Articles
9 February 2012

The Effects of SB81

Solving or Creating Employment Woes?

by Heather Stewart

09 February 2012—

 The massive raid took place on a winter day in December 2006. Early in the morning, U.S. Immigration and Customs Enforcement (ICE) officers arrested more than 1,200 workers at six Swift & Co. meat packing plants across the country on suspicions of identify fraud. Nearly 150 workers were from the company’s plant in Hyrum, Utah.

With intense media attention, complete with images of workers being lined up and handcuffed, the Swift raids became the prime example of ICE tactics in the effort to curtail illegal immigration.

Indeed, four years ago the cornerstone of immigration enforcement efforts was the workplace raid.

But a new focus at the federal level has changed all of that. The primary tactic now is to target employers who are suspected of hiring undocumented workers with audits and fines—and possible criminal prosecutions.

Just over a year after the Swift raids, the Utah State Legislature passed a bill intended to make it harder for undocumented workers to find employment. Senate Bill 81, signed into law in 2008 by Gov. Jon Huntsman, tackled the issue of illegal immigration from several directions. 

One major provision is aimed directly at employers, requiring state agencies and state contractors to verify employees through the federal E-Verify online system. 

The law went into effect on July 1, 2009, and Utah became the latest in an expanding group of states that are requiring some, if not all, local businesses to sign on with E-Verify.

 

A Technological Fix?

A Technological Fix?

Federal immigration enforcement efforts and Utah’s new law have put businesses in the hot seat. Yet many employers have concerns about the accuracy of the E-Verify system and whether it will really protect them from raids and substantial fines.

Despite such fears, “The implications [of SB81] have been slow in coming,” says Roger Tsai, an immigration and employment attorney with Parsons, Behle and Latimer and president of the Utah Asian Chamber of Commerce.

The E-Verify system became available to companies nationwide in late 2004. The system is, for the most part, voluntary for businesses and there are no fees to use it. Employers can use it to double-check the information provided by new hires on their I-9 forms against Social Security Administration records or Department of Homeland Security immigration databases. 

E-Verify will send a red flag if, for example, a name doesn’t match a social security number or an employee’s work visa is not current. 

“E-Verify is a technological fix to a legal problem,” says Tsai. Essentially, the E-Verify system is supposed to solve the problem of document fraud.

“The I-9 form was supposed to be the tool to stop [the hiring of undocumented workers] from happening,” he says. However, identification and citizenship documents can be faked, and human resource professionals have no way of proving their authenticity. 

The accuracy—or not—of E-Verify lies at the base of many fears about
the system.

In 2002, only 83 percent of employees screened through E-Verify were automatically verified as authorized to work. Over time, that number has steadily improved to about 96 percent.

“For 96 to 97 percent of the time, the E-Verify system can spit back a confirmation to the employer within seconds. About 3 percent will be flagged with a tentative non-confirmation,” says Tsai. 

If an employee receives a tentative non-confirmation, he or she has 10 days to work out any snafus, such as a maiden name that hasn’t been changed to a new married name, misspellings or other such errors. 

The employers will receive a final non-confirmation after 10 days if the situation is not resolved. According to Tsai, companies are prohibited from “taking adverse action” against an employee until a final non-confirmation is received.  

A 3 percent rate of tentative non-confirmations doesn’t sound noteworthy, but in Utah’s worker pool of about 1.3 million, nearly 40,000 people would receive a tentative non-confirmation. 

And the impact is uneven for different demographic groups: a foreign-born worker is 30 times more likely to receive a tentative non-confirmation, and a naturalized citizen is 10 times more likely to receive a non-confirmation, according to Tsai.

While many foreign-born workers may be undocumented, this group also includes highly educated and skilled employees with green cards and temporary worker visas who are working at technology companies and research universities. 

Another issue with E-Verify is whether or not it is truly fool proof. In fact, Swift & Co. was actually one of the first companies to sign up to use E-Verify. “They were using the most up-to-date technological solution, yet they had more than 1,000 undocumented workers. How did that happen?” asks Tsai.

The answer is simple: identify theft. If a worker can steal an entire identity, complete with someone’s photo identification and Social Security number, that worker could skate through the E-Verify system.

“E-Verify is simply encouraging people who want to stay here and work here to go further into identity theft,” says Tsai. 

 

Implementation in Utah

The use of E-Verify is not mandatory for most employers nationwide. Instead, companies are encouraged to sign up voluntarily. Nationally, around 140,000 employers have signed up to use the system, and Tsai says that about one in six of all new hires in the country are screened through E-Verify.

More than a dozen states have passed laws mandating the use of E-Verify for at least some businesses. In 2008, an Arizona law went into effect requiring every business to use E-Verify for new hires. However, early reports indicated that few businesses were actually signing up to use it, and the state had taken little action to enforce the E-Verify mandate. 

A University of Arizona study released in late 2008 found that less than 6 percent of the state’s companies had signed up with E-Verify.

Similarly, the impact of Utah’s new law is hard to measure just six months after it has taken effect.

The E-Verify mandate only applies to companies that have state contracts signed after July 1, 2010. With a slumping economy and tightened state budgets, the state hasn’t issued very many new contracts. 

“We do not have any Utah clients right now who are subject to that requirement,” says Clark Merkley, president and CEO of Employer Solutions Group, a professional employer organization that provides outsourced human resource services. However, the company has been using the E-Verify system for clients based in Arizona. 

