By Scott W. Wright
In the wake of 9/11, many Americans expected Congress to implement laws to reduce the number of foreign nationals who would be eligible to come to the United States. Editorial pages and the media air waves were peppered with demands that the United States take swift action to reduce the levels of immigration, both with respect to “green cards” and for those who qualify to work and study in the United States on temporary visas. However, Congress has done very little tinkering with the mechanics of the visa quota and qualification systems. No serious effort has been launched to reduce the number of permanent/immigrant visas available through family or employment-based immigration. Likewise, the long list of visas which authorize foreign nationals to work and study in the United States (E-1, E-2, F-1, H-1B, H-2B, H-3, L-1, O-1, etc.) remains intact, and there are no significant proposals on the horizon that would change the legal standards for these visa categories. There are no indications that the current Congress intends to ‘subtract’ from the visas available pursuant to pre-9/11 legislation.
Public perception would suggest otherwise. If you speak with immigrants or company representatives who handle immigration they will invariably provide a long list of examples of how the legal terrain has changed making immigration to the United States more difficult, complicated and uninviting. Although some of these complications are the result of legislative changes (at a federal or state level), the most significant change is simply one of attitude. What federal agencies tolerated in the past, they no longer will accept. Laws which were essentially ignored are now enforced.
Human resources professionals who have long worked on employment-based immigration matters have seen a sharp increase in state and federal administrative vigilance on an increasing basis since late 2001. The Immigration & Naturalization Service (INS) is sporadically, but strategically, enforcing employer sanctions laws which have essentially laid dormant in most parts of the country for the last several years. Employers have seen the Social Security Administration (SSA) act with renewed vigor to weed social security “mismatches” out of the system. Consequently, the threat of sanctions from the Internal Revenue Service (IRS) is real and could be daunting for employers in certain industries. Even the issuance of a state driver’s license has become a “hot” topic in immigration law seminars across the country as companies grapple with the increasingly strict state laws that make it more difficult for their foreign workers (and family members) to secure and renew driver’s licenses and state identification cards. The auditing power of such agencies as the Office of Special Counsel (OSC) of the Department of Justice and the Wage and Hour Division of the U.S. Department of Labor are also being exercised on a more frequent basis.
It would be a gross overstatement to say that the horrible events of September 11, 2001 brought about these changes. Nothing could be further from the truth. As far back as May 1999, SSA submitted a Management Advisory Report to Congress regarding the use of a Social Security Number (SSN) to commit fraud in the United States. That report identified significant vulnerabilities in SSA’s enumeration process that were being exploited by those seeking to work illegally in this country. SSA clamored for the attention and increased support from Congress and the INS in yet another report issued in September 2000. This second, more detailed report called for more heightened scrutiny in the document verification process used to request social security cards and numbers.
Likewise, well in advance of September 11, 2001 many states, including Minnesota, revised their laws and administrative procedures to further restrict eligibility for state issued driver’s licenses and identification cards. In Minnesota and many other states, foreign nationals were required (well before September 11, 2001) to present concrete evidence of their identity and immigration status to secure issuance of a driver’s license.
The auditing functions of the INS, OSC and DOL have also been propelled by the dramatic changes in the economy. The “implosion” of many companies in the high-tech sector, with consequential layoffs of workers, has led to a sharp increase in the number of complaints filed with federal agencies regarding corporate compliance with H-1B legislation for, among other things, the payment of salaries in compliance with the prevailing wages in the labor market. The terrorist attacks in 2001 did not generate the number of audits or complaints.
But to the extent that 9/11 was not the fuel which “ignited” these examples of increased government vigilance, it has certainly been a high-octane accelerant to bring about an unparalleled “collision” of agency actions that are impacting U.S. employers at an increasing pace. For the most part, the rules and laws are essentially the same today as they were prior to September 11, 2001. But the stakes are higher. The political pressure is greater. And the level of scrutiny continues to rise to unprecedented levels.
INS: SELECTIVE ENFORCEMENT TO SEND A MESSAGE
Some changes in INS investigative and enforcement activity include the following:
I-9 Audits
The number of I-9 audits has progressively decreased over the last decade throughout the United States. The INS increasingly became more selective in who it would audit and which cases it would select to take to an Administrative Law Judge (ALJ) or a U.S. Attorney for the enforcement of sanctions. Despite the well-recognized increase in the number of undocumented workers, I-9 actions became relatively rare for most industries.
