WHO CAN WORK IN THE U.S. AND WHEN:
A PRIMER FOR EMPLOYER SANCTIONS

by Tim Murphy
Shutts & Bowen LLP

I.                    Overview of Employer Sanctions

It was not until 1986 that the U.S. sought to impose sanctions on employers for employing aliens who lacked employment authorization. Prior to that time the potential deportation of the alien employee was considered sufficient deterrent. The imposition of employer sanctions was not a minor undertaking, as it first required that an obligation to check worker documentation be imposed. This carried with it overtones of identity cards and police state identity checks.

However, in a surprise piece of quickly-passed legislation, Congress adopted the sanctions as part of the Immigration Reform and Control Act of 1986. Simply stated, the legislation imposed a requirement to check basic documentation of all employees, U.S. citizens as well as aliens, and it imposed sanctions both for failure to maintain proper paperwork and for knowing hire of illegal aliens. It also contained anti-discrimination provisions and set up an enforcement office for such violations.

Like most legislation, it was a compromise and was and is far from perfect. The anti-discrimination provisions forbade asking any questions beyond whether the person had the unrestricted right of employment. It required completion of a form (the I-9 Form) which require the employee, at the employees sole option, to produce either (1) a single List A identity and employment eligibility document (e.g., U.S. birth certificate, green card or employment authorization document), or (2) a combination of a List B identity document (e.g., a drivers license) plus a List C employment eligibility document, (such as an unrestricted social security card). Needless to say, the second option left a lot of room for production of false documents, since such items as drivers licenses and social security cards have traditionally been copied with ease, and social security cards have no photo or other identity features.

The rather stiff penalties for failure to maintain proper I-9 paperwork proved an irresistible lure to the Immigration and Naturalization Service (INS), an agency which had never been able to pay for themselves. Encouraged by top-level threats of strict enforcement, after an initial grace period they began to reap a windfall of revenue by targeting for inspection large employers of low wage individuals, who might be expected to keep less than perfect paperwork, e.g., the hotel, restaurant, garment and agribusinesses. Some of the paperwork violation proposed penalties were staggering. Failure to check a block, failure to sign in the right place, etc. all resulted in penalties. Sustained charges for actual “knowing hire” of undocumented workers was relatively rare. Finally, in 1996 Congress reacted and sent a clear message that routine paperwork errors were not to be targeted, by providing a “good faith” defense and allowing for a 10 day cure period.

II.                 Who is an “employee”

The starting place is defining who is “employed” such that verification and record keeping must take place. It stands to reason that if you could simply convert your employees to non-employees, e.g., “independent contractors” you could avoid a lot of problems. This was a difficult problem for the INS until they came to the conclusion that the Reagan Administration increase in payroll taxes had provided an even greater impetus for converting employees to independent contractors, and thus the IRS was also aggressively addressing the problem, so in the end they adopted the IRS guidelines by reference. They basically say that if you don’t provide your own tools and work at your own direction you are not an independent contractor; in other words don’t even think about it if you are not a plumber or electrician with a significant number of other customers.

III.               “Knowing Hire” or “Continue to Employ”

The thrust of the 1986 Act was to impose sanctions on employers who knowingly hire or continue to employ aliens who lack employment authorization. The term “knowing” includes not only actual knowledge but knowledge which may be fairly inferred through notice of certain acts and circumstances which would lead a reasonable person through the exercise of reasonable care, to know about certain conditions. Constructive knowledge may include, but is not limited to, situations where an employer:

1.                  Fails to complete or improperly completes the I-9 Form.

2.                  Has information available to it that indicate that the alien is not authorized to work, e.g., information obtained in filing for Labor Certification or an Immigrant Visa Petition.

3.                  Acts with reckless and wanton disregard for the legal consequences of permitting another individual to introduce an unauthorized alien into the workforce or to act on its behalf. 8 C.F.R. 274a.1(1)1.

The latter standard obviously covers such subterfuges as paying someone else to provide services of the unauthorized alien worker.

IV.              I-9 Compliance

The I-9 Employment Eligibility Verification Form (attached as Exhibit “1”) requires that the employer first secure an attestation from the employee that the employee is either a citizen or national of the US, a lawful permanent resident, or is authorized to work until a date certain. The employer then must attest that he has examined the documents present by the employee and that the employee appears eligible to work; this section requires the employer to list the document examined and the expiration date, if any, of either List A document or the List B and C documents. Note that the documents to be presented are entirely at the discretion of the employee.  If the employee indicates he is a lawful permanent resident in part one of the application and puts down an alien registration number, the employer cannot insist that he produce an resident card, the employee may instead chose to produce any document on List A or any documents from Lists B and C.

Most of the documents are self-explanatory. The INS has publication “Handbook for Employers” (M-274 rev. 11/21/91) that provides some more guidance.  The only real ambiguity in the Lists is item 7 under list C, which is an unexpired employment authorization document issued by the INS (other than the EAD form I-688B); this includes such student items as the I-20 ID card and Form I-94 for curricular practical training students and Exchange Visitors’ IAP-66 and I-94 cards, both of which will be rare items for employers.

