Immigration Reform Deal: Should Businesses Be Forced to Act as Border Cop?

According to many lawmakers and administration officials, the latest immigration deal places “border security and enforcement first.” But will businesses get pushed around in the process?

Under the deal, the American workplace will be made a central hub for enforcing immigration law. A labyrinth of new systems, rules, paperwork and penalties has been proposed that would affect every workplace and every worker in America. But just how much of this job should American businesses be required to shoulder? Quite a bit, if the deal struck by a group of bipartisan senators and Bush administration officials becomes law.

(Editor's Note: the author reviewed a May 18, 2007, 11:58 p.m. version of the immigration bill, which, is still “evolving.” However, many of the worksite enforcement measures outlined below have been included in previous drafts.)

At the center of the effort to track and identify illegal immigrants is the Employment Eligibility Verification System (EEVS) — a federal government database where, if and when fully operational, all employers would be mandated to verify the identity and employment status of new and existing employees through a Social Security number match-check. The federal government could require certain employers – like federal contractors, and those in involved in critical infrastructure and national security-related industries – to comply immediately with EEVS requirements upon enactment of the law.

The Department of Homeland Security (DHS) could require additional employers or industries to comply shortly thereafter. Within 18 months of enactment, all employers would be required to electronically verify every new employee. Three years after enactment, all current employees would have to be checked through EEVS.

Employers would be required to transmit, via the Internet, worker identify and work eligibility data to the EEVS. This would occur “no earlier than the date of hire,” but no later than the first day of employment. (When EEVS cannot conclusively determine a worker’s status, he or she can appeal the result. The employer must get in writing from the employee that he or she was alerted to the problem. The individual can work through the resolution process. If an employer receives a final “non-confirmation,” the worker must be terminated.)

An employer “cannot make the starting of an individual’s employment contingent on the receipt of a confirmation of the identity and employment eligibility.” An employer cannot fire an employee solely because there are issues with their number match — that is, before “nonconfirmation” is final, and while the appeals process is working its course. If an employee feels that he or she has been somehow wronged by an employer (for example: a reduction of salary, suspending the employee without pay, reducing hours, or denying the employee the training to do his or her job), as a result of a mis-match or no-match, and during the appeals process, the employee can file a complaint with the Department of Labor.

With respect to hard-copy examination of documents, the employer “must attest, under penalty of perjury” on a DHS form that he or she has verified the identity and work authorization status on the employee by examining the correct documents. At any time the DHS has cause to believe that an employer has failed to comply with the law, it may require that the firm certify that it is in compliance or has developed a program to do so.

With respect to record keeping in general, the employer would be required to inspect, copy, catalog and retain (for up to 7 years after the date of hiring) work authorization documents; as well as EEVS confirmation and correspondence related to number matches, mismatches, no-matches and employer efforts to resolve or clarify issues related to the validity of an employees identity or work authorization. The retained documents would have to be made accessible to several federal agencies for inspection and review if such requests are made.

If an employer fails to comply with any requirement of verification or recordkeeping they could pay a civil fine of $1,000 per violation. Fines increase from $2,000 to $15,000 (per incidence) for violating verification or recordkeeping procedures on a repeated basis (more than once in some cases). An “employer is presumed to have acted with knowledge or reckless disregard” if he or she “fails to comply with written standards, procedures or instructions issued by the Secretary.”

With regards to the use of labor through contracts, subcontracts or exchanges, if an employer uses such “to obtain the labor of an alien in the United States knowing that the alien is an unauthorized alien” the employer shall be considered to have hired that person or persons and be held in violation of the law.

The DHS gives itself regulatory authority to make employers include in written contracts (or subcontracts and exchanges) an “effective and enforceable” requirement that the contractor or subcontractor adheres to U.S. immigration laws and uses the EEVS. DHS also may develop procedures where an employer can check with the government to determine if the contractor has registered with EEVS and is using the system to verify employees. Finally, DHS “may establish such other requirements for employers using contractors or subcontractors as the Secretary deems necessary to prevent knowing violations.”

Naturally, the Internal Revenue Service (IRS) is allowed to enter this worksite enforcement fray. A unit would be established within the IRS Criminal Investigative office to focus on businesses that employ people not authorized to work in the United States. Financial penalties would be vastly increased for employers who “fail to file correct information returns.”

Overall, penalties for hiring or continuing to employ illegal aliens would be stiff (“knowing or with reckless disregard that the alien is an unauthorized alien.”) Civil penalties range from $5,000 per illegal worker, up to $75,000 for repeat violators (meaning having been fined more than twice). Federal contractors who violate the law would obviously be debarred.

Bottom-Line Analysis:

According to a Small Business Administration Office of Advocacy study, small businesses already spend $7,647 per employee to comply with federal regulations (note: this is federal regulatory costs only, and does not include state and local rules.) Requiring firms to absorb yet another regulatory function on the magnitude outlined above will be costly and complex.

Under such a scheme — particularly as it relates to paperwork requirements and reporting (and now, document retention) — as much as the government may try to develop clear standards for compliance, there can be no doubt problems will erupt regarding inspections, paperwork audits and inconsistency when policing business for paperwork and EEVS-use violations. Such a system has the potential to be a cash cow for the government, and expensive and time-consuming for business.

Raymond Keating, chief economist with the Small Business & Entrepreneurship Council (note: the writer’s group) summed up his analysis of the deal after reviewing several of its provisions, including worksite enforcement:

“The burdens, risks and potential penalties placed on small employers would be considerable under this plan, as they would be forced to expand their role of playing immigration police for the government, and rely on untested and intrusive government databases,” he said.

Now mind you, piecing together an immigration reform bill has been no easy task. Key players who have negotiated this “grand compromise” have endured tortuous meetings and re-writes. For the most part, the business community realizes that the final approach will include compromises. Indeed, there has been an expansion of programs to allow more temporary workers into the U.S. to fill vacant jobs, as well as more skilled workers.

It’s no news that the current approach is broken, and the government has failed miserably in securing the nation’s borders and managing the immigration system. Reasonable interests want to strike the right balance in advancing a comprehensive reform package.

Unfortunately, it appears American businesses have become the fall guy (or gal) for cleaning up a mess created by government. Placing excessive burdens on business misses the point, and may yield more costs than benefits.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council, a research and advocacy group based in Washington, D.C. that works to protect small business and promote entrepreneurship. She is also founder of Women Entrepreneurs, Inc. , an association helping women business owners succeed through education, networking and advocacy. Kerrigan can be reached at .