[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]


 
                  IMMIGRATION: ENFORCING EMPLOYEE WORK
                  ELIGIBILITY LAWS AND IMPLEMENTING A
                STRONGER EMPLOYMENT VERIFICATION SYSTEM

=======================================================================

                             FIELD HEARING

                               before the

              SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS

                                 of the

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                     July 31, 2006, in Plano, Texas

                               __________

                           Serial No. 109-51

                               __________

  Printed for the use of the Committee on Education and the Workforce



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                COMMITTEE ON EDUCATION AND THE WORKFORCE

            HOWARD P. ``BUCK'' McKEON, California, Chairman

Thomas E. Petri, Wisconsin, Vice     George Miller, California,
    Chairman                           Ranking Minority Member
Michael N. Castle, Delaware          Dale E. Kildee, Michigan
Sam Johnson, Texas                   Major R. Owens, New York
Mark E. Souder, Indiana              Donald M. Payne, New Jersey
Charlie Norwood, Georgia             Robert E. Andrews, New Jersey
Vernon J. Ehlers, Michigan           Robert C. Scott, Virginia
Judy Biggert, Illinois               Lynn C. Woolsey, California
Todd Russell Platts, Pennsylvania    Ruben Hinojosa, Texas
Patrick J. Tiberi, Ohio              Carolyn McCarthy, New York
Ric Keller, Florida                  John F. Tierney, Massachusetts
Tom Osborne, Nebraska                Ron Kind, Wisconsin
Joe Wilson, South Carolina           Dennis J. Kucinich, Ohio
Jon C. Porter, Nevada                David Wu, Oregon
John Kline, Minnesota                Rush D. Holt, New Jersey
Marilyn N. Musgrave, Colorado        Susan A. Davis, California
Bob Inglis, South Carolina           Betty McCollum, Minnesota
Cathy McMorris, Washington           Danny K. Davis, Illinois
Kenny Marchant, Texas                Raul M. Grijalva, Arizona
Tom Price, Georgia                   Chris Van Hollen, Maryland
Luis G. Fortuno, Puerto Rico         Tim Ryan, Ohio
Bobby Jindal, Louisiana              Timothy H. Bishop, New York
Charles W. Boustany, Jr., Louisiana  [Vacancy]
Virginia Foxx, North Carolina
Thelma D. Drake, Virginia
John R. ``Randy'' Kuhl, Jr., New 
    York
[Vacancy]

                       Vic Klatt, Staff Director
        Mark Zuckerman, Minority Staff Director, General Counsel
                                 ------                                

              SUBCOMMITTEE ON EMPLOYER-EMPLOYEE RELATIONS

                      SAM JOHNSON, Texas, Chairman

John Kline, Minnesota, Vice          Robert E. Andrews, New Jersey
    Chairman                           Ranking Minority Member
Howard P. ``Buck'' McKeon,           Dale E. Kildee, Michigan
    California                       Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Carolyn McCarthy, New York
Patrick J. Tiberi, Ohio              John F. Tierney, Massachusetts
Joe Wilson, South Carolina           David Wu, Oregon
Marilyn N. Musgrave, Colorado        Rush D. Holt, New Jersey
Kenny Marchant, Texas                Betty McCollum, Minnesota
Bobby Jindal, Louisiana              Raul M. Grijalva, Arizona
Charles W. Boustany, Jr., Loiusiana  George Miller, California, ex 
Virginia Foxx, North Carolina            officio
[Vacancy]


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on July 31, 2006....................................     1

Statement of Members:
    Johnson, Hon. Sam, Chairman, Subcommittee on Employer-
      Employee Relations, Committee on Education and the 
      Workforce..................................................     1
        Prepared statement of....................................     3
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts.....................................     4
        Prepared statement of....................................     6
    Wilson, Hon. Joe, a Representative in Congress from the State 
      of South Carolina, prepared statement of...................     9

Statement of Witnesses:
    Beardall, Bill, Ph.D., on behalf of the Equal Justice Center 
      and the National Immigration Law Center....................    31
        Prepared statement of....................................    34
    Chawkin, John, special agent in charge, U.S. Immigration and 
      Customs Enforcement, U.S. Department of Homeland Security..    11
        Prepared statement of....................................    13
    Luther, Jon L., chairman and CEO, Dunkin' Brands, Inc........    42
        Prepared statement of....................................    44
    Martinez, Abel, vice president, H-E-B........................    17
        Prepared statement of....................................    19
    Simmons, Geri, human resources manager, on behalf of the 
      Society for Human Resource Management......................    24
        Prepared statement of....................................    26

Additional Submissions:
    American Staffing Association, prepared statement of.........    57
    The U.S. Citizenship and Immigration Services, U.S. 
      Department of Homeland Security:
        Prepared statement of....................................    52
        News release.............................................    56
        Fact sheet...............................................    56


                    IMMIGRATION: ENFORCING EMPLOYEE
                       WORK ELIGIBILITY LAWS AND
                   IMPLEMENTING A STRONGER EMPLOYMENT

                              ----------                              


                         Monday, July 31, 2006

                     U.S. House of Representatives

              Subcommittee on Employer-Employee Relations

                Committee on Education and the Workforce

                               Plano, TX

                              ----------                              

    The subcommittee met, pursuant to call, at 11 a.m., in 
Plano Council Chambers, 1520 Avenue K, Plano, TX, Hon. Sam 
Johnson [chairman of the subcommittee] presiding.
    Present: Representatives Johnson, Wilson, Tierney.
    Staff Present: Loren Sweatt, Professional Staff Member; 
Steve Forde, Communications Director; and Guerino J. Calemine, 
III, Labor Counsel.
    Chairman Johnson. Thank you. I want to thank all of you for 
being here. It's rare that we have hearings outside of 
Washington, D.C. Oftentimes we bring all these witnesses to 
Washington, to our committee, and it's a pleasure to be able to 
be here in Plano, Texas, and I want to thank Mr. John Tierney, 
who is from Massachusetts, for coming in. He is in the Congress 
on our committee, the full committee, not necessarily the 
subcommittee. And Mr. Joe Wilson from South Carolina, who came 
in as well. But he is on the subcommittee as well as the full 
committee.
    But a quorum being present, the Subcommittee on Employer-
Employee Relations of the Committee on Education and the 
Workforce will come to order.
    We are holding this hearing today to hear testimony on 
immigration, enforcing employee work eligibility laws, and 
implementing a stronger employment verification system.
    With that, I ask unanimous consent that the hearing record 
remain open for 14 days until our member statements and other 
material referenced during the hearing to be submitted in the 
official record.
    Without objection, so ordered.
    I want to again welcome you all. It is an honor to host and 
chair one of the hearings in the heartland. Texans come face to 
face with illegal immigration daily, and that is why I was 
interested in having this discussion here, rather than in 
Washington D.C.
    So you know it, I have heard a lot about this issue from my 
constituents, especially. In fact, about four out of five calls 
and e-mails are from constituents who are fired up about our 
porous borders and want something done about it. I hear you, 
and I am not happy about it either. That is why we are having 
these hearings, to get outside of Washington, to take these 
issues to where they matter, in hometowns across America.
    Today's hearing is the third in a series of hearings that 
the Committee on Education and the Workforce, and its 
subcommittees have held, to examine immigration reform 
proposals pending in both the U.S. House and the U.S. Senate.
    As you all know, the subject of immigration, legal and 
illegal, has garnered significant attention recently.
    The hearing today will focus on practical solutions to 
preventing illegal immigration. Specifically, we will examine 
the enforcement of the employee work eligibility laws that are 
currently on the books and look at legislative proposals that 
would implement a stronger employment and verification system.
    This hearing is an interesting intersection between my 
responsibilities on the Ways and Means Committee and the 
Education and Workforce Committee.
    As a member of the Social Security Subcommittee, in Ways 
and Means, I am well aware of the difficulties facing the 
Social Security Administration as they attempt to implement a 
workable employment verification system that does not 
compromise an individual's privacy.
    We are working diligently with the Social Security 
Administration to resolve these issues, and have been, believe 
it or not, for over 10 years.
    Clearly, employment is the key factor that experts point to 
as to why people come to this country. Our economic 
opportunities are legendary. A legal workforce is welcome but 
an illegal workforce undermines our nation's security. It is 
safe to assume that many illegal aliens in our country are 
doing what we are all doing, working hard to make a good life 
for themselves and their children.
    What is different about them is they have broken the law to 
do so. Employers have been required to determine the work 
eligibility of their employees since 1986. Employers have two 
methods for verifying employment eligibility of people who have 
been offered employment. They can fill out the employment 
eligibility verification, or I-9 form, which requires review of 
the documents presented by the individual to determine work 
eligibility.
    Alternatively, employers can use what is referred to as a 
basic pilot program. You will hear that referred to some today, 
and I hope you understand it. It is a computer-based system 
designed to weed out false claims of U.S. citizenship and 
counterfeit or altered documents.
    The system is designed to work almost instantaneously, and 
I just asked Social Security if it was instant, and they said 
it is. I do not believe it. But it has its shortcomings, and as 
a result, there has been some criticism of the system.
    A lot of you here today own businesses and abide by the law 
when it comes to employee verification. As a result, in 2005, 
the Social Security Administration sent about 128,000 no-match 
letters to employees, no match meaning they did not match up as 
legal, and about 8 million to employees. For those of you here 
who are abiding by the law, we commend you. The fact remains, 
however, that it is against the law to hire an illegal alien or 
someone who is not authorized to work in the United States.
    The U.S. House of Representatives passed an immigration 
bill which would provide for increased penalties and the 
potential for jail time for employers who knowingly violate the 
law. The House bill would also increase the number of employers 
who would be required to use the basic pilot program. Our 
witnesses today will discuss their experiences in using the 
basic pilot program, its impact on the functioning of their 
businesses, and suggest improvements that could be made to the 
system.
    In addition, we will have a witness from Immigration and 
Customs Enforcement, or ICE, everybody calls it ICE, I-C-E-, 
now, who will discuss the consequences faced by those who fail 
to comply with the law. ICE's mandate is broad. Eliminate and 
identify criminal activities that pose a threat to our nation's 
borders. I commend them for their work and welcome them to our 
hearing.
    [The prepared statement of Chairman Johnson follows:]

   Prepared Statement of Hon. Sam Johnson, Chairman, Subcommittee on 
 Employer-Employee Relations, Committee on Education and the Workforce

    Welcome, it's an honor to host and chair one of the ``hearings in 
the heartland.'' Texans come face to face with illegal immigration 
daily and that is why I was interested in having this discussion here, 
rather than in Washington, D.C.
    So you know, I've heard a lot about this issue from my 
constituents.
    In fact, about 4 out of 5 calls and emails are from constituents 
who are fired up about our porous borders and want something done about 
it.
    I hear you--and I'm mad about it too. That's why we're having these 
hearings, to get outside of Washington and to take these issues to 
where they matter--in hometowns across America.
    Today's hearing is the third in a series of hearings that the 
Committee on Education and the Workforce and its subcommittees have 
held to examine immigration reform proposals pending in both the House 
and Senate.
    As you all know, the subject of immigration--legal and illegal--has 
garnered significant attention recently.
    The hearing today will focus on practical solutions to preventing 
illegal immigration.
    Specifically, we will examine the enforcement of the employee work 
eligibility laws that are currently on the books, and look at 
legislative proposals that would implement a stronger employment 
verification system.
    This hearing is an interesting intersection between my 
responsibilities on the Ways and Means Committee and Education and the 
Workforce Committee.
    As a member of the Social Security Subcommittee, I am well aware of 
the difficulties facing the Social Security Administration as they 
attempt to implement a workable employment verification system that 
does not compromise an individual's privacy. We are working diligently 
with the Social Security Administration to resolve these issues.
    Clearly employment is the key factor that experts point to as to 
why people come to this country.
    Our economic opportunities are legendary. A legal workforce is 
welcome, but an illegal workforce undermines our nation's security.
    It's safe to assume that many illegal aliens in our country are 
doing what we're all doing, working hard to make a good life for 
themselves and their children.
    What is different about them is that they have broken the law to do 
so!
    Employers have been required to determine the work eligibility of 
their employees since 1986.
    Employers have two methods for verifying employment eligibility of 
people who have been offered employment.
    They can fill out the employment eligibility verification, or I-9 
form. This requires a review of the documents presented by the 
individual to determine work eligibility.
    Alternatively, employers can use what is referred to as the ``basic 
pilot program.'' The basic pilot program is a computer-based system 
designed to weed out false claims of U.S. citizenship and counterfeit 
or altered documents. The system is designed to work almost 
instantaneously, but it has its shortcomings and as a result, there has 
been some criticism of the system.
    A lot of you here today own businesses and abide by the law when it 
comes to employee verification.
    As a result, in 2005, the Social Security Administration sent about 
128,000 no-match letters to employers and about 8 million no match 
letters to employees.
    For those of you here who are abiding by the law, we commend you.
    The fact remains, however, that it is against the law to hire an 
illegal alien or someone who is not authorized to work in the United 
States.
    The U.S. House-passed immigration bill would provide for increased 
penalties and the potential for jail time for employers who knowingly 
violate the law. The house bill would also increase the number of 
employers who would be required to use the basic pilot program.
    Our witnesses today will discuss their experiences in using the 
basic pilot program, its impact on the functioning of their business, 
and suggest improvements that could be made to the system.
    In addition, we will have a witness from Immigration and Customs 
Enforcement, or ICE, who will discuss the consequences faced by those 
who fail to comply with the law.
    ICE's mandate is broad: eliminate and identify criminal activities 
that pose a threat to our nation's borders. I commend them for their 
work and welcome them.
                                 ______
                                 
    Chairman Johnson. I will introduce our witnesses in a 
moment. I now yield to my distinguished colleague, John 
Tierney, from Massachusetts, for whatever opening statement you 
wish to make.
    Mr. Tierney. Well, thank you, Mr. Chairman, and I want to 
thank the folks here in Plano. We are pleased to be here and 
really appreciate the hospitality we have been shown, even in 
the short period of time that we have been here.
    I was just telling the Chairman, I thought that with the 
condition of this nice city facility, I thought maybe he had 
gotten Federal money down here to build it.
    You know, typically, we don't have hearings during the 
month of August but for some reason, this year, my 
understanding is the committees of Congress are having some 21 
hearings around the country, a whole slew of them on this 
particular issue.
    Now the issue of immigration is of course important and it 
has been for some time, but oddly enough, only now, with this 
campaign season is the Republican Congress seeing fit to hold 
hearings.
    The bills on which we are holding hearings of course have 
already been voted on. The House bill has already passed and 
the Senate bill has already passed.
    So in a sense, these hearings are about 6 years too late 
and millions of dollars too short. If we could just review the 
record for a moment since 2001. President Bush has been in 
office since 2001. Congress has been controlled by the 
Republican Party since 1995. So, in essence, in the last 6 
years, it has been a Republican show, and Congress is charged 
with making and enforcing the laws, so I think people would be 
excused, if they wonder how it is, that with total control of 
Congress and the White House for 6 years, the party that now 
tells us, they are so vigorously running around the country 
concerned about border security and enforcement, are just now 
getting to deal with the issue of immigration.
    But like a lot of issues, it gets a lot of rhetoric and not 
a lot of action.
    Mr. Chairman, under the Republican Party's leadership since 
1995, 5.3 million new undocumented workers have come into the 
United States.
    In 2004, Congress passed the 9/11 Act. That act required an 
additional 2000 border patrol agents over the next 5 years. But 
in the 2006 budget request of the president, he only sought 
210, about 10 percent, and Congress only funded about a 
thousand, about half of what the act called for. And even this 
year, the president doesn't look for the remainder of those 
positions to be filled.
    That same 2004 9/11 Act also called for 800 immigration 
enforcement agents over the next 5 years. Congress, in the 2006 
budget, only gave 350. So it is clear that our borders remain 
porous and that we need to act, but it's not the fault of the 
hard-working border patrol agents or the custom and immigration 
agents. They have been doing the best they can with the staff 
and the resources that they have.
    Seven times, seven times over the last four and a half 
years, Democrats have offered amendments to enhance border 
security resources.
    If those Democratic amendments had passed, and been 
adopted, we would now have 6,600 more border patrol agents, 
14,000 more detention beds, 2,700 more immigration agents. But 
each of those efforts were rejected by the Republican majority.
    Under President Bush, and with Republican majorities in 
both the House and the Senate, immigration enforcement against 
employers has fallen drastically.
    In 1999, the Immigration and Naturalization Service, the 
INS, had 240 agents. In 2003, the Immigration and Customs 
Enforcement, ICE, as the Chairman said, only have ninety.
    Audits of suspected use of undocumented labor has dropped. 
It reached its peak under president Clinton of 8000, and its 
valley under President Bush of 2,200. Fines initiated against 
employers have plummeted. They are now a low priority.
    In fiscal year 1999, President Clinton initiated fines 
against 417 employers. In 2004, under President Bush, the 
United States initiated only three actions against employers. 
That is a 99 percent drop-off.
    So it does seem a bit of odd timing, that the order of 
events as situated brings us to Plano today, and to 21 other 
places around the country, this August.
    But today's hearing is going to focus on employment and the 
enforcement of employment eligibility laws, and how the 
electronic employment verification system should work.
    We are going to hear from our witnesses, and I appreciate 
the fact that they're taking time out of their busy days to be 
with us today.
    But Mr. Chairman, once again, this issue may, in a sense, 
be missing the beat a little bit. The title of this hearing, 
Enforcing Employee Work Eligibility Laws begs the question. In 
order to enforce employee's eligibility, the subject has to be 
an employee, and I think therein lies the rub in some of this.
    Over the last few years, with increasing lax enforcement of 
labor laws, there has been an increasing trend among employers 
to reclassify or misclassify workers as something other than 
employees, to treat employees as independent contractors.
    This practice lets employers avoid immigration laws, and it 
also has them avoid all of our labor employment laws. In an 
employment verification system, if you're not an employee, then 
there's no reason to check on immigration status and verify it.
    In employee rights regimes, if you are not an employee, you 
simply don't get any employee rights. You can set up a 
verification system and you can try to enforce it, but if 
you're not classifying workers as employees, you're not likely 
to do anything more than be chasing your tail.
    If you are not first attempting to enforce the labor laws 
and the employment laws, and making sure employers are properly 
classifying workers and employees, then any discussion of 
verifying immigration status seems to be pointless.
    If we talk about enforcement, as I said, we have seen a 
failure over these last 6 years of the administration to 
enforce those laws, and a failure by Congress to actually have 
the oversight.
    I mentioned the figures of 417 notices to employers in 
1999, and only three in 2004. The number of unauthorized 
workers arrested at a work site has declined by 84 percent. And 
I could go on.
    The hospitality seems to be declining somewhat, Mr. 
Chairman. If I could just wrap up, I would appreciate that. I 
know your hospitality exceeds that of some of the others.
    On labor law enforcement, we have had a steep downward 
slide under the Bush administration. The laws are supposed to 
protect all the workers, whether they're documented or 
undocumented. If we are serious about protecting the rights and 
living standards of our American workforce, and if we are 
serious about reducing or eliminating the incentives for 
employing undocumented workers, then we have to be serious 
about tough and effective labor law enforcement.
    An undocumented worker is an exploitable worker. Employees 
can pay them less, or not at all, and keep them under constant 
threat of arrest and deportation if they attempt to complain 
about labor law violations.
    If you remove that exploitability, then you remove a major 
incentive to use undocumented workers, and you ensure that the 
American workers receive the full protection of the law.
    Mr. Chairman, I think that is what we might concentrate on 
in this hearing, is making sure that we have the full 
enforcement of all the laws, both labor rights as well as the 
immigration laws and verification, and I look forward to the 
testimony of our witnesses, and I thank you for your courtesy 
in allowing me to finish my statement.
    [The prepared statement of Mr. Tierney follows:]