For most companies, that remains the state of affairs in the post-9/11 era. However, certain industries and occupational classifications have been heavily targeted by the INS for audits and scrutiny regarding I-9 processes and record keeping. In the wake of 9/11, the INS first targeted airports and companies that employ airport security personnel. I-9 audits have also targeted airlines, overnight courier companies, and other entities whose personnel have access to airports or items that make their way onto aircraft (including food service, packages, etc.). I-9 audits have been pursued in other areas identified as important to national security, including entities engaged in research regarding chemicals and weapons, and critical energy or infrastructure locations.
Employers in industries that fall outside the scope of these high-priority locations cannot, however, become complacent with respect to I-9 compliance. Employers of all sizes and in essentially any industries are susceptible to high-priority I-9 audits for a variety of reasons. For example, the Joint Terrorism Task Force, which encompasses personnel from many federal and state agencies and law enforcement departments (including the INS), is continually identifying individuals for further investigation. Such individuals may be suspected of activities which support terrorism, or may simply be sought for information about particular events or other people. I-9 audits can provide the INS and the Joint Terrorism Task Force with valuable information on foreign nationals who have been targeted for investigation or questioning. A properly completed I-9 record can pinpoint a great deal of information about these individuals relating to specific time frames. The I-9 “links” an individual to particular U.S. and/or foreign documents. Thus, even if the target of the government’s investigation used falsified documentation, the INS can obtain document numbers, names, dates and places of birth, SSNs and other information from an I-9 audit that can then be used to accelerate an investigation, allowing government personnel to run further checks and to conduct a more comprehensive comparative analysis with results of other investigative activities. An employer that has failed to meet its I-9 obligations may, therefore, stall or otherwise hinder a government investigation.
Employers, therefore, need to be aware that in many instances the INS may have concerns that go far beyond I-9 paperwork compliance and the eligibility of individual workers to seek employment in the United States. The I-9 process has taken on paramount importance in the post-9/11 era because of its unique ability to provide an excellent “snapshot” of the identity of particular individuals, with a trail of document numbers and names, which can provide investigators with a wealth of information and leads. Just a few years ago there was widespread support in Congress to explore a repeal of I-9 obligations and employer sanctions. Now, there is an unchallenged expectation that runs throughout the federal government that employers must ‘do their part’ in this era of Homeland Security by making sure that I-9’s are done correctly for all workers.
Getting Serious with the Imposition of Criminal Penalties
Employers who commit violations in the I-9 process or knowingly employ unauthorized foreign workers have, since 1986, been potentially subject to both civil and criminal penalties. These sanctions were created through the passage of the Immigration Reform and Control Act (IRCA) in 1986, but the criminal penalties of the law have only been imposed sporadically in the Upper Midwest region of the United States. However, the INS St. Paul District Office recently sent a strong message to employers in this region of the country that it will not shy away from seeking criminal penalties if employers act with impunity and disregard for the law. As such, in a case brought in a Federal District Court in Minnesota in 2002, a restaurant manager and his eatery were fined over $30,000 for hiring unauthorized workers. This total included a $9,000 fine against the restaurant manager himself under the criminal penalty provisions of the Immigration and Nationality Act. A U.S Magistrate levied the fine based on findings that the manager knowingly hired foreign nationals who lacked authorization to work in the United States. This case moved forward very quickly, with the cooperation of the U.S. Attorney’s Office, and was part of the continuing INS investigation at the Minneapolis-St. Paul International Airport. These efforts were replicated in a nationwide push by the INS and other agencies in the wake of 9/11 terrorist attacks to make sure that employees at facilities such as airports, power plants and water-treatment plants have proper authorization to work in the United States. This case emphasized the government’s power to impose personal liability on individual managers and executives, with the added threat of imprisonment.
SSA: FEDERAL PROSECUTORS, SSA AND IRS SHAKE THE DUST OFF OLD LAWS FOR A NEW LEVEL OF ENFORCEMENT
On June 25, 2002, the Inspector General for the Social Security Administration (SSA) told a House Judiciary Subcommittee that “the SSN is our national identifier, and protecting the integrity of that identifier is as important to our homeland security as any border patrol or airport screening.” The Inspector General, Mr. James G. Huse, Jr., explained that the country’s “failure to protect the integrity of SSN’s” had caused “enormous financial consequences” for the federal government, states, American businesses and the general public. Citing extensive reports that had been submitted to Congress in 1999 and 2000, but which had essentially been ignored, Mr. Huse confirmed that senior SSA officials “stand ready to do more” in cooperating with Congress, federal prosecutors, other federal agencies and the business community to put an end to the rampant, improper use of SSN’s and related problems of integrity in the wage reporting process.
