Undocumented Worker Legislation - A New Reality For California Employers

When Michael Young* received a "No Match Socialemployers recognize their limitations when it comes to
Security" letter from the Social Security Administration,compliance in the areas of employment liabilities and
he discounted it, as he had always done in the past.human resource policies, and the new undocumented
As the owner of Growing Expectations*, a smallworker laws will continue to help this trend gain
landscape design company in Southern California, hemomentum.
was too busy hiring employees, processing payroll andIn an HR Outsourcing relationship, the employer
managing his insurance obligations. "I receive letters likeengages the services of a professional firm and hands
this [from the SSA] all the time. I just don't have theover many aspects relating to the management of
time to verify the information they need. So, I usuallytheir employment responsibilities. These areas can
just disregard them." While this attitude may haveinclude:
sufficed in the past, times have changed.Â- Labor law compliance
GROWING CALIFORNIA RISKSÂ- Employment administration
With the firestorm still raging in Congress over theÂ- Management training and development
status of illegal immigrant workers, several newÂ- Employee health benefits
regulations have been passed by the BushÂ- Risk Management
Administration to crack down against employers whoÂ- Insurance services
violate newly enforced laws. As of September 14,Â- Recruiting
2007, The Department of Homeland Security beganÂ- Payroll and Tax services.
increasing enforcement efforts and levying larger finesIn some instances, only specific, select functions are
against employers who employ undocumentedoutsourced. In other situations, organizations see the
workers. The DHS is enforcing its new guidelines forvalue in outsourcing the entire human resource
employers who receive "No Match" letters from thepackage and entrust the HR Outsourcing firm with all
Social Security Administration. A No Match letter isthe functions.
issued when tax documents submitted for anCPEhr - A CALIFORNIA COMPLIANCE EXPERT
employee do not match the information on file at theOne such firm is CPEhr, one of California's oldest and
SSA. In the new guidelines, the DHS states thatlargest independently owned HR Outsourcing and
improper handling of No-Match letters may indicateProfessional Employer Organization (PEO) companies.
knowledge by an employer that a worker is illegal, andFounded in 1982, CPEhr has over 25 years of
may lead to civil or criminal enforcement action.experience assisting California-based employers in
In early July, the Bush administration announced thathuman resource and labor law compliance. In response
employers who knowingly employ undocumentedto the new undocumented worker regulations, CPEhr
workers may be eligible for fines up to $12,500 and ahas begun offering customized services to help small
felony prosecution. On the state level, the number ofemployers comply with the new laws and avoid
laws against illegal immigrants has more than doublednon-compliance penalties.
since 2006, to over 170.With years of experience dealing with the SSA and
These new guidelines present employers in Californiathe Immigration and Naturalization Service (INS), CPEhr
with an even greater challenge than employers in thecreates and implements aggressive I9 and
rest of the nation. Consider the following statistics:oemployment verification policies, responds to No Match
California has the largest unauthorized population ofLetters and corresponds with the SSA and INS on its
any state-almost 2.5 million, almost a quarter of theclients' behalf.
nation's unauthorized immigrant population.o ThePeter Escalante, a Human Resources Consultant with
percentage of undocumented workers was almostCPEhr, summarizes CPEhr's compliance process. "First,
twice as high in California (6.9 percent) as in the rest ofwe check all employee files for valid I9s and confirm
the United States (3.6 percent).o There are about 1they are stored in a separate folder, away from their
million unauthorized immigrants in the Los Angelespersonnel file," explains Escalante. "Then, if a client gets
metropolitan area, almost double the number of anya notice from the SSA, they forward them to CPEhr.
other metro area. In 2004, about two-fifths (41 percent)We check the letter against their information on file,
of California's unauthorized immigrants resided in Losand if the information is incomplete, we request
Angeles.o Almost all unauthorized immigrant men work.completed documentation. If they didn't have them we
The employment rates are substantially higher forwould have recommend terminating the employee if
undocumented male employees than for legalthey could not provide the proper documentation in a
immigrant or U.S.-born men.o In California, 94 percent oftimely manner."
unauthorized men age 18-64 were in the labor force inCPEhr recommends that all employers have an
2004, versus 84 percent of legal immigrants and 82undocumented employee policy included in their
percent of native-born men.Employee Handbook. In it, the employee acknowledges
(Source: "The Characteristics of Unauthorizedthat if their Social Security Number is challenged by the
Immigrants in California, Los Angeles County, and theSSA, they have 30 days to produce valid
United States". By: Randolph Capps, Karina Fortuny)documentation, or be fired. This type of involvement by
It is clear that the new laws will have a greater impactthe employer is extremely valuable, says Escalante,
on California employers than on employers in anywhen faced with an investigation or fine by a
other state.governmental agency.
HR OUTSOURCING - A HOPE FOR CALIFORNIA"If an agency finds the employer to be proactive in any
EMPLOYERSregard, they will be more forgiving and typically reduce
The average small to mid-sized California employerthe severity of the penalty," he notes. "The
faces the greatest risks posed by the new regulations.government realizes employees have rights and
While large corporations typically have theemployers can't just fire them. They are understanding
infrastructure in place to address No Match letters andof employers who have policies in place and show an
make the proper employment decisions, smalleffort to cooperate."
employers are less equipped to tackle theseOnly time will tell precisely how the new legislation and
newfound liabilities. The risk of non-compliance isits enforcement will impact the California business
substantially greater for them than with their largerclimate. However, in the interim, employers must take a
counterparts.proactive role in addressing the new responsibilities.
Over the past decade, a visible trend has beenWhile the process may be complex, it is their good
emerging in the small and mid-market business sectorfortune that HR Outsourcing firms such as CPEhr are
in the area of Human Resources Outsourcing. Smallhere to help them through it.