President Barack Obama has identified immigration reform as the number one item on his domestic policy agenda.  On February 5, the new Congress held its first hearing on overhauling immigration laws.  The administration and legislature seem primed for action.

At the February 5th House Judiciary Committee hearing, the new House Judiciary Committee Chairman, Bob Goodlatte (R-Va.), noted there is agreement that “our nation’s immigration system is in desperate need of repair,” that it is “not working as efficiently and fairly as it should be,” and we need to “begin to explore ways to fix our broken system.”

Businesses should pay particularly close attention to the likelihood that any reform will include a mandatory E-Verify provision.  E-Verify, a system operated by the Department of Homeland Security’s U.S. Citizenship and Immigration Services and the Social Security Administration, verifies applicants’ work eligibility electronically.  At present, only employers in certain states and federal contractors are obligated to participate in the program.  Anticipated immigration reform legislation will change that.

Two bills  are relevant:

H.R. 478, sponsored by Congressman Phil Gingrey (R-Ga.), would “make the E-Verify Program permanent and mandatory, and to provide for certain changes to procedures for participants in the Program,” by amending the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Pub. L. No. 104-208, 111 Stat. 3546 (Sept. 30, 1996).

S.B. 202, sponsored by Senator Charles Grassley (R-Ia.), would “expand the use of E-Verify, to hold employers accountable,” among other things.   Senator Grassley explained,

My legislation would increase penalties on employers who continue to hire people unauthorized to work in the country.  Employers would be required to check the status of current employees within 3 years, and would allow employers to run a check prior to offering a job, saving that employer valuable time and resources.  Employers will also be required to re-check those workers whose authorization is about to expire, such as those who come to the United States on temporary visas.

Any immigration reform likely will contain mandatory E-Verify provisions as these bills suggest.  Employers need to consider: (1) what is involved in E-Verifying new hires AND, potentially, the entire workforce, AND (2) what would it cost.

E-Verify is an expense.  Compliance would require a significant investment in human capital.  “False positives” would require further inquiry, taking additional HR effort and might result in the removal of workers.  According to E-Verify’s internal database audit, a national mandate would deem 1.2M to 3.5M legal employees initially ineligible to work.   It would challenge even the most robust HRIS systems.  Employers would need to create parallel E-Verify systems to existing I-9 processes.

The government’s study also projected 770,000 erroneous final non-confirmations, requiring employers to separate the affected employees.

According to one estimate, by Bloomberg Government, businesses with fewer than 500 workers would bear 99 percent of the $2.7B participation cost, if E-Verify became mandatory.  A 2008 Congressional Budget Office report estimated that requiring E-Verify nationally would cut federal tax revenue by more than $17B.

Employers should examine their protocols to identify the impact various local, state, or federal versions of mandatory E-Verify may have on their compliance systems.  The most sophisticated compliance regime is only as good as the least focused member of the team.  There is nothing more exciting for a government prosecutor than finding a company that does not follow its own policies and procedures.  I-9 inspections and E-Verify review via Government data-mining activity is no different.

Policy development and training are key steps in a compliance regime. Spot audits and remedial education are critical.  Unfortunately, in many business operations   Form I-9 completion, necessary for satisfying E-Verify requirements for a new hire, falls to someone who has received only little instruction and has no inkling as to the significance of the verification.

To ensure that the regime is operating effectively, internal audits should be conducted routinely. The audits should ensure the existence of evidence demonstrating that those responsible for effectuating policies are competent.  Failures do occur. In our experience, however, the government will credit remediation as long as it is consistent, pursuant to an employer’s unique verification protocol, and is non-discriminatory.

To be sure, no one really knows what immigration reform is going to look like.  But E-verify, we believe, will be its centerpiece.  To prepare for that eventuality, these precautions are worth taking seriously now.

The Senate Judiciary Committee will hold its first hearing on immigration reform, featuring testimony from Homeland Security Secretary Janet Napolitano, on February 13, 2013.