worker even after employment terminates until U.S. Citizen and Immigration Services (“USCIS”) has revoked the H-1B petition.  In addition, the employer must notify USCIS when an H-1B worker’s employment ends.  An H-1B employer must also post notices at the place of employment regarding its intention to hire H-1B workers.  The Peri and Smartsoft cases serve as excellent reminders to employers that regulations governing the H-1B visa program are very detailed and failure to follow the rigorous obligations can result in significant penalties.

In fact, USCIS has stepped up its review of H-1B employers in the form of unannounced site visits at companies that file H or L petitions, focusing especially on those employers filing H-1B petitions.  In addition, the DOL has been conducting its own inspections, as the Peri and Smartsoft cases demonstrate. 

From an enforcement perspective, these complicated regulations and increased administrative audits make for a hot topic where companies should focus their compliance energy.  Now, more than ever, employing H-1B workers without a comprehensive immigration compliance program is risky business.

As if immigration law is not complicated enough, United States Citizenship and Immigration Services (USCIS) will now require employers filing Form I-129 (for H-1B, L-1 as well as H-1B1 Chile/Singapore, and O-1A petitions) to understand and certify compliance with the equally complicated export control laws.  The new Form I-129 Petition for a Nonimmigrant Worker requires employers to review relevant export laws, understand their applicability to the company and the role of the visa applicant, and certify, under penalty of perjury, that the employer has determined that no export license is required or, if a license is required, that the worker will not have access to covered technologies without first obtaining an export license. 

Although the new Form I-129 is effective today (December 23, 2010), late yesterday evening, USCIS suspended the certification requirement for 60 days until February 20, 2011 to allow employers additional time to develop the procedures necessary for compliance. 

Specifically, Part 6 of the new version of Form I-129 states:

With respect to the technology or technical data the petitioner will release or otherwise provide access to the beneficiary, the petitioner certifies that it has reviewed the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) and has determined that:

1. A license is not required from either the U.S. Department of Commerce or the U.S. Department of State to release such technology or technical data to the foreign person; or
2. A license is required from the U.S. Department of Commerce and/or the U.S. Department of State to release such technology or technical data to the beneficiary and the petitioner will prevent access to the controlled technology or technical data by the beneficiary until and unless the petitioner has received the required license or other authorization to release it to the beneficiary.

Before checking the box and certifying compliance, employers must first classify the technology or technical data that will be released to, or be accessed by, a prospective foreign national employee to determine whether an export license may be required.

Export classifications and licensing determinations can be complex.  An employer should discuss export control requirements with an in-house expert or counsel with expertise in export control law before making this certification as civil and criminal penalties may be imposed on both petitioners and their representatives for misrepresentations made on Form I-129.  Petitioners and their representatives should make sure that the Part 6 certification is accurate in every respect.

Under the EAR (15 CFR Parts 770-774), technology may be subject to export licensing and other restrictions, depending on the nature of the technology, the destination, the end-user and end-use.  Under the ITAR (22 CFR Parts 120-130), technical data generally related to defense articles may be subject to export licensing and other restrictions depending on the nature of the technology and the destination.  Both the EAR and ITAR treat the release of controlled technology or technical data to foreign nationals in the United States as an export – even if provided to them by their employer.  See 15 CFR § 734.2(b)(2)(ii)); 22 CFR § 120.17(a)(3).  Therefore, if an export license would be required to export EAR controlled technology or ITAR controlled technical data to a certain country, an export license would be required to disclose that technology or technical data to a foreign national of that country who is located in the United States.  This “deemed export” rule makes it critically important that employers who only do business within the United States understand that they may be engaging in the “export” of technology if they employ foreign nationals. 

Although export control law has not changed and the limitations on the release of controlled technologies and technical data to foreign persons in the United States have existed for many years, this is the first time that the USCIS has become involved in the export license process by requiring employers to make certifications regarding compliance with this process in their visa petitions.  As a result, companies that may not have considered export control issues will now have to do so.

This new requirement should also serve as a reminder to all companies that have technology or technical data subject to the EAR or ITAR to include a review of both their H-1B petitions and all I-9 Forms as part of the regular export compliance program to ensure that they are not running afoul of export controls by providing information to their own employees within the United States.

As companies across the country analyze whether or not to join E-Verify (a voluntary Internet-based system that electronically verifies the employment authorization status of newly hired employees), much of the concern revolves around whether E-Verify invites additional government scrutiny of an employer’s workforce and an employer’s immigration compliance program (or lack thereof).  However, one should also examine whether not participating in E-Verify might prompt additional government scrutiny.

To date, only 200,000 of the more than 6,000,000 employers in this country have opted to join E-Verify.  Some have had little choice for a number of reasons (e.g., certain federal contractors and participants in ICE’s IMAGE program must participate, as do other employers under state law requirements and settlement agreements).  Others have chosen to participate.  As more employers opt to join E-Verify, however, it raises the question whether there is a critical mass at which an employer’s decision not to participate in E-Verify will be considered an unreasonable business practice. 

The analysis of whether not participating in E-Verify invites additional government scrutiny begins with a closer look at the specific employer’s business and the likelihood of attracting unauthorized workers.  The following risk factors should be considered:

• size of employer
• type of industry (e.g., construction, janitorial, food, transportation, agricultural, critical infrastructure, defense)
• number of unskilled or entry-level positions
• location of facilities (border state or state with high number of illegal immigrants)

The more risk factors that apply to an employer, the more likely not participating in E-Verify will lead to increased government scrutiny.

