Brave New World in Tennessee: E-Verify

Following up on the news that the Tennessee legislature passed a new law - 'The Tennessee Lawful Employment Act' - ('TLEA') in an effort to require all employers to use the federal 'E-Verify' employment authorization system, we will address 5 specific areas of the new law. (Please see prior post of July 7, 2011 for an overview of the Law). The first topic is the 'E-Verify' requirement.

In actuality, this is as much about the Form I-9 process as it is E-Verify. Basically, once the law becomes effective for each employment sector (based upon size), an employer is required to either maintain copies of documents provided by the employee to prove employment eligibility - or use E-Verify to verify employment authorization. The document copies or authorization from E-Verify must be kept for either 3 years after the documentation is provided (or 'date of hire' for E-Verify) or 1 year following termination of employment, whichever is longer.

For those of you who work with the Form I-9, this all sounds familiar - but a little 'off'. For example, the Tennessee law limits the acceptable documents to an odd assortment of birth certificates and 'current immigration registration', etc. Although all of the listed documents appear to be on the list of I-9 approved documents, not all I-9 approved documents appear on the list of Tennessee approved documents. Thus, employers are faced with the peculiar problem of getting documents for the I-9 and then possibly seeking different documents for the TLEA requirements. Of course, to avoid a charge of discrimination, you should not request the employee to provide any specific document on either list; (see, recent U.S. Dept. of Justice settlement with Summit Steel Fabricators, Inc. for an idea of fines and penalties).

The alternative is to enroll in E-Verify. This, of course, is what the Legislature hopes you will do. Without going into details about the E-Verify process at this time, ultimately, you should not begin the employment of an employee until you verify that the employee is authorized to work through the E-Verify system, and maintain proof of this verification for 3 years after hire or 1 year after termination, whichever is later. The incentive, however, is that if it turns out that an employee that you have hired is actually not authorized to work, you can avoid the charge of having 'knowingly' hired an illegal alien by using E-Verify. This is the 'Safe Harbor' under the Tennessee law. Conversely, reliance simply upon keeping documents related to the I-9 process is an ineffective defense to the charge. And the distinction between a 'Safe Harbor' and a charge of 'knowingly' hiring an unauthorized employee is very damaging both financially and to your ability to maintain your license to conduct business in the State of Tennessee.

Finally, it should be noted that you are also required to determine work authorization - from non-employees (e.g. independent contractors) who perform services for you!

That will be a discussion for our next blog -

The Brave New World of Hiring in Tennessee

Since 1986, employers have been the primary enforcement tool of immigration. With the creation of the I-9 Form, it has been the responsibility of employers to find out if a person seeking employment is authorized to be and work in the United States.

The pressure on employers to enforce these immigration laws during the hiring process is getting ready to explode for employers in Tennessee. On June 7, 2011, Tennessee Governor Haslam signed into law new provisions of the 'Tennessee Lawful Employment Act' that will dramatically change the way employers hire new employees - and even independent contractors who provide labor and services for your company.

A new complex layer of state immigration enforcement obligations will supplement (and sometimes overlap) the federal regulations that employers already follow. The new legislation is built around the use of the federal 'E-Verify' system or maintenance of documentation proving legal residency for every employee similar to what is now required with the Form I-9.

Over the next several days, we will focus on 5 different components of the new legislation to help explain the scope of the new law. In summary, the 5 topics will include:

1. E-Verify and Legal Residency documentation; Employer will either have to register and use E-Verify or maintain specific documentation proving lawful residency - even if you do not have internet access;

2. Independent Contractors; new verification requirements now extend to persons who provide labor or services to your company - even if they are not your own employees;

3. Worksite Investigations; a new state office will be created to conduct random audits and inspections at your workplace;

4. Increased Penalties; higher fines and the possible permanent suspension of your license are now among the heightened penalties for violation of these new provisions;

5. Implementation Dates; Employer obligations to comply with this new legislation will be phased in depending upon the size of your workforce. Generally, the law becomes effective on January 1, 2012.

Welcome to the New World of Immigration Enforcement!

E-Verify is Coming! E-Verify is Coming! (to Tennessee, that is)

If you do business and have employees in Tennessee, a law signed by Governor Haslam last week could impact the method by which you verify your applicants’ authorization to work in the United States.

Under the new law (known as the Tennessee Lawful Employment Act), all employers are required:

 

1. Before October 1, 2011, to enroll and maintain active participation in the E-Verify program;
2. On or after October 1, 2011, to verify the work authorization status of each employee hired on or after October 1, 2011, by using the E-Verify program; and
3. On or after October 1, 2011, to maintain records of all results generated by the E-Verify program pursuant to the work authorization status check required by this bill.

If you use independent contractors, the contractor must present a valid Tennessee driver’s license, and you must maintain a copy of it. If the contractor has a license from another state, that is acceptable provided it is a state whose issuance requirements are at least as strict as Tennessee’s.

 

We will have a blog post discussing this legislation in more detail in the coming week.

