1. Do you contract or subcontract with the state of Georgia to provide services in Georgia?
2. Are you a state of Georgia entity with employees?
3. Do you have any 1099 employees in Georgia?
4. Do you provide state benefits to Georgians?
If the answer is yes to any of these questions, then July 1, 2007, may matter to you.
The Georgia Security and Immigration Compliance Act
As of April 2007, state legislators in all 50 states, as well as many counties, had introduced over 1,200 bills and resolutions related to immigration or immigrants. This total is more than double the 500+ introduced in 2006. One such piece of 2006 legislation is the Georgia Immigration and Compliance Act. This legislation, which deals with many immigration and employment-related matters, has provisions that go into effect on July 1, 2007.
Briefly, the Georgia law includes the following provisions:
# Large (over 500 employees) contractors and subcontractors that contract for services with the state of Georgia (and its entities) are required to register and use BASIC for all employees. All such state contracts and subcontracts must include an affidavit of compliance regarding BASIC, the federal electronic employment verification system.
# The state of Georgia and every department, agency or instrumentality of the state or a political subdivision of the state must use BASIC for all new hires.
# An employer who fails to comply with the I-9 verification procedures, or fails to receive a Georgia driver’s license or identification card, may be barred from claiming deductible business expenses for state income purposes.
# Payments made via a 1099 will require a 6 percent state income tax withholding unless the recipient of the 1099 provides a tax payer identification number that is properly issued. A payer who fails to make the 6 percent withholding will be responsible for those taxes.
# Anyone in the United States who receives certain benefits via the state of Georgia will need to verify that they are legally in the United States before receiving such benefits.
# Individuals who are not licensed attorneys should not receive compensation for providing legal advice.
# Individuals who coerce or deceive people into providing labor or sexual services will be guilty of labor and sexual trafficking, which is now a felony. (Corporate liability issues may arise via a contractor who subcontracts with an unscrupulous entity. Know your cleaning company, lawn service, subcontractors, etc.).
As noted above, one such provision of this Georgia law deals with public contracts. Under the current federal electronic verification system, titled BASIC, an employer can electronically enter data into a database and verify whether the name and Social Security number, and maybe the employment authorization, match government records. Under the new Georgia law, the state, as well as all employers who contract or subcontract with the state for the performance of services within the state will be required to register and participate in this federal electronic employment verification system. (The “state” includes every department, agency or instrumentality of Georgia or a political subdivision of the state of Georgia).
The effective date of this registration and participation requirement varies depending on the size of the employer. Contractors and subcontractors with 500 or more employees that contract with the state must initiate the employment verification program by July 1, 2007. Contractors and subcontractors with 100 or more employees must initiate implementation of this program by July 1, 2008. Finally, as of July 1, 2009, all such contractors and subcontractors must be registered and participating in this program.
At present, we are waiting for the commissioner of the Georgia Department of Labor (DOL) to provide final regulations regarding the implementation of these electronic verification systems. Although the DOL proposed regulations require the use of BASIC, there are some concerns. First, BASIC is a national system and it must be used for all new company hires, not just those in Georgia. Affected employers may have to use BASIC nationally or form Georgia corporations or not contract or subcontract with the state.
Another concern is the phrase “within” the state. If an employee sits in California and prepares an audit report to be used in Georgia, is registration with BASIC required?
Other concerns include the “physical performance of services.” If an Ohio company sells wood to the state of Georgia and an Ohio company employee drives to Georgia and unloads the wood, under this new law, is the Ohio company subject to BASIC? Is delivery of goods the performance of services? What if a Canadian company sells and delivers wood to the state of Georgia – Canadian (non-U.S.) companies are not eligible to use BASIC.
We will watch these provisions of the Georgia law, as well as other state laws, and keep you apprised of the states’ attempts to control immigration issues in spite of, or in conjunction with, the federal controls of the same.