With only 3% of employers in this country currently participating in E-Verify, it is unlikely that an employer’s decision not to participate will automatically prompt the government to take a closer look.  However, if ICE has information about two employers that would prompt it to begin an investigation and one of the two employers is participating in E-Verify, will ICE focus its attention on the non-participating employer first?  It is certainly a possibility.

Whether or not to join E-Verify is not an easy decision.  E-Verify is a voluntary (except for certain federal contractors and employers hiring in certain states) Internet-based system, operated by DHS in partnership with SSA, that electronically verifies the employment authorization status of newly hired employees.  To date, over 200,000 employers have chosen to participate in E-Verify.  E-Verify has also been the subject of numerous state laws – some requiring the use of E-Verify and others forbidding it (see blog dated June 2, 2010). 

In order to participate in E-Verify, each employer must sign a Memorandum of Understanding (MOU) with DHS.  On the one hand, E-Verify offers participating employers the comfort of a “rebuttable presumption … that the [e]mployer has not violated … the Immigration and Nationality Act (INA) with respect to the hiring of any individual if it obtains confirmation of the identity and employment eligibility of the individual in good faith compliance with the terms and conditions of E-Verify.”

However, this comfort comes with a price.  In addition to requiring that certain Form I-9 documents contain photographs and that the employer photocopy certain Form I-9 documents, the MOU requires that  an employer agree “to cooperate with DHS and SSA in their compliance monitoring and evaluation of E-Verify, including by permitting DHS and SSA, upon reasonable notice, to review Forms I-9 and other employment records and to interview it and its employees regarding the [e]mployer’s use of E-Verify, and to respond in a timely and accurate manner to DHS requests for information relating to their participation in E-Verify.”  Of course, under current law, an employer must already allow the government access to its Forms I-9, but not necessarily to employment records or to employees (or the employer) for government interviews.  Nor does the current law require employers to respond to DHS requests for information. 

In addition, the MOU provides that information given to DHS by the employer may be used “to enforce the Immigration and Nationality Act (INA) and Federal criminal laws.”  By participating in E-Verify, the employer is regularly providing information to the government it could use in a criminal investigation of the employer.  USCIS has also entered into Memoranda of Agreement (MOA) with ICE and the DOJ OSC (Office of Special Counsel for Immigration Related Unfair Employment Practices in the Civil Rights Division) for referring cases of suspected employer misuse of E-Verify and discrimination matters to ICE and the DOJ OSC.  USCIS will also provide those agencies with information regarding ongoing administrative and criminal investigations when requested.   

While for many employers, the rebuttable presumption offered by E-Verify far outweighs the additional administrative burdens and the risks that an invitation for closer scrutiny brings, all employers should fully understand what signing the MOU entails so as not to invite an unwelcomed guest.  I welcome any thoughts or comments on this subject.

Stay tuned for my next blog pondering whether not participating in E-Verify is also an invitation for the government to look closer …

ICE Director John Morton and DHS Secretary Janet Napolitano announced staggering enforcement statistics for the past year.  In addition to a record number of illegal alien removals for fiscal year 2010, since January 2009, ICE has

• conducted 3,200 audits of employers suspected of employing unauthorized immigrants;
• debarred 225 companies and individuals; and
• imposed $50 million in financial sanctions against employers.

Secretary Napolitano reiterated the Administration’s heightened focus on employers, noting the agencies’ approach “has yielded historic results . . . issuing more financial sanctions on employers who knowingly and repeatedly violate immigration law than during the entire previous administration.”

I hesitate to belabor the point, but ICE keeps providing additional opportunity to do so – the current enforcement focus is on employers – the “immigration magnet.”  Gone are the days when employers can get away with an “ah shucks, we just haven’t focused our compliance efforts on immigration” response to a Form I-9 audit.  Immigration compliance ought to be at the top of every employer’s radar screen.     

In 2005, ICE’s budget (pdf) was $3.56 billion.  For 2010, it is $5.74 billion (pdf) -- an increase of $2.18 billion!  In a time when most most budgets are decreasing, ICE’s budget has increased by 60% in 5 years.  That can only mean that immigration enforcement remains a priority for the federal government.  Like it or not, this means immigration compliance should be a priority in the boardrooms and conference rooms all across corporate America.

Coupled with the dramatic increase in budget is the formal policy of the Obama administration to go after employers who hire illegal immigrants rather than the mass arrest of illegal immigrants.  In a 2009 news release from DHS, the agency announced that Secretary Napolitano has “issued guidance outlining that ICE will focus its resources in the worksite enforcement program on the criminal prosecution of employers who knowingly hire illegal workers in order to target the root cause of illegal immigration.  ICE will continue to arrest and process for removal any illegal workers who are found in the course of these worksite enforcement actions in a manner consistent with immigration law and DHS priorities.  Furthermore, ICE will use all available civil and administrative tools, including civil fines and debarment, to penalize and deter illegal employment.”  ICE recently reprioritized and focused its resources in worksite enforcement “on the criminal prosecution of employers who knowingly hire illegal workers in order to target the root cause of illegal immigration.”

The arrest numbers speak for themselves.  With increased money comes increased enforcement. Since 2002, ICE has increased its annual criminal arrests by more than 1,000 and its annual administrative arrests by over 4,500.  The figures for 2009 are not available yet, but will likely be telling.  Based on enforcement strategies announced by ICE and the dedication of resources, the focus will likely be on increasing criminal arrest numbers.

If you haven’t focused on immigration compliance, now is certainly the time.