Client Alert

By Jacqueline C. Wolff | John F. Libby

Criminal Immigration Enforcement vs. Employers: The New Normal?

On the 2016 website for then-Senator Jefferson Beauregard Sessions III, he announced that he was "committed to immigration reform that…curbs the unprecedented flow of immigration that is sapping the wages and job prospects of those living and working here today [and] an immigration policy that prioritizes the jobs, wages, and security of the American people." On February 9, 2017, Senator Sessions became the Attorney General of the United States, charged with enforcement of federal criminal laws, including those laws that make the knowing hiring or harboring of undocumented workers a crime.

If you are an employer in an industry with a historically higher risk of undocumented or unauthorized workers being in your workforce—construction, hospitality, commercial cleaning, agriprocessing and farming—or you are in the hi-tech outsourcing industry routinely bringing in non-U.S. employees into the United States, your risk of being a target of a criminal enforcement action would appear to have increased exponentially. It is important, therefore, to understand that risk.

Understanding the Risk

There are two main statutes available to the Department of Justice under which to investigate and prosecute employers who employ unauthorized workers. The harboring statute, 8 USC §1324(a)(1)(A)(iii), is a felony that, in addition to criminalizing what would be viewed by a layperson as harboring (transporting, concealing, shielding from detection), also includes a provision that punishes "encouraging…an alien to reside in the United States." This has been interpreted as "conduct tending substantially to facilitate the alien's remaining in the United States illegally." United States v. Kim, 193 F.3d 567 (2d Cir. 1999). When the Immigration Reform and Control Act (IRCA) was enacted in 1986, it expressly eliminated the "employment" carveout from the harboring statute; no longer could mere knowledge of employment of unauthorized workers be excluded from harboring. The DOJ has, in turn, taken the position that knowingly providing employment—which includes constructive knowledge, such as a knowing closing of the eyes or reckless disregard for the truth—can satisfy the harboring statute. When applied to employers who employ the alien for "commercial gain," a conviction under that statute could result in a sentence of up to ten years in prison and significant penalties. If physical harm should result from the employer's actions, the prison term could increase to 20 years and, if the alien dies, life in prison. Furthermore, because harboring is a felony, the DOJ can move to forfeit all profits resulting from the hires.

The other main statute available to the DOJ is the unlawful employment provision of IRCA that punishes employers who employ or continue to employ workers they know to be unauthorized aliens. 8 USC §1324(a). The stated purpose of Section 1324(a) is "to close the back door on illegal immigration…. The principal means of closing the back door…is through employer sanctions." A violation of the Unlawful Employment Statute is not criminal—it is a civil violation subject to monetary penalties—unless the hiring is part of a "pattern or practice," fairly easy to establish for most businesses that hire unauthorized workers. Under those circumstances, it can be charged as a misdemeanor with penalties of up to $3,000 per unauthorized alien and six months in jail for the entire pattern or practice.

The DOJ can also employ tax and more common Title 18 statutes—failure to withhold taxes (26 USC §7202); false statement statutes (18 USC §1001); aiding and abetting identity theft (cite 18 USC §1028)—when pursuing employers hiring unauthorized workers and even securities fraud statutes when the company is publicly traded and its annual statements do not disclose the risk of hiring unauthorized workers in that particular industry. See, e.g., the SEC investigation of Chipotle.

Finally, the DOJ can use the visa fraud statutes against outsourcing companies and the companies that hire them. 18 USC §1546. See, e.g., "Indian corporation pays record $34 million fine." (October 29, 2013) (Infosys agreement to pay $34 million in fines for alleged visa fraud in falsely representing that foreign employees were coming to the U.S. to work for Infosys in order to obtain H-1B visas when, in fact, the employees were ineligible for such visas because they were coming to the U.S. to work for Infosys clients). See also, SCM Data Inc and MMC Systems, Inc. (USAO D.N.J. Sept 26, 2016).

Historically, the employers who were indicted and convicted under these various statutes had either been engaged in active concealment, such as providing false documentation or housing, and/or unscrupulous in their dealings with the undocumented workers. See, e.g., Immigration Agents Raid 40 Plants and Arrest Seven Managers of IFCO and 1,187 of the Company's Illegal Alien Employees in 26 States; Two Defendants Sentenced for Role in Forced Labor Scheme that Exploited Guatemalan Minors at Ohio Egg Farm.i See also, Hearing on "Priorities Enforcing Immigration Law" Before the H. Approp. Comm. Subcomm. on Homeland Sec., 111th Cong. 7 (2009) (statement of Marcy M. Forman, then-Director, Investigations, U.S. Immigration and Customs Enforcement (ICE), saying ICE "targets unscrupulous employers who prey upon [undocumented] aliens by subjecting them to poor or unsafe working conditions or paying them sub-standard wages.").

