By Jay Starkman and Ryan Hollander
Reported in Employee Benefit News
For years, Congress has debated the merits of “comprehensive immigration reform” without passing any legislation toward that end – in part because the concept means different things to different people. On June 27, 2013, however, the Senate passed the Border Security, Economic Opportunity, and Immigration Modernization Act, which contains sweeping changes to existing immigration law that would affect employers of all sizes. Notably, the Senate bill faces a steep uphill battle in the House, but still may form the basis for an eventual compromise.
Currently, 20 states require that all or some employers participate in E-Verify, an electronic system that verifies individuals’ employment eligibility by comparing information from an employee’s Form I-9 to data contained in U.S. government records. Over a period of five years (beginning with larger employers), the Senate bill would require all employers to participate in E-Verify. While there is no cost to participate, businesses must still invest time to train employees to use the system and then to process each new hire. Mandatory use of E-Verify would not replace the use of Form I-9 or any existing employer compliance or maintenance requirements.
Penalties for hiring unauthorized workers would increase significantly under the Senate bill, up to $25,000 for each knowing hire of an unauthorized worker after two prior offenses. An employer who hires an unauthorized worker after their mandatory E-Verify enrollment date but fails to verify the worker in the system would be presumed to have knowingly hired an unauthorized worker. By the same token, an E-Verify authorization would enable an employer to avoid liability even if a worker is later determined to be unauthorized. Increased fines would likely fuel increased enforcement efforts, which could result in a spike in I-9 audits for employers.
Mandatory E-Verify is likely to be a significant component of any proposal that comes out of the House and is widely expected to be an area of political agreement. As a result, employers of all sizes should prepare to participate.
A greater source of controversy, the Senate bill would also allow undocumented immigrants to apply for “Registered Provisional Immigrant” (RPI) status if they meet certain conditions. After 10 years of RPI status, during which time these individuals are eligible to work, they may become eligible to apply for Lawful Permanent Resident status (a “green card”) if certain additional conditions are met. After three years as permanent residents, these individuals may be eligible for naturalization if certain additional conditions are met. This aspect of the Senate bill could result in a substantial increase in legal employees, likely for lower wage positions, which could decrease labor costs for many employers.
This provision could also pose a substantial problem for employers. As unauthorized workers are currently “off the books,” employers may not comply with minimum wage or other requirements. In order to obtain RPI status, an unauthorized worker must re-pay all back taxes, informing immigration officials and the Internal Revenue Service who they had worked for in the process. This disclosure could result in fines and even criminal penalties for employers.
The Senate bill would also add to the labor pool by increasing the number of available visas. Specifically, the bill would create a new, non-immigrant “W” visa for less-skilled agricultural and non-agricultural workers. The bill would also substantially increase the cap on H-1B visas for non-immigrant skilled workers, which could also benefit U.S. employers. That said, the bill would result in increased wages for H-1B workers and require employers to place ads and perform other good faith recruitment to find U.S. workers before hiring an H-1B worker (in addition to a $2,500 H-1B visa filing fee). Demand for H-1B visas is still expected to widely outstrip the increased cap.
Although nothing has been signed into law, there is more momentum for comprehensive immigration reform, in some form or fashion, than at any time in recent history. Employers of all sizes should monitor developments closely as significant change is on the horizon.