Immigration Compliance for the Restaurant and Foodservice Industry: What to Do BEFORE (and After) the Government Comes Knocking

Transcription

1 Immigration Compliance for the Restaurant and Foodservice Industry: What to Do BEFORE (and After) the Government Comes Knocking March 4, 2012 Presented by Kristine A. Sova and Dismas N. Locaria of Venable LLP

2 Renewed Enforcement Focus on Hiring of Undocumented Workers Since 2009, the Obama Administration has been targeting employer compliance with I-9 paperwork The result? Drastic increase in I-9 audits conducted by U.S. Immigration and Customs and Enforcement (ICE)

3 Renewed Enforcement Focus on Hiring of Undocumented Workers (cont d) The figures? FY 2009 FY 2010 FY 2011 Penalties $1.03 million $6.9 million $10.4 million Criminal Charges 114 business owners and managers 187 business owners and managers 221 business owners and managers Audits 1,444 employers 2,196 employers 2,496 employers

4 Renewed Enforcement Focus on Hiring of Undocumented Workers (cont d) Who is being targeted? Large OR small companies Companies that are the subject of a tip or lead Companies that are the subject of audit or investigation by any other governmental agency Specific industries, such as the restaurant industry

5 What is at stake with an I-9 audit? At the ICE level: Knowingly hiring and continuing to employ violations $375 to $16,000, with repeat offenders receiving penalties at higher end Paperwork violations $110 to $1,100 for each violation Debarment by ICE with respect to participation in future federal contracts and from receiving other government benefits

6 What is at stake with an I-9 audit? (cont d) Other: RICO claims Discrimination complaints Shareholder suits Difficulties with M&A

7 Debarment A lesser known, but potentially ruinous consequence of an Immigration and Nationality Act ( INA ) violation is debarment Debarment is neither a criminal nor civil action, it is an administrative action Not to be imposed for punishment To ensure the public interest is protected from unscrupulous businesses and individuals Entities and individuals are judged on whether they are presently responsible

8 Debarment (cont d) INA Basis for Debarment A company or individual may be debarred if: It is a government contractor; and There exists a basis for debarment Pursuant to Executive Order 12989, an INA violation is a basis for at least a one-year debarment Conviction of an INA violation is sufficient evidence An indictment is adequate evidence for suspension (a temporary debarment)

9 Debarment (cont d) The real question is: Are you a government contractor? The Federal Acquisition Regulation defines a government contractor as an entity/individual that: Directly or indirectly (e.g., through an affiliate), submits offers for or is awarded, or reasonably may be expected to submit offers for or be awarded, a Government contract 48 C.F.R (emphasis added)

10 Debarment (cont d) ICE has taken a very expansive view of this definition interpreting reasonably may be expected, to include all companies/individuals located within the U.S. Based on this definition, ICE: Issues notices of proposed debarment to U.S. companies and individuals as a matter of course for INA violations To date, ICE has issued hundreds of notices of proposed debarment to entities/individuals, many of which are not traditional government contractors

11 Debarment (cont d) ICE Debarments Year Entity Debarments Individual Debarments

12 Ramifications of Debarment Ramifications of Debarment: Prohibits the awarding of new contracts or subcontracts from the Federal government Listing on public websites: Excluded Parties List System (EPLS) Federal Awardee Performance and Integrity Information System (FAPIIS)

13 Ramifications of Debarment (cont d) Practical implications for entities that are not traditional federal contractors? State/local governments inquire as to federal debarment status before awarding contracts Large private entities inquire as to debarment status Government contractors cannot subcontract with debarred entities Do not want to be associated with debarred entities Reputational harm Imputation of conviction/debarment to owner, principal, management

14 Ramifications of Debarment (cont d) Individual debarment In addition to above implications, ineligible to participate in federal subsidized programs federally backed home loans, federally subsidized student loans, etc. Remain eligible for public entitlements (e.g., social security benefits, etc.) Listed on the EPLS and FAPIIS Cannot hold a principal, board, executive or managerial position with an entity that receives federal contracts or subcontracts

15 ICE Audit: What to Expect and How to Respond Inspection process begins with service of Notice of Inspection (NOI) on employer notice compels production of I-9 forms NOI will also often request supporting documentation i.e., payroll, current list of employees, Articles of Incorporation, and business licenses, as well as no-match letters issued by Social Security Administration (SSA)

