States have joined the immigration fray out of frustration over our porous borders and lack of federal enforcement of existing laws designed to keep illegal immigrants from being employed. Here’s a survival guide for employers caught in the crossfire of state and federal regulations.

Federal Regulation of Employment Eligibility verification

The Immigration Reform & Control Act of 1986 (IRCA) prohibits employers from knowingly hiring, or continuing to employ, any person not authorized to work in the United States.

Within three business days of the start of employment, an employer must verify a new employee’s identity and authorization to work. To document this verification, the employer must complete a Form I-9 (Employment Eligibility Verification Form). Employers are not required to complete Form I-9 for independent contractors.

When hired or on the first day of work, the employee must complete Section 1 of Form I-9 and provide
documentation of identity and work eligibility. The presented documents must be originals and include one document from the Form I-9’s List A, OR one document from List B AND one from List C. In 2007, Congress revised the list of documents acceptable for establishing identity, and the Department of Homeland Security (DHS) has since published new I-9 forms on three separate occasions. Lists of acceptable documents are shown on page 2 of the new form, which has “Form I-9 (Rev. 02/02/09) N” printed on its lower right corner. The latest version of the form can be found at uscis.gov/i-9.

The employer must review the presented documents and complete information about them in Section
2, Employer Review and Verification. The reviewer must attest that the documents “appear to be genuine.”

The forms are not submitted to any agency. Rather, they must be kept on file by the employer and made available to DHS, U.S. Immigration and Customs Enforcement, the U.S. Department of Labor or other federal agencies in connection with any audits by such agencies.

For years, IRCA was subject to only minimal enforcement. Perhaps the law’s greatest impact was to create a cottage industry of document counterfeiting. A federal crackdown in recent years on the hiring of illegal workers has spurred greater compliance from employers who once considered modest administrative fines a cost of doing business.

Sanctions can be imposed on company officials for hiring unauthorized workers, improperly completing Form I-9, and failing to complete Form I-9. Fines start at $110 for “paperwork” violations, but company officials can be fined up to $11,000 for each unauthorized worker and can be imprisoned for engaging in a “pattern or practice” of knowingly hiring or continuing to employ unauthorized workers.

E-Verify

Originally called the Basic Pilot Program, DHS’s E-Verify program is a voluntary, Internet-based system that allows employers to verify electronically the employment eligibility of their newly hired employees. So far, participation in the program is free. By law, E-Verify cannot be used to pre-screen prospective employees.

Employers can elect to use E-Verify at some work sites and not others. However, each site that signs up to use E-Verify must use it for all new hires at that site.

To use E-Verify, employers log on to a DHS Web site. They enter information on a screen form, using information they already have from the Form I-9. The Social Security Administration (SSA) database then checks the validity of the name and Social Security number. For foreign-born employees, the DHS database checks the employee’s work status.

Most new hires whose names are submitted via E-Verify — about 93 percent — are found to be work authorized. Employers receive responses to most inquiries almost immediately, but some initial queries require manual confirmation by DHS employees.

E-Verify can be a time-saver, especially for employers with a high percentage of foreign-born workers. It identifies unauthorized workers long before “no match” letters from the SSA are triggered by annual W-2 forms.

However, critics claim the E-Verify system has serious flaws. According to a government-commissioned evaluation, the system is vulnerable to erroneous data submitted by employers.
Something as simple as transposing two digits in a Social Security number or misspelling a name can potentially lead to harsh consequences. If the employee cannot resolve the discrepancy, he or she must be dismissed.

New Rules for Federal Contractors

On June 6, 2008, President George W. Bush issued Executive Order 13465, titled “Economy and Efficiency in Government Procurement through Compliance with Certain Immigration and Nationality Act Provisions and the Use of an Electronic Employment Eligibility Verification System,” providing that “[e]xecutive departments and agencies that enter into contracts shall require, as a condition of each contract, that the contractor agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment of: (i) all persons hired
during the contract term by the contractor to perform employment duties within the United States; and (ii) all persons assigned by the contractor to perform work within the United States on the federal contract.” The Federal Acquisition Regulation (FAR) was therefore amended to require federal contractors to use E-Verify, which is the system designated to implement the Executive Order.