Prepared Statment of Hon. John F. Tierney, a Representative in Congress 
                    From the State of Massachusetts

    Mr. Chairman, I am pleased to be here. We typically don't have 
hearings during recesses but, for some reason, the committees of the 
Congress are scurrying around the country holding a slew of hearings 
this August recess. I have to wonder why that is. The issue of 
immigration reform is an important one. We're in the midst of an 
immigration crisis in this country--and only now, in this campaign 
season, is the Republican Congress seeing fit to hold hearings on an 
issue for which it cannot show a single accomplishment.
    Let's take a look at the record leading up to this turn of events:
     Under your party's leadership in the Congress, since 1995, 
we have seen 5.3 undocumented workers enter the country.
     In 2004, Congress enacted the 9/11 Act, which required an 
additional 2,000 Border Patrol agents being hired over each of the next 
five years. It sounds good, but the President and Congress have not 
provided the resources to make it happen. The FY2006 budget from the 
President only called for 210 additional Border Patrol agents, and the 
Congress turned around and only funded for 1,000 agents. And the 
President's FY2007 budget still does not adequately fund for Border 
Patrol.
     The 2004 9/11 Act also called for 800 more immigration 
enforcement agents over the next five years. But Congress's FY2006 
budget only allowed for 350.
     Republicans in Congress have repeatedly voted down 
attempts by Democrats to adequately fund Homeland Security and 
implement the 9/11 Committee's recommendations on border security.
    Only now, in the summer before an election, do we see this 
concerted campaign to hold hearings on the immigration issue 
nationwide. Only now, after the House passed an ill-conceived 
immigration reform bill, do we bother to have hearings.
    It's an odd timing, an odd order of events, but let's get down to 
business.
    This hearing today deals with the enforcement of employment 
eligibility laws and how electronic employment verification systems 
should work.
    But, Mr. Chairman, once again on this issue, we are missing the 
boat. The title of this hearing begs the question. ``Enforcing Employee 
Work Eligibility Laws.'' If you want to enforce an employee's 
eligibility to work under immigration laws, they have to be an 
employee. And there's the rub.
    Over the last several years, we have seen an increasing trend among 
employers to reclassify and misclassify workers as something other than 
employees, to treat employees as independent contractors. This practice 
not only allows employers to get out from under immigration laws--such 
as complying with I-9 requirements--but also out from under all of our 
labor and employment laws. In an employment verification system, if 
you're not an employee, there is no immigration status to verify. In an 
employee rights regime, if you're not an employee, you have no employee 
rights.
    We can set up an employment verification system. We can go about 
trying to enforce it. But if we're not classifying workers as 
employees, we're like a dog chasing its tail.
    So a key question for any attempt to enforce employees' work 
eligibility is whether we are enforcing our labor and employment laws 
or whether we are standing by and letting the entire regime of 
employer-employee relations to recede into a more informal economy. If 
we're not first attempting to enforce our labor and employment laws, 
and making sure employers are classifying workers correctly as 
employees, then any discussion of verifying a person's employment 
status is pointless. It's all for show.
    So let's talk about enforcement. We have not held a single, focused 
oversight hearing on the Department of Labor during this 
Administration--how and whether the Department is enforcing our labor 
and employment laws. The last several years we have seen a failure by 
this Administration to enforce either immigration laws or labor laws, 
both of which are critical to a sound immigration policy. This Congress 
has failed to hold the Administration accountable and failed to address 
these issues for far too long. And now the country is reaping the fruit 
of those failures.
    Let's first talk about immigration law enforcement.
     On immigration, enforcement has fallen precipitously under 
the Bush Administration. The GAO recently reported some stunning 
numbers. The number of notices of intent to fine employers for 
improperly completing I-9 forms dropped 99% between 1999 and 2004, from 
417 notices in 1999 to just 3 in 2004.
     The number of unauthorized workers arrested during 
worksite enforcement operations declined by 84% between 1999 and 2003, 
from 2,849 in 1999 to only 445 in 2003.
    On labor law enforcement, the trend has also been on a steep 
downward slide during the Bush Administration. These laws are supposed 
to protect all workers, US-born and immigrant, documented and 
undocumented. If we are serious about protecting the rights and living 
standards of our American workforce, and if we are serious about 
reducing or eliminating the incentives for employing undocumented 
workers, then we have to be serious about tough and effective labor law 
enforcement. An undocumented worker is an exploitable worker--employers 
can pay them less or not at all, or keep them under constant threat of 
arrest and deportation if they attempt to complain about labor law 
violations. If you remove that exploitability, then you remove a major 
incentive to use undocumented workers. And you ensure that American 
workers receive the full protection of the law.
    But, across the board, we see a lack of focus on labor law 
enforcement.
     The Department of Labor's Wage and Hour Division, which 
enforces our minimum wage, overtime, and child labor laws, has seen 
repeated budget and staffing cuts during this Administration and under 
this Congress. The number of Wage and Hour investigators dropped from 
946 to 788 between 2000 and 2004. What was the impact? A 15% decline in 
the number of compliance actions completed by the Labor Department.
     The Occupational Safety and Health Administration, or 
OSHA, has seen similar budget and staffing cuts. For example, the 
President's latest budget request for OSHA results in more than an 8% 
cut in OSHA staffing, or the loss of 197 total positions at OSHA, since 
2001. At current levels, there is one OSHA staff person for every 1,700 
employers--and that's counting administrative as well as enforcement 
staff.
     When it comes to enforcing the right of workers to 
organize, our labor laws are tragically weak. The penalties for 
violating a worker's right to join with his fellow workers and attempt 
to win better pay and benefits and working conditions are so meager 
that many employers simply ignore the law. Every year, 22,000 workers 
are unlawfully fired or otherwise discriminated against for exercising 
their rights to associate.
     And, again, none of these laws, not work eligibility laws, 
not immigration laws, not labor laws, can be enforced if we allow 
employers to treat workers as something other than employees. More and 
more, we see workers lose all rights under our labor laws through 
misclassification--where employers misclassify an employee as an 
independent contractor or something other than a bona fide employee. 
Indeed, the Bush Administration encourages this practice--of pulling 
more and more workers out from under our laws. For example, the Bush 
National Labor Relations Board has been very keen to reclassify entire 
categories of workers as something other than workers, stripping them 
of their rights--whether it is newspaper carriers, graduate teaching 
assistants, disabled workers, and now possibly, in a pending case, 
nurses and highly skilled construction trades workers.
    So when we set up a system of employment verification before first 
making sure employers are treating all their workers as employees, we 
have put the cart before the horse. When we pass an ill-conceived 
immigration bill and then hold hearings about it, we have put the cart 
before the horse. It is time that we stop putting other considerations 
ahead of the interests of the American people. It is time that we focus 
on practical solutions to the immigration crisis. It is time that we 
get serious about enforcement. It is time that we get serious about 
workers' rights. And it is time that we get serious about doing our 
jobs when it comes to oversight.
                                 ______
                                 
    Chairman Johnson. Thank you, Mr. Tierney.
    I might add that those of you who couldn't understand 
everything he said, he is from Massachusetts.
    I would at this time now yield to my distinguished 
colleague, Congressman Joe Wilson, from South Carolina, for 
whatever statement you wish to make.
    Mr. Wilson. Thank you, Mr. Chairman. I am glad to be from 
Southern Massachusetts of South Carolina.
    I want to thank Chairman Sam Johnson for conducting today's 
hearing. It is an honor to be in the home of one of America's 
great heroes. I am a 31 year veteran myself, of the Army 
National Guard. I have four sons who serve in the military, and 
we look at Sam Johnson as a model of being a hero for the 
American people, Mr. Chairman, so thank you.
    And I feel of course at home being here in Plano, in that 
South Carolina shares the bond of having had persons serve at 
the Alamo, and so we again respect the heritage that we have 
between South Carolina and Texas.
    Our discussion will center on the key issue of debate 
surrounding illegal immigration, that is, employee verification 
systems and employer enforcement. The House border security 
bill incorporates stringent measures for verifying and 
complying with employee eligibility.
    Such provisions are sadly absent from the Reid-Kennedy 
Senate bill. I particularly understand the differences because 
in my legal career, I practiced some immigration law as a 
strong supporter of legal immigration.
    As an indication of the gaps, for example, employers are 
currently required to inspect employees' Government-issued 
identification and require them to complete an I-9 form 
attesting to their work eligibility.
    In addition to these requirements, employers may choose to 
screen employees through the basic pilot program which 
electronically verifies employees work eligibility through the 
Social Security and Department of Homeland Security.
    While both the House border security bill and the Reid-
Kennedy bill make participation in the basic part of the plan 
mandatory, the House bill requires employers to ensure that all 
of the employees are legally able to work in the United States. 
That is current and in the future.
    In contrast, the Reid-Kennedy bill only extends the 
requirement to employees hired after the bill is law, not to 
the current employees.
    Mr. Chairman, this defines logic. Employers should be held 
accountable for all of their employees, not just those hired 
after an arbitrary date. I believe, strongly, that as House 
Republicans take our case to the American people in August, 
with such hearings as we are conducting today, we will hear the 
same response.
    The American people understand the historic differences 
between the House bill and the Reid-Kennedy bill. We are at a 
crossroads today in the United States. We can choose to 
effectively address our growing illegal immigration problem or 
we can turn a blind eye.
    As we continue this debate, I hope Democrats in Congress 
will realize that what the average American already 
understands, we cannot address illegal immigration without 
addressing security at the border.
    This passed the House in December with only strong 
Republican support. It is my belief that progress has been 
blocked by the Democratic closure threat in the Senate.
    In conclusion, God bless our troops and we will never 
forget September the 11th.
    [The prepared statement of Mr. Wilson follows:]

  Prepared Statement of Hon. Joe Wilson, a Representative in Congress 
                    From the State of South Carolina

    Thank you, Mr. Chairman. I want to thank Chairman Sam Johnson for 
conducting today's hearing. Our discussion will center on a key issue 
in the debate surrounding illegal immigration: employee verification 
systems and employer enforcement.
    The House border security bill incorporates stringent measures for 
verifying and complying with employee eligibility. Such provisions are 
sadly absent from the Reid-Kennedy Senate bill.
    For example, employers are currently required to inspect employees' 
government-issued identification and require them to complete an I-9 
form attesting to their work eligibility. In addition to these 
requirements, employers may choose to screen employees through the 
Basic Pilot Program, which electronically verifies employees' work 
eligibility through the Social Security Administration and Department 
of Homeland Security.
    While both the House border security bill and the Reid-Kennedy bill 
make participation in the Basic Pilot Program mandatory, the House bill 
requires employers to ensure that ALL of their employees are legally 
able to work in the United States. In contrast, the Reid-Kennedy bill 
only extends the requirement to employees hired AFTER the bill's 
enactment. Mr. Chairman, this defies logic. Employers should be held 
accountable for ALL of their employees--not just those hired after an 
arbitrary date.
    In conclusion, I believe strongly that as House Republicans take 
our case to the American people in August with such hearings as we are 
conducting today, we will hear the same response: the American people 
are on our side!
    We are at a crossroads today in the United States. We can choose to 
effectively address our growing illegal immigration problem or we can 
turn a blind eye.
    As we continue to debate this issue, I hope Democrats in Congress 
will realize what the average American already understands: We cannot 
address illegal immigration without addressing border security.
                                 ______
                                 
    Chairman Johnson. This hearing is going to be conducted 
under the rules of the House of Representatives. As such we 
have invited witnesses for a thorough discussion of the issues. 
I know many of our attendees today want the opportunity to have 
their voices heard on the subject of today's hearing, and I 
would invite you to submit your statement for the record.
    I know that some of you have received cards or paper to 
make comments on. It is not allowable for you to make comments 
publicly in the hearing. Our witnesses will and we will 
question them. But you are welcome to write your comments on 
those comment cards, which are in the back of the chamber, and 
if you want to provide your statement to the committee, we 
would thank you for your interest.*
---------------------------------------------------------------------------
    *Submitted and placed in permanent archive file, comments submitted 
by public attending hearing. Plano, Texas. July 31, 2006.
---------------------------------------------------------------------------
    With that, let me say that even any emotion, such as 
clapping, is not allowed in the House. However, I am going to 
allow that here today as long as it doesn't get out of hand, 
and I think you all recognize that one of our members is a 
Democrat, the other member on my left is a Republican, and we 
have structured our witnesses in the same manner.
    Thank you, Mr. Wilson, for your comment.
    We have a very distinguished panel of witnesses before us 
today, and I would like to thank all of you for coming and 
begin by introducing them.
    Mr. John Chakwin currently serves as special agent in 
charge of the United States Customs and Enforcement Office of 
Investigation in Dallas. Mr. Chakwin oversees the immigration 
and customs-related investigation for North Texas and Oklahoma. 
He has more than 27 years of law enforcement experience and 
holds degrees from the University of Delaware and from George 
Washington University. I think we are going left to right; is 
that right? Right to left. OK.
    Abel Martinez is a vice president, primarily responsible 
for risk management and compliance at H-E-B in San Antonio. He 
has extensive experience representing management and employers 
in Texas, and the Federal courts relating to labor disputes, 
discrimination suites, OSHA and Texas Workforce Commission 
proceedings, and all other matters involving the employer-
employee relationship.
    Mr. Martinez holds degrees from St. Mary's University and 
the University of Houston Law Center.
    Ms. Geri Simmons is testifying on behalf of the Society for 
Human Resource Management. Ms. Simmons has more than 15 years 
experience as an executive in human resources and business 
development. She is well-versed in employment law, labor 
relations, and other human resources practices.
    Ms. Simmons holds degrees with honors from MidAmerica 
University and the University of Kansas.
    Professor Bill Beardall is a clinical professor of law at 
the University of Texas School of Law. Professor Beardall's 
practice has focused on civil rights and employment law for 
low-income individuals. He is also the executive director of 
the Equal Justice Center which is active in projects to assist 
workers.
    Professor Beardall holds degrees from Rhodes College and 
Harvard Law School.
    Mr. Jon Luther is the chief executive officer of Dunkin' 
Donuts, and is a 35 year veteran of the food service industry. 
He has a distinguished career building brands for various food 
service outlets. Mr. Luther holds a degree in hotel and 
restaurant management from Paul Smith College.
    I thank you all for being here and before the witnesses 
begin their testimony, I would like to remind members, we will 
be asking questions after the entire panel has testified. In 
addition committee rule 2 imposes a 5-minute time limit on all 
questions. Also, we would ask you to limit your comments to 5 
minutes, and any additional comments you wish to place in the 
record will be approved, without objection.
    OK. I will call on Mr. John Chakwin.

 STATEMENT OF JOHN CHAKWIN, JR., SPECIAL AGENT IN CHARGE, U.S. 
              IMMIGRATION AND CUSTOMS ENFORCEMENT

    Mr. Chakwin. Chairman Johnson and members of the 
subcommittee, it is an honor for me to appear before you today 
to share U.S. Immigration and Custom Enforcement's perspective 
on worksite enforcement and how ICE investigates and prosecutes 
employers who engage in the hiring of illegal aliens.
    Working throughout the nation's interior, together with our 
DHS and other Federal counterparts, and with the assistance of 
state and local enforcement entities, ICE is vigorously 
pursuing the most egregious employers of illegal workers.
    ICE is educating the private sector to institute best 
hiring practices, and with its support is identifying systemic 
vulnerabilities that may be exploited to undermine immigration 
and border controls.
    A large part of our worksite enforcement efforts focus on 
preventing access to critical infrastructure sectors and sites 
to prevent terrorism and to apprehend those individuals who aim 
to do us harm.
    In the past, immigration investigators, to different 
degrees over the course of time, focused on worksite violations 
by devoting a large percentage of investigative resources to 
enforcement of the administrative employer sanctions provisions 
of the IRCA.
    The resulting labor-intensive inspections and audits of 
employment eligibility documents only resulted in serving 
businesses with a Notice of Intent to Fine. Monetary fines that 
were routinely mitigated or ignored had little to no deterrent 
effect. Egregious violators of the law viewed the fines as just 
a cost of doing business and therefore the system did not serve 
as a true economic inducement for them to change their business 
model.
    ICE's current worksite enforcement strategy is part of a 
comprehensive layered approach that focuses on how illegal 
aliens get into our country, the ways in which they obtain 
identity documents allowing them to become employed, and the 
employers who knowingly hire them.
    ICE is bringing criminal prosecutions and using asset 
forfeiture as tools against employers of illegal aliens far 
more than administrative fines as a sanction against such 
activity.
    Using this approach, ICE worksite investigations now 
support felony charges and not just the traditional misdemeanor 
worksite violations.
    Of course a key component of our worksite enforcement 
efforts target the businesses and industries that deliberately 
profit from the wholesale employment of illegal aliens.
    In April of 2006, ICE conducted the largest such worksite 
enforcement operation ever undertaken. This case involved IFCO, 
a Houston-based company. ICE agents executed nine Federal 
arrest warrants, 11 search warrants, and 41 consent searches at 
IFCO sites throughout the United States.
    In addition, ICE agents apprehended 1,187 unauthorized 
workers at IFCO worksites. The criminal defendants have been 
charged with conspiracy to transport and harbor unlawful aliens 
for financial gain, as well as fraud and misuse of immigration 
documents.
    ICE launched several investigations to enhance national 
security and public safety here in Texas and throughout the 
nation. Operation Tarmac, a worksite enforcement investigation 
of companies that employed illegal aliens in secure areas of 
the Dallas/Fort Worth International Airport, resulted in the 
removal of over 65 illegal aliens. An ICE spin-off 
investigation of this worksite enforcement operation 
subsequently focused on two Dallas/Fort Worth employers, 
Midwest Airport Services, Midwest and its parent company, 
Service Performance Corporation.
    As a result of ICE's continued efforts, both companies were 
convicted in May 2006 of immigration violations related to the 
employment of illegal aliens and were fined a total of 
$750,000. Furthermore, seven managers, including the former 
president of Midwest, were convicted of immigration violations. 
Another example of ICE's worksite enforcement efforts is the 
arrest and removal last year of 60 illegal aliens that had been 
employed Brock Enterprises in their petrochemical refineries, 
power plants and other critical infrastructure facilities in 
six states. of those 60 illegal aliens, more than 40 were 
apprehended and removed from Brock Enterprise facilities 
located here, in the State of Texas.
    The magnet of employment is clearly fueling illegal 
immigration, but the vast majority of employers do their best 
to comply with the law.
    However, the growing prevalence of counterfeit documents 
interferes with the ability of legitimate employers to hire 
lawful workers. In short, the employment process cannot 
continue to be tainted by the widespread use and acceptance of 
fraudulent identification documents.
    Accordingly, in April 2006, Deputy Attorney General Paul 
McNulty, and Assistant Secretary of Homeland Security for ICE, 
Julie Myers, announced the created of a ICE-led Document and 
Benefit Fraud Task Force in 11 major metropolitan areas.
    These task forces focus on the illegal benefit and 
fraudulent document trade that caters to aliens in need of 
fraudulent documents in order to obtain illegal employment.
    The DBF Task Forces are built on strong partnerships with 
U.S. Citizenship and Immigration Services, the Social Security 
Administration, the Postal Inspection Service, and the 
Departments of State, Justice and Labor.
    The task forces identify, investigate, and dismantle 
organizations that supply identity documents that enable 
illegal aliens, terrorists, and other criminals to integrate 
into our society undetected and to obtain employment or other 
immigration benefits.
    We look forward to working with Congress as it considers 
comprehensive immigration reform, including proposals to 
enhance worksite enforcement.
    The administration has sought the authority to have 
additional access to Social Security administration no-match 
data to improve immigration enforcement. Greater access to no-
match data would provide important direction to ICE 
investigators to target their enforcement actions toward those 
employers who have a disproportionate number of these no 
matches, who have reported earnings from multiple employees on 
the same number, and who are therefore likely to be engaging in 
unlawful behavior.
    Chairman Johnson. Could you try to tighten up, please.
    Mr. Chakwin. Yes. The administration has proposed a 
streamlined administrative fines and penalties process that 
gives the DHS secretary the authority to administer and 
adjudicate fines and penalties.
    And thank you for inviting me. I would be glad to answer 
any questions at this time.
    [The prepared statement of Mr. Chakwin follows:]

