Although Congress' latest attempt at overhauling the nation's immigration laws suffered several legislative setbacks this summer, the debate put the spotlight on the challenges some employers face with workers' immigration status and navigating the employment verification system.

Under federal laws, businesses are required to examine and authenticate documents - such as a Social Security card, birth certificate or a U.S. passport - submitted by a new employee to ensure the individual is a U.S. citizen or authorized to work in the United States.

Of course, since 9/11, the government has tightened federal regulations on employment eligibility based on immigration status. As a result, businesses, especially those relying on immigrant labor, must make sure their I-9 employment verification processes comply with the stricter immigration laws.

Overhauling employee verification

Currently, the U.S. Immigration and Customs Enforcement (ICE), a federal agency overseeing workplace immigration laws, offers a Web-based system where employers can cross- reference I-9 (Employment Eligibility Verification Form) data with federal records managed by the Social Security Administration and Department of Homeland Security. It's a voluntary program, called Basic Pilot Employment Verification, and is used by 16,000 employers, according to government officials.

Yet, during recent congressional debates over the immigration bill, HR lobbyists, fearing Congress might make the program mandatory, pointed out that Basic Pilot relies on paper documents, thus making it susceptible to fraud.

Susan R. Meisinger, president and CEO of the Society for Human Resource Management, testified in June before the House Social Security subcommittee about the system.

"Expanding Basic Pilot to cover all employers is unworkable," said Meisinger. "The result will be confusion and uncertainty for employers and employees, denied employment opportunities and significant employer penalties."

She further explained the system is unable to verify the authenticity of the identity being presented for employment purposes. "In addition, if an employer questions the validity of documents too much, they are also vulnerable to potential claims of discrimination," she added.

SHRM recommends a secure electronic employment verification system using state-of-the-art technology, additional background checks and potential use of biometric enrollment conducted by government-certified private vendors.

Workplace raids

To assuage employers' anxieties of being raided for breaking immigration laws, ICE in 2006 created IMAGE (ICE Mutual Agreement between Government and Employers), a voluntary program that educates and trains businesses about employment eligibility based on immigration status.

ICE apparently has led to significantly increased immigration-related arrests. The agency, under the Department of Homeland Security, set a record in 2006 by arresting 718 individuals for immigration violations. In fiscal year 2005, the agency only arrested 176 individuals.

In the past, employers that exploited illegal immigrant labor only received a fine. The penalty was an administrative slap on the wrist that provided no real deterrent, she said.

"It was simply viewed as the cost of doing business. The fines were happily paid, and the magnet these employers provided for illegal immigrants to enter the country in search of jobs grew stronger."

The agency, created in 2003, is calling for employers to serve jail time and face asset forfeiture for breaking immigration laws.

Immigration reforms and plan administration

Benefits professionals who specialize in plan administration have understood undocumented workers "can sometimes cause a nightmare with plan administration," says Brian O' Dwyer, senior partner at the New York-based law firm O'Dwyer and Bernstien.

O'Dwyer, who specializes in employee benefit law, believes a national database for employers to check Social Security numbers might ease some aspects of benefit plan administration.

"This way an employer will immediately get an idea whether that person's Social Security number matches the one in the system or whether the number belongs to someone else," he says.

In some cases, a fiduciary may have multiple Social Security numbers for one worker because the employee or employer made up phony numbers to hide immigration status. Plan administrators confronted with phony Social Security numbers have a difficult time getting benefits to people and discerning who is a participant and who is not.

"It's a very burdensome thing on plan administrators to try to figure out how to administer such situations," O'Dwyer says. "So if we have a system where everybody will have a legitimate Social Security number, for plan administration purposes, that would certainly make things much better."

Highlights from recent ICE cases

» On Feb. 21-22, 2007, three executives of Rosenbaum-Cunningham International (RCI), a Florida-based national janitorial services contractor, were charged with conspiracy to defraud the United States, harboring illegal aliens for profit and evading payment of federal employment taxes. Between 2001 and 2005, ICE agents arrested approximately 195 illegal workers at more than 60 locations in 18 states and the District of Columbia at such RCI clients as House of Blues, Planet Hollywood and Hard Rock Cafe.

» On Dec. 12, 2006, more than 1,297 illegal aliens were arrested at Swift & Company, a meat-processing company, at facilities in six states during an immigration enforcement operation that was the result of an investigation of work-related identity theft. Of those arrested, 274 were charged criminally, 137 of them with federal crimes, the others with state crimes. The rest were charged as immigration status violators and were processed for removal from the United States. A review of I-9s at Swift facilities nationwide discovered that 30% of them were suspected of being fraudulent. The investigation is ongoing.

Source: U.S. Immigration and Customs Enforcement