Pivec Immigration Compliance08

Immigration Worksite Enforcement Update: Federal Contractor Verification Rules, No Match Letters, I-9 Audits, Criminal Enforcement, and State Employer Sanctions Laws Mary E. Pivec, Esq. Keller and Heckman LLP 1001 G Street N.W., Suite 500W Washington, D.C. 20001 202-434-4212 [email_address] www.khlaw.com Washington, D.C. ● Brussels ● San Francisco ● Shanghai December 4, 2008

Agenda Topics ICE/State Worksite Enforcement Worksite Immigration Crimes and Penalties New developments in Administrative Audits, I-9 Requirements, CMP’s SSA No Match Litigation Update E*Verify Developments FAR EV NPRM – Federal Contractors Civil RICO Suits – Immigration Crimes & Conspiracies Future of Immigration Reform in 111 th Congress McNulty Memo, IMAGE, and Corporate Compliance Plans

New Era in Immigration Worksite Enforcement Not dealing with the INS of old More and better trained Special Agents dedicated to investigating worksite immigration crimes Joint document fraud task force operations in 17 cities (SSA/OIG, PS/OIG, DOJ/FBI & USATT) Access to nationwide immigration fraud/crimes data base - 24/7 Civil enforcement out – Criminal enforcement in

Unauthorized Workers in the Construction Industry Insulation workers --- 36% Roofers and dry wall installers – 29% Passel, Jeffrey, “The Size and Characteristics of the Unauthorized Migrant Population in the U.S.,” March 6, 2006, Pew Hispanic Center.

FDMP Rule 41 Search Warrant – Lessons Learned Genesis of investigation Joint operation with SSA/OIG – access to SS data base and no match information Use of wired confidential informants and sophisticated surveillance equipment Reliance on terminated managers for labor violations and immigration conspiracy evidence Suspicion of PEO operations

Major ICE Enforcement Actions, 2007-2008 Koch Foods Swift & Company George’s Processing, Inc. Cargill/Quality Service Integrity, Inc. Fresh Del Monte Produce Pilgrim’s Pride Agriprocessors Howard Industries

Factors Suggesting Increased Risk of Ice Enforcement Complaints from local citizens and elected officials Arrest and interrogation of unauthorized workers Recent I-9 audit and Notice of Suspect Documents Unresolved Social Security No-Match Letters Prior INS/ICE NOIF or Warning Letter Housing and transportation assistance Identity fraud complaints Union tips - employee abuse, underpayment of wages Proximity to DHS staging facilities and task force units Facilities in immigration backlash and/or 287(g) jurisdictions

48 States Now In the Immigration Enforcement Business Criminal Sanctions for harboring, transporting or assisting illegal aliens in any way – Oklahoma Loss of business license if found knowingly employing undocumented workers – Arizona, South Carolina, Tennessee Mandatory E*Verify for All State Employers – Arizona, South Carolina (phase in beginning with employers of 100 employees on 1/1/09), Mississippi (phase in beginning with employers of 250 employees on 7/1/08) Mandated participation in E*Verify for State Contractors and Subcontractors – Arkansas, Colorado, Florida, Georgia, Idaho, Massachusetts, Minnesota, Mississippi, Missouri, Rhode Island, South Carolina, Tennessee Oklahoma Wrongful discharge CA for US workers displaced by UA – Mississippi, South Carolina

State and Local 287(g) Agreements – There are currently 47 active 287(g) MOA’s More than 1000 local police officers officers have been trained and certified through the 287(g) program as deputy immigration officers There is a strong correlation between 287(g) communities and worksite investigations

Immigration Crimes and Prosecutions Felony Hire Felony Harboring Aiding and Abetting Conspiracy Money Laundering

Felony Hiring Violation 8 USC §1324(a)(3) Elements Actual knowledge that foreign workers were smuggled into the U.S. in violation of law Actual knowledge of illegal immigration status at the time of hire At least 10 individuals in 12-month period Maximum imprisonment – 5 years Maximum Fines – greater of $250,000 or 2x financial gain

What Constitutes “Actual Knowledge” Employee confession: “ I’m illegal” “ I don’t have papers” “ My papers are no good” “ These are not my papers” Government proof : Admissions made on wire Witness testimony

