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Employers and Hiring Practices Are Targets in Immigration Debate

Any immigration law that eventually emerges from Congress is likely to contain more employer responsibilities and sanctions.

June 9, 2006
Related Topics: Immigration
It’s anybody’s guess what the ultimate configuration of immigration reform will be once the political dust settles. But it is safe to assume that the days of minimal liability for hiring undocumented workers will start to fade away, says Louis DeSipio, assistant professor of political studies and Latino studies at the University of California, Irvine.

   "There will be a greater onus on the shoulders of companies to be more careful in their employment practices," DeSipio says.

    This increased liability will, in all likelihood, bolster workforce management-related expenses. Just how dramatic the rise will be remains to be seen, but DeSipio contends that the main costs will probably be embedded in the additional bureaucracy of hiring employees, closer monitoring of subcontractors and potential increases in payroll.

    Employers in the service industry that require large numbers of inexpensive, low-skilled workers will feel the pinch. But it is companies in lodging, agriculture, construction and meat processing--where experts estimate that illegal immigrants account for up to 25 percent of the workforce--that could feel strangled by the new legislation.

    Executives in these industries say they are all for sensible immigration reform and that, for the most part, the new Senate bill is more acceptable than the one that floated around the House of Representatives some months back. The new legislation, however, is far from ideal, they note.

    The lodging industry is particularly concerned about issues of liability, both pertaining to the verification of worker documentation and to the use of subcontractors, says Shawn McBurney, vice president of the American Hotel & Lodging Association in Washington, D.C.

    The 10,000-member trade and advocacy organization worries about of the accuracy of the Department of Homeland Security's Basic Pilot Program, which is a database used for verifying the legal status of workers. Homeland Security's database has an average error rate of 1.4 percent, McBurney says. This rate, however, could increase once more participants join the system, potentially exposing hospitality employers to inadvertently hiring undocumented workers, he explains.

    In 2004, there were 3,625 employers that participated in the program, a number that would increase exponentially if the bill became law.

    "People should not be held accountable for the mistakes of others," McBurney says.

    What's more, the burden of document verification will drive up costs for the industry. The sum may seem small--a proposed 25 cents per initial query and up to 48 cents per additional verification--but it isn’t chump change for the industries in question. Employers in the hospitality business, for example, are known for hiring high volumes of workers and are plagued by high turnover rates.

    Another source of anxiety for the hospitality industry stems from proposed language in the House’s current version of the immigration reform bill that suggests employers could be liable for the actions of their subcontractors. Should this aspect of the bill come become law, it would virtually be a 180-degree departure from the current protocol in which subcontractors carry the responsibility of hiring decisions.

    This could be a hard blow to the hospitality industry, where subcontracting is widely practiced to meet demand for large volumes of workers. Many of the 1.5 million workers in the hospitality industry were hired through subcontractors, allowing employers to save money, reduce paperwork and avoid the hassle, McBurney explains.

    Subcontracting can get quite convoluted because, oftentimes, subcontractors hire other subcontractors, muddying transparency and hindering accountability.

    "Employers cannot be expected to keep track of every single subcontractor," McBurney says.

    Nevertheless, with proposed fines of up to $20,000 for employing undocumented individuals, companies may be hard-pressed to be more vigilant over how their subcontractors operate.

    The Associated Builders and Contractors, which has more than 23,000 members, is also uneasy about the accuracy of verification and the liability of using subcontractor for staffing needs. But its foremost concern is in the realm of wages, particularly as it pertains to the Davis-Bacon Act of 1931, according to Danielle Ringwood, senior director of legislative affairs for the Arlington, Virginia-based group.

    Language in the new immigration reform bill alludes to the possibility of expanding the Davis-Bacon Act, which requires that all on-site employees working on federal construction projects receive compensation that is in line with the market average.

    The new bill could expand into new pockets of the workforce, including temporary guest workers in the private sector, which worries the organization because it will jack up the cost of projects and make its members less competitive in the bidding process. The cost of public construction projects is 5 percent to 38 percent higher than those in the private sector, largely a byproduct of the Davis-Bacon Act.

    For its part, Tyson Foods, the world's largest meat processing company, is a strong proponent of immigration reform, says Gary Mickelson, a Tyson spokesperson. Although he declined to talk specifically about the new immigration legislation, Mickelson did voice one general concern. Echoing concerns in the lodging and construction industries, Tyson, which employs about 114,000 workers and is already a voluntary participant in the Department of Homeland Security's Basic Pilot Program, is also uneasy about the reliability and limitations of verification tools.

    "If the government is going to place employers in the role of policing, it should give (business) better tools to do the job," Mickelson says.

    Tyson is also a member of the Essential Workers Immigration Coalition, an advocacy group that favors the legalization of undocumented taxpaying workers and the implementation of guest worker programs, among other initiatives.

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