The proportion of employer payrolls which include incorrect or invalid SSN’s is growing at an alarming rate. As of July 2002, SSA reported that “suspended” earnings (i.e., wages reported to incorrect or invalid SSN’s) exceeded $374 billion. Although that figure encompasses suspended earnings from 1937 through 2000, nearly $50 billion of those wages were posted in the final 12 months before the report was issued, indicating that the problem is becoming more acute. Although there are several reasons for these mistakes, detailed reports issued by the Office of the Inspector General (OIG) and SSA confirm the belief “that illegal work, rather than identity theft, may be the primary cause for suspended wages” for industries throughout the United States.2
Investigations conducted by OIG and the Federal Bureau of Investigation (FBI) determined that several of the 9/11 highjackers used improperly obtained SSN’s. Their investigations into the events of that day, and the homeland security efforts at preventing future attacks have confirmed, in the opinion of OIG, “the importance of the SSN to any attempt at assimilation into American society” by those who may plan to do harm to this country and its people. This link between the misuse of SSN’s and the most horrifying terrorist attack on American soil will undoubtedly sustain increased government efforts to restore the integrity of the social security enumeration system on many fronts.
Federal Prosecution of Social Security Fraud
The United States Attorneys’ Bulletin recently published an article which advocates the use of a long-standing social security fraud statute in the battle against terrorism. Special Assistant U.S. Attorney Mr. John K. Webb admitted in his article that it would seem “unlikely… at first [that] a little-known felony fraud section of the Social Security Act [could emerge] as a highly effective weapon in the domestic war against terrorism.” But his extensive article documents how federal authorities have used this statute (42 U.S.C. § 406, 1-189 of the Social Security Act) to charge and detain foreign nationals targeted in the domestic war against terrorism. As such, this law has been identified by United States Attorneys as “an increasingly popular tool for prosecutors” which is “more flexible than other felony statutes,” such as the laws pertaining to identify theft.
Special Assistant U.S. Attorney Webb was, in fact, publicizing something that has been well known to prosecutors in the Dakotas and Minnesota for many years, as the social security fraud statutes have been used many times by federal prosecutors in this part of the country to prosecute U.S. citizens and foreign nationals alike, and certainly well before 9/11. However, there is no doubt that most employers, citizens and foreign nationals would be unaware of the potential legal ramifications for misusing a social security card or number. Specifically, under the Social Security Act, a person is subject to criminal penalties if he or she:
- willfully, knowingly, and with an intent to deceive, uses a SSN on the basis of false information furnished to SSA;
- falsely represents, with an intent to deceive, a number to be the SSN assigned to him or her or to another person; or
- knowingly altered a social security card issued by the SSA, bought or sold a card that was, or was purported to be, a card so issued, counterfeited a social security card, or possessed a social security card or counterfeit social security card with an intent to sell or alter it.
42 U.S.C § 408(a)(7)(A)-(C).
An individual who wrongfully uses or misrepresents a SSN can also face criminal penalties under another set of federal laws that make it a criminal offense to make false statements in any matter under the jurisdiction of a federal department or agency of the United States. Thus, the misuse or misrepresentation of a SSN by a foreign worker can easily form the basis of two separate felony charges. At a minimum, these statutes, which according to Mr. Webb’s article have rarely been used by United States Attorneys throughout the country, can be extremely effective to validly keep someone in custody who is suspected of terrorism, or having information that may assist in a terrorist investigation. This gives federal authorities more time to gather evidence to determine if more serious charges should be brought.
In the weeks following 9/11, OIG and SSA worked closely on a special task force with the FBI, the INS and other federal agencies to audit the use of SSN’s by security badge holders at airports throughout the United States. This investigation resulted in the indictment and arrest of dozens of individuals, primarily foreign-born nationals, employed by private companies operating or providing services at airports. The initial sweep was conducted at the Salt Lake City airport, and the investigation ultimately led to similar actions and arrests in Phoenix, Los Angeles, Miami, Boston, San Diego, Charlotte, Las Vegas and San Francisco. Individual operations have since been conducted in Minnesota and many other states around the country. In all of these operations, the principal charges used to indict those using false identification documents was the social security fraud statute. Clearly, the vast majority of these individuals were never suspected of having any association with terrorism. However, there is every indication that the social security fraud statute will be increasingly used by federal authorities to further protect the integrity of the social security enumeration system and to provide the threat of criminal prosecution to weed out individuals who are not properly authorized to work in the United States. Consequently, an increasing number of industries will be targeted for these types of investigations and prosecutions.