Felony Harboring Violation 8 USC §1324(a)(1)(A)(iii) Required Elements Knowledge – Actual or constructive (reckless disregard standard ) that a person has come to, entered, or remains in the U.S. in violation of law Conduct – Harboring, concealing, or shielding from detection said person – thereby “substantially facilitating” the alien remaining in the U.S. illegally Intent – To evade or avoid detection by law enforcement Maximum Imprisonment – 5 yr./10 yr. (commercial advantage/financial gain) Maximum Fine – greater of $250,000 or 2x financial gain

What May Constitute Evidence of “Constructive Knowledge” (Reckless Disregard) Knowledge of expired DHS Employment Authorization Document (Failure to Update I-9) Failure to act reasonably in response to DHS notice of Suspect Documents/Unauthorized Status SNNVS “No Match” Response – No reasonable response Failure to act reasonably in response to SSA No Match Letter Rehiring workers using new documents and new identities Inspection of a foreign passport, foreign birth document, visa application or labor certification application during I-9 process

Conspiracy to Harbor 8 USC §1324(a)(1)(A)(v)(I) Required Elements Agreement with at least one other person Harbor at least one UA One act furthering goal of conspiracy Maximum Imprisonment – 10 years @ violation Maximum Fine – greater of $250,000 or 2x gain

Evidence Found Sufficient to Sustain Harboring Charge Providing housing or transportation to unauthorized workers Paying unauthorized workers through a third party or subcontractor, or paying a contractor while knowing or recklessly disregarding that the contractor and/or his workers are undocumented Cashing checks made payable to 1099 subcontractors Tipping off employees of ICE presence Failing to investigate No Match letters (beware individual letters and SSNVS no matches garnered by payroll software) Accepting documents known to be fraudulent for I-9 purposes Assisting employees in obtaining fraudulent documents

Recent Criminal Cases in Construction 8/7/08 – Ana & Dionel Barrios plead guilty to hiring and harboring roofers hired through a subcontractor agreement with Taylor Made Roofing 7/30/08 – CFO of Cincinnati drywall company (Spectrum Interiors) was sentenced for harboring for commercial gain. Company present, Jeff Wolnitzek, was previously sentenced to 8 months. Key evidence provided by wired labor contractor who supplied the illegal labor.

Recent Criminal Cases in Construction November 15, 2007 – Owner and six managers of a N. Kentucky framing contractor, Progessive Builders, sentenced for conspiracy to harbor undocumented aliens. Owner Robert Pratt received 18 months. His children, who ran Quality Construction and HJP Construction, were each sentenced to 12 months and a day, and three years’ probation (first six months – home incarceration), respectively.

Felony Money Laundering 18 U.S.C. § § 1956/1957 Requires proof of a financial transaction conducted in the proceeds of “specified unlawful activity” 18 USC §1956(c)(7) predicate crimes include harboring, attempting to harbor, aiding and abetting harboring and conspiracy to harbor Maximum Imprisonment – 10–20 years @ violation (depending on added circumstances) Maximum Fines - $250,000 or 2x gain (§1956); greater of $500,000 or 2x amount laundered (§1957).

Criminal Asset Forfeiture 18 U.S.C. §982(a)(6)(a) Requires felony conviction Separate count to be considered by the jury Allows Government to claim all assets used in commission of the crime as well as the proceeds of the crime Major bargaining chip in plea negotiations

The McNulty Memorandum Articulates factors to be considered by federal prosecutors in pursing criminal action against business organizations Nature and seriousness of offense Pervasiveness of wrongdoing within History of similar conduct Timely and voluntary disclosure of wrongdoing Existence and adequacy of pre-existing compliance program

The McNulty Memorandum Voluntary remedial actions – implementation or improvement in compliance plan; discipline or removal of wrongdoers; restitution; cooperation with prosecutors Collateral consequences Adequacy of prosecution of individual wrongdoers for business malfeasance Adequacy of remedies such as civil or regulatory enforcement actions

Elements of an Effective Corporate Immigration Compliance Program Standards and procedures reasonably capable of reducing risk of criminal acts, with compliance responsibility vested at highest corporate level Due diligence/checks and balances built into system Universal corporate compliance training – boardroom to shop floor Detailed written guidelines for managers and supervisors Effective auditing and monitoring procedures Hot line mechanism for reporting alleged violations anonymously and without fear of retaliatory action Prompt investigation of all complaints, followed by prompt remedial action Strong disciplinary action for intentional violations

Recommendations for At-Risk Facilities Reissue your corporate policy prohibiting the employment of undocumented workers, and threatening disciplinary against any manager or supervisor for knowing violations. Adopt an anonymous tip line for reporting suspected policy violations Promptly investigate and resolve all reported violations.

