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Bar News - April 19, 2017

Labor & Employment Law: Immigration-Related Employment Policies Might Need Updating

HIGH STAKES: In August 2016, ICE dramatically increased its civil penalty schedule. Each instance of unauthorized employment is now subject to penalities of up to $21,563; and Form I-9 violations can each cost an employer up to $2,126.

The most familiar and pervasive of the many immigration-related challenges employers face is employment eligibility verification. But the impact of immigration law on the workplace is not limited to the employment of unauthorized aliens.

Federal law also imposes obligations upon employers to refrain from discriminating against employees on account of their national origin or “citizenship status.” These requirements, clarified through rulemaking in December 2016, may also result in civil penalties and could embroil the careless employer in needless and costly administrative proceedings and civil penalties.

According to the Congressional Research Service, employment verification and illegal employment violations yield millions of dollars in civil penalties each year. In fiscal year 2014 alone, the Department of Homeland Security’s Bureau of Immigration and Customs Enforcement (ICE) imposed $16.2 million in fines in worksite enforcement actions involving only 0.02 percent of all US employers.

During the same period, ICE arrested 362 people for criminal activity, such as illegal hiring, identity theft, alien harboring, and money laundering (a marked decrease from prior years). Criminal prosecutions relating to ICE’s worksite enforcement activities yielded 327 indictments and 312 convictions in 2014 and resulted in criminal fines and forfeitures of $35.1 million.

The stakes continue to grow. In August 2016, ICE dramatically increased its civil penalty schedule. Violations that take place after Nov. 2, 2015, are now subject to penalties of up to $2,126 per Form I-9 violation and $21,563 for each instance of unauthorized employment.

Employment Eligibility Verification

Thirty years ago, Congress passed the Immigration Reform and Control Act (IRCA) of 1986. Amongst a host of changes to the existing immigration laws of the United States, including the legalization of most undocumented immigrants then present (which turned out to be about three million people), IRCA made the hiring or continued employment of “unauthorized aliens” illegal. The law also added the term “unauthorized aliens,” or foreign nationals who lacked employment authorization by virtue of their immigration status, to the vocabulary of hiring managers and human resources personnel. Employers, for their part, were charged with verifying the employment authorization of their hires through a new verification system.

The employment verification system has developed into the now-ubiquitous Form I-9. More recently, compliance has been augmented by the Department of Homeland Security (DHS) and its E-Verify system. E-Verify, which provides near-time authentication of an employee’s employment authorization, is mandatory for federal contractors, does not relieve employers from completing and maintaining Form I-9s, and creates additional opportunities for penalties through noncompliance.

In November 2016, the DHS released a new version of the Form I-9. The new Form I-9 reinforces decades’ worth of caution but does not substantially modify an employer’s existing obligations. However, employers and their counsel should note that, as of Jan. 22, 2017, employers must use the new form for all employment verification processes. Prior revisions of the Form I-9 had permitted employers to re-verify the employment authorization of workers with certain expiring documents by using the space allotted on their existing form (Section 3). With this revision, ICE requires a new Form I-9 for each re-verification. Each violation may be subject to fines between $216 and $2,156.

Unfair Employment Practices

IRCA also enacted anti-discrimination provisions prohibiting employers from engaging in “unfair immigration-related employment practices.” The law describes such practices as an employer’s discrimination during the hiring process on account of a person’s “national origin or citizenship status” and applies to employers with as few as four employees.

IRCA worked in concert with the Civil Rights Act of 1964 (applicable to employers with 15 or more employees) to prohibit national origin discrimination and added “citizenship status” (described as an individual’s United States citizenship, lawful permanent resident, temporary resident, asylee, or refugee status) as a protected characteristic. Authority for the enforcement of the “unfair employment practices” resides with the US Department of Justice’s Immigrant and Employee Rights Section (previously known as the Office of the Special Counsel).

About 20 years ago, Congress amended the IRCA through passage of the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) of 1996. IIRIRA explicitly prohibited employers from requesting or rejecting certain documents during the verification process (so-called unfair documentary practices). In other words, employers had to accept any valid employment verification documents presented by the employee, or risk a charge of discrimination. IIRIRA also clarified that only intentional discrimination – disparate treatment, as opposed to disparate impact – was covered by the law.

DOJ enforces “unfair employment practices” in a different manner than ICE’s worksite enforcement scheme. Like employment discrimination allegations under Title VII of the Civil Rights Act, aggrieved individuals and their representative, DHS officers, and the Immigrant and Employee Rights Section are permitted to file charges of discrimination against employers.

At the conclusion of an investigation, or upon referral, the charging party may then file a complaint with the Office of the Chief Administrative Hearing Officer (OCAHO). The proceedings follow the traditional McDonnell-Douglas burden-shifting formula, permitting an employer to defend its actions as justified by a legitimate and otherwise lawful business reason.

Although less publicized and robust than illegal hiring enforcement actions, unfair employment practices have embroiled major US employers, whose patterns and practices of requiring certain documentation from lawful permanent residents, preference for hiring immigrants, or creation of discriminatory postings have led to fines. In one June 2016 case, 121 podiatry residency programs and their association agreed to settle charges of citizenship status discrimination (favoring US citizens) for a total of $205,000 in civil penalties.

Employers trying to follow the dueling dictates of IRCA are sometimes confronted by their conflicting purposes. On Dec. 19, 2016, the Immigrant and Employee Rights Section published a final rule, updating pre-IIRIRA regulations relating to unfair employment practices, in a document titled, “Standards and Procedures for the Enforcement of the Immigration and Nationality Act.”

These updates provide new guidance to employers and attempt to harmonize the regulations with existing enforcement policy – policy that had only previously been expressed through a series of Technical Assistance Letters. As one commentator wrote during the rulemaking process, IRCA may be seen as an invitation “to treat certain individuals differently in particular contexts based on their employment authorization, citizenship status, and national origin.”

Indeed, the tension between an employer’s obligation to verify a new hire’s employment authorization, and the complimentary duty to do so without discriminatory animus, is recognized by the Immigrant and Employee Rights Section. But regulators remain convinced that facially neutral policies and practices permit compliance with both dictates (See 81 Fed. Reg. at 91773).

The key to compliance is awareness. With these new rules in place, employers should develop employment policies and practices that strike the right balance between employment verification procedures and discriminatory practices.

Nathan Warecki

Nathan Warecki is an associate in Nixon Peabody’s Commercial Litigation practice in Manchester. He teams with attorneys and other legal professionals on a wide variety of matters, including commercial litigation, business disputes, business immigration and employment.

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