Safe harbor

Have you ever hired an illegal alien?

Chances are you wouldn't know it if you did. There are 12 million undocumented immigrants in this country, and many have fraudulent papers that would fool almost anyone.

But it would be a costly mistake if Uncle Sam found out about it — you'd have to fire the workers at the least. And if it was deliberate you could end up in jail, like the owner of 10 Dunkin' Donuts stores in Connecticut in a recent case.

So why bother using immigrants at all? Because they'll take low-level jobs that American citizens don't seem to want, and they'll do them well if properly supported.

That's the dilemma facing multichannel merchants and firms of all types as Congress debates the issue.

First, an update.

The Senate approved a bill in May that would mandate sweeping changes to U.S. immigration policy. It would set up a guest-worker program and allow illegals who arrived in this country before Jan. 1 of this year to work toward permanent residence.

The measure stalled in June when conservatives objected to its amnesty provisions. It was close to dying altogether, but as of press time in mid-June it had been revived with the promise of new amendments.

Even if it becomes law, companies will still have to adhere to the rules contained in the Immigration Reform and Control Act of 1986. And there's little wiggle room.

For one thing, the bill requires that all U.S. employers fill out a U.S. Citizenship and Immigration Services' Employment Eligibility Verification form (an I-9), for all employees hired after Nov. 6, 1986. This avows that they are authorized to work in the country and that they are who their documents say they are.

New employees must fill out Section 1 of the I-9 at the time of hire. The employer must complete Section 2 of the form within three business days of the employment date, which means the company must review the person's documentation and assess as best it can that it's genuine. And it must maintain all I-9 records in its files for three years after the date of hire or one year after the employee has been terminated.

No free pass

Theoretically, the I-9 protects employers if it later turns out that the workers used improper identification. But it's not a free pass, and the company could end up with a serious labor shortfall.

That's what happened to Fairytale Brownies. The Phoenix-based cataloger had to let go of nearly half its seasonal staff five years ago after it discovered that those workers lacked proper documentation.

Fairytale Brownies uncovered the problem through its professional employer organization (PEO), a third-party firm that handles all aspects of human resources, employee benefits, payroll, and worker's compensation. At the start of the season, the merchant submitted all the paperwork to Gevity, its PEO, says Fairytale Brownies' operations team leader Kim Silva. Gevity notified Fairytale that some workers had social security numbers that did not match the information in the Social Security Administration database. “When we asked the employees about the mismatch letters, they admitted they were using invalid information to obtain work,” Silva says.

Fairytale Brownies' experience shows that even when you're using a PEO you can run into immigration woes. “We do what we're supposed to do,” Silva says. “If someone comes in and their information doesn't check out, we don't hire them.”

But fraudulent documents “are really hard to identify,” Silva continues. “If they're using stolen information, they've got the Social Security number, date of birth, and name all covered.”

How widespread is this problem? Some sources claim that phony documentation is a $100 million-a-year business.

“The first thing that someone does who doesn't have authorization to work and needs to get it is they get false documents,” says Michael D. Patrick, an attorney and partner at New York-based immigration law firm Fragomen, Del Rey, Bernsen & Loewy.

And while no one is expecting businesspeople to be forensic experts, “employers need to know that under the current law, it's not enough to complete an I-9 for everyone you hire,” Patrick explains. “The burden on the employer is to not turn a blind eye to important and obvious information.”

This doesn't mean the manager needs to “give every new hire the fifth degree and say, ‘Hey, where did you get this document?’” he adds. “On the contrary, they should never do that.”

Get too inquisitive, in fact, and you could end up in a lawsuit. It's illegal for firms with four or more employees to discriminate against authorized aliens (or anyone, for that matter) when hiring or terminating workers.

How do you straddle that fine line? One way is to follow Fairytale Brownies' example and outsource the filling of low-wage, low-skill positions.

For the seasonal workers in its distribution center, “We use an employment agency,” says Joe P. Kiley, senior manager for facilities and engineering at Disney Shopping Inc. “They screen all our employees and handle the paperwork, and we haven't had a problem.”

Yet even this solution isn't foolproof. The employment agency may technically be the employer of record. But if turns out that “those people aren't authorized to work, they'll be pulled off the job, and then the question of liability for the company will depend on whether the company knew or should have known they were using undocumented workers,” Patrick says.

The bottom line: “You can't do indirectly what you can't do directly.”