The right side of the law

Immigration legislation is without a doubt the legal issue that could have the greatest effect on roofing contractors and the overall construction industry this year. Although the specifics of immigration reform legislation in Congress and state legislatures remain to be determined at press time, increased employer verification requirements and liabilities relating to employment of unauthorized workers undoubtedly will be implemented. Regardless of whether a guest-worker program is established, it will not be business as usual in the years ahead with regard to hiring and employing workers who may not be authorized to work in the U.S.

The most comprehensive recent study of the migrant population was released in March 2006 by the Pew Hispanic Center, a nonpartisan research organization that is part of the Pew Research Center, a self-described Washington, D.C., "fact tank" that does not engage in advocacy. As of March 2006, the center estimated the U.S. illegal population was between 11.5 million and 12 million. Of this total illegal population, about 7.2 million illegal workers make up 4.9 percent of the overall 148.6 million U.S. civilian work force.

Although illegal immigrants comprise less than 5 percent of the total work force, unauthorized workers are in a much higher proportion in certain occupations. Illegal workers primarily are employed in jobs that require little formal education and rely on on-the-job training, such as construction, agriculture and farming, hospitality, cleaning, and food processing and preparation. The Pew Hispanic Center study found that almost 20 percent of all unauthorized workers were employed in the construction industry and 17 percent were employed in the leisure and hospitality industry.

The study reported 93,000 roofing workers—29 percent of the 325,000 roofing work force—were unauthorized, and unauthorized workers make up about 14 percent of the total construction industry work force.

On the rise

The rate of illegal immigration has been increasing each year and most dramatically in recent years despite substantial increases in funding for border enforcement. In 2005, an estimated 6.2 million illegal immigrants—56 percent of the illegal population—were Mexicans. Another 2.5 million, or 22 percent of the total, have come from the rest of Latin America, primarily Central America.

More than 40 percent of the nearly 12 million current illegal immigrants have arrived in the U.S. since 2000. Following passage of the 1986 Immigration Reform Control Act and commencement of employer verification through the I-9 system, illegal immigration slowed substantially for two years. But by the 1990s, illegal immigration was increasing because of the booming U.S. economy, need for workers in industries that did not require extensive education, desire of foreign-born workers to find better paying jobs and failings of the I-9 system.

The Pew Hispanic Center estimates that during the 1980s, an average of 180,000 illegal immigrants entered the U.S. each year. The number increased to an annual average of 400,000 between 1990-94 and further increased to an average of 575,000 per year between 1995-99. The rate of illegal immigration grew again to an annual average of 850,000 between 2000-05. In contrast, in 2004, 202,842 illegal immigrants—less than 2 percent of the total illegal immigrant population—were deported.

Verification and sanctions

Employers first became responsible for verifying employment eligibility of new employees and faced sanctions following the 1986 Immigration Reform and Control Act. Before 1986, it was not unlawful for employers to hire illegal immigrants. Facing the same issues and arguments in 1986 that are being debated in 2006, Congress determined that making it unlawful for U.S. employers to hire illegal immigrants would curtail the employment opportunities that lured illegal Hispanic immigrants and stem the flow of illegal immigration across the U.S.-Mexican border.

Following passage of the 1986 Immigration Reform and Control Act, employers were required to determine the employment eligibility of all employees hired after Nov. 6, 1986, including U.S. citizens, by examining certain prescribed documents and completing an I-9 form. Per the current law, employers are required to view prescribed documents presented by the prospective employee and complete the I-9 form for all new employees to ascertain identity and employment eligibility. Employers who do not comply with the I-9 requirements are subject to fines. Employers who knowingly hire or continue to employ unauthorized workers face civil penalties, as well as possible criminal penalties.

Under current law, employers are required to check documents, but they are not required to confirm documents' authenticity. As a result, the 1986 law spawned an underground industry producing false documents, particularly Social Security cards. The Center for Immigration Studies, a group favoring stricter immigration controls, estimates 55 percent of the 7 million current unauthorized workers were hired using documents with fabricated or stolen Social Security numbers. Currently, the Social Security Administration contacts businesses that have more than 10 percent of a work force with discrepancies between names and Social Security numbers; however, the administration typically does little follow-up.

