Verifying Employment Eligibility: Navigating Compliance with Federal Law and Alabama’s New Law
- Employers are required to complete a federal I-9 form to verify the employment eligibility of all employees hired after November 6, 1986.
- Use for every employee, even relatives. Do not discriminate and only use it for employees of a particular national origin or who share some other characteristic.
- Be sure to always use the most current form, because the government modifies the form about every other year or so. See the top right corner of the I-9 form.
- After an offer of employment, or a conditional offer of employment, the employee should complete Section 1 of the I-9 Form no later than the first day of work for pay.
- The employee must provide to the employer documentation of employment eligibility from the I-9’s “List A” or one from “List B” and one from “List C.” In other words, if you don’t get a document from “List A,” you must get one from “List B” and one from “List C.”
- “List A” documents prove both identity and employment authorization. Acceptable documents are listed on the last page of the I-9 form, and you can see examples online at http://1.usa.gov/o8hl32.
- The most common “List A” document is a U.S. passport.
- “List B” documents establish identity only, not work authorization. The most common “List B” document is an unexpired driver’s license.
- “List C” documents establish work or employment authorization. The most common “List C” document is a Social Security card that is unrestricted. Some Social Security cards are stamped “NOT VALID FOR EMPLOYMENT” or “VALID FOR WORK ONLY WITH DHS AUTHORIZATION.” Another common “List C” document is a certified copy of a birth certificate (no photocopies).
- If a document is on the list, the employer must accept it. The employer cannot require an employee to provide a specific document on the list if the document the employee has provided is an apparently valid document on the list.
- An employer is not required to be a document expert. If the document appears to be valid on its face, the employer must accept it. However, if a document is obviously not valid, the employer should reject it.
- When more than one document is received from an employee, compare the names, and compare the photo on a photo ID to the employee’s appearance.
- Discrepancies are grounds for rejecting the documents as not reasonably appearing to be genuine.
- If there is a discrepancy in the names or between the photo and an employee’s appearance, the employer should ask the employee to present other documentation that satisfies the I-9 requirements.
- Employees unable to present acceptable documents should be terminated.
- Once the documents are received, the information from them should be used to complete Section 2 of the I-9 form within 3 days of the date employment begins.
- Include the document title (e.g. driver license), the issuing authority (e.g., State of Alabama), the document number, and any expiration date.
- You cannot accept any expired documents. You cannot consider a future expiration date in determining whether to employ someone, as that may constitute employment discrimination.
- However, when certain List A or List C documents expire, they will need to be reverified. So, you need to develop a system to calendar and alert any future expiration dates of List A or List C documents.
- Keep your I-9 forms in a separate file — not with the employee’s personnel file. This is not a legal requirement. But decisionmakers who will be using the personnel file don’t need to see the I-9 forms, and more importantly, it will help you if you ever need to respond to an I-9 audit. It is also advisable to keep the I-9 forms of current employees separate from terminated employees.
- An employer must retain the Form I-9 for each employee either for 3 years after the date of hire or for 1 year after the employee is terminated, whichever is later. As such, employers must have I-9 forms on file for all current employees.
- What if you get audited by ICE? Federal law mandates that an ICE administrative Form I-9 audit be preceded by a written Notice of Inspection (NOI), providing for the IRCA-mandated 72-hour notice. The NOI will indicate the date, time and place that the ICE agent will arrive, and the documentation that the employer is requested to produce.
- ICE does not do random audits. If you receive an NOI, it is because ICE has received a complaint or been provided information, frequently a disgruntled employee or a competitor.
- Respond to the NOI by (1) immediately contacting a lawyer and (2) gathering the I-9 forms requested for inspection. Review the I-9 forms for any problems that can be corrected or mitigated.
- ICE may ask consent to do a “survey” of the employees present at the employer’s work place, so it is advisable to have an attorney present when investigators are on the company’s premises.
- In the absence of consent, ICE may not make a warrantless search of the company’s premises.
- The best defense to an audit is to take efforts to do compliance on the front end. Another precaution is to do an internal audit periodically, either on your own or using a lawyer.
- Federal civil penalties for knowingly hiring or continuing to employ unauthorized aliens: 1st offense: Between $375 and $3,200 for each unauthorized alien; 2nd offense: Between $3,200 and $6,500 for each unauthorized alien; Subsequent Offenses: Between $4,300 and $16,000 for each unauthorized alien.
- Federal civil penalties for failing to properly complete, retain, or make available for inspection Forms I-9 as required by law, you may face civil money penalties in an amount of not less than $110 and not more than $1,100 for each violation
Alabama’s new law: Act no. 2011-535
The Beason-Hammon Alabama Taxpayer and Citizen Protection Act
Section 15 — Employment Eligibility Verification/E-Verify
- Section 15 of the new Alabama Act (the “Act”) prohibits any business entity or employer from knowingly hiring or continuing to employ an unauthorized alien to work in the State of Alabama.
- This is the same thing prohibited by the federal Immigration Reform and Control Act (“IRCA”) for at least 25 years.
- Section 15 of the Act requires all employers to enroll in and use the federal E-Verify system to verify employment eligibility of employees no later than April 1, 2012.
- Unless an employer is a federal contractor, only new employees hired after enrollment in E-Verify should be confirmed using E-Verify.
