Corporate Immigration Compliance For Our Time
Human resource departments are responsible for overseeing and implementing a company’s "immigration corporate compliance" obligations. The state of flux of US immigration law makes it difficult for human resources professionals to know with what they must do to keep their employer compliant. The days of "easy" compliance are long gone; today’s immigration law is complex, always changing and confusing. The US government has become more active in enforcing immigration laws against employers. In response to 9/11, the government has increased security measures and electronic initiatives to address national security concerns. The increase in the government's immigration policies is manifesting itself in a resurgence of government audits and criminal investigations of US employers. Government search warrants, worksite raids and audits have become standard investigative tools to assist in the enforcement of immigration laws.
Each year the Social Security Administration (SSA) sends correction requests, known as no-match letters to thousands of US employers. Employers responding to no-match letters might be tempted to ask employees for new documents, suspend, or even terminate workers who cannot produce a new Social Security card. Before responding rashly and risking violations of other federal and state laws, employers need to understand that no-match letters are simply requests corrections (after all, they are called employer correction requests). Employers should not treat a no-match letter as notification of an immigration violation, however, should consider the consequences of not dealing with the request properly.
Each year employers must provide every employee with a Form W-2 Wage and Tax Statement and transmit an executed copy to the IRS. The SSA is often unable to post earnings to an employee’s SSA account because of inconsistencies in with the employee’s Social Security Number (SSN) or name. Billions of dollars cannot be credited to the proper SSN holders. SSA holds these reported earnings in "suspense accounts," which now exceed US$300 billion. To reduce the number and amount of suspense account postings SSA began to issue employer correction requests.
SSA cannot penalize employers for supplying incorrect SSN information – or for failing to respond to a no-match letter. The SSA can provide no-match information to the IRS. The IRS can investigate, audit, and ultimately fine, an employer based on the information provided by SSA.
The IRS can fine employers for each W-2 Form filed with an incorrect SSN. If the IRS determines failures resulted from an employer’s intentional disregard of the information reporting requirements can go up to 10 percent of the amount to be reported correctly, without an annual limit. The IRS can also institute its own criminal investigation. (See recent US Immigration and Customs Enforcement (ICE) raid and IRS criminal investigation of Fischer Homes, Inc.)
Department of Homeland Security Secretary Michael Chertoff's recently announced that enforcement of immigration laws will be a "collaborative effort" and DHS plans to enlist the cooperation of the IRS, SSA and the US Department of Labor (DOL). In other words, this "cooperation" could allow SSA’s no-match information to flow to DHS regularly, which could provide reasonable basis to conduct its own investigations of employers for potential immigration violations. (ICE recently raided IFCO Systems on information provided by SSA). 
In SSN not-matches, the "events beyond an employer’s control" require the employer to show that the failure resulted from employee failure to provide a correct SSN and that the employer had relied upon the incorrect SSN in good faith. Furthermore, the employer must establish it acted in a responsible manner, both before and after the failure occurred. To prevent problems, employers should check their records for a discrepancy in recording the information by comparing the employees’ W-4s to the SSNs reported to SSA. If there is an inconsistency, employers should contact affected employees and former employees to notify them of the problem and request they correct the discrepancies at an SSA office and then advise the employer of the result. Employers should use the information received from employees to correct the employer’s records. If discrepancies persist or employees and former employees do not report changes, employers should follow-up with employees and former employees at the end of the current tax year. Again, the employer should send a form notice. The employer should send yet another notice at the end of the next tax year.
Employment Verification Procedures
The Immigration Reform and Control Act of 1986 (IRCA) requires employers to verify the employment eligibility of employees and penalizes employers who knowingly hire or continue to employ a foreign national not authorized to work in the United States. Because of the penalties of noncompliance with I-9 processing, employers should consider implementing a regular system of verifying employment authorization or I-9 procedures that are operating adequately.
IRCA sets out the I-9 process for the employer to both confirm that an employee is authorized to work yet at the same time prevent certain types of discrimination against employees. In the I-9 process, the employee presents documents demonstrating his or her authorization to work at the time of hire. The IRCA prohibits discrimination and "document abuse" for example, requiring an applicant to produce more documents than needed for I-9 compliance or refusing to honor a document that reasonably appears on to be genuine. These anti-discrimination and document-abuse provisions of IRCA prohibit employers from double-checking an employee’s employment authorization documents except in very limited situations.
Employers must also consider timing. Failure to conduct I-9 verification within the correct period is itself a separate basis for a finding of a paperwork violation. Within three business days of commencement of employment, the employers must complete the I-9 verification process. Employers should also review the verification documents presented by the employee and compare any identification information on the documents to the employee.
An employer who wants to limit the hiring of employees who have time limited employment eligibility should have a consistent employment policy devoted to the hiring of protected individuals under IRCA. Some protected employees will nevertheless have an expiration date for employment eligibility that they will list in Section 1. Employers should screen out applicants ineligible under its hiring policy before reaching the I-9 form.