   Prepared Statement of John Chakwin, Special Agent in Charge, U.S. 
   Immigration and Customs Enforcement, U.S. Department of Homeland 
                                Security

    Chairman Johnson and members of the subcommittee, it is an honor 
for me to appear before you today to share U.S. Immigration and Customs 
Enforcement's (ICE's) perspective on worksite enforcement and how ICE 
investigates and prosecutes employers engaged in the hiring of illegal 
aliens.
Introduction
    Among the Department of Homeland Security (DHS) law enforcement 
agencies, ICE has the most expansive investigative authority and the 
largest force of investigators. Our mission is to protect our Nation 
and the American people by targeting the people, money and materials 
that support terrorist and criminal activities. The men and women of 
ICE accomplish this by investigating and enforcing the nation's 
immigration and customs laws. Working throughout the nation's interior, 
together with our DHS and other federal counterparts and with the 
assistance of state and local law enforcement entities, ICE is 
vigorously pursuing the most egregious employers of illegal workers. 
ICE is educating the private sector to institute best hiring practices, 
and with its support is identifying systemic vulnerabilities that may 
be exploited to undermine immigration and border controls. A large part 
of our worksite enforcement efforts focuses on preventing access to 
critical infrastructure sectors and sites to prevent terrorism and to 
apprehend those individuals who aim to do us harm. That is why the 
Administration has proposed a comprehensive overhaul of the employment 
verification and the employer sanctions program as part of the 
President's call for comprehensive immigration reform.
The 1986 IRCA and Lessons Learned
    ICE has substantial experience as a result of its role in 
implementing the 1986 Immigration Reform and Control Act (IRCA). We 
know its strengths and shortcomings and I believe it will be beneficial 
to provide a quick review of worksite enforcement under IRCA.
    In the past, immigration investigators, to different degrees over 
the course of time, focused on worksite violations by devoting a large 
percentage of investigative resources to enforcement of the 
administrative employer sanctions provisions of IRCA. The resulting 
labor-intensive inspections and audits of employment eligibility 
documents only resulted in serving businesses with a Notice of Intent 
to Fine (NIF) or a compliance notice. Monetary fines that were 
routinely mitigated or ignored had little to no deterrent effect. The 
results were far from effective and the process involved endless 
attorney and agent hours in discovery and litigation to adjudicate and 
resolve cases. Egregious violators of the law viewed the fines as just 
a ``cost of doing business'' and therefore the system did not serve as 
a true economic inducement for them to change their business model.
    Moreover, while IRCA required employers to review identity 
documents demonstrating employment eligibility, its compliance standard 
rendered that requirement meaningless and essentially sheltered 
employers who had hired unauthorized aliens. Under the 1986 law, an 
employer could comply with the eligibility verification process by 
reviewing a document that reasonably appeared to be genuine. Employers 
were not required to verify the validity of a document and were not 
required to maintain a copy of the documents that they reviewed. The 
ability of the employer to rely on the facial validity of a single 
document and the lack of available evidence permitting after-the-fact 
review of the employer's assessment routinely prevented the government 
from proving that the employer knew the employee was not authorized to 
work. Thus, the law should reasonably require the employer to retain 
copies of relevant documents and information obtained during the 
verification process, as well as during the subsequent employment of a 
worker. It should also not allow unscrupulous employers to ignore 
highly questionable documentation or other facts indicative of 
unauthorized status.
    Another detrimental result of the documentation compliance standard 
established under IRCA was explosive growth in the profitable false 
document industry catering to undocumented workers seeking employment.
Worksite Enforcement: A New and Better Approach
    ICE's current worksite enforcement strategy is part of a 
comprehensive layered approach that focuses on how illegal aliens get 
to our country, the ways in which they obtain identity documents 
allowing them to become employed, and the employers who knowingly hire 
them.
    The ICE worksite enforcement program is just one component of the 
Department's overall Interior Enforcement Strategy and is a critical 
part of the Secure Border Initiative.
    ICE is bringing criminal prosecutions and using asset forfeiture as 
tools against employers of illegal aliens far more than administrative 
fines as a sanction against such activity. Using this approach, ICE 
worksite investigations now support felony charges and not just the 
traditional misdemeanor worksite violations under Section 274A of the 
Immigration and Nationality Act.
    Of course, a key component of our worksite enforcement efforts 
targets the businesses and industries that deliberately profit from the 
wholesale employment of illegal aliens. In April of 2006, ICE conducted 
the largest such worksite enforcement operation ever undertaken. This 
case involved IFCO Systems, a Houston-based company. ICE agents 
executed nine federal arrest warrants, 11 search warrants, and 41 
consent searches at IFCO worksite locations throughout the United 
States. In addition, ICE agents apprehended 1,187 unauthorized workers 
at IFCO worksites. This coordinated enforcement operation also involved 
investigative agents and officers from the Department of Labor, the 
Social Security Administration, the Internal Revenue Service, and the 
New York State Police. The criminal defendants have been charged with 
conspiracy to transport and harbor unlawful aliens for financial gain 
(8 U.S.C. 1324 and 18 U.S.C. 371), as well as fraud and misuse of 
immigration documents (18 U.S.C. 1546).
    Worksite enforcement combats alien smuggling. Alien smuggling is 
the importation of people into the United States involving deliberate 
evasion of immigration laws. This offense includes bringing illegal 
aliens into the United States, as well as the unlawful transportation 
and harboring of aliens already in the United States. In the last few 
months, we have made arrests at employment agencies that served as 
conduits between the criminal organizations that smuggle illegal aliens 
into this country and the employers that willfully employ them.
    As a result, and in immediate response to 9/11, ICE launched 
several investigations to enhance national security and public safety 
here in Texas and throughout the Nation. In 2002, Operation Tarmac, a 
worksite enforcement investigation of companies that employed illegal 
aliens in secure areas of the Dallas/Ft. Worth International Airport 
(DFW), resulted in the removal of over 65 illegal aliens. An ICE spin-
off investigation of this worksite enforcement operation subsequently 
focused on two DFW employers, Midwest Airport Services (Midwest) and 
its parent company, Service Performance Corporation (SPC). As a result 
of ICE's continued efforts, both companies were convicted in May 2006 
of immigration violations related to the employment of illegal aliens 
and were fined a total of $750,000. Furthermore, seven managers, 
including the former president of Midwest, were convicted of 
immigration violations.
    In June of this year, an ICE investigation apprehended 55 illegal 
aliens working at a construction site at Dulles International Airport, 
just outside Washington, DC. Effective homeland security requires 
verifying not just the passengers that board the planes, but also the 
employees that work at the airports and have access to secure and 
sensitive areas that can be exploited by terrorists or other criminals.
    Another example of ICE's worksite enforcement efforts is the arrest 
and removal last year of 60 illegal aliens that had been employed by 
Brock Enterprises in their petrochemical refineries, power plants and 
other critical infrastructure facilities in six states. Of those 60 
illegal aliens, more than 40 were apprehended and removed from Brock 
Enterprise facilities located here, in the State of Texas.
    Worksite enforcement also combats human trafficking. Through its 
worksite enforcement actions, ICE has dismantled forced labor and 
prostitution rings, be they Peruvian aliens in New York or Chinese 
aliens in Maryland. The common threads are the greed of criminal 
organizations and the desire of unwitting aliens to come here to work. 
Human trafficking cases represent the most egregious forms of 
exploitation, as aliens are forced to work and live for years in 
inhumane conditions to pay off the debt they incur for being smuggled 
into the country.
    Worksite enforcement combats trafficking in counterfeit goods, 
commercial fraud, financial crimes, and export violations. ICE 
enforcement efforts leverage our legacy authorities to fully 
investigate offenses that involve the employment of illegal aliens to 
promote and further these other crimes.
    By careful coordination of our detention and removal resources and 
our investigative operations, ICE is able not only to target the 
organizations unlawfully employing illegal workers, but to detain and 
expeditiously remove the illegal workers encountered. For example, in a 
recent case in Buffalo, New York, involving a landscape nursery, 34 
illegal workers were apprehended, detained, and voluntarily repatriated 
to Mexico within 24 hours.
    Such actions send a strong message to illegal workers here and to 
foreign nationals in their home countries that they will not be able to 
move from job to job in the United States once ICE shuts down their 
employer. Rather, they will be detained and promptly deported.
    Another recent example of our worksite efforts occurred in May of 
2006, when 85 unauthorized workers employed by Robert Pratt and other 
sub-contractors for Fischer Homes, Inc., were arrested as part of an 
ICE-led joint federal, state, and local investigation. In this case the 
targets of the investigation knowingly harbored, transported, and 
employed undocumented aliens. Five supervisors were arrested and 
charged with harboring illegal aliens.
    What impact will this have? Criminally charging employers who hire 
undocumented aliens will create the kind of deterrence that previous 
enforcement efforts did not generate. We are also identifying and 
seizing the assets that employers derive from knowingly employing 
illegal workers, in order to remove the financial incentive to hire 
unauthorized workers and to pay them substandard wages.
    The magnet of employment is clearly fueling illegal immigration, 
but the vast majority of employers do their best to comply with the 
law. ICE has provided training and tools on its website to help 
employers avoid violations. However, the growing prevalence of 
counterfeit documents interferes with the ability of legitimate 
employers to hire lawful workers. In short, the employment process 
cannot continue to be tainted by the widespread use and acceptance of 
fraudulent identification documents.
    Accordingly, in April 2006, Deputy Attorney General Paul McNulty 
and Assistant Secretary of Homeland Security for ICE Julie Myers 
announced the creation of ICE-led Document and Benefit Fraud (DBF) Task 
Forces in 11 major metropolitan areas. These task forces focus on the 
illegal benefit and fraudulent document trade that caters to aliens in 
need of fraudulent documents in order to obtain illegal employment. The 
DBF Task Forces are built on strong partnerships with U.S. Citizenship 
and Immigration Services, the Social Security Administration, the U.S. 
Postal Inspection Service and the Departments of State, Justice and 
Labor. The task forces identify, investigate, and dismantle 
organizations that supply identity documents that enable illegal 
aliens, terrorists, and other criminals to integrate into our society 
undetected and to obtain employment or other immigration benefits.
New Tools
    ICE has made substantial improvements in the way it investigates 
and enforces worksites. DHS supports several of the additional tools 
contained in pending legislation. We look forward to working with 
Congress as it considers comprehensive immigration reform, including 
proposals to enhance worksite enforcement.
Social Security No-Match data
    The Administration has sought the authority to have additional 
access to Social Security Administration no-match data to improve 
immigration enforcement. Greater access to no-match data would provide 
important direction to ICE investigators to target their enforcement 
actions toward those employers who have a disproportionate number of 
these no-matches, who have reported earnings for multiple employees on 
the same number and who are therefore more likely to be engaging in 
unlawful behavior.
Fines and Penalties: A Proposed Model
    Although criminal prosecution of egregious violators is our primary 
objective in worksite cases, a need exists for a new and improved 
process of issuing fines and penalties that carry a significant 
deterrent effect and that are not regarded as a mere cost of doing 
business. The United States can have an effective worksite enforcement 
program only with a strong compliance program, combined with issuance 
of meaningful, enhanced penalties that compound for repeat offenders.
    The Administration has proposed a streamlined administrative fines 
and penalties process that gives the DHS Secretary the authority to 
administer and adjudicate fines and penalties. We would further propose 
a penalty scheme that is based on clear rules for issuance, mitigation 
and collection of penalties.
    As I have outlined in my testimony, ICE has greatly advanced its 
worksite enforcement program and its efforts are part of a 
comprehensive strategy that focuses on several different layers of the 
problem simultaneously, including illegal employment, document and 
benefit fraud, and smuggling.
    Our responsibility at ICE is to do everything we can to enforce our 
laws, but enforcement alone will not solve the problem. Accordingly, 
the President has called on Congress to pass comprehensive immigration 
reform that accomplishes the following objectives: strengthening border 
security; ensuring a comprehensive interior enforcement strategy that 
includes worksite enforcement; establishing a temporary worker program; 
and addressing the population of undocumented workers already in the 
United States. Achieving these objectives will dramatically improve the 
security of our infrastructure and reduce the employment magnet that 
draws illegal workers across the border, while eliminating the mistakes 
that accompanied the 1986 legislation.
    ICE is dedicated and committed to this mission. ICE agents are 
working tirelessly to attack the egregious unlawful employment of 
undocumented aliens that subverts the rule of law. We are working more 
intelligently and more efficiently to ensure the integrity of our 
immigration system. That is why we, and the President, support 
comprehensive immigration reform that includes interior and border 
enforcement in addition to a temporary worker program and a plan for 
addressing the current illegal population. We look forward to working 
with this Subcommittee in our efforts to secure our national interests. 
Thank you for inviting me and I will be glad to answer any questions 
you may have at this time.
                                 ______
                                 
    Chairman Johnson. Thank you, sir.
    I appreciate your comments. Mr. Martinez, you are welcome 
to begin.

STATEMENT OF ABEL MARTINEZ, VICE PRESIDENT, PARTNER RELATIONS, 
             RISK MANAGEMENT AND COMPLIANCE, H-E-B

    Mr. Martinez. Chairman Johnson, committee members, I want 
to say thank you, first of all, not just for allowing me the 
opportunity to be here and give you my views and opinions on an 
employment verification system, but thank you for all the work 
that you do each and every day.
    Chairman Johnson. Get a little closer to the mic.
    Mr. Martinez. I was going to say I just want to thank the 
committee, and Chairman, the work that you do every day to help 
our great country and the great State of Texas. I know this is 
a very contentious issue, regardless of which side you are on. 
Everybody has their opinions on this very important issue, and 
it is a very important issue for our country and the State of 
Texas.
    I just really want to introduce myself, Abel Martinez. I am 
with H-E-B. I don't know how much you guys know about H-E-B out 
there in the audience, but, you know, what we do is we are a 
company that have been around for a 100 years.
    We grew up small. We started in 1905. We started with one 
store. We think of ourselves as retailers who focus on the 
grocery business. We now have 300 stores. We do business in 
Texas and Mexico. We have over 12 billion in sales, and I think 
one thing that really sets us apart from a lot of our 
competitors or other companies is that we donate over 5 percent 
of our pretax dollars to nonprofit organizations in communities 
that we serve and in communities that we don't serve.
    So I think that kind of explains a little bit about our 
culture and what we do, and when it comes to immigration 
enforcement, I think we are very good on making sure we follow 
the law, and we expect the people we do business with, our 
vendors and contractors, to also follow the law.
    Of course we comply with I-9 requirements. We train our 
folks that do the interviewing and the hiring on I-9 
requirements. We have had INS come in, Department of Homeland 
Security come in to do training for us, as well on I-9 
requirements.
    We conduct annual audits, and on 60,000 employees who we 
call partners, that's not always an easy and inexpensive task, 
but we do that because we realize how important it is to make 
sure our workforce is here legally.
    We also require our contractors to ensure, both 
contractually, that they are complying with I-9 laws, and we 
require them to sign a notarized written affidavit under the 
law, under the penalties of perjury, that they are complying 
with all I-9 requirements as well.
    And I can sit here and testify about the need for stronger 
enforcement because I think we need it. I can testify about the 
need for better verification systems because I think we need 
it. I also can testify about the needs we have to make sure 
that we fix our system, and we have a comprehensive immigration 
reform system that will address the issues that we face today.
    As far as the Senate Bill 2611, and the House Bill 4437, 
each one of those bills takes into consideration some 
employment verification measures. We believe that some of the 
provisions in each bill are good. We think some of the 
provisions in each bill aren't so good, they need some work, 
and so I would like to hit on a few of them, and I strongly 
support a verification system that is fast, that is efficient, 
and accurate. I think those are extremely important in any type 
of verification that we have.
    And when it comes to making sure our system is fast, I 
think we should strive toward a system that allows employers to 
be able to determine whether or not they should hire somebody 
within 24 hours.
    Chairman Johnson, you stated earlier that the Social 
Security Administration told you that it was instant. I have a 
hard time understanding that because I know from time to time, 
it does take days and days to get back confirmation on someone 
you are running a check on.
    So I see an issue there. We need to speed up the process, 
and I am hoping that Congress can dedicate enough resources to 
make sure that we have a system that will work.
    At H-E-B, we conduct a criminal background check on every 
single employee we hire, and we usually get those results back 
within 24 hours, and it's a third party independent company 
that we use. They, at some times, will go in and check 
courthouse records manually, to determine whether or not 
somebody has a criminal background, and as part of that 
process, they are able to turn around those results within 24 
hours.
    I am hopeful that Social Security Administration, with one 
data base, would be able to have that information and be able 
to turn that around within 24 hours. That would be extremely 
helpful to employers and be extremely helpful to enforce the 
laws of the United States.
    So I ask the committee to look at that and really push 
very, very aggressively on a system that would be fast, 24 
hours, and a system that will allow us to also have a 
conditional offer of employment based upon conducting that 
verification on employment status.
    Right now, what we have is within 3 days of hire, you have 
to fill out the I-9 form, a paper form, and then after that you 
wait for, you know, basically some results from the basic pilot 
program to give you those results back. And sometimes it takes 
days.
    But if we could have a system that allows employers to make 
a conditional offer of employment, that is, to tell the 
applicant you have the job subject to passing what we have, a 
criminal background check or background reference check, and 
then also your work status.
    If we can have it as a conditional offer, allow us to get 
moving on that, so that we don't have delays of days and days, 
that would certainly help the system become much more 
efficient, rather than having or requiring employers to wait 
until after somebody physically starts working in order to 
gather that information. It would also be efficient if we could 
do away with any paper type requirements. Requiring employers 
to have a paper I-9 form, and then also requiring them to have 
an electronic verification system, becomes very burdensome on 
employers. It is very difficult to do both on the recordkeeping 
side.
    Right now, we have to basically fill out the I-9 forms, and 
in order to have a process, in order to get those forms back 
because we are a large employer, we scan those in, image each 
one of those in, so that we can retrieve those quickly, so that 
we can conduct an audit. Because every year we conduct an 
audit, and so it makes it much easier and faster for us.
    If we went through an electronic system, that would be even 
faster but it would not require the need for us to keep paper 
documents. And also looking at making sure it is accurate. Both 
sides have their versions of which system would be better as 
far as when it comes to verification. We have got to have a 
system that is accurate.
    The error rates under the basic pilot program are very 
high, regardless of who you talk to, percentage-wise, they are 
very high, and so I would ask the committee to ensure that we 
have got a system that is accurate and if fast.
    And finally, there is verification requirement under both 
bills. We ask the committee to seriously consider not going too 
far back and making it large employers or any employer go back 
and have to reverify the workforce when they have already been 
complying with the laws.
    Just to wrap it up, I would like to thank you for your 
time, and I appreciate you giving me the opportunity to be here 
on behalf of H-E-B and EWIC, the Essential Workers Immigration 
Coalition, and I again thank you for your time.
    [The prepared statement of Mr. Martinez follows:]

