Ensure Your Workers Are Legal

Construction employers face a more difficult compliance task today than ever before. This is because the Department of Homeland Security (DHS) and its Bureau of Immigration and Customs Enforcement (ICE) began enforcing immigration law in the interior in the spring of 2006.Following a highly publicized raid upon IFCO Systems, Homeland Security Secretary Michael Chertoff announced that the government would be using every weapon at its disposal to investigate, prosecute and convict employers suspected of employing illegal workers. Since that announcement, DHS and ICE have radically stepped up enforcement efforts, bringing more and more resources to bear with a consequent result of a nearly tenfold increase in the number of arrests and indictments.

The use of criminal sanctions is a marked departure from the prior “hands-off” approach, and the consequences are serious. The penalty for harboring, concealing, smuggling or transporting an illegal alien can be as much as ten years in prison and/or a fine of up to $250,000.  

Chertoff also announced a change in the way the government would view the Social Security Administration (SSA) mismatch letter. (The SSA sends a “mismatch letter” to an employer if an employee’s name does not match the social security number in the SSA database.) Prior to April 2006, the government consistently took the position that receipt of the mismatch letter was not a basis for questioning an individual’s right to work. That position has been reversed, and DHS now takes the position that receipt of the mismatch letter puts the employer on constructive notice that the workers named therein lack authorization to work. Failure to take appropriate action upon receipt of a mismatch letter could result in criminal sanctions.

In June 2006, DHS proposed a “safe harbor” regulation specifically instructing employers on what to do upon receipt of a mismatch letter. The public commentary regarding the proposed regulation was uniformly against it. As a result, DHS did nothing in 2006 with the safe harbor rule. In the spring of 2007, DHS requested that Social Security not send out a 2007 mismatch letter pending action in Congress on comprehensive immigration reform. When it became clear that Congress was not going to enact any comprehensive immigration reform legislation, DHS published the final rule in mid-August 2007.  

The final safe harbor regulation was challenged in federal court in northern California. The court granted a preliminary injunction preventing DHS and Social Security from sending out the 2007 mismatch letters or otherwise enforcing the final rule. Note, however, that the rule is only a safe harbor mechanism; nothing prevents DHS from using the mismatch letter as an enforcement tool. Indeed, DHS has made it quite clear that it intends to continue using the mismatch letter as an enforcement tool while the litigation goes on and during its efforts to publish a revised rule. Thus, it is very dangerous for an employer to ignore prior mismatch letters and any other correspondence from the government that might put the employer on constructive notice that some workers may lack authorization to work.

Another enforcement development of particular concern to the construction employer occurred in mid-May 2006 when DHS raided Fischer Homes, a residential homebuilder. In late January 2006, a senior ICE agent visited a Fischer Homes property and asked permission to speak to workers. The agent and a Fischer Homes superintendent approached a work crew framing a house. The agent interrogated the workers in Spanish and later reported to the superintendent that some of the workers had confessed to being illegal. The Fischer Homes superintendent responded by noting that the workers worked for a subcontractor and not for Fischer Homes.  

This process was repeated at several other Fischer Homes jobsites. Two days later, the agent observed the same laborers working on the same houses, but nothing more was said to the company. In May, ICE raided those jobsites, rounding up seventy-five illegal aliens and arresting four Fischer Homes managers who were charged with harboring illegal aliens because they had actual knowledge that the workers lacked authorization to work but allowed them to continue working on the jobsite nonetheless. The lesson gleaned from the Fischer Homes raid is that an employer can be liable for its contractor’s or subcontractor’s employees if the employer has actual or constructive knowledge that those workers are illegal.

The construction industry as a whole is subject to a heightened risk of enforcement action. This is so because the government believes construction employers historically have employed substantial numbers of immigrants and therefore, are likely to be employing substantial numbers of illegal workers. This risk is compounded by the fact that the government is also focusing its enforcement efforts upon “infrastructure” projects (e.g., airports, ports/harbors, utility plants, military bases, etc.) that might be viewed as targets for terrorists. Thus, construction employers involved in new construction or renovation projects in infrastructure face an especially high risk of enforcement action.  

Prudent employers will take steps to reduce the risk of enforcement and the possible liability. Today, most enforcement efforts begin with an audit of I-9 forms. If the employer’s I-9 forms are in good shape, the risk of criminal sanctions is greatly diminished. Therefore, it is important to audit I-9 compliance, provide training if necessary and obtain expert review of forms and overall compliance. An employer that needs help conducting a self-audit should seek out a competent professional with experience defending against government audits. Most deficiencies on I-9 forms can be cured with relative ease.

Another practical step is an effective electronic I-9 completion program that contains built-in error checking, which thereby reduces the risk of I-9 errors. Software systems that automate the I-9 process are increasingly common and help the employer make the I-9 process paperless and more accurate.  

Construction industry employers should also consider taking advantage of the Social Security Administration’s online number verification system. This system is reliable, instantaneous and free, and the use of this system will help ensure that the employer does not receive mismatch letters in the future, which should reduce exposure and liability.

Because employers can now be held liable for their contractor’s or subcontractor’s noncompliance, it is especially important to make contractors aware of the need to improve their own compliance. In addition, it is a good idea to have contractors and subcontractors periodically certify they believe that they are in compliance with U.S. immigration law and do not knowingly employ illegal aliens. Contractors and subcontractors may wish to take advantage of the situation from a marketing standpoint by including such certification language in their proposals and bids. Obviously, employers with actual or constructive knowledge that employees of their contractors or subcontractors are illegal must act promptly to remove those workers from the workforce.  

It is very likely that DHS will publish a revised “mismatch letter” safe harbor rule sometime in the next three to six months. Final implementation of a safe harbor regulation may cause widespread termination of workers who appear on a mismatch letter. This, in turn, will cause a labor shortage that will affect all employers, including those who do not receive mismatch letters. All of this suggests the need to take action now to gradually eliminate illegal aliens from the workforce, while at the same time increasing efforts to recruit and retain legal workers.

Unfortunately, it appears unlikely that Congress will enact comprehensive immigration reform legislation in the near future. Proponents of stricter enforcement and proponents of leniency are just too far apart to reach a compromise. This means that new legislation is increasingly likely at the state, county and local levels. Many construction employers may find that bidding on public-sector work may require more onerous and more difficult compliance steps.  

Finally, all employers should remain alert regarding enforcement activity in their area and industry. As the events of the last two years clearly demonstrate, immigration continues to be a complex and difficult problem to resolve. It is clear, however, that enforcement is here to stay, and all employers—especially those in the construction industry—need to take timely, effective steps to reduce their risk of an enforcement nightmare.

Construction Business Owner, February 2008