SSA "No-Match Letters" Continue to Identify Fraudulent Numbers in the Work Place
The SSA reviews all employers’ W-2 forms and credit social security earnings to workers. If a name or SSN on a W-2 form does not match SSA records, the earnings go into a suspense file, and the agency tries to resolve discrepancies in the following months or years. It has now gotten to the point that SSA is unable to match employee information with SSA records for 6 to 7 million workers each year.
In the past, SSA would only send ‘no-match’ letters to employers if records indicated incorrect matches for 10% or more of a company’s work force. However, the number of no-match letters went from 40,000 in 2000 to over 800,000 in 2002 as the agency changed its policy to send no-match letters to any employer with one or more indication of a mistake. The no-match letters explain that the employer submitted at least one W-2 form in which a name or SSN did not match SSA records. The letter provides a list of the names and SSN’s of all employees whose records do not match, and requests that the employer provide corrected information to SSA within 60 days. The letter cautions employers that these notices do not, by themselves, provide a basis for the employer to take adverse personnel action against the employees and confirm that the no-match letters are not (again, by themselves) an indication that a particular employee is without proper immigration status to work in the United States.
SSA reports that a small percentage of the no-matches result from typographical or other errors that may be due to name changes, compound surnames, etc. However, OIG and SSA officials have concluded that intentional misuse of SSN’s by foreign nationals who are not authorized to work in the United States “is a major contributor” to the exponential growth of “suspended” wages. Some immigrant rights groups and union activists have aggressively “lobbied” the business community to do very little in response to receiving SSA no-match letters. However, it is quite clear that employers have a legal obligation under the Internal Revenue Code to report accurate information to SSA and the IRS. As such, once an employer finds that an employee has provided an incorrect SSN (as identified through a SSA no-match letter), the employer should immediately notify the employee and ask that the issue be resolved within a timely fashion. The employer may also have additional legal obligations based on the circumstances. SSA no-match letters do not typically arrive in a ‘vacuum.’ Company managers may receive other information which indicates that a particular employee is not authorized to work in the United States (before or after receipt of an SSA no-match letter). The employer may have a legal obligation, after an appropriate investigation, to take further steps to verify the employment eligibility of the individual or even terminate his or her employment. Certainly, employers should not make any immediate employment decision based on receipt of an SSA mismatch letter. But if a subsequent investigation indicates that the employee was unlawfully working in the United States, and the employee has refused to come forward with other acceptable documentation or a reasonable explanation for the mismatch, the employer may have no choice but to terminate the employee, or the employer could face penalties for continuing to employ a foreign national that the company knew or should have known was not authorized to work in the United States.
If the employee merely reported an incorrect SSN, or there was some other discrepancy that can be resolved, the employer must then file a separate W-2C with the IRS for each year the employer reported the incorrect information. It is also advisable for the employer to provide SSA with written notice of all corrections and updates. Finally, the employee should be advised to contact SSA directly to make sure that the individual’s benefits and social security entitlements are properly reported and protected.
IRS: Federal Tax Authorities Will Act as the Enforcement Arm of SSA
Many employers have expressed concern that they will be subject to sanctions or penalties by SSA for any failures to properly to respond to no match letters. That concern is valid, but misplaced. SSA has no enforcement authority. SSA is a benefits agency, and was never authorized by Congress to sanction or otherwise penalize even the most egregious offenders of social security laws and regulations. SSA must rely exclusively on the IRS to enforce penalties for inaccurate wage reporting and upon the INS to enforce immigration laws. Prior to 9/11, senior INS officials showed little interest in collaborating with SSA on these issues. Likewise, the IRS was extremely reluctant to devote its resources to seek penalties against employers based on social security no matches. Times have changed.
In Minnesota INS officials have challenged the approvability of applications to secure lawful permanent resident status submitted by individuals suspected of using fraudulent social security cards or numbers. In these cases the INS has alleged that the fraudulent use of social security cards or other immigration documents constitutes a “crime of moral turpitude,” which can be used as a legal barrier to adjusting one’s status to that of a lawful permanent resident (which most people refer to as a “green card”). Likewise, as discussed above, federal prosecutors across the United States are using charges, or at least the threat of indictments under the social security fraud statutes in immigration-related and criminal proceedings in an increasing number of cases involving foreign nationals.
The IRS has sent more of a mixed message. Senior IRS officials have held planning sessions with SSA to more aggressively use IRS enforcement resources to prosecute and penalize emplo