Obligations for verifying work authorization

The 1986 Immigration Reform and Control Act (IRCA) requires that employers verify that all employees have proper work authorization. The centerpiece of this system is the I-9 form, which employers must complete within three days of the start of work for each employee. This section explains some of the issues involved with maintaining a strong I-9 compliance program at your company.


Independent Contractors are not covered by IRCA

The employment verification regulations (so-called "I-9 rules") cover only true employees, not independent contractors. As in the workers' compensation area, whether an individual or entity is an independent contractor is determined on a case by case basis -- there are no bright line rules. The term "independent contractor" includes those who "carry on independent business, contract to do a piece of work according to their own means and methods, and are subject to control only as to results." In most cases, a company would have no direct obligation to check the immigration documents of employees of its subcontractors.

An argument can be made that an individual whose work is directed on a day to day basis by a company employee is in fact not an independent contractor. Furthermore, if the company "uses a contract, subcontract, or exchange" to avoid the I-9 requirements, the company would be subject to the same liability as a direct employer who violates the employment verification rules. However, USCIS has not pursued this "Use of Labor Through Contract" provision in subcontractor situations generally in its enforcement efforts.


Penalties tend to be mild

Moreover, the penalties for IRCA violations are relatively mild, and enforcement tends to be lax as long as there is not a clear pattern of violations. In fact, current USCIS policy expresses a preference for a warning letter before fines are assessed. The goal of this policy is to educate employers and encourage them to correct problems without litigation. There are simply too many employers hiring foreign nationals for the USCIS to keep track of them. The civil penalties range from $250 to $2000 for a first offense, up to $3-10,000 for a third or subsequent offense. The law also allows recovery for backpay and attorney fees (only if defense is frivolous), and may permit orders to comply or reinstate the employee.


Date of the employment contract matters

Note also that the IRCA provisions apply only to contracts "entered into, renegotiated, or extended" after November 6, 1986, the effective date of the Act. However, it would appear that changing the financial terms or extending a contract after that date would bring the user of contract labor under IRCA, and therefore most contracts in force today would fall under IRCA as they will have been modified somehow in the past 13 years.

Violations must be knowing

Violations of the employment verification rules through a contract situation must be knowing, a difficult standard to prove. Knowing includes constructive knowledge and failure to exercise reasonable care in learning about and implementing immigration rules.

The USCIS regulations now specifically refer to several situations where constructive knowledge will be inferred: (1) where the I-9 is not completed or is improperly completed; (2) where the employer has information indicating that the alien is not authorized to work, such as the fact of a labor certification application (note: a "no-match" letter from the Social Security Administration should not be used as evidence that an individual may not be authorized to work); and (3) where the employer acts "with reckless and wanton disregard for the legal consequences of permitting another individual to introduce an unauthorized alien into its work force or to act on its behalf." But lack of authorization "may not be inferred from an employee's appearance or accent." Nor does the definition permit an employer to require more or different documentation than authorized by law.

The absence of a verification requirement for companies using contractors reduces the likelihood of learning that a given worker is an unauthorized alien. "However, contracts may not be used for the purposes of circumventing the employment eligibility verification requirements."


Employment discrimination is prohibited

An employer cannot selectively hire, or refuse to hire, nationals from certain countries for any reason. That practice is "national origin discrimination" under both federal employment discrimination law and immigration law. In contrast, limiting hiring to individuals of a certain immigration status (generally) is permissible.

Various federal statutes intersect on this issue. 8 U.S.C. § 1981 and Title VII apply to noncitizens, and prohibit discrimination on the basis of national origin. The 1986 Immigration Reform and Control Act (IRCA) adds another layer by prohibiting discrimination on the basis of national origin and citizenship in hiring and firing employees. IRCA violations are known by the legal acronyms, UIREP (unfair immigration-related employment practices).


Employers may only require the minimum identity and employment documents outlined in the I-9 handbook. Employers may not require any specific or additional documentation

IRCA created the I-9 employment eligibility verification scheme to reduce illegal immigration. The UIREP provisions were added to temper the effect of IRCA on aliens who have proper work authorization. Congress did not want employers to stop hiring foreigners or people with accents for fear of accidentally hiring an illegal alien.

Indemnity clause is one option to avoid liability for immigration practices of subcontractors

The definitions of "employer" and "employee" are being strained by modern trends toward "outsourcing" in the corporate world. This raises the question of whether a company might be liable for hiring a subcontractor that in turn has hired unauthorized alien workers. The answer is no, unless the employee is in reality working directly for the company, or the company knows of the immigration violation. A relatively simple way to protect the company from possible liability is to include an indemnity clause for immigration violations in the agreement with the subcontractor.

One option for a large company that seeks to protect itself from the employment verification abuses of its subcontractors is to include an indemnity clause in the contract. While indemnity clauses in contracts with individuals are strictly prohibited, such clauses can be included in an agreement with another company. It is very possible that an indemnity clause would encourage a subcontractor to follow the immigration rules more carefully.



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