I. Do You Have an Authorized Workforce?

Due to the nature of the business, the construction industry is a high-risk industry when it comes to authorized employment. Construction companies are more likely than many other kinds of employers to employ unauthorized workers (those without the proper documents to make them eligible to accept employment in the United States), and, in the process, become targets for investigations and raids conducted by U.S. Immigration and Customs Enforcement (ICE). For many employers in the construction industry, the Form I-9 that employees should complete when they begin work is an afterthought. It may or may not be completed on time (or at all), and the company representatives tasked with certifying the form are often not trained to complete the certification process properly. I-9s retained by the employer are rife with errors, and I-9s are retained well after they can —and should—be purged.

In addition, employers have tended to ignore, or pay scant attention to, social security mismatch letters. [The U.S. Social Security Administration (SSA) sends these letters to employers on an annual basis to inform them about names and social security numbers provided by the employers to the SSA that do not match the SSA’s records.] Although employers have begun notifying employees whose names appear on these letters, few employers take further action to clear up the mismatch, and the federal government has begun to target them for violating immigration law.

Further, many employers believe that they are insulated from liability for using unauthorized workers if they employ the workers indirectly, through a subcontractor or labor staffing firm. Experience shows that a subcontract relationship does not protect against immigration law violations, and recent enforcement trends strengthen that conclusion.

If these situations and attitudes toward I-9s, mismatch letters and subcontracted workers sound familiar to you, it is time to worry. Missing and poorly completed I-9s, in combination with neglected mismatch letters and cavalier attitudes toward subcontracted labor, leave employers and individuals open to significant risks for liability. Fines for I-9 violations can reach $16,000 per employee, and individual managers, human resources staff members, supervisors, owners, and recruiters may ultimately face civil and criminal charges. For some, these immigration-related violations may result in prison sentences.

The Broad Meanings of “Employer” and “Knowing”

The Immigration Reform and Control Act of 1986 (IRCA or Act) prohibits employers from knowingly hiring or continuing to employ unauthorized workers. Under the Act, proper completion of Form I-9 by reviewing an employee’s original documentation of identity and employment authorization shows “good faith” compliance with the law and can be used as an affirmative defense by an employer charged with violation of the Act.

Regulations implementing IRCA define the word “employer” broadly to mean “an individual or an entity, including an agent or anyone acting directly or indirectly in the interests thereof….” This means that many agents from different levels of management in a company may be classified as “employers” and face liability, including criminal liability, if the company is found to employ unauthorized workers.

The regulations also define “knowing” more broadly than many employers expect. To be liable for knowingly hiring an unauthorized worker does not require that the employer actually be aware that the individual being hired is not legally authorized to work in the United States. “Knowing” includes “constructive knowledge,” which is defined as “knowledge which may fairly be inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition.” If an employer has sufficient information to suspect that an employee is working illegally and the employer does not take action, that employer may be deemed to be “knowingly” employing undocumented workers.

For many years “constructive knowledge” was understood to include only willful and obvious disregard of an employee’s likely unauthorized status. On August 10, 2007, however, ICE changed this understanding when it announced a rule requiring employers who receive a social security mismatch letter to take specific steps to resolve the mismatch within a given time frame. Under the rule, if the mismatch is not resolved and if the employer continues to employ the individual, then ICE can use the mismatch letter as the basis to find that the employer knowingly continued to employ an unauthorized worker in violation of IRCA. While enforcement of this rule has been enjoined by a federal judge, it is clear that ICE intends to treat receipt of a mismatch letter (and failure to take reasonable steps to resolve the mismatch) as evidence that an employer has knowingly continued to employ an unauthorized worker.

Tougher Regulations and Enforcement Policies

In recent years, ICE has changed its focus in the area of employment authorization from one of education to one of enforcement and has begun cracking down on employers who hire undocumented workers. For example, in 2003, ICE collected a total of $73,000 in fines from employers nationwide in connection with I-9 violations and the employment of undocumented workers. In the first half of 2007 alone, ICE collected over $30 million for similar violations. In March 2008, civil monetary fines for I-9 violations and for the employment of unauthorized workers were increased by as much as $4,000 per violation.

In addition to the civil fines and penalties that ICE has typically used to enforce IRCA, ICE has recently sought to use criminal laws associated with organized crime as enforcement tools. If an individual’s or a company’s actions go beyond I-9 violations, charges of racketeering, money laundering, and/or harboring may be faced. A sympathetic manager who warns employees that ICE is on the way will not only be charged with the knowing hire of unauthorized workers. He or she may also be charged with harboring and could face a prison sentence.