Recommendations for At-Risk Facilities Retrain all facility personnel engaged in the preparation of Form I-9’s to ensure knowledge and understanding of the latest document verification requirements. Consider implementation of SSNVS and/or E*Verify procedures companywide or on a pilot basis.

Recommendations for At-Risk Facilities Adopt appropriate inspection and communication procedures for all facility personnel to be used in the event of a government inspection, or service of a subpoena or warrant. Review company housing assistance and transportation policies and programs (if any) to ensure compliance with all state and federal immigration laws.

New Development with Administrative ICE Audits New “Business Inspection” Notice Original Forms I-9 Current alpha payroll roster (showing name and tax withholdings, preferably in electronic form) Completed ICE Employee Information Certification Form (name, DOH, DOT, DOB) Completed and Certified Business Entity Questionnaire Quarterly Wage and Withholding Reports for most recent fiscal year

Administrative ICE Audits – New Developments New Administrative Subpoena Commands appearance before a Senior Special Agent to give testimony relating to compliance with the employment and verification requirements of INA §274A Commands production of all Social Security Administration “Employer Correction Requests” and “Request for Employee Information” letters that the company has received in calendar years 2004-2005, together with corresponding payroll records

New Certified Business Entity Questionnaire Ownership interest and names of owners EIN Number of employees Gross or net income Number of divisions or sites/addresses Number of shifts/shift times Name of parent company Identity of Form I-9 preparers Method of paying employees Predecessor interest post 11/6/86

New I-9 Form – Effective 12/26/07 Documents no longer valid for Identity/Work Eligibility: Certificate of U.S. Citizenship (Form N-560 or N-561) Certificate of Naturalization (Form N-550 or Form N-570) Older Alien Registration Cards (Form I-151) Unexpired Re-entry Permit (Form I-327) Unexpired Refugee Travel Document (Form I-571) Advisory: Use of the old I-9 is a paperwork violation

I-9 Myths Completing I-9 forms provides an absolute defense to civil and criminal liability Employers should not ask questions about the validity of questionable documents; they should follow a “don’t ask, don’t tell” policy Employers who insist on presentation of a valid social security card may be sued for document abuse or discrimination Employers can never insist that an employee complete a new I-9 form if the employee has already completed one It is a mistake to copy documents Employers can’t terminate employees for providing fake documents and fake identities in the I-9 process

Increased Civil Money Penalties Effective March 27, 2008 Knowing hire 1 st offense 2 nd offense 3 rd offense Paperwork violations Document fraud 1 st offense 2 nd offense 3 rd offense Failure to notify DHS of action on final NC if enrolled in E-Verify $375-$3200@UA $3200-$6500@UA $4,300-$16000@UA $110-$1100@I-9 $375-$3,200@document $3,200-$6,500@document $4,300-$16,000@document $550-$1,100@violation

SSA/DHS No Match Letters – Constructive Knowledge and The Safe Harbor Rule What is a No-Match Letter? Why does DHS contend failing to investigate can be used as evidence of constructive knowledge of unauthorized status? Will Letters be going out in 2008? Are employers free to ignore Letters sent to individual employees? How does an employer qualify for the DHS Safe Harbor? What are the risks of implementing or exceeding DHS Safe Harbor requirements?

Ignorance Is Not Bliss DHS views No Match data as key evidence of employer complicity in illegal hiring scheme DHS remains free to prosecute employers based on actual and/or constructive knowledge of unauthorized status – IFCO, Swift, Koch – painful examples DHS may obtain information regarding past No Match Letters from SSA if criminal investigation is opened through ex parte procedure or may seize such documents pursuant to criminal search and seizure warrant DHS could continue raids and stings in pursuit of evidence of immigration crimes

No-Match Rule Litigation PI entered 10/18/07 enjoining implementation of 8/15/07 Final Rule - Failure to adequately explain perceived change in policy re significance of No Match letters Ultra vires as to claim of immunity from discrimination claims Failure to comply with the RFA DHS 3/21/08 Supplemental Rule 10/23/08 – DHS Issues Final Supplemental Rule containing no substantive change, followed by Motion to Vacate PI and Motion for Summary Judgment Hearing Date – 12/12/08

