On December 19, 2008, Immigration and Customs Enforcement (ICE)
announced that IFCO Systems North America (IFCO), the nation's
largest pallet management services company, had agreed to a record
$20.7 million settlement of claims alleging the knowing employment
of illegal aliens. This settlement agreement resolves only the
corporate liability and does not encompass pending criminal cases
against IFCO managers and employees. To date, nine managers and
employees have pled guilty to various criminal charges, and four
managers are awaiting trial in New York.
The government investigation began after ICE received a tip from
an IFCO employee that illegal alien workers at IFCO's Albany,
NY plant were seen shredding their W-2 forms. In April 2006, after
a 14-month investigation, ICE and several other government agencies
conducted a massive worksite raid at over 40 IFCO plants in 26
states, resulting in the apprehension of over 1,100 illegal
workers. The government's investigation included analysis of
the company's payroll and tax data, no-match correspondence
received from the Social Security Administration (SSA), and the
company's response (or lack of it) to that correspondence.
The settlement also includes $2.6 million in back pay and
penalties relating to overtime violations under the Fair Labor
Standards Act. The remaining amount will be paid out over four
years, and these funds will be used for further worksite
enforcement investigations. IFCO also agreed to enroll in and use
E-Verify for all new hires companywide.
This settlement demonstrates the government's zeal for
enforcing existing immigration laws and cracking down on illegal
employment. The IFCO case was used by ICE to confirm its new and
more forceful enforcement policies. The case is significant for at
least two reasons. First, it reflects increased use of interagency
investigative resources, including in this case, ICE, IRS, SSA, and
DOL, in addition to state law enforcement entities. Second, the
amount of the settlement reaffirms the government's intent to
go after the corporation, not just individuals, aggressively in an
effort to make the adverse financial consequences of illegal
employment even more severe.
The size of the settlement and the fact that it targets only the
corporate liability suggest that employers must be extremely
vigilant to avoid severe financial penalties. In addition to
providing training on proper employment practices, prudent
employers will ensure their compliance with I-9 requirements.
Similarly, prudent employers will take appropriate steps in
response to receipt of government information indicating that
workers may lack authorization to work. Finally, employers in
industries where there is greater enforcement may wish to consider
voluntarily enrolling in E-Verify.
With respect to I-9 compliance, all employers should note that
an interim I-9 form will be required as of February 2, 2009,
pending final regulations. The new version of the form and a
revised Handbook for Employers should be available soon.
In addition to a revised form, employers will no longer be able to
accept expired documents or Forms I-688 (Temporary Resident Card),
I-688A (Employment Authorization Card), or I-688B (Employment
Authorization Card). See Littler's December 2008 ASAP, USCIS Issues Interim Final Rule on I-9 Employment
Employers with federal contracts in excess of $100,000 should
also note that the revisions to the Federal Acquisition Regulation
requiring enrollment and use of E-Verify are scheduled to take
effect on January 15, 2009. After that date, federal contracting
officers will likely begin requiring E-Verify enrollment as part of
new, extended, or amended contracts. There remains a possibility
that the effective date of the new requirements may be postponed as
a result of a lawsuit seeking to enjoin implementation of the
The content of this article is intended to provide a
general guide to the subject matter. Specialist advice should be
sought about your specific circumstances.
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