Beginning September 8, 2009, federal contractors and subcontractors will be required to use the
E-Verify system to verify their employees’ eligibility to work legally in the United States. This new rule requires federal contractors to agree, through language inserted into their federal contracts, to use E-Verify to confirm the employment eligibility of all persons hired during a contract term, and to confirm the employment eligibility of federal contractors’ current employees who perform contract
services for the federal government within the United States. Federal contracts awarded and solicitations issued after September 8, 2009, will include a clause committing government
contractors to use E-Verify. The same clause will also be required in subcontracts over $3,000 for services or construction. Contracts exempt from this rule include those that are for less than $100,000 and those that are for commercially available off-the-shelf items. Companies awarded a contract with the federal government are required to enroll in E-Verify within 30 days of the contract
award date. They also need to begin using the E-Verify system to confirm that all of their new hires and
employees directly working on federal contracts are authorized to work legally in the United States.

Injunction Leaves New DHS Rules and Employers in Limbo

Even without the burdens of widely varying state regulations, many employers are confused by
federal processes for verifying employment eligibility. In some cases, an employer’s staff must navigate a bewildering maze of rules and make difficult choices and interpretations that presume a great deal of legal knowledge.

Much of the confusion centers on so-called Social Security “no match” letters. The SSA attempts to match E-Verify inquiries and W-2 forms, both of which contain a worker’s name and Social Security number, with valid Social Security numbers in its database so that reported earnings can be posted to the right records. When information in an E-Verify inquiry or Form W-2 doesn’t match the database, SSA sends the employer a “no match” letter. The letter is not a notification of any wrongdoing by the employee or employer — innocent reasons for mismatches include misspellings, transpositions, unreported name changes, and other inaccuracies or clerical errors.

Regulations issued by DHS on August 15, 2007, defined the steps employers and employees should take to resolve no-match letters. In general, the rules gave employers 30 days to determine if the mismatch resulted from a clerical error, and an employee had 90 days from the date the employer received the mismatch letter to clear up any discrepancy with SSA. The new regulations also gave employers a “safe harbor” from immigration sanctions based on no-match letters if they followed
certain procedures.

The new DHS rules sparked an uproar from employers. Many feared that under the rules, the mere receipt of a no-match letter would constitute “knowing” employment of unauthorized workers, subjecting company officials to criminal liability and civil fines.

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In October 2007, a U.S. district court found serious defects in the regulations. The court issued a preliminary injunction, rendering the rules unenforceable until DHS issued a revised no-match rule. Meanwhile, the SSA suspended its plans to issue no-match letters to 140,000 employers, based on 2006 W-2 forms, until revised DHS rules are issued.

On March 26, 2008, DHS published a supplemental proposed rule that attempted to clarify its August
2007 final rule. However, as of this writing, the injunction remains in effect. Employers and their immigration attorneys, as well as the SSA and several other government agencies, are
in limbo awaiting the final no-match rule. Some observers predict that any changes are unlikely before Congress again tackles immigration reform, which may not happen until September 2009 or later.

Meanwhile, DHS’s pre-August 15, 2007 rules and polices remain in effect. For employers trying to decide what to do, that’s a double-edged sword. On one hand, the old rules put employers under less onerous obligations than the new rules would have imposed. On the other hand, employers would be wise to use the waiting period to prepare for “the worst case” by setting up procedures for complying with the more rigid rules.

In any case, employers need to be diligent in completing Form I-9. Most human resources professionals take pride in their attention to detail — a trait that is definitely required for this task. Still, employers are advised to implement self-audit procedures to detect any problems.

While only a small fraction of U.S. employers currently participate in E-Verify, usage is expected to soar.

A suggested protection for employers is to warn applicants and new employees, in writing, that they can be fired for any falsehoods on their application or other employment forms. The warning should be among the first documents shown to a new employee. It can be a form the employee signs, or a paragraph that the human resources professional points out in the company’s employee handbook.
The following is suggested text for the warning in an employment application:

I understand and agree that the information that I have provided on this application is true and complete to the best of my knowledge. Any misrepresentation or omission of any fact in my application, résumé or any other materials, or during any interviews, can be justification for refusal of employment, or, if employed, termination from [company name]’s employ.

An employer’s obligation to ensure that its employees are eligible to work doesn’t stop with initial completion of the Form I-9. If the employer later believes that an employee’s I-9 contains false statements or was based on fraudulent documents, a new I-9 must be completed, or the employee can be dismissed as part of a non-discriminatory policy against false statements.

