Protecting Your Company from Fines and Debarment from Federal Contracts
Under theImmigration Reform and Control Act of 1986 (IRCA),employers who hire or continue to employ in the United States an alien knowing the alien is an unauthorized alien with respect to such employment face severe potential civil and criminal liability. Over the last few years, the government has taken a much more stringent stance towards these types of violations. In 2008 Immigration and Customs Enforcement (ICE) worksite enforcement actions resulted in 1,103 criminal arrests and 5,184 administrative (deportation) arrests, a 27 percent increase over the previous year. ICE secured nearly $21 million in criminal fines, penalties and forfeitures against employers in worksite enforcement cases and for the first time, launched federal contract debarment proceedings against seven companies. ICE indicted 135 business owners, managers, supervisors or human resources employees for criminal offenses including harboring, smuggling, and money laundering.
Under the current administration, the Department of Homeland Security (DHS) Secretary has directed ICE to refocus its investigative resources on prosecuting employers and company officials who knowingly hire illegal workers, increasing scrutiny and prosecution of business owners, hiring managers, and supervisors. As part of the new focus on criminal prosecutions, ICE is utilizing a variety of tools to uncover noncompliance, including informants, undercover agents, whistleblowers, and I-9 audits.
ICE raids launched in 2009 targeted over 1650 businesses in various industries around the country, and have thus far resulted in many companies being subjected to substantial fines, potential criminal charges, and major disruptions to business operations. Further, in 2009, ongoing investigations led to significant indictments and settlements. For example, pursuant to a non-prosecution agreement to resolve an ongoing investigation, a Fortune 500 poultry company agreed to pay $4.5 million and adopt more stringent immigration compliance practices to ensure that its workforce is composed of employees legally entitled to work in the United States.
Similarly, a well known agricultural company entered into a deferred prosecution and settlement agreement to resolve pending criminal charges, as well as civil and administrative violations, regarding the company's alleged hiring of undocumented workers. Under the terms of the agreement, the criminal case will be continued for two years to allow the company and affiliates to redress hiring and employment issues at its facilities. As a condition of the continuance, the company must adopt and maintain a compliance program to ensure that its hiring practices comply with federal law. In addition, the company will be required to:
- use E-Verify for all new hires;
- use Spanish language services to assist Spanish-speaking job applicants in completing I-9s;
- use the Social Security Number Verification Service;
- provide regular training to employees regarding lawful employment practices and procedures; and
- use an external auditor to conduct annual I-9 audits.
Finally, the company has agreed to pay $1.5 million to settle all criminal, civil or administrative claims that are pending or could be brought as a result of the investigation.
Other investigations in 2009 have led to fines and criminal prosecution at all levels, including company owners, managers and HR personal. Most of these ICE investigations included a close review of employer I-9 forms and Social Security Administration (SSA) No-Match letters.
Avoid Liability Due to the Violations of Your Subcontractors
Companies that regularly use contractors, particularly those which rely on a largely immigrant workforce, must ensure immigration compliance not only for their own employees but for their contractorsaEUR(TM) employees as well through implementation of defensive strategies. A landmark 2005 investigation and settlement against a large national retailer signified the governmentaEUR(TM)s refutation of long-standing beliefs in a lack of corporate responsibility for the illegal actions of independent contractors. The scope of the settlement also sent a message that the government will investigate and prosecute employers for its contractorsaEUR(TM) immigration violations to the fullest extent of the law.
The settlement in question followed a four-year investigation, after which ICE announced that the retailer would pay $11 million to settle a complaint based on the companyaEUR(TM)s hiring of independent contractors that employed unauthorized aliens. ICE claimed that the retailer, through the use of independent contractors, aEURoeknowingly employedaEUR? unauthorized aliens in violation of IRCA.
While the Department of Justice and ICE agreed to drop criminal charges against the retailer on the basis that it did not know at the time of engagement that the contractors were employing unauthorized aliens, the following three requirements were imposed upon the company:
. The retailer must establish a means to verify that independent contractors are also taking reasonable steps to comply with immigration laws
. The retailer must train all of its store managers regarding its IRCA obligation to prevent the knowing hiring, recruitment and continued employment of unauthorized aliens while also complying with pertinent anti-discrimination laws
. The retailer must continue to cooperate in the investigation of alleged illegal employment
Consequences of Discriminatory Practices
In addition to liability imposed for hiring or continuing to employ unauthorized aliens, IRCA also establishes civil penalties for discrimination via unfair immigration related practices. Further, separate civil penalties exist for actions having a disparate impact on protected classes, such as over documentation or rejection of facially valid documents. These fines range from $110-$1,100 per individual discriminated against, and in some cases, attorneysaEUR(TM) fees may be awarded. Individuals may also have claims under Title VII entitling them to wages, emotional distress damages, attorneyaEUR(TM)s fees and punitive damages.