       Prepared Statement of Abel Martinez, Vice-President, H-E-B

    Mr. Chairman and Members of the Committee: On behalf of H-E-B, I 
would like to take this opportunity to thank you for your service to 
our country and for your efforts in developing a reasonable and 
comprehensive immigration reform initiative that will benefit our great 
country and the great State of Texas.
    From our beginning as a small grocery store in Kerrville, Texas, H-
E-B has grown to be the largest, privately held company in Texas. Since 
1905, H-E-B has grown to include more than 300 stores in Texas and 
Mexico. H-E-B is also one of the few companies in the nation that 
donates over 5% of its pretax earnings to charitable and non-profit 
organizations. We employ 60,000 people whom we call Partners. We 
recently celebrated our 100th anniversary, and for over 75 years, we 
have served the communities of South Texas.
    I am very pleased that this Committee is addressing the critical 
issue of security and guest worker programs and their impact on 
immigration policy. My testimony, however, will focus on the employment 
verification issues raised by the Committee.
    Although H-E-B, like many other employers, takes great care to 
ensure that its employees are authorized to work in the United States, 
H-E-B supports a new EEVS, within the context of comprehensive 
immigration reform. The prevalence of false documents makes it 
difficult for an employer to know who is authorized to work and who is 
not. Employers need an efficient, accurate, and reliable system to 
ensure that the workers they hire are indeed authorized to work.
    There are currently two differing versions of electronic employment 
verification procedures in the House and Senate bills, one found in 
Title VII of the House-passed Border Protection, Antiterrorism, and 
Illegal Immigration Control Act of 2005 (H.R. 4437) and the other found 
in Title III of the Senate-passed Comprehensive Immigration Reform Act 
of 2006 (S. 2611). Both proposals seek to establish a new way of 
verifying the employment eligibility of the American workforce. The 
House version relies on the current I-9 system for identity 
verification while modifying and expanding the current voluntary 
``Basic Pilot Program'' and imposes it on all employers. The Senate 
version modifies the current I-9 system and builds on the principles of 
the Basic Pilot, but takes a much different approach overall.
    The Basic Pilot Program is the only EEVS in use, and the strengths 
and weaknesses of that program can be used to guide decision-making 
concerning the development of any new mandatory system when expanded to 
over seven million employers and over 140 million employees. It is also 
worth noting that although the program is commonly referred to as 
``electronic'' in nature, both the House and Senate EEVS versions will 
retain paperwork requirements designed to verify the identity of 
workers at least until such time as a system imposes biometric 
identifiers on all workers. This is an issue which has not received a 
great deal of attention, and is beyond the scope of this testimony, but 
is clearly a major issue that will have to be dealt with in the future.
Accuracy of the Underlying Databases for the Basic Pilot Program
    The accuracy of the underlying databases, maintained by DHS and 
SSA, continues to be an issue for the Basic Pilot Program. These 
databases struggle to keep pace with status or name changes among our 
fast growing population.\1\ Historically, the error rates of government 
agency databases tend to be extremely high.\2\ For example, error rates 
for Internal Revenue Service data and programs are typically in the 
range of 10-20%.\3\ A Government Accounting Office (``GAO'') study on 
databases used for alien employment verification, pre-Basic Pilot, 
found that 20% of a sample of Immigration and Naturalization Services 
(``INS'') data on aliens was incomplete and 11% of the files contained 
information that was erroneous.\4\ The National Law Journal reported 
approximately ten years ago that files on 50,000 Guatemalan and 
Salvadoran aliens regularly contained the first, middle, and surnames 
in the wrong field.\5\ This is still a common occurrence today because 
Hispanics tend to have compound names and the first part of the last 
name is routinely written as the middle name.
    The National Law Journal also discovered that proper name searches 
came out blank because other data was also routinely entered into the 
wrong data field; there were rampant misspellings, and numbers were 
often entered where letters should have been.\6\ Even Social Security 
files have been found to contain error rates in 5-20% of cases.\7\ In 
fact, INS itself estimated that it would be unable to electronically 
verify employment eligibility in some 35% of all cases due to delays in 
updating computer records, name-matching problems, and errors in the 
database.\8\
Error Rates
    The law that created the Basic Pilot Program required the INS to 
have an independent evaluation of the program before it would be 
extended.\9\ The INS chose two research firms, the Institute for Survey 
Research at Temple University (``ISR'') and Westat, to do the 
independent evaluation.\10\ In January 2002, the Basic Pilot Evaluation 
Summary Report was published and in June 2002, the ``more in-depth 
empirical evaluation,'' Findings of the Basic Pilot Program Evaluation, 
was published.\11\ The latter, as the U.S. Citizenship and Immigration 
Services (CIS) readily admits, is an excellent, comprehensive, and 
well-researched report that continues to serve as the basis for the 
debate, in part because the subsequent DHS publications and responses 
have not been as thorough or as well documented.\12\
    As these reports found, there are deficiencies with the Basic Pilot 
Program. For example, while the final outcome for 87% of the 
verification submissions was employment authorization confirmation at 
one of the four stages, less than 0.1% (159 persons) were found between 
1999 and 2002 to be unauthorized to work in the United States.\13\ The 
remaining 13% never reached a final determination.\14\ In other words, 
approximately one in eight verification submissions was never resolved, 
which leads to the conclusion that the Basic Pilot Program does not 
have the appropriate consistency checks, and that the information 
caught by the submission database is not sufficient for evaluation 
purposes and quality control.\15\ There are many reasons for these and 
other inconsistencies.\16\
    The most compelling error-rate is the false-negatives. The 
generally published statistic is that the rate of false-negatives is 
20%. This data is found on page 88 of the June 2002 ISR and Westat 
report. It shows that out of 364,987 transactions, only about 69.9% 
came out authorized on the first attempt, while about 17.1% came 
authorized only after two or more attempts or stages, the latter 
percentage (17.1%) comprises all the verified false-negatives. As 
mentioned, 13% of the total never reached a final determination and 
through statistical modeling, the study team estimated that up to 10% 
of total submissions were probably unauthorized workers, which means 
that at least the other 3% that never reached a final determination 
were also false-negatives.\17\ And, of course, 17.1% plus 3% gives the 
20% false-negatives estimate that most experts have been using.
    The 20% is a conservative estimate and other groups and individuals 
sometimes use higher rates. For example, the rate of false-negatives 
for foreign-born workers-even naturalized U.S. citizens-is estimated to 
be anywhere between 35% and 50%. In addition, the numbers above are 
based on 364,987 ``transactions.'' \18\ During the period tested there 
actually were 491,640 ``queries.'' \19\ A query occurs every time an 
employer enters a submission in the SSA or DHS database.\20\ An 
employer may have multiple queries for one employee.\21\ There are a 
number of reasons for these multiple queries, which include entering 
new information for the same employee after a tentative non-
confirmation is issued-done instead of a worker initiating an 
appeal.\22\ The independent evaluation uses transactions as the unit 
for analysis, which combines, and counts as just one, multiple queries 
for a specific Social Security Number by the same employer.\23\ Thus, 
using transactions as the unit of analysis, instead of queries, and 
considering multiple entries with corrected information due to a 
tentative non-confirmation as just one submission, leads to a lower 
rate of false-negatives.
Translating Error Rates into Basic Terms
    The basic translation of error rates is that 20% of properly work 
authorized individuals are told initially that they are not authorized 
to work. The independent evaluation stated that ``[a]pproximately one-
third of employers using the pilot system reported that it is easy to 
make errors when entering information.'' \24\ In fact, relying on 
informal INS surveys, the independent study indicated that 
``approximately 20 percent of employees who faxed or visited an INS 
status verification office did so because of employer input errors.'' 
\25\ Last name changes due to marriage and compound last names are two 
of the explanations for this error. The independent study stated that 
``a specific employer data entry problem noted by some Federal 
respondents is the difficulty of entering compound surnames. * * * The 
problem is especially likely to arise with certain foreign-born 
employees and could contribute to the much higher error rate observed 
among these employees.'' \26\ The result is often an incorrect 
tentative non-confirmation (false-negative).\27\
    When an employer does not catch an error, it results in ``more 
significant burden on employees, employers, and the Federal 
Government.'' \28\ The independent study went on to say, back in 2002, 
that DHS could probably solve part of the problem by modifying ``the 
software * * * to check Federal records to determine whether the 
entered Social Security number or Alien Number has been issued to 
someone with a compound name containing the name in question * * * 
improv[ing] the user friendliness of the Basic Pilot system and 
mak[ing] it less error prone.'' The in-depth ISR and Westat independent 
evaluation and independent analysis is approximately 400 pages long. 
Before expanding the Basic Pilot to all 50 states, Congress mandated 
DHS to submit a report to Congress by June 1, 2004.\29\ DHS 
acknowledged that the most serious deficiency, noted by the evaluation, 
was that the Basic Pilot Program frequently resulted in work-authorized 
employees receiving tentative non-confirmations (false-negatives).\30\ 
It stated further that employers and employees incur costs in the 
process of resolving these erroneous findings.\31\ DHS also 
acknowledged that since foreign-born employees were more likely to 
receive erroneous tentative non-confirmations than were U.S.-born 
employees, these accuracy problems were also a source of 
``unintentional discrimination against foreign-born employees,'' 
including many that are U.S. citizens.\32\ As DHS stated before 
Congress, the vast majority of employers wish to comply with the law, 
but the government also needs to provide them with the tools needed to 
properly and easily screen for undocumented workers.\33\
Current Proposals
    The possible harm to employers, United States citizens, and legal 
immigrants, due to a flawed EEVS should not be taken lightly or 
understated. The high consequences of government errors should be 
paired with real safeguards for those most affected by such errors. 
Obviously, delays in the hiring of workers while verification problems 
are sorted out will have an adverse impact on the ability of 
businesses, especially smaller businesses, which inherently have less 
flexibility, to operate.
    Under both the House and Senate versions, employees will be 
responsible for appealing wrongful determinations and dealing with the 
federal bureaucracy to fix errors. The ISR and Westat evaluation found 
that when employers contacted the INS and SSA in an attempt to clarify 
data, these agencies were often not very responsive or accessible with 
39% of employers reporting that SSA never or only sometimes returned 
their calls promptly and 43% reporting a similar treatment by the 
INS.\34\
    Hence, Congress needs to ensure that any new EEVS minimizes errors 
to de minimis levels, is prompt under real-life working conditions, and 
contains a mechanism in which errors can be quickly rectified. Even an 
extremely low error rate of 1% would still translate into about 1.4 
million false-negatives, and, thus, the improper disqualification of 
millions of potential workers, including U.S. citizens.
    Both employers and employees should receive a fast, accurate, and 
reliable response within a reasonable amount of time. Keeping employees 
in a ``tentative non-confirmation'' limbo is unfair to everyone. 
Forbidding employers from firing tentatively non-confirmed employees, 
but then using this data to investigate employers is unfair and 
impractical. Employers must be able to receive a final, accurate, 
answer upon which they can rely, within a reasonable period of time. 
One measure voiced by employers to accelerate the verification process 
is to allow employers the opportunity to make conditional offers of 
employment to applicants, which would allow the employer to obtain 
employment verification prior to the actual start or hire date of the 
applicant. This would also allow the applicant/employee the opportunity 
to correct their information, if needed, prior to his/her start date 
and reduce the likelihood of any interruption in their work.
    Further, the Senate version creates a final default confirmation/
non-confirmation when DHS cannot issue a final notice of employment 
eligibility within two months of the hiring date. While two months for 
a final default notice is too long, this provision is still incredibly 
important in cases where the government is unable to reach a final 
decision within a reasonable timeframe. It works as a default 
confirmation until the accuracy rates reach acceptable levels. Without 
this provision, millions of authorized workers could potentially be 
denied employment because of a government error. Once the GAO can 
certify that the EEVS is able to issue a correct final notice 99% of 
the time, then, instead of default confirmations, the system will issue 
default non-confirmations and the employer will be legally required to 
fire the worker.
    There are ways to reduce the lag time from two months to a more 
reasonable time frame: reducing the time allowed for the reply from DHS 
when the initial electronic request is submitted (e.g., from 10 days to 
3 days), reducing the time period for the default notice after the 
contest has been submitted (e.g., from 30 days to 10 days), and 
allowing employers to submit the initial inquiry about two weeks before 
the first day of employment so the clock starts running earlier. To 
prevent the latter provision from being used as a pretext for pre-
screening, there would have to be a set start date in place and the 
date could not be changed based on an initial tentative non-
confirmation. These three changes would allow the new employer to have 
a final determination within two weeks of an employee's first day at 
work, instead of about 60 days as currently envisioned in S. 2611. Of 
course, an employer should continue to have the option of submitting 
its initial inquiry shortly after the new employee shows up for his or 
her first day at work or, in the case of staffing agencies, when the 
original contract with the agency is signed.
Cost Concerns for Employers of a Nationwide Mandated Program
    H.R. 4437 has targeted the Basic Pilot Program for conversion into 
a mandate on employers-rather than a mostly voluntary program-and seeks 
its expansion to all 140 million U.S. workers. Currently, only about 4% 
of employers use the system.\35\ The Senate version will also rely on 
the same databases used by the Basic Pilot Program and, thus, will have 
similar challenges.
    In addition to the government cost of hiring more verifiers, 
modernizing the system, and purchasing and monitoring additional 
equipment, the GAO, in its most recent report, relying in part on the 
ISR and Westat independent evaluation, estimated ``that a mandatory 
dial-up version of the pilot program for all employers would cost the 
federal government, employers, and employees about $11.7 billion total 
per year, with employers bearing most of the costs.''\36\ (Emphasis 
added.) This would be the cost of mandating the other 96% of employers 
to be linked into the database.
    Employers would also need to train employees to comply with the new 
law's requirements and devote a great deal of human resources staff 
time to verifying and re-verifying work eligibility, resolving data 
errors, and dealing with wrongful denials of eligibility.\37\ In 
particular, data errors and technological problems would lead many 
employees to start work as ``would-be employees.'' \38\ This could lead 
to a substantial decrease in productivity, especially when the work to 
be done is seasonal or time-sensitive.\39\ Employers would also have to 
deal with the possibility of another level of government bureaucracy 
with random ``on-site auditing'' powers.\40\ Finally, employers who 
already will incur many internal costs of meeting the requirements of a 
new EEVS, should not be subject to a fee to pay for the cost of 
building the system itself-this should be and is a government function.
Implementation Timetable
    GAO continues to call attention to the weaknesses in the Basic 
Pilot Program that have been reported, including delays in updating 
immigration records, false-negatives, and program software that is not 
user friendly.\41\ Specifically, GAO has reported on additional 
problems and emphasizes ``the capacity constraints of the system [and] 
its inability to detect identity fraud.'' \42\ Also, in fiscal year 
2004, 15% of all queries handled by the Basic Pilot Program required 
manual verification because of data problems.\43\ Recently, GAO 
reiterated its conclusion that as of now the Basic Pilot Program is not 
prepared to handle the abrupt increase in participation, particularly 
at the degree mandated by H.R. 4437.\44\
    Given these concerns, the EEVS should be phased in and tested at 
each stage, and expanded to the next phase only when identified 
problems, the ``kinks'' in the system, have been resolved. The best 
approach would be for the program to move from one phase to the next 
only when the system has been improved to take care of inaccuracies and 
other inefficiencies ascertained through the earlier phase. This would 
also allow DHS to properly prepare for the new influx of participants. 
In addition, employers should only be required to verify their new 
employee, as existing employees have already been verified under the 
applicable legal procedures in place when they were hired. Re-verifying 
an entire workforce is an unduly burdensome and costly proposition-and 
unnecessary given how often workers change jobs in the United States.
Conclusion
    H-E-B urges you to work with the business community to create a 
workable EEVS within the context of comprehensive immigration reform. 
This includes:
     An overall system that is fast, accurate and reliable 
under practical real world working conditions;
     A default confirmation/non-confirmation procedure when a 
final determination is not readily available;
     A phase-in to guarantee proper implementation at every 
level;
     A reasonable approach to the contractor/subcontractor 
relationship;
     An investigative system without artificially created 
incentives in favor of automatic fines and frivolous litigation;
     Accountability structures for all involved-including our 
government;
     Provisions to protect first-time good faith violations 
caused by the ever-changing federal regulations;
     Congressional oversight authority with independent 
studies.
    Employers will be at the forefront of all compliance issues. Thus, 
employers should be consulted from the start in the shaping of a new 
EEVS-to ensure it is workable, reliable, and easy to use.
    Finally, H-E-B would like to reiterate that the new EEVS needs to 
be done within the framework of comprehensive immigration reform.
    I wish to thank you again for this opportunity to share our views, 
and I look forward to your questions.
                                endnotes
    \1\ NILC, Basic Information Brief: Employment Verification 
Programs, at 4.
    \2\ John J. Miller and Stephen Moore, A National ID System: Big 
Brother's Solution to Illegal Immigration, Policy Analysis no. 237, 
September 7, 1995.
    \3\ Daniel J. Pilla, How to Fire the IRS, at 68-69, 1994.
    \4\ General Accounting Office, Immigration Reform: Alien 
Verification System Data Base Problems and Corrective Actions, June 
1989.
    \5\ Anne Davis, Digital IDs for Workers in the Cards, National Law 
Journal at 1-21, April 10, 1995.
    \6\ Anne Davis, Digital IDs for Workers in the Cards, National Law 
Journal at 21.
    \7\ Consumers Union, What Are They Saying about Me?, April 29, 
1991.
    \8\ National Immigration Law Center, Basic Information Brief: 
Employment Verification Programs at 4.
    \9\ Tyler Moran, National Immigration Law Center, Written Statement 
to the U.S. Senate Committee on the Judiciary on Employment 
Verification Systems in Comprehensive Immigration Reform, at 2, October 
18, 2005.
    \10\ F. James Sensenbrenner, Committee on the Judiciary, Report 
Together With Dissenting Views to Accompany H.R. 2359, 108th Congress 
Rept. 108-304, at 4, October 7, 2003.
    \11\ U.S. Citizen and Immigration Services, Employment Verification 
Pilot Evaluations, found at http://uscis.gov/graphics/aboutus/
repsstudies/piloteval/PilotEval.htm on February 15, 2006.
    \12\ Id.
    \13\ Institute for Survey Research at Temple University (ISR) and 
Westat, Findings of the Basic Pilot Program Evaluation, at 81-82, June 
2002.
    \14\ ISR and Westat, Findings of the Basic Pilot Program 
Evaluation, at 84.
    \15\ ISR and Westat, Findings of the Basic Pilot Program 
Evaluation, at 87.
    \16\ Id.
    \17\ ISR and Westat, Basic Pilot Evaluation Summary Report, at vi, 
January 2002.
    \18\ ISR and Westat, Findings of the Basic Pilot Program 
Evaluation, at 81, footnote 63.
    \19\ Id.
    \20\ ISR and Westat, Findings of the Basic Pilot Program 
Evaluation, at 81, footnote 63.
    \21\ Id.
    \22\ Id.
    \23\ Id.
    \24\ ISR and Westat, Findings of the Basic Pilot Program 
Evaluation, at 122-123.
    \25\ Id.
    \26\ Id.
    \27\ Id.
    \28\ Id.
    \29\ NILC, ``Basic Pilot'' Employment Eligibility Verification 
Program Expanded Nationwide, Immigrants' Rights Update, Vol. 18, No. 8, 
December 22, 2004.
    \30\ NILC, ``Basic Pilot'' Employment Eligibility Verification 
Program Expanded Nationwide.
    \31\ Id.
    \32\ Id.
    \33\ Stewart A. Baker, Assistant Secretary for Policy at DHS, 
Testimony Before the Subcommittee on Oversight of the House Committee 
on Ways and Means, February 16, 2006.
    \34\ ISR and Westat, Basic Pilot Evaluation Summary Report, at 18, 
January 2002.
    \35\ Government Accountability Office, Immigration Enforcement: 
Weaknesses Hinder Employer Verification and Worksite Enforcement 
Efforts, at 20-21 and Appendix IV, August 2005.
    \36\ GAO, Immigration Enforcement: Weaknesses Hinder Employment 
Verification and Worksite Enforcement Efforts, at 29.
    \37\ Sparapani, Memorandum on Problems with Employment Eligibility.
    \38\ Id.
    \39\ Id.
    \40\ DHS, Report to Congress on the Basic Pilot Program, at 8.
    \41\ Barbara D. Bovbjerg, Director, Education, Workforce, and 
Income Security Issues at GAO, Testimony Before the Subcommittee on 
Oversight of the House Committee on Ways and Means, February 16, 2006.
    \42\ Id.
    \43\ GAO, Immigration Enforcement: Weaknesses Hinder Employment 
Verification and Worksite Enforcement Efforts, GAO-05-813, at 23, 
August 2005.
    \44\ Barbara D. Bovbjerg, Testimony Before the Subcommittee on 
Oversight, during Questions and Answers period. Failure to Comply with 
the Regulatory Flexibility Act: IRS Endangering Small Businesses Yet 
Again.
                                 ______
                                 