Risks to Unionized Employers Aramark Facilities Services v. SEIU, Local 1877 , No. 06-566662, 9 th Cir., 6/16/08 Unions and ACLU read as death knell for Employer Use of Safe Harbor Rule Really application of FAA to CBA grievance arbitration Solution – Give notice and comply with DHS protocol

Prominent Immigration Crime RICO Cases – Filed on the Heals of ICE Raids/Audits Tyson Foods Swift & Company Monsanto ABX/DHL DH Horton Pilgrim’s Pride Wal-Mart Stores Collins Service Systems Zirkle Fruit Company

The RICO Risk 18 USC §1962 et seq. Elements of Civil RICO Cause of Action Predicate Immigration Crimes – motivated by financial gain 8 USC §1324(a)(3) – Felony Hiring – proof difficulties; actual knowledge requirement both with respect to being smuggled in for unlawful employment and actual unlawful employment.

The RICO Risk 18 USC §1962 8 USC §1324(a)(1)(A)(iii), (iv) – Felony Harboring, Transporting – reckless disregard/constructive knowledge enough to survive summary judgment Damage Theories – diminished compensation and employment opportunities Causality Issues - must flow from the predicate RICO offenses at the actual place of employment – and not from alternative causes

Update on E-Verify 92,000+ employers signed up and growing Authorized through March 1, 2009 FAR E-Verify Final Rule – issued November 14, 2008, effective on contracts issued on and after January 15, 2009 State E-Verify requirements for employers and contractors

FAR EV NPRM Employer Coverage All prime contractors and subcontractors supplying commercial and non-commercial services and construction to federal executive agencies, excluding prime contracts under $100,000 and less than 120 days’ performance, contracts performed exclusively outside the United States, and contracts for commercially available off-the-shelf supplies (COTS); subcontracts for $3,000 or more covered DHS estimates coverage at 169,000 employers in YR1 May include contractors who hold indefinite-quantity or indefinite-delivery contracts awarded in prior years but still active as of the date the FAR EV NPRM becomes final. According to the NPRM, task orders issued pursuant to such contracts will become subject to the FAR EV NPRM if such contacts are valid for a period of six months or more following the effective date of the rule and the remaining work or orders to be filled is substantial.

FAR EV NPRM Employee Coverage All incumbents hired after 8/6/86 who perform direct services under a federal contract + all new hires Excludes employees who normally work in support positions and who do not perform any substantial work under a covered federal contracts All new hires of contractor not directly assigned to federal contract employed in U.S. DHS admits exact number of affected employees is unknown DHS has repeatedly stated that up to 40% of workers in certain industries are undocumented and that they remain active participants in the labor force through no fault of the employer because of the broad availability of fake documents – if this program takes effect, all such workers will be smoked out and their employers will have no choice but to fire them DSH estimates replacement costs at $5000 @ displaced worker (recruitment and training); no estimate for cost of litigation associated with potential wrongful discharge DHS does not immunize contractors for data base errors. Unionized contractors may face added costs – Aramark decision

FAR Reg – Mandatory E-Verify Within 30 days of award – must enroll and train all authorized personnel to input EV data, monitor DHS responses in system, and respond to DHS directives Within 90 days following first enrollment or date of contract award if previously enrolled – must initiate E-Verify process for all existing employees directly engaged in covered federal contract. Pull I-9s of all incumbents If I-9s reveal expired documents (including expired USC passports), or if expiration date cannot be ascertained, or no picture ID, or no social security account number provided in Part I Meet with incumbents to complete new I-9 Picture IDs and SSANs required for EV Initiate EV process After the initial 90 days, contractors must initiate EV process within 3 business days of hire or assignment to contract All new hires of covered contractor/subcontractors Complete I-9 process on first day and process through EV system

FAR Reg – Mandatory E-Verify Grounds for Potential Legal Challenge Constitutional -- E.O. conflicts with 1996 Congressional authorization and subsequent reauthorizations -- limit DHS authority by requiring voluntary employer participation except for federal executive agency personnel APA - MOU not subject to notice and comment and requires employer waiver of Fourth Amendment Search and Seizure protections RFA – defective analysis

Future Legislation Immigration Reform in the 111 th Congress

Expected Worksite Enforcement Provisions New document retention requirements Extension of I-9 retention periods New mandates for SSA No-match Letters Extension of electronic verification New Certification of Compliance Program Expanded investigation and enforcement capability Expanded fines and penalties