State laws can also be implicated based on how employers handle termination of unauthorized aliens. In a notable example, the Ninth Circuit in Incalza v. Fendi North America, Inc., 479 F.3d 1005 (9th Cir. 2007) held that under the California Fair Employment and Housing Act, an employer should allow a reasonable period of leave for an employee to resolve employment eligibility issues rather than terminating the employee immediately. The court reasoned that an employer would not be aEURoecontinuing to employaEUR? an individual who was placed on unpaid leave, and therefore that there would be no IRCA violation where an employee whose work authorization expired was placed on leave. The court distinguished such cases from situations where employees aEURoeare indisputably not authorized to work.aEUR?
Danger areas in Visa Sponsorship
H-1B Visa Petitions
When an employer files a petition to classify a worker for H-1B status, the employer makes a series of attestations which cover, among other areas, payment of the required wage for the occupation. The required wage is defined as the higher of either the actual wage paid to similarly situated employees, or the prevailing wage as determined by the Department of Labor. This obligation extends until the expiration of H-1B visa status, until the employee voluntarily quits, or until the employer effectuates a bona fide termination. The employer is required to pay the wage at all times, meaning that the employer may not aEURoebenchaEUR? or place the employee on involuntary leave without pay. Affected employees can bring anti-benching claims for back pay, and the one-year statute of limitations on anti-benching claims is tolled until the employer effects an actual bona fide termination, which includes giving notice to the relevant agencies.
The Wage and Hour Division of the Department of Labor (DOL) reviews H-1B wage violations and may assess civil money penalties with maximums ranging from $1,000 to $35,000 per violation, depending on the type and severity of the violation, and may impose other remedies including back pay. Willful violators may be debarred from using the H-1B program and well as other nonimmigrant and immigrant programs for a period of one to three years. More than a dozen employers were barred from the H-1B program in 2009 for periods of 1-2 years.
In addition to DOL oversight, to detect H-1B fraud the U.S. Citizenship and Immigration Services (CIS) has recently begun conducting site visits where H-1B workers are employed. CIS contracts with third party investigators to conduct these reviews and auditors arrive with no notice and must be given access to work areas and H-1B Public Access Files. Both DOL and CIS regulations require that certain documents related to H-1B filings such as wage determinations be made available via a Public Access File. Failure to comply with these regulations can carry severe consequences including debarment.
Application for Labor Certification
Employers seeking to sponsor foreign nationals for permanent residence will frequently be required to make an application for labor certification. This process is to document that there are no qualified U.S. workers available and willing to take the position, and that the company will pay the prevailing wage for the position. The current labor certification system is known as the Permanent Online System or PERM and took effect in March of 2005. Current PERM regulations went into effect on July 16, 2007.
Major changes in the 2007 regulations include the barring of employees from paying fees towards their own labor certification applications, and a prohibition against using a labor certification for a different employee from the one originally named. In response to these changes, some employers have attempted to enter into reimbursement arrangements with employees. Any such arrangements entered into after the 2007 regulation change are in violation of DOL regulations and can lead to debarment from the labor certification process for both the employer and the attorney handing the matter. Criminal charges may also be brought in cases of fraud or willful misrepresentation. Likewise, misrepresentations in the application process, such as misinformation regarding applicants or recruitment, may lead to debarment and criminal charges.