A January Surprise!

Are you on the 'E-Verify' hook? If you have a contract for services or construction with the Federal Government, then you probably need to get to know 'E-Verify'. But even if you don't have a federal contract, you still might need to get to know 'E-Verify'. Here's why:

In an earlier blog posted on July 21, 2008, Senitria Goodman explained the computer-based E-Verify program of the U.S. Department of Homeland Security and discussed the proposed rule that makes it mandatory for any federal contractor or subcontractor to use 'E-Verify' for all employees 'assigned' to the federal contract. After a comment period on the proposed rule, a slightly revised final rule was published on November 14, 2008. Its effective date is January 15, 2009.
Basically, the new regulation states that if you provide services or goods (except goods that are 'commercially available off-the-shelf') under a contract with the U.S. government, you are required to use the 'E-Verify' program to verify whether your employees working under the federal contract are eligible to work in in the U.S. (When we talk about being 'eligible' we are talking about making certain that you are not employing someone in violation of U.S. Immigration laws; this is why you complete a Form I-9 for all of your employees.)
If you have a federal contract, you must use E-Verify on all employees assigned to work under the government contract. Furthermore, you must also use E-Verify on all new hires - whether or not they are assigned to work under the government contract.
Now, here's the fun part. All federal contractors must include language in their subcontracts that the subcontractor will use the E-Verify program under the same circumstances. By now you have probably figured out that - even if you are not a federal contractor - this means that if you do business with someone who is a federal contractor - or even another subcontractor of a federal contractor - you may also have to use the E-Verify program for your employees.

Here is the language from the regulation identifying who a 'subcontractor' is:

"Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor." (emphasis added)

Following this to its absurd conclusion, you might be required to use E-Verify for your employees if a product you provide ultimately ends up in the hands of a federal contractor.
Fortunately, there are some restrictions that narrow this interpretation; the subcontract must meet the following specifications:

1. The subcontract is for 'commercial or noncommercial services' or it is a construction contract;
2. The subcontract has a value of more than Three Thousand Dollars ($3,000.00); and
3. The subcontract includes work performed in the United States.

Nonetheless, if you perform a contract meeting these qualifications, you might be obligated to use the E-Verify program for your employees. The federal contractors are required to put this requirement in their contracts with their subcontractors, so read your contracts carefully - and govern yourself accordingly.

Happy New Year!

E-Verify: Use It or Lose Your Federal Contract

On June 9, 2008, an Executive Order was issued by President Bush requiring that certain federal contracts contain a clause committing the contractor and certain subcontractors to use E-verify as a condition of the federal contract. E-Verify is an Internet-based system that allows an employer to verify the identity and work eligibility of new employees for purposes of Form I-9. Both federal contractors and their subcontractors will be required to enroll in E-Verify within 30 days of being awarded the federal contractor and must continue use of E-Verify throughout the duration of the contract.

The rationale behind the Executive Order is that due to Immigration and Customs Enforcement’s (ICE) increased enforcement efforts, federal projects could be jeopardized, delayed or derailed if a federal contractor’s workforce is disrupted pursuant to a worksite raid. If federal contractors use E-Verify, the government reasons that the risk of these disruptions and delays are lessened. Notably, while E-Verify does not ordinarily offer any protection from worksite enforcement raids conducted by ICE, the federal government has indicated that federal contractors that use E-Verify are much less likely to face immigration enforcement actions.

Just a word about E-Verify… It’s free, it’s fast and it’s easy…it’s also riddled with erroneous information. E-Verify uses records from the Social Security Administration (SSA) and the Department of Homeland Security (DHS) to verify the employment authorization of individuals; however, the SSA itself estimates that approximately 17.8 million of its records contain discrepancies. Further, statistics also show that E-Verify has an error rate that is between ten to fifteen percent.

Nonetheless, federal contractors as well as certain subcontractors will be required to use E-Verify to verify new employees and all employees that will directly work under the federal contract, whether they are new employees or existing employees. Interestingly, DHS has acknowledged that this is a deviation from the rule normally applicable to employers—that an employer may not re-verify employees who have already properly completed Form I-9—and has seemed to indicate that this deviation is necessary for the stability and security of federal projects.

With respect to subcontractors’ compliance with the Executive Order, federal contractors are required to “flow down” the E-Verify contract clause to certain subcontracts. Subcontracts that exceed $3,000.00 and where the subcontractor will provide commercial or noncommercial services or construction in the U.S. must contain language requiring the subcontractor to use E-Verify. Clearly, the inclusion of this language in subcontracts could have exponential effects. The government’s aim is to protect the integrity of its “supply chain” but not burden federal contractors or subcontractors with the cost of compliance, thus the $3,000.00 threshold.

At this time, we are in the middle of a comment period that will end on August 11, 2008. After the comment period ends, final regulations will be issued by DHS regarding the implementation of the Executive Order. Expect the final regulations to include harsh consequences for a contractor’s failure to use E-Verify, including fines and possible debarment.