Proposed New Document Retention Requirements Under current law, an employer need not copy the documents presented by the employee as evidence of identify and work eligibility Under reform legislation employer will be required to copy, sign and date (and have the employee sign and date) each document presented for review, and retain all documents with the I-9

Extension of I-9 Retention Period Under current law, an employer must retain I-9’s for the length of employment plus one year, or 3 years from the date of hire, whichever is longer Under reform bills, I-9 retention would be the length of employment plus one year, or 7 years from the date of hire, whichever is longer

Retention of SSA No-Match Letters and Investigative Records The DHS No-Match Rule, requiring an employer to investigate No-Match Letters or be subject to potential civil and criminal prosecution for constructive knowledge, is currently subject to legal challenge Under reform proposal, an employer would be required to retain copies of all SSA no match letters, as well as records reflecting the employer’s attempts to clarify of resolve questions about the referenced employees’ identity and work eligibility. Failure to retain such records would constitute a record keeping violation, subject to the same civil money penalties as I-9 recordkeeping violations.

Universal Electronic Verification 180 days post-enactment 2 years post-enactment All employers who are part of the critical US infrastructure, or directly related to national or homeland security (all employees subject to electronic verification) Employers with more than 5,000 employees in the US (but only as to employees hired on date to be specified by Secretary of DHS)

Universal Electronic Verification System 3 years post-enactment 4 years post-enactment 5 years post-enactment Employers with 1,000 – 5,000 employees in US (new hires only) Employers with 250 – 1,000 employees in U.S. (new hires only) All other U.S. employers (new hires only)

Increases in Civil Money Penalties Current Law 1 st Offense $375-$3200@UA 2 nd Offense $3200-$6500@UA 3 rd Offense $4,300-$16000@UA Reform Proposal 1 st Offense $500-$4,000@UA 2 nd Offense $4,000-$10,000@UA 3 rd Offense $6,000-$20,000@UA

Labor Contractor Changes Under current law, employers are prohibited from obtaining the services of an individual, knowing that individual is unauthorized for employment, through the use of a labor contract or subcontract As proposed, the labor through contract provision would be subject to a reckless disregard standard, not just actual knowledge Employers would be prohibited from hiring a subcontractor knowing that the subcontractor had failed to verify his employees Employers would have to obtain the EIN of all subcontractors, retain in I-9 records, and check for violations through E-Verify

Proposed Changes to Antidiscrimination Provisions of IRCA Employers would be prohibited from using E-Verify to screen applicants prior to an offer of employment Employers would be prohibited from terminating workers prior to a FNC Civil money penalties would be increased to equal proposed increases in knowing hire and paperwork violations

Employers Lose Right To Hearing Before ALJ Under current law, OCAHO ALJ hears appeals from civil money penalties in employer sanctions cases Reform bill eliminates the right to a de novo hearing and vests review within DHS based on paper appeal filed by employer B/P would be placed on the employer to demonstrate w/n 30 days following service of the NOIF that the proposed liability findings and penalties were not based on substantial evidence No right to discover content of agency file No right to confront and cross examine witnesses No right to discover fines levied against similarly situated employers Review of final agency orders by the U.S. courts of appeal would be subject to substantial evidence standard Very difficult to challenge without a well-developed agency record through the discovery and hearing process

Implications of the Proposed Amnesty Program 4-7 million unauthorized workers could qualify for work authorization New class of legal workers will provide a feast for union organizers under the Employee Fair Choice Act

Recommendations for At-Risk Facilities Conduct a confidential, internal immigration compliance audit, including a review of all Form I-9’s within the retention period, timely resolution of all Social Security no-match letters, and compliance with any applicable state or local immigration law or regulation. Take prompt corrective action to ensure that all workers have a complete I-9 and that the documents provided related to the individual and evidence eligibility to work for the company in the United States.

Worksite Immigration Compliance Update 2008 – Group Discussion

Immigration Worksite Enforcement Update: Federal Contractor Verification Rules, No Match Letters, I-9 Audits, Criminal Enforcement, and State Employer Sanctions Laws Thank you for your participation. Mary E. Pivec, Esq. Keller and Heckman LLP 1001 G Street N.W., Suite 500W Washington, D.C. 20001 202-434-4212 [email_address]

Pivec Immigration Compliance08

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