Wall Street Journal
By Miriam Jordan and Julia Jargon
September 12, 2013
The U.S. government has launched a fresh crackdown on employers suspected of hiring illegal immigrants by notifying about 1,000 businesses across the country in recent weeks they must submit documents for audits.
The so-called "silent raids" are the largest since July 2009 when just as many companies were notified, according to immigration attorneys, and weren't publicly disclosed by Immigration and Customs Enforcement, the agency that conducts such inspections.
When asked about the audits, ICE responded that the agency inspects company hiring records "when necessary…to ensure compliance with U.S. employment laws." An ICE official added, "the names and locations of the businesses will not be released at this time due to the ongoing, law enforcement sensitive nature of the inspections."
The new employment audits hit restaurants, food processing, high-tech manufacturing, agriculture and other industries that together employ tens of thousands of workers, according to attorneys representing some of the companies.
The audits happened just before the close of the government's fiscal year, which ends Sept. 30. Last year, the Obama administration audited 3,004 companies, according to DHS.
"It's crazy. I think we are going to exceed last year's tally," said Kevin Lashus, an attorney at the Austin office of Jackson Lewis LLP, who is handling 30 cases in a range of industries in Texas, Florida and other states.
The audits suggest the Obama administration is choosing not to ignore companies that hire blue-collar, foreign labor even as it presses for an immigration overhaul, which is languishing in Congress, to put many undocumented immigrants on the path to legal status.
"The latest audit push demonstrates that the government is not suspending its enforcement efforts, even during the debate on immigration," says Julie Myers Wood, former ICE chief during the Bush administration and now a compliance consultant.
Mr. Lashus, who worked as an ICE counsel before entering private practice, said the Obama administration is using stepped up enforcement to "drive employers to get off the sidelines and contact government representatives" to press for a revamp of the immigration system.
While the audits don't lead to the deportation of a firm's illegal workers, they lose their jobs if discovered. Critics of the crackdown say it drives more immigrants to exploitative, off-the-books work. For employers, the audits can lead to deep losses in productivity, in addition to civil and criminal fines, and many workers end up getting hired by competitors..
Typically, ICE sends a notice of an audit to a business demanding documents, including I-9 employee eligibility forms, worker rosters and payroll sheets. After examining the documents, ICE issues a "notice of suspect documents" to the company, listing workers with mismatched names and Social Security numbers or fake IDs. At that point, the employer must inform the workers that authorities have challenged their right to work and that they must quit unless they show legitimate papers. After an employer takes action, ICE issues fines for both clerical mistakes on forms and the hiring of illegal workers.
Angelo A. Paparelli, an attorney at Seyfarth Shaw LLP who represents janitorial, grocery and food preparation companies, said the government has slashed the time it gives employers to find and train replacement workers, to about 20 days from three to four months, which "avoided disrupting or closing the business," he said, deeming the new policy potentially a "deadly blow" to employers.
In the last four years, the government has audited at least 10,000 employers suspected of hiring illegal labor and imposed more than $100 million in administrative and criminal fines. Two Texas companies, Atrium Corp. and Advanced Containment Systems Inc., last year agreed to each pay $2 million to avoid criminal prosecution for hiring unauthorized foreign workers. HerbCo International Inc., a Washington state-based supplier of organic herbs, agreed last year to pay $1 million in fines for employing unauthorized immigrants and rehiring some of them after an ICE audit.
About 11 million undocumented immigrants live in the U.S. and about 8 million of them are in the workforce, according to researcher Pew Hispanic Center. The majority of workers in agriculture are unauthorized, and other businesses, especially in services, also employ undocumented immigrants. In 2012, more than 38% of ICE audits were directed at restaurants, according to Freeman Mathis & Gary LLP, a law firm with offices in Atlanta and California.
Jennifer Roeper, an immigration attorney with Fowler White Boggs in Tampa, Fla., said even if no undocumented workers are discovered, employers can be fined for paperwork errors, such as an inaccurate employee start date. She said fines can range from $110 to $1,110 a form, depending on the violation, which can add up to several thousand dollars for a business employing dozens of workers. Employers can appeal the fines, often leading to a reduction. A blog that Freeman Mathis & Gary attorney Kelly Moul recently posted on the firm's website cited several restaurants, including three Subway sandwich shops in North Carolina, as businesses that succeeded in reducing fines. The Subway franchisees didn't return calls seeking comment.
Gary Rodriguez, president of operations for 14 El Rancho Grande restaurants in Ohio, said its Germantown, Ohio, restaurant was audited in early 2012. No undocumented workers were found, he said, but paperwork errors resulted in a $27,500 fine, which didn't get reduced. The company paid another $7,500 to have an immigration attorney handle the case and review the I-9 forms of the other 13 restaurants to make sure they were filled out correctly.
Eileen Scofield, an immigration attorney with Alston & Bird LLP in Atlanta, said that recent audits have been "deeper in scope and more intense" as the government has moved from requesting basic paperwork to demanding weekly work schedules, names of managers, lists of temporary staffing agencies used and even a company's articles of incorporation, among other things.
"The administration appears to start with the presumption that employers are not telling the truth about their listed employees," said Ms. Scofield, whose clients include farmers, airlines and tech companies.
One of the highest-profile targets of immigration audits in recent years was Chipotle Mexican Grill Inc. CMG -0.43% In late 2010, the chain lost about 450 Minnesota workers, between 30% and 40% of its employees there. Chipotle lost additional immigrant workers in Washington, D.C., and Virginia after officials expanded scrutiny.
Last year, the burrito chain announced it was under federal investigation over possible criminal securities law violations related to communications to investors of work-authorization compliance. The company has said it is cooperating fully with the investigation. A Chipotle spokesman said the investigation is ongoing and that there have been no further changes.
To fend off enforcement, more employers in recent years have begun using the government's E-Verify electronic system that flags new hires who aren't eligible to work in the U.S. But lawyers say that doesn't protect employers from getting busted because the system doesn't check the status of workers hired years ago.
Sometimes immigrants figure out how to evade E-Verify. A Minnesota food production facility that has used the system for almost a decade was recently informed by ICE that more than half of its workers had problematic work documents.
"The government is saying they have 10 days to terminate these individuals," said Amy Peck an attorney with Jackson Lewis LLP in Omaha, Neb. She said it was her fourth case in six months of employers who had thought their workers were legal because they passed E-Verify. "It blows my mind," she said, adding that the plant would likely close and that the community would be "devastated."
In their quest to avoid running afoul of the law, employers sometimes become overzealous by requesting too much documentation from workers. In June, the Macy's department store chain agreed to pay fines and revise its employment policies after workers complained about discriminatory practices involving immigrant workers, leading to a Justice Department investigation.
For more information, go to: www.beverlyhillsimmigrationlaw.com
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