Employment Practices


Crackdown on ‘shadow economy’ rattles employers


Homeland Security Secretary Michael Chertoff rattled the employer community when he announced a tough new zero-tolerance policy toward employers that harbor illegal aliens in the workplace. His announcement accompanied a raid on pallet manufacturer IFCO Systems North America, which ended in the arrest of seven managers charged with conspiring to recruit illegal workers knowingly and the apprehension of 1,187 allegedly illegal IFCO employees. The conspiracy charges carry a penalty of up to 10 years in prison and a fine of up to $250,000 for each alien.

“Employers and workers alike should be on notice that the status quo has changed,” said Chertoff in an April 20 release. “These enforcement actions demonstrate that this department has no patience for employers who tolerate or perpetuate a shadow economy. We intend to find employers who knowingly or recklessly hire unauthorized workers, and we will use every authority within our power to shut down businesses that exploit an illegal workforce to turn a profit.”

Who’s at risk?

All employers in the United States are potentially vulnerable to enforcement actions. That’s because the Immigration Reform and Control Act (IRCA), enacted in 1986, requires everyone who is hired or who changes jobs to produce documents that prove they’re eligible to work in the United States. In addition, it requires employers to review the documents and complete the Employment Eligibility Verification Form I-9. IRCA casts employers in the role of border agents and levies civil and criminal charges for noncompliance.

In addition to their exposure under IRCA, employers with questionable practices may face litigation from another source: charges from lawfully documented workers who claim that the intentional recruitment of illegal aliens drives down wages. Those lawful employees are using the Racketeer Influenced and Corrupt Organizations (RICO) Act to go after employers and recruiters who recruit illegal aliens from border areas. RICO, which was originally aimed at organized crime, targets enterprises that work together for a common illegal purpose.

A case before the U.S. Supreme Court (Mohawk Industries Inc. v. Williams) will decide whether RICO can be used against employers.

To some on Capitol Hill, Chertoff’s actions are a political football intended to pressure Congress to approve legislation establishing a guest worker program while bowing to conservatives who would rather see stricter enforcement of the immigration laws.


Despite the fact that all employers are potentially vulnerable to enforcement actions, immigration experts say that some companies are more susceptible than others:

• Those with security sensitive operations. This list includes airlines, airports, businesses that operate within airports, nuclear power plants, public utilities and trucking companies transporting goods across state lines.

• Those who rely on foreign nationals. Agricultural and food processing employers head this list, followed by companies whose workers perform hard labor, such as construction and landscaping.

• Those operating in industries plagued by labor shortages. Trade associations representing many such employers belong to the Essential Worker Immigration Coalition (EWIC), a group at the epicenter of immigration reform, which advocates policies that address the need for workers. EWIC members include employers in the health care, hospitality, trucking, construction, retail and landscaping industries.

• Those with lax I-9 procedures. A lot of employers would rather look the other way. They don’t know which questions to ask, and they run the risk of bias if they question only employees who appear as if they might be undocumented aliens.

• Egregious violators and prior violators. In the case of IFCO, for example, approximately 53.4 percent of the Social Security numbers on the IFCO payroll of roughly 5,800 workers during 2005 were invalid, didn’t match the true name registered with the Social Security Administration for that number, or belonged to children or deceased persons. The Social Security Administration said it sent at least 13 written notifications to IFCO headquarters about such discrepancies in 2004 and 2005. IFCO stated that it takes the allegations seriously and has begun a thorough investigation of the facts. The company says it is cooperating with immigration authorities.

Dilemmas for employers

Still, even employers who aren’t on this list are at some risk, because every company must process the I-9 form for new hires. In addition, experts say that many companies don’t know how to do so properly. The result: the unknowing employment of undocumented aliens.

The I-9 is tricky. The employee looks at the back of the I-9 and chooses the documents to give to the employer. The employer has to allow the employees to provide the documents they want. You can’t tell, unless it’s blatant, whether something is counterfeit. The company is protected if it looked at the document and thought it was valid.

“The government doesn’t expect employers to be document experts,” said Patrick Cont, an immigration expert with law firm Sturm & Cont in Spartanburg, S.C. “The standard is reasonableness.”

“The I-9 potentially requires 27 different combinations of documents,” Reiff added.

Another problem is keeping people on board after their work permits expire. There are all types of permits and visas, so employers have to know about the different kinds and how long they’re valid.

The SHRM survey confirmed this dilemma: Respondents said that keeping track of documents with expiration dates was the most common challenge faced by HR during the I-9 process. Also, employers can’t request certain documents—and they can’t ask only employees who look like foreigners to provide certain documentation.

What to do

Given these many types of exposure, there’s no shortage of steps employers can take to protect and defend themselves, including:

• Uniformly copying the documents that are presented and keeping them in a file separate from the personnel file. The decision to copy documents should be made after discussing the issue with immigration counsel.

• Ensuring there is a robust, organized system in place for enforcement.

• Tracking when visas expire and following up when they do.

• Training employees on how to complete the I-9 and minimizing the number of employees who perform this function.

Employers are advised to download a copy of the I-9 and look at the instructions.

Source: SHRM