Rarely was an employer charged with criminal conduct when the employer's unauthorized workers had been treated as well as its authorized workers and there was no evidence of any active involvement of the employer in engaging in other criminal conduct such as visa fraud, obstruction or the purchase or dissemination of false documentation. The harshest result for such cases would be a deferred or nonprosecution agreement. Given President Trump's election promises to U.S. workers reiterated in his February 28, 2017 address to Congress, coupled with the Attorney General's views on the hiring of undocumented workers, this may be changing.

How Do Investigations Start?

In understanding the risk to an employer, it is helpful to understand how investigations start. An investigation of an employer can be triggered by any of the following: (1) an I-9 audit by ICE; (2) the loss of a bid by a competitor who blames the loss on the winning bidder's employment of unauthorized workers and lower employment costs; (3) union workers being replaced by an open shop contractor; (4) an unauthorized worker having been being picked up by ICE for deportation who decides to cooperate in order to get a U visa—also known as a "snitch" visa—allowing him to stay and work in the U.S. during the pendency of the case, or (5) a media story about U.S. workers losing their jobs to workers supplied by foreign outsourcing companies.

Also, if the IRS sees a high number of taxpayer identification numbers ("TINs")—rather than Social Security numbers—identifying the work force, the TINs will be rejected and the matter referred to IRS Criminal Investigation Division (CID) and potentially ICE. Similarly, if IRS CID receives complaints from multiple taxpayers claiming to have been taxed on income they did not earn from the same employer they did not work for, a red flag will be raised that the employer may be hiring a lot of employees with stolen social security numbers. That too may result in a referral to ICE.

Proactive Steps

So what can employers do to protect themselves? First, since many criminal investigations result from a poor I-9 audit, a good start is to conduct one internally. Evidence of lax or sloppy I-9s can often lead from a civil audit to a criminal investigation. Second, although antidiscrimination laws prevent an employer from questioning an applicant or employee about his or her status, once there is a red flag the employer should consider whether an inquiry would constitute discrimination or appropriate due diligence. For example, when an inquiry comes in from IRS CID noting that an employee is using a Social Security number that is being challenged by another taxpayer as theirs, the employer should not only respond to the IRS but should seriously consider investigating the status of that employee and whether stolen social security numbers are more prevalent than that provided by the one employee.

The red flags and the protocol to address them should all be set forth in writing such that employees are given clear guidance as to what constitutes discrimination and what constitutes an appropriate proactive step to prevent a charge of harboring. The outsourcing industry also needs to implement compliance programs to make sure the correct visa is being requested for the right position. Employers using such services should also be mindful. Aiding and abetting visa fraud is also a crime.

Finally, every employer in a high-risk industry should have a plan B in place. If a raid should take place, a protocol should be in place as to who to call (criminal defense and immigration counsel) and how to quickly replace employees who could be swept up in such a raid.

Reprinted with permission from Business Crimes Bulletin, February 2017. © 2017 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.

iSee, e.g., 4 Houston residents charged with employing illegal aliens, https://www.ice.gov/news/releases/4-houston-residents-charged-employing-illegal-aliens (employer provided identities of former authorized employees to unauthorized applicants); US v Agriprocessors, Inc., No. CR 08-1324 (N.D. IA, March 31, 2009) (provided additional monies to employees specifically to obtain false documentation); US v Shum, 496 F. 3d 390 (5th Circuit 2007); Novi Restaurant Owner and Wife Indicted for Harboring Undocuments [sic] Immigrants; IFCO senior managers plead guilty to unlawful employment of illegal aliens; see, e.g., Northern California Restaurant Owner Pleads Guilty to Obstructing the Internal Revenue Laws and Harboring Illegal Aliens for Profit (employees paid in cash and employer put profits in overseas bank account); Four Restaurant Owner/Managers In State College Area Sentenced And Property Forfeited In Illegal Alien Harboring Case (employees paid in cash well below minimum wage); Zavala v Wal-Mart Stores, Inc., 393 F. Supp 2d. 295, 301 (D.N.J. 2005); Former Deportation Officer Indicted For Accepting Bribes, Harboring An Undocumented Immigrant And Lying To U.S. Immigration Authorities (lied to ICE in representing would not hire unauthorized workers in hair salon for which he received approval); US v Kahlon, H-08-CR-00521d-1 (SD Texas July 1, 2008) (employees told to leave because ICE was coming).