Within the past two years, more than 20 states have also enacted legislation in this area. Employing undocumented workers may, due to tougher state and federal laws and regulations, lead to the loss of government contracts, the revocation of business licenses, forfeiture of property, fines, and lengthy prison sentences. The message to employers is clear: taking steps to ensure that you have an authorized workforce should be a top priority.

Best practices to ensure an authorized workforce

Even with the best tools currently available, no employer can ensure that its workforce is entirely made up of authorized workers. Employers can, however, take several steps to ensure that they are doing everything possible to avoid employing unauthorized workers. Proof that an employer has taken these steps can help employers to minimize liability if an unauthorized individual makes his or her way onto payroll. While the mechanisms described below represent some of the best employment practices possible, they may not be feasible for all employers. A lack of technological resources, the sheer expense of some of the options, and the reality that some employers rely on a workforce of which a significant portion is unauthorized may keep certain employers from implementing some of these practices.

I-9 Training

The best way to avoid fines and penalties in connection with I-9 errors is to avoid those errors in the first place by providing proper training to the company representatives charged with completing the I-9 process. Many HR managers receive little or no training in this area, and even with the best training, mistakes are inevitable. Completing an I-9 for a U.S. citizen employee may seem simple, but it is not uncommon for an employer to find that more than 80% of its I-9s for U.S. citizen employees contain errors. Those error rates are even higher for non-citizen employees, as the immigration laws and regulations governing the right to work are complicated. At $100 or more per error, even seemingly innocent errors can create a nightmare for employers.

Company representatives who take part in the hiring process should receive training to ensure that the proper questions are asked of job applicants during the interview process, the I-9 form is properly completed, charges of discrimination and document abuse are avoided, and I-9s are stored and retained properly. Refresher training should be provided annually or, minimally, every other year. Training can be provided in person or via webinar, and in all events receipt of training should be documented.

Another option for ensuring that I-9s are properly completed is to implement an electronic I-9 program. Several vendors provide electronic I-9 creation software that is errordetecting, making it virtually impossible to commit I-9 errors. Some systems also offer seamless integration with the federal E-Verify program to avoid duplication of efforts.

Voluntary I-9 Audits

Even with proper training, I-9 errors lurk in every employer’s filing cabinet. Rather than sit on a ticking time bomb of millions of dollars worth of potential liability, more and more employers have chosen to audit their I-9s voluntarily. The fact is that most I-9 errors can be corrected, and correcting the errors in advance of a government investigation both helps the employer avoid fines and, perhaps more importantly, sends the message to the government that the employer has taken steps to ensure that its workforce is authorized.

The most effective audits are those completed by an outside vendor with I-9 expertise. This typically means that a team of attorneys or other specialists will review the I-9s, mark all of the errors, and provide instructions to the company for correcting those errors. After the audit, the attorneys provide customized training to company representatives to help them understand the most common errors that were found on the I-9s.

Because audits can be expensive, some employers choose to perform a self-audit. The success of such audits varies. Most employers underestimate the resources required to complete an I-9 audit, and most assign HR staff to perform the audit. The problem with this is clear: the individuals who committed the I-9 errors are unlikely to identify them. And even if the errors are identified, many untrained auditors do not understand the proper manner in which to correct the errors. Consequently, if a company insists on completing its own I-9 audit, the individuals responsible for auditing the I-9s should undergo thorough prior training. Ideally, the company should have an I-9 expert on call to answer questions from auditors throughout the process.

E-Verify

E-Verify is the federal government’s online verification system that uses SSA and Department of Homeland Security (DHS) databases to verify that an employee is authorized to work in the United States. While the system is not 100% accurate, it is currently an employer’s best tool for ensuring that newly hired employees are authorized to work. Many states have enacted laws requiring all employers (or at least those contracting with the state government) to use the system. By this fall, new contracts with the federal government are expected to contain a clause requiring that the contractor use E-Verify for all new hires nationwide as well as for existing employees who will be working on the federal contract.

Once registered, employers must use E-Verify to confirm the employment eligibility of all new hires. The system must be used by the end of the third business day of a new hire’s employment and may only be used once Sections 1 and 2 of the Form I-9 have been completed. Currently, the system cannot be used to verify the work authorization of current employees, but this rule will change in the fall, at least for federal government contractors, who will be required to use the system for any existing employee who is assigned to perform work in connection with the government contract.