Comprehensive Immigration Reform For Employers
While efforts in 2007 to enact new immigration legislation that would provide better enforcement of laws barring illegal entry and employment of undocumented alien workers failed, debate surrounding the need for Comprehensive Immigration Reform (CIR) continued and became a prominent part of President ObamaaEUR(TM)s campaign. The PresidentaEUR(TM)s commitment to CIR was exemplified by a December 11, 2009 statement from DHS Secretary Janet Napolitano that reforming the nationaEUR(TM)s immigration laws remains a top priority for President Obama, and that aEURoeWeaEUR(TM)re ready to go, and the President wants to get it done.aEUR? Secretary Napolitano did not provide details, but has stated that she seeks new legislation that would include aEURoebetter enforcement toolsaEUR? to address worksite violations. Consistent with this position, on December 15, 2009, U.S. Representative Luis V. Gutierrez, (D-IL) introduced a bill to overhaul the nationaEUR(TM)s immigration laws, the Comprehensive Immigration Reform for AmericaaEUR(TM)s Security and Prosperity Act of 2009 (CIR ASAP). CIR ASAP reflects some common reform elements in other recent immigration bills, but it remains to be seen what the final version of CIR legislation will include. Because legislation such as CIR ASAP may significantly increase agency actions against employers, companies are urged to join the discussion and make their preferences know to congressional representatives.
Greater Hiring Risks and Liabilities
If enacted, CIR ASAP would amend existing laws to require the Department of Homeland Security to develop and implement a new Electronic Employment Verification System (EEVS). Mandatory employer participation would be phased in over a period of time, and all employers would eventually be required to use the system to verify the identity and employment eligibility of new hires and employees referred for a fee. Employers would need to exercise care in complying with the proposed EEVS procedures. CIR ASAP provides for a new private cause action for damages against an employer where there is a final administrative finding that an EEVS determination that the employee was not employment authorized was the result of the employeraEUR(TM)s own acts or negligence. Under the proposal, in addition to damages, affected employees would be able to obtain reinstatement, back pay, and other remedies.
CIR ASAP would expand current grounds of unfair immigration related employment practices to include circumstances related to the employeraEUR(TM)s use of EEVS. Employers would be prohibited from: terminating the employment of individuals or taking any adverse action due to receiving a aEURoetentative non-confirmationaEUR? from the system;using EEVS to screen applicants for employment prior to making a job offer; using EEVS to reverify an employee after the employee had previously completed the employment verification process; using EEVS to selectively exclude certain individuals from consideration for employment as a result of perceived likelihood that additional verification will be required beyond what is required for most job applicants; using EEVS to deny workers employment benefits or otherwise interfering with their labor rights; or using the system to engage in any other unlawful employment practice.
Under CIR ASAP, the civil monetary penalties for unlawful hiring, recruiting and referral violations and for employment verification paperwork violations would double those under current law. Likewise, CIR ASAP would substantially raise criminal fines for unlawful pattern or practice violations from $3000 to $20,000 per unauthorized alien, and would extend the allowable term of imprisonment of responsible employer representatives from 6 months to 3 years. Government contractors who repeatedly violate prohibitions against employment of unauthorized aliens, fail to comply with employment verification requirements, and repeatedly commit unfair immigration related practices would face debarment from continuing participation in and receiving federal contracts and grants.
Increased Burden on Employers Seeking H-1Bs
Employers who petition for and employ H-1B temporary workers may face new requirements and restrictions under CIR ASAP. H-1B employers would be required to pay a higher level of wages, demonstrate actual recruitment of U.S. workers for the position through a 30 day internet job posting, and attest that the company has not indicated a preference to hire or use H-1B workers over other workers in its recruitment efforts.
Moreover, H-1B employers would be barred from being able to place, outsource, lease or otherwise contract for the services or placement of their H-1B workers with another employer unless the petitioning employer has obtained a waiver of the prohibition. Under the proposed rule, if the petitioning employer employs 50 or more employees in the United States, the total number of H-1B workers and L-1 workers in its employ cannot exceed 50% of the total number of employees.
To enforce these new requirements, CIR ASAP calls for establishment of additional statutory procedures for receiving complaints, conducting investigations, and allowing for the assessment of substantial fines for each violation, as well as debarment from the H-1B temporary worker visa program. Back pay awards to the aggrieved H-1B employees are also contemplated.
Conclusion
TodayaEUR(TM)s employer faces myriad challenges to maintaining immigration compliance. Even employers who are unaware of issues related to their employment practices can face severe financial and business consequences. Employers who knowingly violate immigration-related employment laws and those deemed to have constructive knowledge of such violations, face even greater consequences, including possible criminal liability. Looking to the future, proposed immigration reform only presents an expansion of such potential liability. Employers must be vigilant in ensuring that their companiesaEUR(TM) employment practices comport with Federal regulations. Employers must also be proactive and expeditious in addressing identified compliance issues. Action today can prevent disaster tomorrow.
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