Once the I-9 process is complete, the employer has fulfilled its duty to ensure that it employed an authorized worker. The employer requires no further action unless it acquires "actual or constructive knowledge" that an employee does not have employment authorization. If an employer acquires actual or constructive knowledge that an employee does not have employment authorization, it must terminate the employee.
Employers, however, should conduct internal audits systematically and take corrective actions when necessary. Doing so shows an indication of the employer’s good faith in attempting to comply as closely as possible with I-9 verification requirements. Good faith compliance is extremely beneficial because it serves as an affirmative defense to a charge of knowingly hiring or continuing to employ an unauthorized alien. A finding of failure to comply with IRCA can subject employers to civil penalties. Engaging in a pattern or practice of violating IRCA can subject an employer to a criminal penalty of up to US$3,000 for each unauthorized employee and imprisonment for up to six months.
Labor Condition Applications and Public Inspection Files
Immigration regulations require that each company wishing to employ foreign nationals in H-1B status, in specialty occupations or professions, must file first a Labor Condition Application (LCA) with the DOL. As part of the LCA process, employers are required to document that they have complied with the posting requirements and attestations listed on the LCA.
A Public Inspection File (PIF) including the LCA and its supporting documentation must be available for public examination at the principal place of US business or at the place of employment within one working day after the filing of the labor condition application. For a year after any H-1B immigrant’s last day of employment, their employer must retain copies of the records under the labor condition application. Employers must retain the payroll records for the H-1B employees and other employees in the occupational classification for three years.
Employers should keep PIFs separate from the H-1B worker’s personal and I-9 files. For each H-1B, a PIF should be available for inspection. The following documentation should be included for each PIF: a copy of the certified labor condition application (Form ETA 9035 or Form 9035E) and cover pages (Form ETA 9035CP). Files should also include documentation explaining the H-1B immigrant’s wage rate and how the employer set the "actual wage" and "prevailing wage." Employers should also retain documents demonstrating how the employer has satisfied the union or employee notification requirements. Employers should include a summary of the benefits offered to US workers in same occupational classification as H-1B nonimmigrant and describe any difference in employee benefits between US and H-1B workers.
Where the employer is H-1B dependent or willful violator, a summary of the recruitment method used and the time frames used and the time frames of the recruitment of US workers or copies of pertinent documents showing this information. If the H-1B employer utilizes the definition of "single employer", a list of any entities included as part of the single employer in making the determination as to its H-1B –dependency status. When the H-1B employer is H-1B-dependent or a willful violator, and indicates on the LCA(s) that only "exempt" H-1B nonimmigrant will be employed, a list of such "exempt’ H-1B non immigrants. If the employer undergoes a change in corporate structure, a sworn statement by a responsible official of the new employing entity accepting the former company’s obligations, liabilities and undertakings under the LCAs, together with a list of each affected LCA and its date of certification and a description of the actual wage system and EIN of the new employing entity.
If the employer does not comply with LCA regulations, a DOL finding that the employer has violated the LCA requirements, such as "willful" failure to pay the required wage rate or "substantial" failure to post a notice of the LCA filing.
For filing an LCA which is found to misrepresent a material fact, civil money penalties can be imposed up to US$1,000 per violation, a notice of USCIS and ETA regarding debarment from H-1B1 program, and any other actions the DOL deems appropriate including fines up to US$10,000 and possibly five years imprisonment.
Civil money penalties, debarment from H-1B1 program and any other actions the DOL deems appropriate may result from the failure to pay required wages, provide required working conditions or willful misrepresentation of a material fact on the LCA. Employers face the same penalties for filing an LCA during a strike or lockout, failing to provide required notice, to be specific on the LCA, not making available to the public the LCA and its documentation or failing retain documentation.
Other Immigration Compliance Issues: Documents Foreign National Employees Should Carry With Them
Although not falling directly under the purview of corporate employers, it is always advisable for employers to advise their foreign national employees, who are age 18 or older, and who are in the United States, that US law requires all foreign nationals to carry with them "any certificate of alien registration", which means to have in their personal possession at all times evidence of their US immigration status. Failure to comply with the law is punishable as a misdemeanor and carries a fine of up to US$100 or imprisonment of up to 30 days, or both.
In sum, the safest course for companies to take is to establish consistent and fair immigration compliance procedures and must act carefully in maintaining accurate immigration records in good faith.
1 ICE recently published a proposed rule to amend the regulations relating to the unlawful hiring or continued employment of unauthorized aliens (8 CFR §274a). The amended regulation describes the legal obligations of an employer that receives a "No-Match Letter" from the Social Security Administration (SSA) or the DHS. The proposed rule also describes ''safe-harbor'' procedures that an employer can follow to secure protection. The proposed amendments to the regulation are not yet in effect. They are subject to a 60-day public comment period ending on August 14, 2006.
© Hector A. Chichoni
Hector A. Chichoni practices law with Squire Sanders & Dempsey LLP and co-chairs the immigration practice in Florida. He focuses on all aspects of US immigration law and global human resources strategic planning. Mr. Chichoni has a vast legal background and experience which covers 10 years of practice in US immigration and complex export control matters. He is an author, a legal presenter, and a lecturer in both fields.
The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.