“It’s pretty straight forward; it’s pretty easy to use,” Merkley says. 

In Utah, Employer Solutions Group has fielded many questions and concerns from clients who “have heard a lot of noise” about the new law, says Merkley. “There is some concern in the employer community because of the risk of false rejections.” 

When the law was initially passed in 2008, many businesses were worried about the ultra-low unemployment rate and the lack of available authorized workers. But those fears have evaporated.

“Because of what’s happening in the economy, it’s not as big an issue as it was even a couple of years ago,” he says.

 

Constructing the Future

Because of the law’s narrow scope, some industries will be more impacted than others. For instance, many state contracts are for building and high-
way construction. 

The construction industry is often seen as a haven for undocumented workers. And two years ago, the industry faced unemployment rates as low as 2 percent, says Richard Thorn, president and CEO of the Associated General Contractors of Utah. 

Contractors were nervous about anything that would make it even harder to hire workers. And when SB81 was proposed, construction companies were anxious and fairly confused about the details of the legislation.

How would it be enforced? Did it apply to companies of every size, or just large contractors? Were purchase orders considered state contracts?

Some of these questions have yet to be answered.

  “We had a lot of discussion early on about contractors and how they are going to comply,” says Thorn. Industry leaders and lobbyists made sure their questions and concerns were at least heard by legislators.

Another fear is that the construction industry will be targeted for state and federal audits due to the perception that construction companies turn a blind eye to the hiring of undocumented workers. 

“Employers in Utah, particularly in construction, do their best to comply with all the regulations before them. They are trying their best, and if they make a mistake, and it’s a genuine mistake, we don’t want them to get their heads lopped off,” says Thorn.

Most industry worries had been allayed by the time the bill was passed and signed. In fact, Thorn says many of the state’s larger construction companies had already voluntarily implemented E-Verify. 

Smaller companies have had a harder time with the various issues surrounding E-Verify.

“Some are more willing to do it than others,” says Thorn. “Some companies will choose not to bid for state contracts at all.” 

Even so, most in the industry knew that some form of legislation increasing worksite enforcement of immigration laws was inevitable. And Thorn feels SB81 was likely the best compromise possible. “This was an important piece of legislation that garnered a lot of emotions. Our legislators felt like they had to pass something. The question was do we want to follow Arizona’s draconian lead?”

And in the end, companies in the construction industry will do their best to comply with the law. The feedback from companies so far is that E-Verify has not been difficult to work into existing human resource practices.

“I’ve not had a lot of people saying, ‘this thing is kicking our backside,’” says Thorn. 

 

Without a License

An aspect of SB81 that is less well known is the new mandate that anyone applying for a professional license in Utah must demonstrate proof of citizenship. This provision impacts a wide range of professions: manicurists, accountants, real estate agents, child care providers, restaurateurs, health care professionals and the construction trades, among many others.

Thousands of workers and small business owners will lose their licenses within the next year if they are unable to provide proof or affidavits of citizenship. 

“Either these businesses are going to go underground or they are going to close,” says Juan Ruiz, president of the Latin American Chamber of Commerce. If these businesses go underground, the state will lose the ability to provide regulatory oversight of them.

The number of unlicensed in-home daycare providers could increase, for instance, or unlicensed contractors who offer home repair services.

Ruiz is personally aware of numerous small businesses that have closed or have found a shell owner so they can keep operating. “This becomes a huge risk to the state and to the [former] business owner, who is at risk for being taken advantage of.”

As Ruiz also points out, the state will be losing a significant revenue source from the uncollected licensing fees—during a time when the state is already struggling with reduced tax revenues.

“Unfortunately, these issues will not be resolved until they have already severely impacted the state and the minority business community,” he says.

Some of the problems could have been circumvented if legislators had engaged minority business owners while crafting and debating the legislation, according to Ruiz. “There was a huge disconnect between the legislation and the community. Very few people knew about the nature of the bill until it was being implemented,” he says.

 

Worksite Enforcement

Ruiz has familiar concerns about the accuracy of the E-Verify system. But he does believe that “a good system could prevent identify theft and fraud.”

And the human resource department has become ground zero in the government’s crackdown on fraud and illegal immigration. High-profile sweeps and arrests of workers are not the standard anymore. Instead, ICE is turning the screw on employers with audits and hefty fines.

Just two months ago, ICE announced a new wave of audits at 1,000 companies across the country. The audits were focused on businesses that are involved in public safety or national security, and only eight unidentified Utah companies were included in the sweep.

ICE conducted a similar large-scale action last July. Agents examined more than 85,000 I-9 forms at 654 companies, identifying thousands of suspect documents. As many as 16 percent of the forms were considered suspect by ICE.

As a result, the agency has issued $2.3 million in fines to 61 companies. And more than 250 cases are still under review.

The ICE office in Utah has hired two full-time auditors on top of its five investigators. 

“Employers need to be aware of their potential liability and take a look at their documents,” says Tsai. He advises companies to conduct their own internal audit of I-9 forms and to make sure human resource workers
are following the company’s policies and procedures. 

At the end of the day, Tsai believes E-Verify is likely to become the national standard, particularly for businesses that want to use the latest technology to prevent fraud. “Essentially, it has created a national ID, but online,” he says.  

 


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