Once an employer inputs an employee’s I-9 data into the E-Verify system, the system will (within seconds) return one of three results: “employment authorized,” “SSA Tentative Non-Confirmation,” or “DHS Verification in Process”:

  • Employment Authorized: This indicates that the employee is authorized to work. The employer must record the verification number generated by E-Verify on the employee’s I-9 form. No further action is necessary.
  • SSA Tentative Non-Confirmation: This indicates that there is an information mismatch with the SSA databases. The following instructions must be followed by an employer for SSA and DHS Tentative nonconfirmations (TNCs): 
    • The employer must inform the employee of the TNC and must print the TNC notice (generated by E-Verify) and review it with the employee.
    • The employee has the option to contest the TNC or not to contest the TNC.
    • If the employee chooses not to contest the TNC, a final non-confirmation results, and the employee should be terminated.
    • If the employee contests the TNC, the employee must contact the appropriate agency (SSA or DHS) within eight (8) business days to resolve the discrepancy.
    • While attempting to resolve the discrepancy, the employee may continue to work. Once the employee resolves the discrepancy, the employee should inform the employer.  SSA or DHS will automatically update the system once the discrepancy is resolved or once it is determined that the discrepancy is not resolvable. At that point, the status of the verification will change to “Employment Authorized,” “Final Non- Confirmation,” or “Review and Update Employee Data then Resubmit.”
  • DHS Verification in Process: This indicates that DHS is working to confirm employment authorization in its databases. In general, DHS will make a determination within 24 hours, and the status of the verification will change to either “Employment Authorized” or “DHS Tentative Non-Confirmation.” Employers should follow the instructions above once the status changes. 
  • Final Non-Confirmation: This means that the employee must be terminated. The employer should keep records to indicate the reasons for termination.

For many employers, E-Verify is unattractive due to its rumored inaccuracies, the training required for implementation, the fear that a significant number of employees would need to be terminated or that fewer qualified job candidates will surface, a lack of technological resources, and/or concerns about voluntarily providing I-9 information to the federal government. While these concerns are well-founded, it is important to remember that, at least under the current rules, only new hires may be run through the system, so employers will not lose their current workforce due to its use. In addition, the federal government continues to take steps to make use of E-Verify mandatory for as many employers as possible. For this reason, many employers are voluntarily registering one or two worksites at a time to become familiar with the system so that they are not overwhelmed when and if it becomes mandatory.

Social Security Number Verifi cation Service

The Social Security Number Verification Service (SSNVS), is recognized under some state laws as an E-Verify substitute. It allows employers to check the SSA’s database to determine whether an individual’s name and SSN as provided to the employer match the SSA’s records. It does not verify the employment authorization of employees. And it is used by employers for many other purposes, such as for tax reasons. While there are not clear regulations governing SSNVS’s use for immigration purposes, use of the system can still serve as strong evidence that an employer has taken steps to ensure that it employs only individuals who are legally able to accept employment in the United States.

Employers who use the system should do so consistently to avoid charges of discrimination. If it is used for a new hire, it should be used for all new hires. If it is used for a current employee, it should be used for all current employees at the same worksite. If the system informs the employer that an employee’s information has “failed verification” or that the name and number provided belong to a deceased individual, that employer must take proper steps to resolve any errors and, if the errors cannot be resolved within a reasonable time, must terminate employment. Suggested best practices in this area align with the steps suggested to be taken upon receipt of a mismatch letter, as described below.

Social Security Mismatch Letters

These letters are generally sent to employers on an annual basis by the U.S. Social Security Administration to inform them that the names and social security numbers provided by the employers to the SSA do not match the SSA’s records. The stated purpose of the letters is to solve the problem that is caused when social security taxes paid and credits earned by certain employees cannot be credited to the proper individuals’ social security accounts. In 2007, DHS published a rule requiring employers who receive a social security mismatch letter to take specific steps to resolve the mismatch within a given time frame. Under the rule, if the mismatch is not resolved and if the employer continues to employ the individual, then ICE can use the mismatch letter as the basis to find that the employer knowingly continued to employ an unauthorized worker in violation of federal I-9 law. While the so-called “safe harbor” regulations are currently not in effect due to a pending lawsuit, the regulations describe what the federal government believes to be the best practice for employers who are in receipt of a mismatch letter: 

  • First, within 30 days of receiving the notice, the employer should check its records to determine whether the discrepancy results from a typographical, transcription, or similar clerical error in the company’s record or in communication to SSA or DHS. If there is such an error, then the employer must correct the record, inform SSA or DHS, and then verify that the corrected record has resolved the discrepancy. The employer should document the manner, date, and time of the verification. 
  • If there is no clerical error, then the employer should ask the employee to confirm the accuracy of the record. If the employee states that the company record is incorrect, then the employer should make the appropriate changes according to the employee, inform SSA or DHS of the corrections, and verify that the corrected record has resolved the discrepancy. If, however, the employee maintains that the record is correct “as is” then the employer must ask the employee to pursue the mismatch matter directly with SSA. If the employee then provides new information that would change the record, the employer must verify the validity of the new information with SSA using E-Verify or SSNVS.
  • If the discrepancy is still unresolved 90 days following receipt of the mismatch letter, the employer may have the employee complete another Form I-9, using the same procedures as if the employee were newly hired except that no document containing the SSN or alien number that was the subject of the discrepancy may be used. In addition, no document without a photograph may be used to establish identity. The new Form I-9 must be completed within three days following the initial ninety day period.
  • If the new I-9 does not resolve the matter, the employer must either terminate the employment or risk a finding that the employer had “constructive knowledge” that the employee is an unauthorized worker (thereby putting the employer in violation of the federal I-9 laws under IRCA).