U.S. Citizenship and Immigration Services (USCIS) provides a helpful training aid for HR staff on using the new Form I-9. USCIS’s Handbook For Employers: Instructions for Completing the I-9 contains answers to frequently asked questions and up-to-date explanations of employer obligations. The Handbook For Employers can be downloaded at uscis.gov/files/nativedocuments/m-274_3apr09.pdf.

Georgia Takes Initiative at State Level

Lack of immigration reform at the federal level prompted state legislatures to fill a widely perceived void in enforcement of existing U.S. laws. Even before Congress failed to pass immigration reform legislation in 2007, states began to act.

Seeking to discourage employers from hiring illegal immigrants, Georgia enacted its own employment verification law. On April 17, 2006, Governor Sonny Perdue signed into law the Georgia Security and Immigration Compliance Act (SB-529). The act, which became effective July 1, 2007, was one of the first state laws requiring employers to verify the immigration status of new hires. Georgia’s law became a model for subsequent legislation in other states.

The law requires all public employers — defined as any department, agency or instrumentality of Georgia or its political subdivisions — to verify that all newly hired employees are eligible to work in the United States. The same requirements apply to businesses contracting with state, county or municipal governments. The law applies to all contractors and their subcontractors, including contract employees, staffing agencies and “any contractor regardless of tier.” Effective July 1, 2009, all public employers, contractors and subcontractors, regardless of size, will have to comply.

To verify worker eligibility, Georgia requires the employer to register for and use a “federal work authorization program,” meaning the EVerify program operated by USCIS and the SSA. During its 2009 session, the Georgia legislature passed HB-2, which expands portions of SB-529 by adding law enforcement verification requirements and adding agencies that will have to use the Systematic Alien Verification of Entitlement (SAVE) program. Governor Perdue signed the measure into law on May 12, 2009.

Rules necessary for administering and enforcing the act have been published on the Georgia Department of Labor’s Web site dol.state.ga.us/pdf/rules/300_10_1.pdf.

E-Verify and the States

The Department of Homeland Security encourages employers to participate in the E-Verify program. While only a small fraction of U.S. employers currently participate in E-Verify, usage is expected to soar as more states require contractors, subcontractors or all private employers to enroll in eligibility verification programs.

According to USCIS, about 112,000 employers were using E-Verify as of January 2009, with about 1,000 additional employers signing up per week. DHS predicts 300,000 total users in fiscal 2009. That amounts to just five percent of the six million U.S. employers — or 13 percent if you only consider companies with more than four employees (based on U.S. Census Bureau statistics for 2005).

The table below provides a snapshot of which states, as of March 2009, have enacted legislation requiring employers to use E-Verify. Developments in this arena occur almost daily, so to determine the status of legislation in specific states, employers are advised to consult with immigration attorneys.

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Compliance Issues for Multistate Employers

A company with employees in multiple states, or contracts in multiple states, should determine how it can comply with a bewildering, ever-changing labyrinth of state and federal regulations. The greater the variety and number of state laws one must deal with — even if only for sporadic hiring needs in distant branches — the more complex the compliance burden will be. Large companies operating in many states probably won’t find a single, straightforward eligibility verification process that can minimize risk, start-up effort, training needs and administrative costs.

To frame its options, management will need to first analyze the legislative landscape of all states where the company has public contracts or may hire new employees. Use of E-Verify will be required in some of these states, and possibly forbidden in others. Some states will require the company to maintain copies of worker-supplied verification documents, thereby increasing administrative costs and opening the door to audit violations. And other states will have different compliance requirements and forms for public contractors. Obviously, employers that need a state-by-state approach to compliance face a difficult situation. Even if an employer strives to stay up to date on laws in all states where it hires employees or bids on public contracts, there may be pitfalls and consequences.

Be Careful Swimming in Murky Waters

For employers with a relatively small, stable work force located in one or even a few states, compliance
may be easy to achieve. Employers with more complex situations, however, will not be so fortunate.

Large, multistate employers trying to monitor or navigate the landscape of federal and state employment laws and regulations will soon be mired in a legal minefield of enacted legislation — some with provisions now in effect, others with provisions scheduled to take effect at various future dates, and still others in limbo pending judicial decisions. Compounding the confusion, employers must deal with contradictory provisions of the various laws, unclear or yet-to-be-issued regulations, unanswered questions and unforeseen pitfalls. And that’s before a multitude of proposed laws are brought into the picture. With such complicated issues, clear answers to your specific circumstances may require counsel from experts in employment and immigration law.