Newland's Business Notes

Immigrants - Employers

Volume 11 Issue 5 -- September/October 2007

Recently, in August 2007, the Bush administration announced a plan to step up immigration enforcement.  In addition to border fences and border agents, one method for enhanced enforcement is to put greater burdens on employers for verifying Social Security Numbers.

We have discussed aspects of this problem in our newsletters of November/December 2006 and January/February 2007 [Invalid SSNs  – What To Do (Parts 1 and 2)].  For more background on the basic problems, you may want to refer to those newsletters.

Because this is a developing issue, we will not repeat much of what was said in the earlier newsletters but focus here instead on what  has changed.

President Bush says that although Congress has not passed much-needed immigration reform, his administration will take greater steps to enforce existing laws.  It is anticipated that there will be additional emphasis on prosecution of employers who hire illegal immigrants. 

The new rules were supposed to go into effect in September 2007, but a federal judge has temporarily delayed their taking effect pending the outcome of a court proceeding.

Under both the prior and the new regulations, an employer, when it receives a “no match letter,” will be required to notify its employee that there appears to be a mismatch between the Social Security Administration’s records and those of the Internal Revenue Service or other government agencies.  The periods of time within which the respective steps are taken from the date the employer receives a “no match letter” are outlined below:

Within 30 days –  The employer must check his records.  If employer records are correct the employer must inform the worker of the discrepancy.

Within 90 days (was 60 days) – The worker must contact the appropriate agency and correct the error.

Within 93 days (was 63 days) – If the employee does not resolve the mismatch within 90 days after the employer receives the letter, the employee has three days to fill out new paperwork and provide the necessary documentation.

On 94th day – If the worker cannot provide the documentation, the employer must fire the worker or risk becoming liable for failing to act.

The key emphasis of the new rules is to try to force employers to fire employees who cannot provide adequate documentation. If the employer does not fire such employees, the employer may be prosecuted.

What is an employer to do? Even the Bush administration acknowledges that the databases available to employers for addressing no-match issues are not perfect.

For some employers, the choice will be to “keep on keepin’ on” — to continue to treat the immigrants with insufficient documentation (“Podocs”) as they did before their status was questioned. 

It is estimated by some groups that at least two thirds of those immigrants working in the construction and agricultural industries are illegal and that there is no replacement workforce that would serve to replace the immigrant workers thought to be illegal. 

Undoubtedly there will be many employers who take this course of action and hope that they are not prosecuted, because in many instances the Podoc workers are good workers, and there is genuine friendship between the employer and the employee. But if the new rules go into effect, the risks of this approach will increase.

Another alternative would be to treat the Podocs as independent contractors, but under IRS rulings, many Podocs will not qualify as independent contractors. 

The reality is that some smaller businesses, denied the services of illegal immigrants, may be forced to close their doors.  Perhaps this is what caused The Washington Post to state in an editorial on August 12, 2007, “The nation is saddled with a [n immigration] law that cannot work.  The economy as long as it continues to grow, will continue to attract immigrants and they will come illegally if there is no other way.” 

The purpose of the newsletter is not to suggest a course of action but to advise employers and readers of the dilemma facing a nation without a sufficient work force and inadequate immigration laws.

Copyright 2007

Published by the law firm of Newland & Associates, PLC
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Call us at (703) 330-0000 for a full range of business law and tax-related services.

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