State and Federal Immigration Reforms Could Make E-Verify the Norm

By D. Jeffrey Craven

Originally published in the June/July 2013 edition of Hardwood Floors Magazine.

By now, most of us have heard of the infamous “SB1070,” a law enacted in Arizona in 2007 that addressed compliance with immigration laws, particularly for employers. This law was bemoaned by minority groups as discriminatory, and by employers for the additional burden imposed upon them. Employers face potential penalties for non-compliance, effectively making them an extension of the government’s enforcement agencies with respect to immigration policy. For the most part, though, it merely enhanced and supported federal policies dating back to 1996 that were designed to reduce the number of illegal aliens getting jobs in the U.S., particularly the program known as “E-Verify.”

Nothing New

E-Verify is a program by which employers and workers submit worker information contained on the federal I-9 form, along with the documentation reviewed by the employer as part of the I-9 compliance, to a website. The information is electronically compared against various federal databases to verify its accuracy. The employer is either notified that the worker is authorized to work in the U.S., or, if there are discrepancies, the employer is notified that it needs to have the worker submit additional information to confirm eligibility for employment.

Flooring contractors who have done work for the federal government are likely familiar with this program, as federal contractors have been required to comply with E-Verify since late 2009. However, most U.S. employers were not required to participate. SB1070 changed that for Arizona, requiring all employers to participate in E-Verify for new hires after January 1, 2008. Since the U.S. Supreme Court largely determined that the Arizona law was constitutional, other states have begun adopting similar laws.

Getting with the Program

For most employers, the E-Verify program will mostly be a nuisance and some additional overhead cost to first register through the E-Verify program and then conduct an E-Verify review on each new hire or rehire. Beyond that, both U.S. and states’ immigration laws provide for severe penalties for employers who knowingly or intentionally hire illegal workers (e.g. up to $10,000 per violation), and the requirement for E-Verify compliance has led to a corresponding increase in compliance audits.

There are additional costs that employers may incur for which, at present, there is too little data to quantify. For example, locating and hiring new employees places a significant burden on employers, in addition to the costs of advertising for employment, interviewing prospective employees and record-keeping for new hires. Even in “right to work” states like Arizona, where employees can’t be required to join unions, a new hire can be difficult to terminate. The E-Verify program adds to the tightrope that an employer must carefully walk to verify a worker’s authorization to work in the U.S. while ensuring that its processes do not expose it to claims of discrimination. An employee whose documentation results in a mismatch in the E-Verify system cannot immediately be fired by an employer, yet the employee’s continued presence creates additional burden and risk. What employer wants to train an employee that may ultimately be legally unemployable and therefore subject to termination? Thankfully the incidence of false negatives (where E-Verified workers were found to be unauthorized) is very low. According to a 2009 audit, false negatives in the E-Verify initial screening occur less than 1 percent of the time.

What About Worker Fraud?

The same 2009 audit reported that E-Verify had only a 46 percent success rate in finding unauthorized workers, and that one of the E-Verify’s weaknesses was its ability to find instances of false or forged documentation. Meanwhile, the I-9 rules mandate that an employer cannot require specific documentation or demand alternative documentation if the documentation presented on its face appears to be legitimate. In other words, so long as the new employee presents facially valid documentation, the employer is required to accept it. While participation in E-Verify may offer a buffer for an employer from claims of “knowingly” or “intentionally” hiring an unauthorized worker, compliance with I-9 and E-Verify may not fully shield the employer who knows that the documents presented, while facially accurate, are false, forged or stolen.

Employers may be exposed to other avenues of fraud as well. For instance, while employers have always been exposed to workers who “game” the system through false workers’ compensation claims, the E-Verify program creates a unique opportunity for abuse, since an employer may not immediately terminate an employee who receives a “tentative non-confirmation” notice through the E-Verify process. That employee has a certain amount of time through which to file documentation to support their right to work. While such an employee may ultimately be determined not authorized to work in the U.S., if the employee suffers (or falsely claims to suffer) an on-the-job injury, for instance, the employee may still be entitled to participate in workers’ compensation. Conversely, if the employer fires such an employee following the initial screening, the employer risks being sued for not complying with the law and for discriminating against the employee. While the process is being appealed, the employee may still be entitled to his or her salary.

Additionally, an employer cannot avoid potential exposure by hiring workers as independent contractors. While employers may avoid the burden of E-Verify compliance by using independent contractors, they remain exposed to potential sanctions if they knew that the independent contractors were not authorized to work in the U.S.

The Road Ahead

According to the U.S. Customs and Immigration website, as of 2012 there were only 404,295 employers enrolled in E-Verify. A flooring contractor choosing to participate may initially be at a competitive disadvantage compared with those flooring contractors who do not participate. However, participation does give a contractor a “rebuttable presumption” of compliance with U.S. law, and likely with state law for those states mandating participation. As more contractors comply with the law, the playing field should level, and increasing compliance audits and the risks associated with non-compliance should drive more contractors to participate. While compliant contractors may not be able to compete with non-compliant contractors that purposefully hire undocumented and unauthorized workers, over time those non-compliant contractors should become easier to identify and report for such non-compliance, thereby being forced to shut down.

Meanwhile, businesses that rely heavily upon temporary labor, and particularly migrant workers, will likely be hardest hit. In Arizona this has had a significant impact on flooring contractors, because historically, the skilled labor force that performed installs were typically migrant workers from Mexico who would work for whichever flooring contractor needed the labor. Hiring labor only as needed kept overhead low for the employing contractors, while the lack of verification processes permitted undocumented workers the opportunity and flexibility to earn income in the U.S. without the complexity, time and cost associated with obtaining a U.S. work visa. This situation calls to attention the continued need for immigration policy reform, which likely will come through the combined lobbying efforts of minority groups, non-governmental organizations, farming organizations and trade associations.

However, in the interim, flooring contractors need to be mindful of the requirements of the state(s) in which the contractor operates. Even if the state in which the contractor operates does not require compliance with E-Verify, it appears that this is a trend that will gradually be adopted throughout the U.S., so the savvy contractor should plan ahead to avoid lost productivity and minimize both the potential increased cost and the potential exposure for non-compliance.