Recently, federal enforcement of employer requirements pertaining to employing illegal workers generally has been limited to sensitive work sites, such as power plants and military facilities. Since 9/11, fewer federal agents have been assigned to take actions against unauthorized workers and their employers as more personnel have been assigned to work on terrorism cases. In 1992, 1,063 U.S. employers were fined for immigration violations. The number declined to 78 in 2001. Similarly, workplace arrests have fallen sharply, from a high of 17,552 in 1997 to 418 in 2001.

But U.S. Department of Homeland Security Secretary Michael Chertoff announced April 20 that Immigration and Customs Enforcement (ICE) would be adding work site-enforcement agents and launching a more aggressive campaign aimed at employers who knowingly hire illegal immigrants. Chertoff's announcement came one day after the largest ICE workplace raid ever undertaken.

Following a tip that male Hispanic workers were seen ripping up their W-2 forms at an upstate New York plant, federal agents embarked on a yearlong criminal investigation indicating that company supervisors knowingly hired illegal immigrants.

On April 19, agents raided 40 plants in 26 states operated by IFCO Systems North America Inc., Houston, a pallet and crate supplier, and arrested 1,187 people, including seven IFCO Systems North America managers. Federal agents found that more than half of IFCO Systems North America's 5,800 employees had invalid Social Security numbers and a supervisor had reimbursed an undercover agent for obtaining fraudulent identification documents. The seven relatively low-level managers and foreman charged with conspiring to transport, harbor and induce illegal immigrants could face jail sentences up to 10 years.

Because of frustration at the state level with a lack of action by the federal government, 368 bills related to immigration have been proposed in 42 states, according to the National Conference on State Legislatures. Many of these proposals contain employer verification requirements and penalties for employers who hire unauthorized workers.

On April 17, Georgia's governor signed into law the first state immigration statute that targets employers. The statute, the Georgia Security and Immigration Compliance Act, requires electronic verification of new employees' work eligibility through the federal government for contractors working on state and local public projects and disallows a state income tax deduction for wages paid to unauthorized employees or unauthorized independent contractors.

The governors of Minnesota and Arizona have been particularly outspoken about the need for immigration action. Minnesota Gov. Tim Pawlenty (R) has proposed imposing state penalties on top of federal penalties on employers who employ unauthorized workers.

One solution

Because of the failings of the I-9 process, in 1996, Congress ordered the former Immigration and Naturalization Service to develop pilot programs that, through a federal database, would electronically verify worker eligibility. One of the three pilot programs, known as "Basic Pilot," met with some success and still operates. Basic Pilot was modeled after a similar program used by state and local agencies to verify eligibility of welfare, Medicaid and unemployment compensation applicants.

The Basic Pilot program was initiated in September 1997 in five states: California, Florida, New Jersey, New York and Texas. At the request of the Nebraska congressional delegation, Basic Pilot also was made available in Nebraska in 1999. Although limited in number, employers who have used the Basic Pilot system report they generally have been satisfied.

In 2003, Congress reauthorized the Basic Pilot program for an additional eight years and made Basic Pilot available to employers nationwide. Basic Pilot has been an entirely voluntary program except for certain employers who have been required to use the system as part of a sanction arising from hiring illegal workers. The Basic Pilot program has been available at no charge to all U.S. employers since 2004. However, only 4,385 companies of the 5.7 million companies counted by the U.S. Census Bureau use the program, according to U.S. Citizenship and Immigration Services.

If an employer chooses to participate in the Basic Pilot program, he must use the program for all new employees; the program cannot be used selectively. Using the Internet, the employer first enters into a Memorandum of Understanding with the Social Security Administration and the U.S. Citizenship and Immigration Services Bureau of the Department of Homeland Security. Per the terms of the memorandum, the employer agrees to use the Basic Pilot program only to verify new employees' employment eligibility and not to discriminate against employees based on national origin or citizenship status. The program is not to be used to screen employees but rather to verify employment eligibility after hiring.

After completing a slightly modified version of the I-9 process, requiring presentation of a document with a photograph if the job applicant relies on separate documents to establish identity and work eligibility, the employer must go online within three employer business days after hiring the individual and submit the employee's name, date of birth and Social Security number to be checked against the Social Security Administration's database. Online access is available 6 a.m. to midnight daily.

If the employee is a U.S. citizen and the information provided by the employee matches Social Security Administration records, the employer immediately receives a message indicating the employee is eligible to work and no further action is required. If the new employee is foreign-born, the employee information also must be electronically checked against the Department of Homeland Security's database to determine the employee's legal work status. The Department of Homeland Security is to respond within three federal government work days of the initial inquiry. If the information submitted also matches the Department of Homeland Security's database, nothing further is required.

