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Compliance Issues Put Recruiters on the Hot Seat

February 15, 2008
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Related Topics: Immigration, Staffing and the Law, Featured Article, Recruitment, Staffing Management
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With immigration law enforcement actions rising, employers who have not trained their recruiters in new state regulations and federal I-9 compliance run the risk of stiff penalties and jail time.

    Most experts agree that comprehensive immigration reform is dead in the current election-driven environment, and until new federal legislation is enacted, recruiters will be caught in the crackdown on undocumented workers that is sweeping across whole industries.

    New draconian state laws and federal raids leave recruiters with responsibilities that can lead to violations with heavy penalties.

    "We’ve never seen corporate executives go to jail before," notes Lynda Zengerle, partner and head of the immigration practice at Steptoe & Johnson in Washington. "Now it is commonplace."

    Immigration and Customs Enforcement policy now entails an explicit shift to criminal arrests for workplace immigration law violations. In fiscal year 2007, ICE made 863 work-site criminal arrests of corporate officers, managers and contractors, up from 25 in 2002, and 4,077 administrative arrests, up from 485 in 2002. ICE officers commonly stage raids at the workplace and then move straight to corporate headquarters.

    "We will continue to see an increase in enforcement," says Frieda Glucoft, partner and chair of the immigration and naturalization practice at Mitchell Silberberg & Knupp in Los Angeles. "It’s a harsh climate. I-9 audits are exhausting. Most employers are very forthcoming and have good systems, but the rules change almost daily."

    On November 7, the Department of Homeland Security published a new Form I-9 and a companion employer handbook. As of December 26, employers are in violation of the law if they are still using the old I-9 forms. "Some big companies are very organized and doing a very good job with compliance," Zengerle says. "They follow up with questions if they are uncertain about the requirements."

    But other companies are in disarray, she adds.

    "We are in a big mess because individuals are now responsible for hiring illegal aliens but they don’t monitor the actions of their HR and recruiting departments. They just assume everything is in order, and some of these executives are going to jail."

State complications
   In addition to the new I-9 compliance issues, recruiters face a hugely complex collection of state laws. By the close of 2007, state legislatures passed nearly 250 new laws related to immigration. A new West Virginia statute sets stiffer penalties for employing unauthorized workers, including fines, jail sentences and revocation of business licenses. A 2007 Tennessee law also includes the temporary suspension of the employer’s business license as a penalty for hiring illegal immigrants.

    Arizona’s new statute is the most severe, and the new model for states moving toward a crackdown. Under the Legal Arizona Workers Act, which went into effect January 1, all business owners in Arizona risk losing their state and local licenses if they knowingly or intentionally hire undocumented workers. Employers must check the legal status of new hires using E-Verify. An employer’s business licenses can be suspended for 10 days for a first offense and revoked for a second offense.

    The new law is already changing the face of recruitment in Arizona. Some employers are centralizing their recruitment functions to limit the risk that recruiters and hiring managers at individual locations may violate the law. Others have instituted a hiring freeze until recruiters complete training programs and establish controls to avoid violations.

    With an estimated 350,000 undocumented immigrants working in the state and one of the lowest unemployment rates in the nation, recruiters in Arizona now face a huge challenge in filling jobs at the lower end of the pay scale. Widespread reports of immigrants relocating to other states or returning to their home countries indicate tighter labor markets ahead.

    Lawsuits contesting the Arizona statute are still moving through the federal courts.

    "If the Arizona law is upheld, we will see many states follow," says Bonnie Gibson, managing shareholder of Littler Mendelson’s global corporate migration law group in Phoenix. "If these states adopt the same business license punishment, the stakes will be large. They have the power to wreak havoc at the local level."

Training programs
   For I-9 compliance, the federal government’s June 2006 list of best practices is a good starting point, according to Betsy Stelle Morgan, partner and head of the international executive transfer practice group at Baker & McKenzie in Chicago. She suggests that employers should also analyze their workforce and their past experience with immigration, review their protocols for I-9 compliance and install an I-9 compliance officer. I-9 compliance is particularly important in the context of mergers and acquisitions.