    Chairman Johnson. Thank you. I appreciate your testimony. 
You know, we were discussing it here, a moment ago, it should 
be instant, and when I asked Social Security Administration if 
it was, they said it was. I didn't realize you had to have a 
paper trail. I don't understand that, but as a matter of fact, 
being on the Social Security subcommittee, I remember, well, in 
1995, that is what? 10 years ago, we gave them 5 million bucks 
to get their computer system up to speed so it would be 
instantaneous.
    And they have yet to do it. What you guys don't realize out 
there, sometimes you tell these Government agencies to do 
something, and they actually don't do it.
    And it isn't always the Senate's fault either.
    Ms. Simmons, go ahead with your testimony, please.

STATEMENT OF GERI SIMMONS, HUMAN RESOURCES MANAGER, SOCIETY FOR 
                   HUMAN RESOURCE MANAGEMENT

    Ms. Simmons. Thank you, Chairman Johnson.
    Chairman Johnson, members of the Subcommittee on Employer-
Employee Relations, I am Geri Simmons.
    Chairman Johnson. Get into your microphone, please.
    Ms. Simmons. I am Geri Simmons, H.R. manager for a large 
food processing corporation here in Texas. I appear today on 
behalf of the Society of Human Resources and am grateful for 
this opportunity to provide testimony.
    SHRM, which is the Society for Human Resources, is well-
positioned to provide insight on the current and proposed 
employment verification system as we H.R. professionals are on 
the front line with organizations and administer the current 
verification requirements.
    We agree that the current employment verification system is 
in need of reform. The details of a new employment verification 
and worksite enforcement system do matter. We caution Congress 
to carefully consider the implications of any new employment 
system, as it will touch all our lives, both employer and 
employee.
    As you know, we, as employers, are required to review 
documents presented by employees, and after review, employers 
are required to attest on a I-9 that they have reviewed the 
documents, and that they appear genuine and authentic.
    Even in the best circumstances, H.R. professionals 
encounter a number of challenges complying with the current 
employment verification requirements.
    According to a survey conducted by SHRM in 2006, 60 percent 
of H.R. professionals indicate that they continue to experience 
problems with the current verification requirements.
    This, unfortunately, has been my experience as well. In my 
H.R. role, I have seen documents presented for employment 
verification purposes that are clearly fraudulent, while the 
validity of others are uncertain.
    Another challenge is the reverification of workers 
authorized documents that expire. Approximately 30 percent of 
the employees that come to our organization use documents that 
have an expiration date. When an individual work authorization 
document nears an expiration date, my office must contact the 
employee and require him or her to update and reverify the work 
authorization form or the I-9 form.
    In addition to the electronic verification, as employers, 
we are also required to do the I-9 verification. So there is 
that double documentation that we do.
    The Basic Pilot Program is required to respond to employers 
within 3 days with either a confirmation or a tentative non-
confirmation. And those requiring that tentative non-
confirmation, they have 10 days to provide those documents.
    My organization has participated in Basic Pilot for about 5 
years or more. In about 95 percent of the cases, the employees 
are confirmed in the initial verification process in just a few 
minutes. You know, I do get a lot of confirmation within just a 
few seconds or up to 5 minutes.
    There have been a few cases that have taken up to 10 days, 
and then a secondary confirmation does take those 10 days. One 
of my challenges in the H.R. field is my colleagues in the 
fast-food industry didn't participate in the Basic Pilot 
Program. We had a few people that did participate and were 
administered through the system, and they came back and were 
timed out at the secondary verification and they were not 
confirmed to work here.
    But then, after the 10 day verification program, they were 
eligible to work here. They were documented. They were able to 
work here in the United States.
    SHRM supports an electronic verification system that is 
easy to use, expedites the employment verification process, and 
does not expose employers to new liabilities. 92 percent of the 
H.R. professionals surveyed stated that they would support an 
electronic employment verification system if it meets these 
standards.
    However, we continue to have practical concerns about the 
feasibility and workability of employment verification 
proposals currently before Congress. Both the House and Senate 
bills implement the electronic verification system at specific 
points in time. However, as we have reported, and we had 
reported by the GAO in June of 2005, with the relatively small 
amount of employers, that is a percentage, we have 5.6 million 
employers in the United States, a small percentage of us, 2300, 
use the Basic Pilot Program.
    We found that 15 percent of all inquiries required 
additional verification. SHRM recommends that the current Basic 
Pilot Program should be required to meet a high level of 
accuracy with regard to the confirmation status of U.S. 
citizens and work-authorized employees, before it is 
implemented, or phased into operation. SHRM has several 
concerns with the lengthy verification process proposed by the 
Senate bill, which would allow an employee to be on the payroll 
up to 43 days before the final verification.
    At the same time, employers seeking to comply with the law 
would risk losing a substantial investment in training and 
compensation costs for employees if they are eventually deemed 
ineligible to work.
    In addition, many employers offer health coverage within 
that 30 day period, and then they would be obligated to go into 
the COBRA and obtain health coverage for that employee.
    It is a strong recommendation to allow employers the option 
of using the electronic verification system after an offer of 
employment is accepted but before the employee commences.
    Employers that hire employees on the spot, of course, will 
have to allow the employee to begin work immediately and 
confirm eligibility after commencement. Many employers 
currently conduct post-acceptance, pre-employment background 
checks on employees under the requirements of Fair Credit 
Reporting, and of course follow the ADA guidelines.
    Both the House and Senate bill promotes an electronic 
verification system but require employers to attest, complete 
paperwork, which means completing paperwork similar to I-9 or 
an I-9 document.
    SHRM supports moving to a truly electronic verification 
process by allowing entire verification efforts to be conducted 
electronically as opposed to requiring employers to check work 
authorization electronically and verify identify manually.
    Both the House and Senate bill would increase civil and 
criminal penalties for recruiting, hiring and referral 
violations. Our members do not dispute that there should be 
appropriate punishment for hiring unauthorized workers. 
However, employers are often penalized, especially for 
paperwork or technical violations.
    I would like to thank the committee for the opportunity to 
appear here, and if you have any questions, please forward them 
to me. Thank you.
    [The prepared statement of Ms. Simmons follows:]

Prepared Statement of Geri Simmons, Human Resources Manager, on Behalf 
              of the Society for Human Resource Management