If the name and Social Security number submitted do not match, the employer receives a tentative notice of nonconfirmation. The employer must provide written notification to the new employee of the nonconfirmation, ask the employee whether he wants to contest the tentative nonconfirmation, and give the employee the telephone number and address of the Social Security Administration. Similarly, a written notice must be given to the employee if the Department of Homeland Security gives a tentative nonconfirmation notice.

If the employee wants to challenge the tentative nonconfirmation, the employee checks a box on the notice form and must contact the Social Security Administration or Department of Homeland Security within eight federal work days. During the period the employee is contesting a tentative nonconfirmation notice, the employer cannot take any adverse action against the employee.

If the discrepancy is not resolved within 10 days, the employer is notified the employee is not eligible to work. Likewise, if the employee does not contest a tentative nonconfirmation notice within eight federal work days, the tentative nonconfirmation is treated as a final nonconfirmation. At that point, the employer must terminate the employee or face liability for employing an illegal alien unless the employer can prove the government was wrong and the employee was authorized to work.

A final nonconfirmation has the legal effect of creating a rebuttable presumption that the employer is employing an unauthorized worker. If the employer does not terminate the employee after a final nonconfirmation, the employer must notify the Department of Homeland Security. Failure to notify the department subjects the employer to a civil penalty between $500 and $1,000.

Current proposals

Virtually all the legislative proposals in Congress, as well as in state legislatures, require employers to use the Basic Pilot approach in the years ahead. The bill that was passed by the U.S. House of Representatives in December 2005 requires all businesses to use an electronic system to determine whether an individual is eligible to work in the U.S. All private employers would be required to use the Basic Pilot program to verify employment authorization of new employees within two years.

Federal, state and local governments and the military would have three years under the House bill to verify all employees. Within six years of enactment, all employers would need to electronically verify the employment eligibility of all their employees. Employers of illegal workers would face civil and criminal penalties. Under the House bill, fines imposed on employers for paperwork violations would increase from the current range of $100 to $1,000 per individual to $1,000 to $25,000 per individual.

The House bill requires employers to submit information to the federal government to ascertain whether an individual is eligible to work in the U.S. within three working days of hiring an individual. If an employer fails to make the required inquiry within three working days, he would not be able to assert the defense that he had a good-faith belief the documents the employee presented were authentic and the individual was eligible to work.

One consequence of requiring electronic verification may be increased identity theft. Instead of relying on bogus documents, illegal workers seeking to obtain jobs may use the names and Social Security numbers of authorized workers.

The House bill does not contain any guest- or temporary-worker program and focuses exclusively on increased border protection, enforcement and employer sanctions. It authorizes the expenditure of $2.2 billion to construct a high-tech, two-layer fence along 700 miles of the 2,000-mile U.S.-Mexican border in Arizona and California and makes illegal presence in the U.S. a felony rather than a civil offense.

Unlike the House bill, the bill the Senate Judiciary Committee approved on March 27 by a 12-6 vote would establish a guest-worker program and allow 400,000 foreign workers to come to the U.S. to work each year. The bill, which NRCA supports, would permit individuals who were living in the U.S. before 2004 to continue working for six years if they paid a $1,000 fine, cleared national security and criminal background checks, and registered for Selective Service. They also could become eligible for citizenship after 11 years.

The proposed Senate compromise bill, put together just before Congress' spring recess, requires that jobs be posted publicly and offered at the prevailing local wage; only if the job cannot be filled by a legally authorized worker can the employer hire a guest worker.

What does it mean?

You can expect changes regarding employment of unauthorized workers. Electronic verification of Social Security numbers and employment eligibility will, in all likelihood, become mandatory in the years ahead. To bring illegal immigration under control, employers will be required to take more active steps to ensure their employees are authorized to work in the U.S. or face stiffer consequences.

For economic reasons, some form of temporary or guest worker program, whether sanctioned or de facto, is inevitable. Given its reliance on Hispanic workers, the construction industry—and the roofing industry in particular—will want to be active participants in developing the new rules governing employment eligibility and guest-worker programs so such programs conform with the law and are fair to employers and employees.

Stephen M. Phillips is a partner with the Atlanta-based law firm Hendrick, Phillips, Salzman & Flatt.