While employers may not yet be prepared to follow these steps or the strict timeline, employers should adopt a mismatch letter policy. The worst thing to do is ignore a mismatch letter. It is not much better to simply inform the affected employees of the mismatch without follow up. Employers are expected to seek to correct mismatches proactively, and it is important that an employer be able to show the government that it has fulfilled its obligation in this area. Otherwise, an employer should be prepared for charges that it has knowingly employed unauthorized workers.

Comprehensive Policies

A written company policy stating that the employer takes its I-9 responsibilities seriously and detailing the steps taken by the company to ensure compliance with federal, state, and local immigration law provides evidence to the government in the event of an audit or raid that the company takes compliance obligations seriously. It also serves as a resource for HR and employees to ensure compliance and consistent application of company policies. This type of a policy may help a company avoid liability for the actions of a “rogue” manager by proving that the manager’s actions were clearly out of line with company policy. Companies can work with their immigration and employment counsel to draft an effective policy.

Proper Use of Subcontractors

Employers are not required to complete or retain I-9s for subcontracted employees. Employers may, however, be liable under IRCA if the employer is found to have known (or had reason to know) that the subcontracted employees were not authorized to work in the U.S. Liability for hiring unauthorized employees cannot be avoided by using a subcontract arrangement. In fact, if the subcontract relationship is used in part to avoid such liability, the government may be able to assert the very existence of the subcontract arrangement as evidence of wrongdoing. The e-mail to a hiring manager suggesting that subcontractors be used to avoid “the immigration mess” can land both the manager and his employer in prison. Because of this, it is imperative that employers take steps to avoid liability for unauthorized subcontract employees.

Possible strategies for subcontractor compliance range from the most hands-off (including a clause in the contract requiring the subcontractor to comply with IRCA) to the most involved (reviewing the subcontract employees’ I-9s). Employers may also provide I-9 training to the subcontractor, run the subcontracted employees’ information through SSNVS, audit the subcontractor’s I-9s, or require the subcontractor to have an independent expert verity that its I-9 practices and I-9 forms are compliant. One risk here is that the more hands-on the employer becomes, the more likely it will be found to directly employ, or to be a joint employer of, the subcontracted laborers. If an employment relationship is found to exist, the employer will be required to maintain its own I-9s for the subcontracted employees and will face other employment issues in connection with its status as an employer (or joint employer).

Preparing for the worst – the raid!

While employers can take steps to ensure that its workforce is made up of those who are authorized to work in the United States, counterfeit documents often appear to be more authentic than real ones, and inevitably unauthorized workers will find a way onto a payroll. In addition, it is impossible for an employer to control every action of its managers, and occasionally a manager will break company policy with regards to unauthorized workers, placing the employer at significant risk of liability. Employers can take steps to prepare for what is, in the workforce compliance context, the worst-case scenario: an ICE raid.

ICE Raid Preparation

ICE will often target employers in industries with a history of employment of unauthorized aliens, including construction. Raids occur when ICE, using investigative techniques, has collected substantial evidence of IRCA and other violations against a company. These techniques most often include tips from informants, evidence of SSA “mismatch” letters sent to the company, and/or I-9 audits revealing a substantial number of errors. Once ICE has compiled a significant level of evidence against the company, an application for a subpoena or warrant will be made, and ICE will then raid the worksite.

Preparing for a raid means training company personnel, including the company’s receptionist, front-line managers, and HR personnel, to ensure that ICE officers have a warrant, that the warrant reflects the company address, that the company’s attorney is contacted immediately when a raid begins, and then to record the raid events as carefully as possible to preserve evidence of any government wrongdoing. A company that has begun to experience warning signs of a raid (an I-9 audit, a spike in the number of employees listed on an SSA mismatch letter, union organizing, and/or increased levels of complaints about suspected unauthorized workers from within the company and from third parties) should ensure that key personnel, including those who work in reception, have easy access to telephone numbers for the company’s immigration, white collar crime, and employment attorneys.