- E-Verify is a system that allows an employer to take an employee’s information from an I-9 form and verify the employee’s eligibility to work. It has been required for federal contractors since September 2009 and has also been available for voluntary use by any employer.
- You can get information on the E-Verify system at the USCIS web sitew w w . u s c i s . g o v, at http://1.usa.gov/8k8MZ, and you can enroll in E-Verify at http://bit.ly/xO2bM.
- Under the new Alabama Act, if an employer fails to use E-Verify, upon a first violation the employer will be required to terminate the employment of all unauthorized aliens, will be put on three-years probation during which the employer must make quarterly reports to the district attorney of all hires, and will have its business license suspended for up to 10 days until the employer provides a sworn statement that all unauthorized aliens have been terminated and that the employer is in compliance with the law. A second offense will result in the “permanent” revoking of all business licenses and permits held by the employer.
Section 16 — The State Income Tax Provision
- Any compensation paid to an unauthorized alien for work or services performed are not deductible as a business expense for state income tax purposes. The consequences of violating this provision is a penalty equal to 10 times the business expense deduction claimed in violation of the provision.
- The prohibition on deductions includes payments to an unauthorized alien who was considered an independent contractor, because the Act says that it applies whether or not an IRS form 1099 was issued.
- The Act does not impose any additional liability because an independent contractor of a company employs unauthorized aliens, but it is still a violation of federal law.
- The Act says: “The employees of an independent contractor working for a business entity shall not be regarded as the employees of the business entity, for the purposes of this act.”
- A good practice is to obtain a W-9 form from all individual (not corporate) independent contractors, as this form requires the contractor to certify that he or she is a “U.S. person” (which means a U.S. citizen or legal resident alien).
- Additionally, if there is a written contract with the contractor, it is a good idea to include a provision in which the contractor agrees to hire only employees who are eligible to work in the USA.
- The federal IRCA prohibits an entity from hiring an independent contractor if the entity knows or has reason to know that the contractor employs illegal aliens.
Section 17 — Civil Cause of Action for Discrimination
- The Act creates a civil cause of action for discrimination for any employee who is not hired or who is fired if the employer hires or continues to employ a worker who the employer knows or should know is an unauthorized alien.
- Damages are limited to “compensatory relief,” which prevents any punitive damages. It is unclear whether damages for emotional distress are included in “compensatory relief.”
- Section 17 also has a very unusual loser-pays attorney-fee provision that says the losing party must pay the attorneys’ fees of the prevailing party but only as much as the losing party spent on its attorneys.
Section 9 — State and Local Government-Funded Contracts
- Section 9 of the Act applies to companies that contract with the State of Alabama or any subdivision of the state or any entity funded by the state (or subdivision) and imposes requirements on those entering such contracts and those subcontracting under any such contracts.
- Section 9 becomes effective January 1, 2012.
- Section 9 requires a government contractor or subcontractor to (a) give a notarized verification that it will not knowingly employ an unauthorized alien and (b) provide documentation that it is enrolled in the E-Verify program.
- Section 9 provides that a contractor is not liable for its subcontractors if it receives a sworn affidavit of compliance from the subcontractor.
- For a 1st violation of Section 9 by a government contractor, (a) the contractor will be deemed to be in breach of the contract, and the entity issuing the contract may terminate it after providing notice and an opportunity to be heard, and (b) the Attorney General may bring an action to suspend the contractor’s business licenses and permits for up to 60 days.
- For a 2nd violation of Section 9, the contract must be terminated (after providing notice and an opportunity to be heard).
Section 13 — No Concealing, Harboring, Shielding, or Transporting Unauthorized Aliens
- Section 13 of the Act is a criminal provision. It prohibits concealing, harboring, shielding, or transporting unauthorized aliens, or to conspire or attempt to do so, with knowledge of or with reckless disregard to their status as unauthorized aliens.
- A violation is a Class A misdemeanor for each unlawfully present alien, and if the violation involves 10 or more aliens, it is a Class C felony. For a Class A misdemeanor, the punishment is not more than $6,000 and imprisonment in the county jail of not more than one year. For a Class C felony, the punishment is imprisonment of between 1 and 10 years and a fine of not more than $15,000.
- An employer who violates the provisions concerning employment of unauthorized aliens can turn it into a criminal offense if the employer conceals, harbors, shields, or transports the unauthorized aliens.
- Any vehicle or other conveyance used is also subject to civil forfeiture.
- There are also provisions that prohibit making or dealing in false documentation of employment eligibility. So if an employer tries to falsify the eligibility of its employees, that is another criminal violation (potentially a Class C felony).
Handbook for Employers: Instructions for Completing Form I-9 (69 pages)— access online or download at: http://www.uscis.gov/files/form/m-274.pdf
The Form I-9 Process in a Nutshell (7 pages): http://www.uscis.gov/files/article/EIB102.pdf
I-9 document samples:
Act 2011-535 — http://bit.ly/pQNS8K
The Alabama Department of Homeland Security http://www.homelandsecurity.alabama.gov/
September 1, 2011: The state income tax provision (Sec. 16) and the new state cause of action for discrimination (Sec. 17) become effective.
January 1, 2012: The provision governing state and local government or government-funded contracts (Sec. 9) becomes effective.
April 1, 2012: The general employment provision and E-Verify requirement becomes effective (Sec. 15).
Form I-9, Employment Eligibility Verification
Michael L. Jackson
Larry S. Logsdon