    Establishing strong policies and protocols for handling I-9s can help protect the company if there is an investigation. "Employers should take a proactive approach by establishing internal I-9 protocols and conducting both internal and external I-9 audits on at least an annual basis," Morgan advises.

    Morgan has seen a notable increase in federal enforcement actions.

    "The message from the federal government is that it will not only enforce the law, but it will also expose immigration issues to the media, with the potential for reputational damage to the company," she says.

    Recruiters are now walking a fine line between immigration laws and anti-discrimination laws.

    "For recruiters, the key is that immigration status is not ripe until an offer is extended and accepted," Morgan notes. The only permissible question until then is whether the candidate is authorized to work in the United States. Immigration status should not be a factor in the hiring decision.

    Unnecessary verification may violate the Immigration and Nationality Act’s anti-discrimination provisions.

    "This creates a difficult situation, but careful training on I-9 compliance can help recruiters feel comfortable with the process," Morgan says. "The company should include in the I-9 training program all recruiters and employees who have contact with applicants and new hires through the onboarding stage."

    Zengerle also advises employers to include all recruiters and employees involved in the hiring process in I-9 workshops or seminars.

    "It’s important to provide a focused session to get everyone on the same page for I-9 compliance," she says. "The time and money will be well spent and will save the employer heartache. Recruiters need to have their questions answered to avoid problems. The law is constantly changing."

    The training program should walk recruiters though the I-9 documents.

    "Many recruiters don’t know what the documents listed on the back of the I-9s should look like and have no idea of what they should and should not accept," Zengerle says. "We’ve seen recruiters accept documents where the applicant pasted a new photo over an existing photo."

    The training should include information on penalties so recruiters are fully aware of the consequences for improperly completed I-9s. To ensure that recruiters stay abreast of new developments, employers can sign up for the distribution lists of any number of law firms that send out bulletins on changes in immigration laws, Zengerle notes.

E-Verify
   With the spike in federal enforcement actions and new state laws, more employers are signing up for the federal E-Verify program as a safeguard in hiring.

    "E-Verify may be a good fit for some employers," Morgan says. "Companies should review the memo of understanding for E-Verify to see if they need to register."

    An employer who verifies work authorization under E-Verify establishes a rebuttable presumption that it has not knowingly hired an unauthorized alien, but E-Verify does not provide a safe harbor from work-site enforcement.

    Zengerle advises all employers to use E-Verify.

    "There’s no downside, and it is an important step in compliance," she says. "Smithfield Foods, for example, lost a very significant number of its employees in ICE raids, but no one went to jail because the company had been using E-Verify for years."

    Zengerle advises employers to sign up for E-Verify, not ICE’s Mutual Agreement between Government and Employers (IMAGE) program. Launched in 2006, IMAGE employers use E-Verify and submit to ICE reviews of hiring practices.

    "IMAGE requires the government to come into the workplace and audit all I-9s, and employers should be wary of this," Zengerle notes. "IMAGE is useful because it verifies all employees, unlike E-Verify, which only verifies new hires, but some industries would be shut down if employers used IMAGE. Agriculture is a good example. We would all be paying $10 for a head of lettuce."

    E-Verify continues to draw fire, however. Although Arizona’s new law requires employers to use the system, Illinois passed legislation in August 2007 that barred its use, but then backed off after the federal government filed a lawsuit challenging the Illinois law. Other states are actively debating the use of E-Verify. In the meantime, recruiters across the country face a barrage of conflicting requirements.

    "We are looking at many Arizonas on the horizon," Gibson says. "Congress and the federal agencies are at fault, but they are never going to point the finger at themselves, and there is some employer-bashing going on here. It’s nativist."

    The broader problem for employers and recruiters is that the nativist sentiments fanned by the debate over illegal immigration spill over into issues concerning all work visas.

    "You really need to divide the world of foreign nationals into two buckets: skilled and unskilled," Gibson says. "The risk we face is that analytically and legally, they are separate issues, but politically, they have become conflated."

    HR executives and recruiters should be working to help shape public opinion on the immigration issue, Gibson notes. If the country goes the way of Arizona, recruiters will be looking at hundreds of thousands of open positions they simply cannot fill.

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