    Chairman Johnson, Ranking Member Andrews, and members of the 
Subcommittee on Employer-Employee Relations, my name is Geri Simmons 
and I am the Manager of Human Resources for a large food-processing 
corporation located in Lufkin, Texas. I have over 15 years of 
experience in Human Resources, 7 years as an adjunct professor teaching 
in an MBA program and several years of experience in profit and non-
profit business. I appear today on behalf of the Society for Human 
Resource Management (SHRM) and I am grateful for the opportunity to 
provide commentary to the Subcommittee on this important issue.
    SHRM is the world's largest association devoted to human resource 
management. Representing more than 210,000 individual members, the 
Society's mission is to serve the needs of HR professionals by 
providing the most essential and comprehensive resources available. As 
an influential voice, the Society's mission is also to advance the 
human resource profession to ensure that HR is recognized as an 
essential partner in developing and executing organizational strategy. 
Founded in 1948, SHRM currently has more than 550 affiliated chapters 
within the United States and members in more than 100 countries.
    SHRM is well positioned to provide insight on the current and 
proposed employment verification system as the discussion of 
immigration reform and how to maintain a safe and secure border is at 
the forefront of the national conversation on immigration reform, 
currently taking place among the general public as well as federal and 
state governments. It is in the interests of our economy and national 
security to establish a reliable, efficient, and predictable employment 
verification system.
    Human resource (HR) professionals are on the front line when 
organizations administer the current verification requirements. HR 
professionals are committed to the proper application of the 
Immigration Reform and Control Act (IRCA) of 1986 in the workplace and 
the hiring of only work-authorized individuals. While we agree that the 
current employment verification system is in need of reform, the 
details of a new employment verification and worksite enforcement 
system do matter. We caution Congress to carefully consider the 
implications of any new employment system as it will touch all of our 
lives--employees and employers alike.
    My remarks today will focus on the current employment verification 
process, including my experience working with the Basic Pilot Program 
that was created in The Illegal Immigration Reform and Immigrant 
Responsibility Act (IIRIRA) of 1996, as well as on legislation passed 
by the House, the Border Protection, Antiterrorism, and Illegal 
Immigration Control Act of 2005 (H.R. 4437); and the Senate, the 
Comprehensive Immigration Reform Act 2006 (S.2611), to reform the 
immigration system.
Current Law
    Mr. Chairman, as you know, under IRCA employers are required to 
review documents presented by employees within three business days of 
hire demonstrating identity and work authorization in the United 
States. After reviewing these documents, employers are required to 
attest on Form I-9 that they have reviewed the documents and that they 
appear genuine and authentic. In the current employment verification 
process, (27) documents are available to employees to demonstrate work 
eligibility, with (12) different documents authorized under law to 
prove identity.
    As noted above, IIRIRA of 1996 created the Basic Pilot program for 
employers to voluntarily confirm an employee's eligibility to work 
using an electronic verification system. Under the Basic Pilot program, 
employers are required to review an employee's identity and work 
authorization documents consistent with IRCA requirements, including 
completing all Form I-9 paperwork. Employers are then required to check 
each new employee's work eligibility using the electronic verification 
system. The Basic Pilot system is required to respond to the employer 
within three days with either a confirmation or a tentative non-
confirmation of the employee's work eligibility. In the cases of a 
tentative non-confirmation, a secondary verification process lasting 
ten days is initiated to confirm the validity of the information 
provided and to provide the employer with a confirmation or non-
verification of work eligibility. Employers are not permitted to 
terminate individuals that they have received a tentative non-
confirmation on until the employer has received a final non-
verification or the ten-day period has elapsed.
    Mr. Chairman, even under the best of circumstances, HR 
professionals encounter a number of challenges complying with the 
employment verification requirements under IRCA. These challenges 
include: maintaining the I-9 records when an employee presents a 
document that has an expiration date; the authenticity, quality, and 
quantity of documents presented by an employee for work authorization 
and identification purposes; and the time that an employer spends 
administering the current I-9 process. According to SHRM's 2006 Access 
to Human Capital and Employment Verification survey, 60 percent of 
responding HR professionals indicated they continue to experience 
problems with the current verification requirements of IRCA 20 years 
after its enactment. The most common challenges cited in the survey are 
maintaining records when presented with a document that has an 
expiration date (31 percent); authenticity of documents presented for 
employment (28 percent); and the quality of documents presented by 
employees (22 percent).
    This has unfortunately been my experience as well. In my HR role, I 
have seen documents presented for employment verification purposes that 
are clearly fraudulent while the validity of others is uncertain. To 
try and ensure compliance within the employment verification 
requirements, employers spend a great deal of time and financial 
resources training their staff on Form I-9. For example, one 
organization wanted to train their HR staff on document fraud 
detection, contacted the then Immigration and Naturalization Service 
(INS) and asked the Service to give training classes on the 
identification issue. The INS officer stated that if our company 
participated in classes and made a mistake in our review of the 
documents, we would increase our liability. I verified this with our 
corporate attorney and then made the decision not to take classes for 
identifying false documents.
    Another challenge is the re-verification of work authorization 
documents that expire. For example, our company tracks the expiration 
date of all of the work authorization documents that are used by 
employees in the verification process. Approximately 30 percent of our 
employees use work authorization documents that contain an expiration 
date. When an individual's work authorization document nears its 
expiration date, my office must contact the employee and require him or 
her to update and re-verify their work authorization documents on the 
Form I-9.
    While I was working in another business, the company was trying to 
take the extra step to ensure compliance with IRCA. It was the job of 
one of our HR generalists at the company to call the Social Security 
Office for verification of the Social Security number of a new 
employee. The Social Security office would only allow us to submit five 
numbers and names at a time to be checked; the generalist would have to 
call back to verify the next group of five new employees.
    My organization has been a participant in the Basic Pilot program 
for approximately five years and generally has had a positive 
experience with the program. Our company typically hires 15 to 20 new 
employees each month. Each new employee is subject to the employment 
verification process through the Basic Pilot program. In about 95 
percent of the cases, the employees are confirmed in the initial 
verification process in just a few minutes. The individuals unable to 
be confirmed in the initial process are then subject to the secondary 
verification process which on average has taken five to six days to get 
a final confirmation but we have had several cases of the system taking 
up to ten days for the employee to receive a final confirmation from 
the system.
    I have encountered a few challenges of my own in the process. For 
example, I have an employee who works for me who is from El Salvador. 
He is a United States citizen and has worked legally in the U.S. for 
over 20 years. His initial verification screening came back as a non-
confirmation indicating that he needed to report to the Social Security 
office. This employee's information was correct and up-to-date but the 
verification system was unable to confirm his work authorization. As a 
result, he had to take the time off work, go to the Social Security 
office, and clarify his work status even though he was eligible to work 
in the United States. While my colleague was eventually able to get 
confirmed by the secondary verification process, it's clear that the 
system has some challenges.
    One of my HR colleagues working in the fast food industry and 
participating in the Basic Pilot program has had a few employees 
administered through the system who actually have ``timed'' out of the 
secondary verification process with the system unable to confirm the 
employee's eligibility within the ten day period. The employer, 
believing the employees were work authorized based on the documents and 
information presented, as well as the previous work history of the 
individuals in question, continued to employ them hoping the system 
would eventually be able to confirm the eligibility of the employees. 
Eventually, within another few days, the system was able to confirm the 
work eligibility of these employees. However, if the employer would 
have made his decision to terminate the employees in these examples at 
the end of the ten day period, he would have been firing individuals 
that were legally eligible to work in the United States.
    Another challenge that occurs with the Basic Pilot is that 
individuals may not pass the initial verification because their last 
name submitted for verification purposes is different then the records 
maintained by the Social Security system or the Department of Homeland 
Security. For example, work authorized male employees from Latin 
American countries typically have two last names; with the first last 
name from their mother's side of the family and the second last name 
from that of their father. If the name is not entered into the system 
exactly as it appears on the work authorization documents, the 
individual will receive a non-confirmation for employment. A similar 
situation arises with a female U.S. citizen who may have married and 
not yet had the opportunity to apply for a new Social Security card 
reflecting her new name.
Areas of Concern to SHRM with the House-Senate passed Immigration Bills
    SHRM supports an electronic verification system that is easy to 
use, expedites the employment verification process, and does not expose 
employers to new liabilities in using the system and, most importantly, 
restores integrity to our immigration system. In SHRM's 2006 Access to 
Human Capital and Employment Verification survey, 92 percent of HR 
professionals surveyed stated that they would support an electronic 
employment verification system if it meets these standards. However, we 
continue to have practical concerns about the feasibility and 
workability of the employment verification proposals currently before 
Congress. These concerns include the accuracy, certainty, 
responsibility and enforcement of the employment verification and 
worksite enforcement proposals.
Accuracy of the Electronic Employment Verification System
    Both the House and Senate bills implement the electronic employment 
verification system at a specific point in time. H.R. 4437 would 
require all employers to begin to verify a new hire's eligibility for 
employment within two years of the bill becoming law; S. 2611 would 
require all employers to use the electronic verification system within 
18 months after funding for the system has been authorized by Congress. 
The proposed legislation is based on the current Basic Pilot system and 
is designed to verify employment electronically. However, as reported 
by the Government Accountability Office (GAO) in June of 2005, only 
2,300 out of 5.6 million current U.S. employers actively participated 
in the Basic Pilot in 2004, and even with the relatively low 
participation rate, the GAO found that about 15% of all queries require 
additional verification because the automated system is unable to 
provide confirmation responses on the initial attempt. The total number 
of participating employers has risen to about 10,000, according to the 
government's latest figures, still a small fraction of the total number 
of employers who would be using the system once the legislative 
proposals become effective. Expanding this system to cover all 
employers within such limited time frames as proposed in the 
legislation absent federal certification that the system is adequately 
staffed and prepared to handle the increased workload is likely to 
cause confusion, denied employment opportunities and significant 
employer penalties.
    U.S. employers and employees want an accurate and fair electronic 
employment verification system, but should not have to participate in 
such a system program until the federal government provides assurances 
that the system works. SHRM recommends that Congress provide sufficient 
financial resources and planning to reduce the possibility of 
administrative delays for employers as well as inaccurate and unfair 
work authorization determinations.
    In addition, the current Basic Pilot system should be required to 
meet a high level of accuracy with regard to the confirmation status of 
U.S. citizens and work authorized employees before it is implemented or 
phased into operation.
Certainty of the Employment Verification System
    As noted previously, employers choosing to participate in the Basic 
Pilot system are provided an initial response to an inquiry to the 
system within three days, and, if necessary in the case of a tentative 
non-confirmation, in another ten days for the secondary verification. 
H.R. 4437 is identical to the current Basic Pilot in terms of the time 
frames of the verification system. The Senate bill, S. 2611 however, 
would extend the initial time that the system has to respond with 
either a confirmation or a tentative non-confirmation of work 
eligibility to ten days, and provide for a secondary verification 
response to last as long as 30 days.
    SHRM has several concerns with the lengthy verification process 
proposed in S.2611. First, it creates a giant loophole to circumvent 
the verification system for unscrupulous employers and a prolonged 
period of uncertainty for law-abiding employers. Creating a lengthy 
waiting period for a response allows bad-actor employers to 
intentionally employ an unauthorized temporary worker for a substantial 
period of time without penalty. At the same time, employers seeking to 
comply with the law would risk losing substantial investments in 
training and compensation costs for employees if they are eventually 
deemed ineligible to work. Second, most employers that offer health 
care and benefits coverage to employees begin coverage for these 
employees and their dependents within 30 days of the employee starting 
work. Mandating such an extensive verification time period after an 
employee begins work would trigger continuing health care coverage 
under COBRA if the worker is later deemed ineligible at the end of the 
30-day verification process. Third, such an extended verification phase 
would present companies with the dilemma of not knowing whether to 
start the employee on a long-term assignment, and consequently, could 
cause the loss of valuable opportunities for business development 
during this period of uncertainty.
    Employers and employees want an electronic verification system that 
provides a reliable and efficient confirmation of a new employee's 
eligibility to work in the United States. An effective system must 
address concerns of hardship to the legitimate employers and at the 
same time not discriminate against workers. A verification system that 
is timely, reliable, and conclusive should minimize verification-
related discrimination and streamline the employment verification 
system by allowing employers the option of using the electronic 
verification system screening after an offer of employment is accepted, 
but before the employee commences work. The employer may begin the 
process of verification immediately upon acceptance of the offer of 
work by the employee. Employers that hire employees on the spot, of 
course, will have to allow the employee to begin work immediately and 
confirm eligibility after commencement. As long as the employer 
uniformly follows either of the procedures above, discrimination 
concerns should not be present. The post-acceptance, pre-employment 
approach would not be unique to this particular employment law. Many 
employers currently conduct post-acceptance, pre-employment background 
checks on employees under the requirements of the Fair Credit Reporting 
Act (FCRA). Also, some jobs--municipal police officers, for example--
are required to pass certain physical or job-related tests governed by 
protections of the Americans with Disabilities Act and the Civil Rights 
Act in a post-acceptance, pre-employment approach.
    Finally, in order to assist in the accuracy and streamlining of the 
verification process, SHRM believes that individuals themselves should 
be permitted to check on their own employment authorization status and 
correct any errors prior to the employment process. Similar to 
individuals checking their credit, and with measures to ensure the 
privacy and security of personal information, potential employees 
should be provided access to the data bases populating the employment 
verification system to correct any discrepancies in their respective 
work authorization areas.
Paper-Based System
    Both House and Senate bills promote an electronic employment 
verification system, but still require employers to attest to the new 
hire's employment and identification documents to ensure authenticity; 
record the Social Security number of each new hire; and record the 
verification code received through the electronic verification process 
on a paper-based Form I-9 or similar documents as part of that process. 
This will significantly increase, not decrease, the amount of staff 
time and resources that an employer must spend in the verification 
process. As reported in the Access to Human Capital and Employment 
Verification survey, 21 percent of responding HR professionals 
indicated that they continue to experience administrative challenges in 
the current employment verification process, even without adding the 
additional administrative burden of the untested electronic employment 
verification system to the process. SHRM supports moving to a truly 
electronic verification process by allowing the entire verification 
effort to be conducted electronically as opposed to requiring employers 
to check work authorization electronically and verify identity 
manually.
Documents Establishing Work Authorization and Identity
    As under current law, both the House and Senate bills base the 
worksite enforcement procedure of the legislation on an employer 
examining documents presented by the employee to establish work 
authorization and identity. Unfortunately, neither H.R. 4437 nor S. 
2611 effectively addresses the challenges presented to employers 
regarding the authenticity or proliferation of documents presented in 
the verification process. H.R. 4437 makes no changes to the number or 
standards of the documents establishing employment eligibility or 
identity. S. 2611 does curtail the number of documents for establishing 
identity to a U.S. passport or documents that satisfy the REAL ID 
requirements for U.S. citizens; for permanent residents, a permanent 
resident card; for other aliens, an employment authorization card; or 
for those that are unable to obtain above documents, a document 
designated by the Secretary of the Department of Homeland Security with 
various identifying information and security features. While the Senate 
bill is a step in the right direction, SHRM believes any government 
documents that are required should be secure and have biometric 
features to curtail the use of fraudulent documents for employment 
purposes.
Responsibility for Hiring Decisions
    Both the House and Senate bills would place new requirements on 
employers for their subcontractors' hiring practices if a subcontractor 
hires an illegal worker. Employers should be liable for their own 
hiring decisions, not the hiring decisions that are made outside of 
their control. However, SHRM recognizes there have been instances where 
an unscrupulous employer has used a subcontractor to hire unauthorized 
aliens to avoid IRCA requirements. H.R. 4437 seeks to address this 
issue by requiring that an employer have actual knowledge that a 
subcontractor is using unauthorized workers before imposing fines or 
sanctions on the contracting employer. SHRM supports the House 
provision. S. 2611, however, places a new, untested, standard on 
employers by requiring employers to attest in a contract with a 
subcontractor that the employer is not using the subcontractor to 
``knowingly or in reckless disregard'' hire labor irrespective of the 
individual's work status. In addition to the new undefined standard, 
the Senate bill will place additional data collection and reporting 
requirements on employers to collect information from each of their 
subcontractors. SHRM believes these requirements are burdensome, 
unnecessary and exposes the employer to unwarranted penalties and fines 
for the actions of another employer. In addition, making employers 
liable for the actions for subcontractors blurs the line in the legal 
relationship between employers and subcontractors. SHRM believe this 
requirement should be eliminated.
Enforcement
    Both the House and Senate bills would increase civil and criminal 
penalties for recruiting, hiring, and referral violations. Our members 
do not dispute that there should be appropriate punishment for hiring 
unauthorized workers. However, employers are often penalized strictly 
for paperwork or technical violations. For example, employers have been 
fined for transposing the document number and issuing authority on 
consecutive lines, even though it was clear that the employer had 
examined a valid document. With a new electronic employment 
verification system, it is likely that paperwork errors will increase, 
at least initially, as employers implement new systems for retaining 
information and subsequently enter confirmation or non-confirmation 
codes in the system. This will not be a small task for firms that hire 
thousands of individuals annually.
    SHRM believes that enforcement of the employer sanction program 
needs to be vigorous and fair for employers and employees. In addition, 
civil fines and criminal sanctions should be appropriate to the 
seriousness of the violation. This is particularly true with the 
increased administrative load of the new system proposed in both the 
House and Senate bills, particularly in the early years of 
implementation. A strong enforcement effort should allow employers to 
receive a warning and a fair time to correct any typographical or other 
administrative errors without suffering the consequences of having 
violated worksite laws. Employers that fail to correct errors within an 
appropriate timeframe following a warning should face penalties.
Conclusion
    I would like to thank the committee again for the opportunity to 
appear before you today and again emphasize that SHRM supports the 
concept of a reliable employment verification system. However, we are 
extremely concerned with the practicality and feasibility of the 
employment verification system currently proposed. We look forward to 
working with Congress to create an approach that improves and 
strengthens the employment verification process.
    I will be pleased to respond to any of your questions regarding 
both my written and oral statements.
                                 ______
                                 
    Chairman Johnson. Thank you, ma'am. Appreciate your 
testimony. Professor, you are welcome to begin your testimony.

    STATEMENT OF BILL BEARDALL, CLINICAL PROFESSOR OF LAW, 
 EXECUTIVE DIRECTOR, EQUAL JUSTICE CENTER, UNIVERSITY OF TEXAS 
                         SCHOOL OF LAW

    Mr. Beardall. Thank you. Chairman Johnson, Representatives 
Tierney and Wilson, I appreciate the opportunity to be here 
today to offer some comments. My name is Bill Beardall. I have 
practiced as an employment lawyer for low-income working people 
for 28 years now, as well as directing the Transnational Worker 
Rights Clinic at the University of Texas Law School. I am 
testifying today on behalf of the Equal Justice Center and the 
National Immigration Law Center, which are both nonpartisan, 
nonprofit organizations that protect the rights of low-income 
working people and immigrant families.
    In my remarks today, I'd like to highlight five key points 
that are laid out in more detail in the written testimony I 
have submitted.
    The central, and most important point, I hope to emphasis 
today, is that in your current consideration of immigration 
reforms, the most effective thing you can do to support and 
protect U.S. workers is to fully enforce employment protections 
for undocumented immigrant workers as well as U.S. citizens and 
documented immigrants.
    Continuing to allow the widespread employment exploitation 
of undocumented workers, not only subjects the undocumented 
worker to unfair and inhumane treatment, it hurts U.S. workers 
by creating an incentive for unscrupulous employers to prefer 
hiring vulnerable, undocumented workers and thus reducing good 
job opportunities and wages and working conditions that are 
available to all workers, including U.S. workers.
    The only effective way, really, to prevent the reduction in 
good jobs and decent wages is to ensure that all workers, 
documented and undocumented, enjoy full and equal employment 
rights, and fully effective means to protect their rights 
without regard to their immigration status.
    Chairman Johnson. Hold it. Hold it. We can't have that. 
Please continue.
    Mr. Beardall. And, unfortunately, enforcement of employment 
rights for U.S. workers and all other workers has plummeted in 
recent years.
    The second point I would like to make is that it is a 
mistake to try to rely mainly on the approach of cracking down 
on employment verification and tightening employer sanctions to 
address the problems associated with unauthorized employment.
    Our 20 year history of utilizing that approach shows that 
it is not only ineffective but counterproductive, doing more 
harm than good.
    Now why do I say it is ineffective and counterproductive? 
Because placing employment eligibility requirements and 
penalties on employers has already created an incentive that 
has pushed a huge number of employers into now hiring workers 
off the books, paying them in cash, under the table. 
Intensifying employment verification requirements on employers 
will elicit compliance from some, like the legitimate employers 
that are here, but it will likely push even more employers into 
this unrecorded off-the-books employment labor market.
    In addition, the exclusive use of employment verification 
requirements has already encouraged a vast number of employers 
to evade those requirements by misclassifying their employees 
as independent contractors. More rigorous employment sanctions 
will now encourage more of these independent contractor 
schemes, and fostering these illegal employment schemes, that 
is, off-the-books employment and independent contractor scams, 
has a terribly counterproductive effective on everyone in our 
society, especially U.S. workers.
    These practices reduce the payment and collection of pay 
roll and income taxes. They reduce participation in the 
unemployment insurance, workers compensation and Social 
Security safety net programs.
    They reduce the ability of Government regulators and 
workers to monitor and enforce basic wage, workplace safety, 
and other labor protections, and they foster increased 
disrespect for the law among previously law-abiding citizens.
    There is another very ironic way in which the overreliance 
on employment eligibility restrictions is counterproductive. 
Unscrupulous and opportunistic employers have adroitly used 
workers unauthorized status as a threat to hold over their 
heads of their undocumented workers, to keep them in line and 
get rid of any worker who might complain about illegal 
treatment, or ask for a raise, or get injured on the job.
    This very vulnerability on the part of undocumented workers 
gives many employers a positive incentive to hire and exploit 
the undocumented workers, which, in turn, lowers job 
opportunities, wages, and working conditions for all workers, 
including U.S. workers.
    The third observation I want to offer is that no 
verification system, including the employee eligibility 
verification system, the electronic system that's being 
discussed here, no system can successfully address the problems 
associated with undocumented immigration unless it is 
accompanied by a realistic path to earn legal status for 
currently undocumented workers and their families, and 
accompanied by----
    Chairman Johnson. Let's maintain the decorum, and would you 
try to tighten it, sir. You are over 5 minutes. Thank you.
    Mr. Beardall. And that it should provide an orderly 
mechanism for legally accommodating the inevitable future flow 
of immigrant workers, ensuring that they have full and equal 
employment rights that they can effectively enforce.
    My fourth comment, related to specifically the proposed 
employment eligibility verification system, is similar to those 
that have been reflected by the other witnesses here, and that 
is that these systems should not be implemented unless critical 
problems that have been identified with the basic pilot program 
that has been used so far are corrected.
    That includes the inaccuracy of databases because they are 
notoriously inaccurate. There need to be protections that 
prevent employers from misusing their access to this computer 
data on all workers, not just immigrant workers. Every U.S. 
worker is subject to these employment verification 
requirements, and there need to be provisions to ensure that 
that data is not misused by employers, or used selectively, or 
used to discriminate against people who look or sound or seem 
foreign and yet may be United States citizens and legal 
immigrants.
    The final concern I would like to mention, briefly, is that 
the recent rules, proposed by the Department of Homeland 
Security, to begin using Social Security no-match letters as an 
enforcement tool are unwise and will be counterproductive.
    It is an effort to inappropriately turn employees, all 
employees' Social Security numbers and accounts into a law 
enforcement tool, an immigration enforcement tool, and that's 
not the purpose of the Social Security system that we rely on 
as one of our basis social benefit programs. I am grateful for 
this opportunity to testify before the committee. I would be 
happy to answer any questions that you may have later in the 
hearing.
    [The prepared statement of Mr. Beardall follows:]

  Prepared Statement of Bill Beardall on Behalf of the Equal Justice 
             Center and the National Immigration Law Center