16 ICE Audit: What to Expect and How to Respond (cont d) Employer Response to NOI: Insist on 3 business days notice before inspection of I-9 forms (this is minimum amount of notice the federal agency must provide) Document any communications with government Keep a copy of all documents provided to government Carefully note any violations alleged by the auditor

17 ICE Audit: What to Expect and How to Respond (cont d) Government will notify audited employer of results of inspection, in writing, once completed Types of Notices: Notice of Inspection Results Notice of Suspect Documents Notice of Discrepancies Notice of Technical or Procedural Failures Warning Notice Notice of Intent to Fine

18 ICE Audit: What to Expect and How to Respond (cont d) Notice of Intent to Fine (NIF) Charging documents will be provided specifying the violations committed by the employer Employer can either negotiate a settlement or request a hearing before the Office of the Chief Administrative Hearing Officer (OCAHO) within 30 days of receipt of the NIF If employer takes no action after receiving a NIF, ICE will issue a Final Order If hearing is requested, OCAHO assigns case to an Administrative Law Judge, and sends all parties a copy of a Notice of Hearing and government s complaint, putting the adjudicative process in motion

19 ICE Audit: What to Expect and How to Respond (cont d) Determination of Recommended Fines in NIF is based on a formula involving: Percentage relating to violations and number of employees Tiered fine schedule Enhancement/mitigation matrix

20 ICE Audit: What to Expect and How to Respond (cont d) Challenging Debarments Administrative process Respond to notice in writing In-person meeting with ICE debarment official Adverse final decisions Seek reconsideration File suit in federal district court

21 I-9 and Employment Eligibility Best Practices Properly Completing an I-9 Form Self-Audit of I-9 Forms Compliance Plan E-Verify / IMAGE Program / I-9 Compliance Software

22 Properly Completing the Form I-9, Employment Eligibility Verification Form Employers must complete an I-9 form each time they hire any person to perform labor or services in the U.S. in return for wages or other renumeration (e.g., food and lodging). The form requires that the employee present his/her employer an original document or documents showing his/her identity and employment authorization within 3 business days of the date employment begins.

23 Properly Completing the Form I-9, Employment Eligibility Verification Form (cont d) The I-9 form identifies proper forms of documentation that an employer may accept. (Note: Some aliens have and present an Individual Taxpayer Identification Number (ITIN) from the Internal Revenue Service to employers. An ITIN is never acceptable for employment eligibility verification purposes.) Employer must re-verify an employee s employment if the employee indicates that he/she is only authorized to work in the U.S. for a specified period of time or if the employee has a name change.

24 Guidelines for Self-Audits of I-9 Forms Confirm there is an I-9 form on file for: Every current employee, Every employee hired within the last three years, whether or not still employed, and Every former employee who left employment within the previous year Discard any I-9 forms you are no longer required to maintain Confirm there is a consistent practice on photocopying supporting documents Confirm all I-9 forms are filled out completely and correctly Be transparent about any corrections that are made Complete new form for any required forms that are missing, if possible

25 Guidelines for Compliance Plans Plan should include: Description of roles/accountability of various departments and/or positions in your restaurant/organization Time-frames in which actions should occur Mechanisms to address: Allegations that your restaurant s workers are unauthorized Discrepancies in payroll and identity information regarding your employees Description of how and when certain issues should be escalated to upper management, in-house counsel, and outside counsel Union relations/obligations Conduct staff training on plan and ensure employees have the necessary tools to implement the plan Update plan to reflect changes in the law or regulations and train employees on those changes

26 E-Verify / IMAGE Program / I-9 Compliance Software E-Verify / IMAGE Program Pros: Mitigating factor Cons: Government access to employer information; invitation/agreement to government audit; no safe harbor I-9 Compliance Software Pros: Some programs assist with quality control; some programs store data online Cons: Not all programs comply with law/regulation, creating liability

27 Additional Resources For updates, go to: (select Resources and then Get Updates ) Revised Handbook for Employers (M-274) from USCIS (revised June 1, 2011), available at: I-9 Central (launched by USCIS in mid-may 2011) is a new online resource center that contains resources, tips, and guidance to properly complete the Form I-9, available at:

28 Questions? Contact information: Kristine A. Sova Dismas N. Locaria