Note that the verification must take place within three days of hire.  8 C.F.R. 274a.2(b)(1)(ii).  A related successor or reorganized employer whether by reason of corporate reorganization, merger or sale of stock or assets, need not complete a new I-9 for the inherited employees. 8 C.F.R. 274a.2(b)(1)(viii)(A)(7).  In all cases, employers must retain I-9’s for three years after the date of hire or one year after termination, whichever is later.  C.F.R. 274a.2(b)(2)(i).

V.                 Reverification - the real problem

The real problem seems to be with documents that expire. With the exception of the very rare student exceptions noted above which are found in List C (employment eligibility), we are talking about list A (both identity and employment eligibility) items. The problem can be divided into three areas:

1.                  Green cards for residents. Alien Registration Receipt or resident cards expire every ten years and must be renewed, but they are only evidence of a status, they do not confer a status, and the underlying status of lawful permanent resident that in all cases authorizes unrestricted employment, never expires. Thus, person with green cards valid for the full ten years never have to be re-verified even though their cards do expire. Conversely, those granted Conditional Resident status, whose cards are limited to two years, must be re-verified.  In either case, since the initial evidence of resident status is a stamp in the passport that says “I-551 pending” with an expiry date, a problem does arise due to the long delays in issuing the cards. Employers may rely upon the stamp in the passport but must limit the validity of the I-9 to the expiry date on the stamp and re-verify prior to expiration. Note that Conditional Residents are not being converted to permanent within the one year re-verification period for their cards, so they also have to get an “I-551 pending” stamp in order to remain legally employed.

2.                  I-94 Departure Cards. This is the white card issued when you enter the United States in a non-immigrant status, and the inspecting officer puts on the card the date upon which the period authorized stay will expire. In many cases, most commonly E, H, and L visas, employment is authorized incident to this status. It is important to note that the nonimmigrant “working visas” authorize employment based solely on the I-94 departure card, but only for the specific employer that sponsored the visa. 8C.F.R. 274a.12(b). Their employment authorization expires when the period of authorized stay on the card expires. Prior to the expiration of authorize stay you must file for an extension.  Fortunately, INS has given a grace period of 240 days from the expiry date. 8 C.F.R. 274a.12(b)(20).  Evidence of having filed a timely application for extension of stay in these categories is the INS receipt (Form I-797, Exhibit “3”).  Almost all extension applications are answered within this period and this seldom causes a problem. Unlike extensions, a receipt for a change of status, for example from a non-working visitor status to a working status or from one employer to another, does not provide a grace period and the employer must await approval of the application; however, a very recent change in the H-1B provisions now allows employers to rely on such receipts in changing from one H-1B employer to another.

3.                  Employment Authorization Documents. These look like resident alien cards or drivers licenses and are labeled “Employment Authorization Document.” They too have expiry dates and must be renewed, but INS has granted no grace period for timely filed extensions. This is a constant source of difficulty for employers as it takes120 to 180 days to receive a renewal, and most people assume that if you file before the expiration and present a receipt you will be OK. This is not true and technically the employer has no recourse but to terminate the employee until the card is renewed (many simply choose to run the risk of being fined in this case). You can help employers avoid this by making sure that they docket all EAD cards for renewal at least six months before expiration. Even if you file this early, their cards can run out. However, many District offices will have mercy on them and if more than 90 days have passed from the receipt date, by filling out a new form, with new pictures and paying the fee again, you can get the card issued the same day.

VI.              Penalties

1.                  Civil Penalties

a.                   For an unauthorized employment violation, an employer can face:

(i)                  $250 - $2,000 fine for each unauthorized individual;

(ii)                $2,000 - $5,000 for each employee if the employer has previously been in violation;

(iii)               $3,000 - $10,000 for each individual if the employer was subject to more than one cease and desist order.

b.                  For a paperwork violation, an employer may be fined $100 - $1,000 for each individual with respect to whom the violation occurred.

Factors considered in setting the fine level are the size of the business, the good faith of the employer, the seriousness of the violation, and the employer’s history.  Also, the Attorney General can bring a district court action seeking equitable relief (i.e., permanent injunction, etc.).

2.                  Criminal Penalties

Under INA § 274A(f), the penalty for a pattern and practice violation can be up to $3,000 for each unauthorized alien, imprisonment up to six months for the entire pattern and practice, or both.

VII.            Employment Discrimination

The Act created a new right of action for individuals who are discriminated against as a result of their citizenship status, which supplements the national origin discrimination of Title VII of the Civil Rights Act of 1964. Discrimination is specifically prohibited in hiring, recruiting, referring for a fee or discharging. Persons who hire four or more employees are potentially liable. It created an Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices to handle these complaints (in effect, only for employers of 4 to 15 employees, as those over 15 employees are under Title VII and the EEOC). Discrimination charges can be avoided by:

1.                  Treating everyone the same.

2.                  Not conducting verification until a prospect is hired (although verification information may be provided during the employment process). (EEOC Opinion Letter, June 17, 1993).

3.                  Limiting pre-hiring questions re work authorization to the following: “Do you have an unrestricted right of employment in the United States”.  (OSC Opinion Letter, September 13, 1989) or “Are you currently authorized to work for all employers in the U.S., or only for your current employer.  (OSC Opinion Letter, June 24, 1993).

4.                  A better practice may be to simply include the following questions authorized by the OSC (Opinion Letter, August 6,1998) on employment application forms:

Are you legally authorized to work in the United States?

Will you now or in the future require sponsorship for employment visa status (e.g., H-1B visa status)?