    Members of the Committee, thank you for the opportunity to address 
the critical issue of employment verification laws and the pending 
proposals to create a new Employment Eligibility Verification System 
(EEVS). I am testifying today on behalf of the Equal Justice Center and 
the National Immigration Law Center. The Equal Justice Center (EJC) is 
a non-profit employment justice and civil rights organization based in 
Texas which empowers low-income working families, individuals and 
communities to achieve systemic reforms that improve their lives. EJC 
provides the critical support, legal rights advocacy, and 
infrastructure that enables low-income working people to achieve fair 
treatment in the workplace, in the justice system, and in the larger 
civil society. The National Immigration Law Center (NILC) is a 
nonpartisan national legal advocacy organization that works to protect 
and promote the rights and opportunities of low-income immigrants and 
their family members. Since 1979, NILC has established a national 
reputation for its expertise on immigration law and the public benefit 
and employment rights of low-income immigrants. NILC is also a convener 
of the Low Wage Immigrant Worker Coalition, a nationwide coalition of 
labor unions, civil rights organizations, immigrant rights 
organizations, and others concerned with the rights of low wage 
immigrant workers in the U.S.
A Punitive Enforcement-Only Approach will not Reduce Undocumented 
        Migration but Will Exacerbate the Harms Associated with 
        Undocumented Migration
    Contrary to popular opinion, our current immigration woes are not 
merely the result of a failure of will. Rather, increased migration is 
a worldwide phenomenon resulting from the powerful economic, 
demographic, technological and political forces that have made our 
world smaller and have given birth to a truly global labor market. 
These include explosive increases in global trade and the resulting 
political and social upheavals, the telecommunications revolution that 
has brought peoples into unprecedented proximity, and the reduced cost 
of travel. The United States has played a historical role in adapting 
and integrating large numbers of newcomers into our political, social 
and economic lives. Given our history as an immigrant receiving nation 
and our economic and political position in the world, there is little 
to suggest that we could significantly reduce the current levels of 
migration--setting aside whether this is a good or a bad thing--without 
taking a sledge hammer to our economy and our way of life.
    We have tried. Congress has enacted almost one bill per year in the 
last two decades intended to further strengthen immigration enforcement 
as the resources devoted to immigration enforcement have grown 
exponentially. This trend began in 1986 with the passage of the 
Immigration Reform and Control Act (IRCA) of 1986, which for the first 
time made it unlawful for employers to ``knowingly'' hire unauthorized 
workers and created civil penalties (known as ``employer sanctions'') 
for those who do so. The intent of this change was to stem the flow of 
undocumented immigrants to the United States, by removing the job 
magnet. Although employer sanctions have not been vigorously enforced 
since then, it should be noted that neither have any other employment 
laws such as wage and hour, employment discrimination, collective 
bargaining, and health and safety protections for workers.
    The enforcement-without-reform policy of the last 20 years, 
including the initiation of employer sanctions, has been a resounding 
and obvious failure. Although undocumented migration appears to have 
plateaued, it has done so at an all time high, with 7.2 million 
unauthorized workers now employed in the U.S., representing almost 5 
percent of the civilian labor force.\1\ If we are going to be 
realistic, we have to recognize that our economy is now highly 
dependent upon low-wage, low-skill labor provided by undocumented 
workers. The share of undocumented workers in agriculture, cleaning, 
construction, food service, and other low-wage occupations is 
approximately three times the share of native workers in these types of 
jobs.\2\ In the aggregate, these hard-working, enterprising workers are 
not going away, and neither are their spouses or the children who have 
grown up in this country and integrated into our society. Like it or 
not, they will play a role in our nation's future.
    Given this fact, and the reality that high immigration levels are 
likely to be a part of our future, the focus of our immigration policy 
should be on maximizing the benefits and minimizing the harms of their 
arrival and established presence, both for the immigrants themselves, 
and even more importantly, for those of us who were lucky enough to be 
born here.
    We need to recognize that the impact of immigration is not merely a 
matter of numbers. Like all complex social phenomenon, immigration is 
neither all good nor all bad. There are winners and losers. And the 
impact of immigration on all of us will be substantially different 
depending on how we treat the immigrants. Do we punish them, 
marginalize them, make it harder for them to rely on labor or law 
enforcement protections, steer them into dangerous substandard jobs? Or 
do we invest in them, provide them with equal rights, protection 
against exploitation, the tools to learn English and to upgrade their 
skills, and the ability to be productive, upwardly mobile participants 
in the economy?
    If immigrants enjoy the same workplace protections and economic 
mobility as others, they will be less subject to exploitation at the 
hands of employers whose practices will then undermine the wages and 
working conditions of other workers. In addition, there is evidence 
that raising the wages and working conditions of low-wage workers will 
actually reduce immigration by making the existing workforce relatively 
more attractive to employers.\3\ Therefore, it is imperative, for the 
benefit of all workers, to eliminate the vulnerabilities and 
marginalization inherent in the existence of a large, economically 
vulnerable undocumented workforce. The only practical way to do this is 
to legalize those who are already working and raising families here. 
And it is equally important to ensure that all immigrants--current and 
future, documented and undocumented--have full labor protections.
    It is in this context that efforts to impose electronic 
verification and increase workplace immigration enforcement should be 
examined. Many Americans believe that such changes would be a magic 
bullet, painlessly solving our immigration woes. The theory is that if 
there were no employment market, unauthorized workers would not come, 
and those who are here would leave. This might be true, but there is no 
evidence the measures that have been proposed to date would dry up the 
employment market. Rather, to the extent these measures are effective 
in initially reducing employment opportunities, their main effect will 
be to make America's 7.5 million undocumented workers even more 
desperate for employment and willing to accept even more marginal jobs.
    History teaches us that such a willing and desperate workforce will 
find employers willing to take advantage of their availability and 
reduced-cost. This is not theory. It is exactly what happened in the 
late 1980's and 1990's in response to the impositions of employer 
sanctions in the IRCA.\4\ Experience with the current employer 
sanctions system gives us some indication of the increased us of 
exploitative practices by unscrupulous employers and the increased 
pressure that even legitimate employers feel to engage in similar 
practices or risk going out of business. Under the current system, many 
employers twist immigration law into a tool to punish workers seeking 
to enforce their labor rights. Many of them knowingly violate IRCA's 
employment verification provisions to hire undocumented workers whom 
they know will then be reluctant to hold them accountable for labor law 
violations. It is common practice for these same employers to use the 
existence of the employer sanctions scheme to threaten undocumented 
workers with deportation if they do indeed complain about their 
deplorable working conditions. For example, an employer may not verify 
a worker's employment authorization at the time of hire but will 
conveniently remember the requirements under IRCA only after the worker 
complains of some labor violation or attempts to organize a union to 
improve their working conditions. Implementation of a system that only 
enforces hiring sanctions without increased enforcement and improvement 
of existing labor and employment protections will further exacerbate 
these problems, and create additional incentives for unscrupulous 
employers to recruit, hire and exploit unauthorized workers. This 
exploitation of course not only harms the undocumented worker, it just 
as surely harms U.S. born workers who find their job opportunities, 
wages and working conditions undermined by the incentives thus created 
for employers to hire and take advantage of vulnerable undocumented 
workers.
    In addition to increasing the opportunity for exploitation of 
vulnerable workers, an exclusive reliance on employer sanctions will be 
counter-productive for three other important reasons. First, it will 
create an economic incentive for even more employers to hire workers 
``off-the-books'' in unreported, cash- based employment relationships. 
Second, it will encourage more employers to evade employer sanctions by 
misclassifying their employees as ``independent contractors.'' Third it 
will encourage companies to interpose substandard, middleman labor 
contractors between themselves and their employees, pretending the 
workers are employees of these sham contractors and exposing the 
workers to marginal fly-by-night employment practices by the middlemen. 
All of these practices in fact increased dramatically following the 
imposition of employer sanctions in the 1986 IRCA. And all of these 
practices have harmful economic and social impacts beyond the increased 
exploitation of workers. For example, they increase our reliance on an 
unregulated cash economy; reduce the collection of payroll and income 
taxes; reduce participation in the unemployment insurance, workers 
compensation and social security safety net programs; reduce the 
ability of government regulators and workers to monitor and enforce 
basic labor protections; and reduce employers' general respect for 
operating legally and above-board. These substandard practices have an 
adverse effect on everyone in our society, but they are especially--and 
ironically--harmful for U.S. workers, whose employers will be forced to 
compete with a growing sector of businesses that are unconstrained by 
the regulatory apparatus that is supposed to protect us all and is 
designed to underpin our basic standard of living.
    As a practical matter, the only law enforcement approach that is 
very likely to succeed in addressing the problem of unauthorized 
employment in our economy is the comprehensive enforcement of labor and 
employment protections for all working people without regard to their 
immigration status. This would be by far the most effective way to 
remove employers' incentive to hire and exploit unauthorized workers, 
while also removing employers' incentive to adopt substandard 
employment practices that evade our core tax, social benefit, and 
regulatory systems. On the other hand, ramping up enforcement of 
employer hiring sanctions alone will surely do more harm than good, at 
least without vastly increased enforcement of employment protections 
for both undocumented and documented workers.
    As Congress considers creating a mandatory Employment Eligibility 
Verification System (EEVS), this Committee must understand that an 
approach that relies only on enforcement of hiring sanctions will not 
solve the problems associated with unauthorized employment. In fact it 
is doomed to fail--again, as it did after 1986. An employment 
verification system has no real chance of succeeding unless it is also 
accompanied by (1) a comprehensive opportunity for currently 
undocumented immigrants to earn legal status; (2) a realistic 
opportunity for the future flow of immigrant workers to work in our 
economy with fully effective employment rights; (3) vigorous, status-
blind enforcement of our nation's labor and employment laws for U.S. 
workers, documented immigrant workers and undocumented immigrant 
workers alike.
Concerns about Expanding the Basic Pilot Program
    The pending legislative proposals for a mandatory Employment 
Eligibility Verification System (EEVS) will also do more harm than good 
if the EEVS is not regulated by strict safeguards and cautious 
implementation. These pending EEVS proposals are based on the existing 
Basic Pilot Program. Unfortunately, the Basic Pilot program has been 
plagued by problems since its inception in 1997. Most notably, the 
program, which is so far used only by a relatively small number of 
employers, has been hindered by inaccurate and outdated information in 
the Department of Homeland Security (DHS) and Social Security 
Administration (SSA) databases, lack of adequate privacy protections, 
and misuse of the program by employers.
    The Basic Pilot Program is an internet-based program that allows 
employers to electronically verify workers' employment eligibility by 
directly checking the records maintained by the DHS and the SSA.
    The program is one of the three pilots created by the Illegal 
Immigration Reform and Immigrant Responsibility Act of 1996, and began 
operating in six states in 1997. The other two pilot programs were 
discontinued. However, in December 2004 Congress extended the Basic 
Pilot to all 50 states, and it is now available to employers who 
voluntarily choose to participate in the program, although certain 
employers who have been found to unlawfully hire unauthorized workers 
or who have discriminated against workers on the basis of national 
origin or citizenship status may be required to participate. According 
to the Government Accountability Office (GAO), as of June 2006, 
approximately 8,600 employers were registered to use the Basic Pilot 
program out of the approximate 5.6 million employer firms nationwide, 
though only 4,300 employers are active users.\5\ A July 26, 2006 press 
release from DHS states that 10,000 employers are registered to use the 
program.
    In creating the pilot programs in 1996, Congress required the 
former Immigration and Naturalization Service (INS) to have an 
independent evaluation conducted before the pilot programs could be 
extended. The INS selected two firms--the Institute for Survey Research 
at Temple University and Westat--to conduct the independent evaluation. 
In January 2002, an evaluation of the Basic Pilot Program was issued. 
The evaluation report identified several critical problems with the 
pilot program and concluded that it ``is not ready for larger-scale 
implementation at this time.'' Significant problems included:
             Database inaccuracies
    One of the most significant problems identified by the independent 
evaluation was that the program was seriously hindered by inaccuracies 
and outdated information in SSA and INS databases. For example, a 
sizeable number of workers who were not identified as having work 
authorization were in fact authorized, but for a variety of reasons the 
databases did not have up-to-date information. While the database 
accuracy has somewhat improved, a 2004 DHS report to Congress notes 
that SSA's databases currently are able to automatically verify the 
status of less than 50 percent of work-authorized non-citizens (versus 
99.8 percent for native-born citizens).\6\ While most of these cases 
eventually are favorably resolved, resolution often requires costly and 
time-consuming manual reviews. Additionally, an unknown number of work-
authorized applicants abandon their employment plans rather than 
pursuing the uncertainty of the appeals process, while another group of 
work authorized individuals are wrongfully terminated before they even 
have the opportunity to prove that they are indeed authorized to work 
in the U.S.
    Evaluators also found that when employers contacted the INS/DHS and 
SSA in an attempt to clarify data, these agencies were often not 
accessible; 39 percent of employers reported that SSA never or 
sometimes returned their calls promptly and 43 percent reported a 
similar experience with the INS.
             Employer misuse of the program
    The independent evaluators also discovered that employers engaged 
in prohibited employment practices, including pre-employment screening, 
which denies the worker not only a job but also the opportunity to 
contest database inaccuracies; taking adverse employment action based 
on tentative nonconfirmations, which penalizes workers while they and 
the appropriate agency (DHS or SSA) work to resolve database errors; 
and the failure to inform workers of their rights under the program. 
Some employers also compromised the privacy of workers in various ways, 
such as failing to safeguard access to the computer used to maintain 
the pilot system, including leaving passwords and instructions in plain 
view for other personnel to potentially access the system and 
employees' private information.
    Although employers are prohibited from engaging in these practices 
under a Memorandum of Understanding that they sign with DHS, U.S. 
Citizenship and Immigration Service officials have told the GAO that 
their efforts to review employers' use of the pilot program have been 
limited by lack of staff available to oversee and examine employer use 
of the program.\7\
    The Basic Pilot Program Extension and Expansion Act, which 
authorized expansion of the Basic Pilot Program to all 50 states, also 
required DHS to submit a report to the Committees on the Judiciary of 
the House of Representatives and the Senate. This report should have 
evaluated whether the problems identified by the independent evaluation 
of the Basic Pilot had been substantially resolved, and it should have 
outlined what steps the DHS was taking to resolve any outstanding 
problems before undertaking the expansion of the Basic Pilot program to 
all 50 states.
    While the DHS did submit a report to Congress in June 2004, it 
failed to adequately address the concerns laid out in the independent 
evaluation. Most importantly, it failed to address the explicit 
recommendation by the independent evaluation against expanding the 
Basic Pilot program into a large-scale national program until the DHS 
and the SSA address the inaccuracies in their databases that prevent 
those agencies from confirming the work authorization of many workers.
    In August 2005, the GAO noted in its report, Immigration 
Enforcement: Weaknesses Hinder Employment Verification and Worksite 
Enforcement Efforts, that although DHS has taken some steps to improve 
the timeliness and accuracy of information in its database, it cannot 
effectively assess increased program usage without information on the 
``costs and feasibility of ways to further reduce delays in the entry 
of information into DHS databases.'' According to the GAO, DHS staff 
stated that they may not be able to complete timely verifications if 
the number of employers using the Basic Pilot Program were to 
significantly increase.
Employment Eligibility Verification Systems in the Context of 
        Comprehensive Immigration Reform
    The Border Protection, Antiterrorism, and Illegal Immigration 
Control Act of 2005 (H.R. 4437) and the Comprehensive Immigration 
Reform Act of 2006 (S. 2611) both include a mandatory EEVS but there 
are significant differences between these two proposals. Most notably, 
S. 2611 attempts to address some of the shortcomings of the Basic Pilot 
program by including privacy, anti-discrimination, and due process 
protections, while H.R. 4437 simply expands the Basic Pilot program 
without addressing any of the concerns outlined above.
The Border Protection, Antiterrorism, and Illegal Immigration Control 
        Act of 2005 (H.R. 4437)
    H.R. 4437 creates a mandatory EEVS that would make use of toll-free 
telephone lines and other toll-free electronic media through which 
workers' identities and employment authorization could be verified by 
the DHS. Within six years of the bill's enactment, employers would be 
required to verify the employment eligibility of all employees via the 
EEVS. Use of the EEVS would be required three years from enactment for 
all employees of federal, state, or local governments, including for 
all workers at a federal, state, or local government buildings, 
military bases, nuclear energy sites, weapons sites, airports, or other 
critical infrastructures.
    Use of the EEVS would apply not only to employers but also to those 
who recruit or refer individuals for employment, including labor 
service agencies and nonprofit groups. This means that temporary worker 
agencies, worker centers, and other similar job placement or referral 
programs (including job fairs and websites such as monster.com) would 
have to comply with a process similar to the current I-9 process before 
referring workers to a job. This represents a radical expansion of the 
current I-9 system beyond the overly regulated employment relationship, 
and mandates an unworkable system whereby service providers and for-
profit employment services would be deputized as immigration officials 
as well. This will likely result in vastly limited employment 
opportunities for minorities who often use these services and job fairs 
to meet employers who may be seeking to diversify their workforce.
    While the bill requires that the government correct and update 
inaccurate records that would make the EEVS unworkable, it includes no 
procedures, funds, or safeguards for ensuring that this requirement is 
carried out. If workers are unjustly fired due to errors in the EEVS, a 
provision of the bill would prevent them from filing class action 
lawsuits against the government or the employer to redress this 
injustice. Instead, they would be allowed only to file a claim against 
the government under the Federal Tort Claims Act, which is not equipped 
to handle large numbers of claims or lawsuits of this nature. 
Additionally, the Federal Tort Claims Act process is cumbersome, 
expensive, and time-consuming, making it an unrealistic form of relief 
from government database errors.
The Comprehensive Immigration Reform Act of 2006 (S. 2611)
    S. 2611 also creates a mandatory EEVS where employers would 
electronically transmit information to SSA and DHS for purposes of 
verifying workers' employment authorization. S. 2611 requires the new 
EEVS to be implemented with respect to new hires 18 months after the 
date that at least $400 million have been appropriated and made 
available to DHS; however, DHS has the authority to require 
``critical'' employers (based on an assessment of homeland security or 
national security needs) and employers that DHS has reasonable cause to 
believe have engaged in material violations related to unlawful 
employment of immigrants to use the EEVS to verify the work 
authorization status of all employees before the 18-month period.
    S. 2611 does include important worker protections that seek to 
address the shortcomings of the Basic Pilot program. Specifically, the 
bill includes the following:
     Anti-discrimination protections. S. 2611 amends the 
section of the Immigration and Nationality Act (INA) relating to unfair 
immigration-related employment practices to explicitly apply to 
employment decisions related to the new EEVS. Additionally, it 
increases fines for violations of the INA's anti-discrimination 
provisions and provides funding to educate employers and employees 
about anti-discrimination policies.
     Due process protections. S. 2611 includes important due 
process protections intended to ensure that workers can challenge 
erroneous findings and fix inaccurate information in the DHS and SSA 
databases. Specifically, it requires employers to provide employees 
with information in writing (in a language other than English if 
necessary) about their rights to contest a response from the EEVS, and 
the procedures for doing so, and allows individuals to view their own 
records and contact the appropriate agency to correct any errors 
through an expedited process. It also creates an administrative and 
judicial review process where individuals can contest findings by DHS, 
and seek compensation for the wages lost where there is an agency 
error.
     Privacy protections. S. 2611 includes important privacy 
protections intended to protect against misuse of information and 
identity theft. Specifically, it requires minimization of the data to 
be both collected and stored, and creates penalties for collecting or 
maintaining data not authorized in the statute. It also places limits 
on the use of data, and makes it a felony to use the EEVS data to 
commit identity fraud, unlawfully obtain employment, or any other 
purpose not authorized in the statute. Lastly, it requires the GAO to 
assess the privacy and security of the EEVS, and its effects on 
identity fraud or the misuse of personal data.
Provisions That Must Accompany Any Nationwide, Mandatory Employment 
        Eligibility Verification System
    After nearly a decade of experience with the Basic Pilot Program 
and two decades with the employer sanctions scheme, it is clear that 
the existing programs have significant flaws that must be addressed if 
Congress is to pursue the creation of a new EEVS. The creation of such 
a system without addressing the fundamental flaws in the current 
program is unadvisable and will result in severe negative consequences 
for immigrant and U.S. workers on a much larger scale than they 
currently experience. Provisions of S. 2611 take a step in the right 
direction by including important worker protections, and we have 
additional suggestions below, but these provisions are meaningless 
without addressing the need to legalize the undocumented population in 
this country, and punish employers who flout labor laws.
    The following components are essential to any mandatory EEVS--
     The EEVS must have measurable and enforceable standards. 
The best way to ensure implementation of an EEVS that is accurate and 
implemented in a non-discriminatory manner is to set standards and 
expectations for system performance upfront and to hold DHS accountable 
for meeting those standards (e.g. the databases must have a specific 
level of accuracy). Experience confirms that federal agencies do not 
meet expectations if the standards they are given are vague and 
optional. The EEVS program is particularly vulnerable to poor planning 
because of its unprecedented scope, and the disconnect between the 
agency mandate to get something up and running quickly and the 
requirements that would ultimately determine whether it is successful, 
such as the need for speed, efficiency, reliability, and information 
security. It is much easier to make design changes in a system before 
it goes fully online than afterwards. That is why software 
manufacturers produce ``beta'' versions of their programs to be tested 
in the real world before mass public marketing distribution. Once a 
system is designed and put in place for all employers and workers in 
our economy it will be costly and difficult to implement needed 
changes.
     The EEVS should be phased-in with a realistic timeline. 
Any mandatory universal verification system must be implemented 
incrementally, with vigorous performance evaluations taking place prior 
to any expansion. Moving forward rapidly without addressing ongoing 
problems within the system will not help to achieve stated goals and 
will result in harm to U.S. workers. Additionally, an unrealistic 
timeframe would likely delay implementation of the new system. It is 
easy for Congress to pass a law requiring that something be done by 
some arbitrary date, but that doesn't necessarily make it happen. If 
the deadline is unrealistic, it will not be met no matter how many laws 
Congress passes. For example, in 1996 Congress mandated implementation 
of an electronic entry-exit system within 2 years. Yet after repeated 
extensions the system still is not online. Setting an unrealistic 
timeframe is more than just an exercise in futility. It actually delays 
implementation because it leads to inadequate and unrealistic planning 
and misallocation of resources and taxpayer monies.
     The EEVS must only apply to new hires. Requiring employers 
to re-verify their existing workforce is adding more bureaucracy to the 
process, will be extremely expensive and burdensome for human resource 
departments, and will inevitably lead to many workers losing time from 
work to correct the inaccuracies in the system. The current workforce 
has already been authorized to work under the law using the current I-9 
system. Moreover, the circularity in the workplace today, with a 
turnover/separation rate of 40 percent a year (50-60 million employees 
each year), means that eventually most people will be verified by the 
new system in a relatively timely manner without forcing employers to 
go through old records and re-verify all existing employees.
     The EEVS must be designed to prevent misuse and abuse, and 
must not lead to increased discrimination against workers who look or 
sound foreign. Experience has taught us that unscrupulous employers 
will use the system to unlawfully pre-screen potential employees, re-
verify work authorization, and engage in other unlawful activities when 
an employee lodges a complaint or engages in organizing. It is 
therefore essential that employers are explicitly prohibited from: 1) 
using the system selectively or without authorization; 2) using the 
system prior to an offer of employment; 3) using the system to exclude 
certain individuals from consideration for employment as a result of a 
perceived likelihood that additional verification will be required; 4) 
using the System to deny certain employment benefits, otherwise 
interfere with the labor rights of employees, or any other unlawful 
employment practice; and 5) taking adverse action against any person, 
including terminating or suspending an employee who has received a 
tentative nonconfirmation.
     The EEVS must protect the privacy of information in the 
system. The employment verification system must protect information in 
the database from unauthorized use or disclosure. It is critical that 
privacy protections be included so that the information contained in 
the databases is not used for non-employment verification purposes. The 
2002 evaluation of the Basic Pilot program found several instances 
where employers or other non-authorized individuals gained access to 
the program for uses other than the designated purpose.
     The EEVS must be independently assessed for program 
performance. Any EEVS should be independently evaluated to ensure that 
the program is meeting the needs of both employers and employees. 
Reports should specifically evaluate the accuracy of DHS and SSA 
databases, the privacy and confidentiality of information in the 
databases, and if the program has been implemented in a 
nondiscriminatory manner.
The DHS Proposal to Use SSA ``No-Match'' Letters as an Enforcement Tool 
        Should Be Withdrawn
    In an attempt to address immigration enforcement at the worksite, 
DHS issued proposed rules on June 14, 2006, regarding an employer's 
legal obligations upon receiving a letter from the SSA stating that the 
information submitted for an employee does not match SSA records 
(otherwise known as an SSA ``no-match'' letter). Under the proposed 
rule, ICE could use the receipt of a no-match letter as evidence that 
the employer has ``constructive knowledge'' \8\ that an employee is 
unauthorized to work. The proposed rule includes ``safe harbor'' 
procedures that such an employer should follow in order to avoid 
liability under section 274A(a)(2) of the Immigration and Nationality 
Act.
    Although the rule will cause enormous upheavals in the workplace, 
it will have no impact on undocumented immigration. Our past experience 
with no-match firings and workplace audits is very clear: the fired 
workers will not leave the country. They will simply find other more 
marginal jobs, most likely in the unregulated underground cash economy. 
Because of this, the proposed rule will result in growth of this 
underground economy. It will also erode our privacy rights, and it 
represents an end-run around the federal legislative process.
    Proposals to use the SSA no-match letter as an enforcement tool, 
such as the DHS proposed rule, should be rejected for the following 
reasons:
     The proposed rule will harm all workers regardless of 
immigration status. The DHS rule will result in unnecessary, unjust, 
and potentially discriminatory mass firings. Out of caution, panic, and 
confusion employers will fire workers who receive an SSA no-match 
letter before workers have a chance to correct their records with SSA. 
The SSA database is notoriously inaccurate, and often times ``no-
matches'' occur because of name changes and clerical errors. Hundreds 
of thousands of workers--including U.S. citizens and authorized 
noncitizens--could lose their jobs. Such firings may run afoul of 
federal and state anti-discrimination laws and other worker 
protections, and lead to costly and protracted litigations against 
employers for wrongful terminations. Unscrupulous employers already use 
the SSA no-match letter to stymie labor organizing campaigns and to 
retaliate against workers who have been injured on the job or complain 
of unpaid wages or other labor violations. In documented cases 
(including arbitration decisions) from across the country, employers 
initially ignored SSA no-match letters, and then decided to use them as 
a pretext to fire workers who participated in efforts to improve 
working conditions and wages. The proposed rule would only exacerbate 
this problem.
     The proposed rule will expand the unregulated underground 
cash economy. Although the proposed rule purports to provide employers 
with general guidance on SSA no-match letters, DHS is in fact imposing 
a new set of legal obligations on millions of employers. These new 
legal obligations will increase pressure on businesses to employ 
workers ``off the books,'' or to misclassify their employees as 
independent contractors, thereby promoting the unregulated underground 
cash economy which results in potentially billion-dollar losses in 
federal, state, and local tax revenues, unfair competition, and further 
exploitation and abuse of citizen as well as immigrant workers by 
unscrupulous employers. The proposed rule also has the perverse effect 
of punishing ``good'' employers who keep good records and want to stay 
on the books. These ``good'' employers will be put at a disadvantage 
compared with ``bad'' employers with whom they compete and who pay in 
cash and do not keep records, or who misclassify employees as 
independent contractors, and who consequently will not be reached by 
the new rule.
     The proposed rule is an end-run around the legislative 
process. The proposed rule is badly timed. Any worksite immigration 
enforcement proposal should happen in the context of comprehensive 
immigration reform. The House and the Senate have both passed bills 
that contain worksite enforcement mechanisms. Implementing the proposed 
regulations at this time would be an end-run around that process. 
Immigrant workers should not be subjected to unnecessary, unjust, and 
potentially discriminatory mass firings while the current law is 
clearly under debate and reformulation.
     The SSA no-match letter program is ill-suited as a tool 
for immigration enforcement. The proposed rule attempts to transform 
the SSA no-match letter into an immigration enforcement tool when the 
SSA database does not have the capacity to fulfill this objective. In 
addition to being error prone, the database does not contain complete 
information about a worker's immigration status or employment 
authorization. Indeed, the database contains information about both 
U.S. citizens and work-authorized noncitizens who employers will 
presume to be undocumented simply because they appear on a no-match 
list. The letter is not indicative of immigration status, and 
explicitly states on its face that a worker's identification in the 
letter does not make a statement about his or her immigration status. 
Moreover, as an evidentiary matter, an employer's receipt of a SSA no-
match letter by itself does not constitute ``constructive knowledge'' 
of immigration status under current law. The proposed rule dramatically 
alters the definition of ``constructive knowledge'' and makes a stark 
departure from existing case law and long-standing federal guidance in 
this area despite the fact that the SSA no-match letter provides no 
evidence of immigration status.
     The proposed rule is an erosion of our privacy rights. DHS 
is currently barred from direct access to the SSA database by laws 
protecting our privacy and tax confidentiality. These laws were put in 
place to protect sensitive and personal information, and to ensure 
compliance with tax laws. This proposed rule is an attempt by DHS to 
end-run these privacy protections and commandeer personal information 
in the SSA database for their own purposes.
     The costs of implementing the proposed rule are 
prohibitive. If the proposed rule is to be carried out as envisioned, 
DHS and SSA will need to make a massive investment in employer and 
worker education programs in order to combat the rampant panic and 
confusion that is almost certain to follow. The proposed rule also 
contains unrealistic timetables for compliance that will derail its 
implementation. Further, although this rule purports to make changes to 
how DHS interprets these letters, it has a significant impact on the 
way in which SSA has to respond to the inevitable increase in employer 
and worker inquiries about this confusing rule. The actual costs of 
administrating the program will be astronomical for SSA, an agency 
whose limited resources should go towards administering Social Security 
benefits rather than enforcing immigration law. The proposed rule 
should therefore be withdrawn.
Conclusion
    An enforcement-only approach (as embodied by a mandatory EEVS, the 
use of the SSA no-match letter as an enforcement tool, and misplaced 
reliance on increased worksite enforcement) will never solve the 
problem of unauthorized employment. If anything, the lessons of IRCA 
have taught us that an enforcement-only approach actually creates 
incentives for employers to hire unauthorized workers. If Congress is 
serious about addressing this issue, it must muster up the political 
will to address the root causes of migration in sending countries and 
to address the need for improved working conditions for all workers in 
the U.S. Congress can begin by 1) creating a legalization program for 
workers who are filling the jobs in demand by employers, and 2) 
enforcing existing labor and employment laws. If not, unscrupulous 
employers will continue to have a financial incentive to hire and 
exploit undocumented workers, legitimate employers will be placed at a 
competitive disadvantage, and both documented and undocumented workers 
will be increasingly subject to workplace abuses.
                                endnotes
    \1\ Jeffrey S. Passel, Size and Characteristics of the Unauthorized 
Migrant Population in the U.S. , Pew Hispanic Center (March 2006).
    \2\ Jeffrey S. Passel, Unauthorized Migrants: Numbers and 
Characteristics, Pew Hispanic Center (June 2005), pp. 26-28
    \3\ ``How L.A. kept out a million migrants'' Ivan Light, Los 
Angeles Times, April 16, 2006.
    \4\ Donato, K. M., J. Durand and D. S. Massey. 1992. Stemming the 
Tide? Assessing the Deterrent Effects of the Immigration Reform and 
Control Act, Demography 29: 139-158.
    \5\ Richard M. Stana, Testimony Before the Subcommittee on 
Immigration, Border Security, and Citizenship, Committee on the 
Judiciary, U.S. Senate, Immigration Enforcement: Weaknesses Hinder 
Worksite Enforcement Efforts, U.S. Government Accountability Office 
(June 2006)
    \6\ See Report to Congress on the Basic Pilot Program, U.S. 
Citizenship and Immigration Service, June 2004.
    \7\ Richard M. Stana, Testimony Before the Subcommittee on 
Immigration, Border Security, and Citizenship, Committee on the 
Judiciary, U.S. Senate, Immigration Enforcement: Weaknesses Hinder 
Worksite Enforcement Efforts, U.S. Government Accountability Office 
(June 2006)
    \8\ As defined in 8 CFR 274a.1(l)(1).
                                 ______
                                 
    Chairman Johnson. Thank you. I think sometimes we forget 
what the word illegal means.
    Mr. Luther. Mr. Luther, you are welcome to testify.

  STATEMENT OF JON LUTHER, CHAIRMAN AND CEO, DUNKIN' DONUTS, 
          BASKIN-ROBBINS, TOGO'S, DUNKIN' BRANDS, INC.

    Mr. Luther. Thank you, Mr. Chairman and members of the 
subcommittee. It is my great pleasure to be here today. I know 
that applause wasn't for me, so I'll move right on.
    My name is Jon Luther. I am the chairman and CEO of Dunkin' 
Brands. Dunkin' Brands is one of the largest quick service 
restaurant companies in this country, represented by nearly 
8,000 Dunkin' Donuts, Baskin-Robbins and Togo's restaurants, 
here, in the United States, and an additional 4,000 restaurants 
abroad.
    Our three brands are stalwarts of the franchise industry, 
collectively representing over 143 years of experience.
    And further, our system is totally franchised, meaning that 
all of our U.S. restaurants are owned and operated by small 
business owners who implement our standards while they totally 
control the day to day operations, including deciding whom to 
hire and setting the conditions of employment.
    And we have approximately 2,600 franchisees and they, in 
turn, employ well over one hundred thousand people.
    As franchisors of Dunkin' Donuts, Baskin-Robbins and Togo's 
systems, Dunkin' Brands has the responsibility to set the 
standards that define our concepts--everything from what the 
restaurant looks like to what products it sells. We are the 
stewards of the brands, contractually committed to protecting 
our trademarks, our systems, and the investment of our great 
franchisees.
    And each of those franchisees is the owner and operator of 
his or her business, and each has total day-to-day control of 
the operation, and promises to meet the standards that define 
our brands to the consumer.
    And one of those contractual promises that every franchisee 
makes is to obey the laws, Federal, state and local, and 
anything like that that pertains to the operation of our 
restaurant. That includes the laws that pertain to the 
entitlement to work. The knowing hiring or employment of an 
undocumented worker is a violation of law, and Dunkin' Brands 
has enforced that requirement for many years, long before the 
topic became so controversial.
    While we enforce that requirement, we also recognize the 
necessity of giving our franchisees the best tools currently 
available, so they can comply with the law.
    A note, that many of our franchisees do not have the large, 
centralized human resources apparatus available to them. They 
are small business owners. Because of the prevalence of these 
counterfeit documents, it is not always easy for our 
franchisees to be confident that a new hire is lawfully 
entitled to work, especially if they do not have the benefit of 
this well-staffed, well-resourced, Human Resource Department 
that is staffed by experienced hiring professionals. These are 
small business owners.
    We determined that our franchise community needed help to 
comply with the law and in the hiring process. We began to 
examine the Basic Pilot Program in the summer of 2005, and 
while I understand that many businesses have had problems, many 
other businesses have problems, I would like to say that the 
personnel of the Department of Homeland Security were very 
helpful to us, and went way out of their way to familiarize all 
of us with the aspects of this program.
    When we determined to implement the Basic Pilot Program as 
a mandatory standard, so that our folks can obey the laws, the 
Department of Homeland Security employees played an important 
role in training our personnel and our franchisees, making 
themselves available at our convention earlier this year and at 
many of our regional meetings.
    They have also done a great job with their telephone help 
line, and the assistance of the Department of Homeland Security 
contributed to the broad acceptance of the program by our 
franchisees across our system. In fact, I can characterize the 
response by our franchise community broadly as enthusiastic.
    As of June 1, the use of the Basic Pilot Program has been 
required by all of our franchisees and we have gotten broad-
based acceptance. We do not have a wealth of experience so far, 
but based on the preliminary canvassing of our system, our 
franchisees are finding the tool easy to learn and use.
    They have not experienced any real difficulty with 
resolving tentative non-confirmation, the mismatches. Usually 
the issue is caused by an input error by the franchisee, 
perhaps mixing up a first and middle name.
    In those situations where there is a genuine mismatch, the 
circumstances strongly suggest that the employee was not a 
documented worker, meaning that they don't contest the results, 
and guess what? They don't return for the job. It weeds them 
out.
    I would also add that if a mismatch is truly a record 
error, and the employee is entitled to work, then resolving the 
issue ensures that the employee gets proper credit for the 
Social Security contributions, which is to his or her benefit.
    So I cannot say that a data base error may not result in an 
arduous, and even costly effort, by someone to establish his or 
her rightful entitlement to work. This could happen. I can only 
say that we have not seen it in situations as yet. The Basic 
Pilot Program appears to be working well for our franchisees, 
and their applicants.
    Now while the Basic Pilot Program is working for Dunkin' 
Brands, I want to emphasize that we and our industry need a 
comprehensive solution to deal with the need for an adequate 
employee base. The National Restaurant Association projects 
that over the next decade, the number of jobs in the food 
service business will grow one and a half times as fast as the 
U.S. labor force. At the same time, the number of 16- to 24-
year-olds in the labor force, half of our industry's workforce, 
will not grow at all.
    Unfortunately, America's legal immigration system does not 
easily satisfy our need for workers. Our economy provided 13.4 
million jobs last year. And my testimony says 134 million. It 
would be nice; but it was 13.4. I want to adjust that for the 
record.
    But the Federal Government only makes 10,000 green cards 
available for service industry workers each year. There is a 
huge disconnect. An enforcement-only solution could have severe 
economic consequences for the restaurant industry.
    According to some estimates, undocumented workers account 
for approximately 5 percent of the workforce, and although 
never documented for the restaurant industry, the same ration 
holds true, which I believe is higher--but if that holds true, 
then roughly 625,000 of the 12.5 million restaurant workers and 
food service jobs are held by undocumented workers. Enforcement 
only isn't going to work.
    We need a comprehensive solution, one that will 
realistically come to terms with the needs of our industry and 
the presence of millions of undocumented workers already here 
in the United States.
    One last comment. Recently, President Bush visited one of 
our restaurants in Alexandria, Virginia, to commend our system 
for adopting the Basic Pilot Program. While there, he noted 
that the owners of the franchise, and several of their 
managers, were first generation Americans who were immigrants, 
and the president noted that this was a healthy sign that the 
pattern of immigration and assimilation, that has always been 
the strength of our country, is well-represented at Dunkin' 
Brands. And I am proud to say that our system was, in 
substantial part, built by first generation Americans, and the 
success of our system represents the achievement of the 
American dream for thousands of families, and I hope that 
working together, Government and industry can fashion and enact 
a comprehensive solution that ensures the continued vibrancy of 
our economy and the perpetuation of this country's unique role 
as a safe harbor for those seeking a better life. Thank you 
very much..
    [The prepared statement of Mr. Luther follows:]

Prepared Statement of Jon L. Luther, Chairman and CEO, Dunkin' Brands, 
                                  Inc.

    My name is Jon L. Luther, Chairman and CEO of Dunkin' Brands.
    Dunkin' Brands is one of the largest quick service restaurant 
companies, represented by nearly 8,000 Dunkin' Donuts, Baskin-Robbins 
and Togo's restaurants in the United States and an additional 4,000 
abroad. Our three brands are stalwarts of the franchise industry, 
collectively representing over 143 of years of existence. Further, our 
system is totally franchised, meaning that all of our U.S. restaurants 
are owned and operated by small business owners, who implement our 
standards while they totally control the day-to-day operations, 
including deciding whom to hire and setting the conditions of 
employment. We have approximately 2,600 franchisees, and they in turn 
employ well over one hundred thousand people.
Dunkin' Brands and our Franchise System:
    As franchisors of the Dunkin' Donuts, Baskin-Robbins and Togo's 
systems, Dunkin' Brands has the responsibility to set the standards 
that define our concepts--everything from what the restaurant looks 
like to what products it sells. We are the stewards of the brand, 
contractually committed to protecting our trademarks, our system, and 
the investment of our great franchisees. Each of those franchisees is 
the owner and operator of his or her business. Each has total day-to-
day control of the operation, and promises to meet the standards that 
define our brands to the consumer.
    One contractual promise every franchisee makes is to obey all the 
laws, federal, state and local, that pertains to the operation of the 
restaurant. That includes the laws pertaining to entitlement to work. 
The knowing hiring or employment of an undocumented worker is a 
violation of law, and Dunkin' Brands has enforced that requirement for 
many years, long before the topic became so controversial. While we 
enforce the requirement, we also recognize the necessity of giving our 
franchisees the best tools currently available to comply with the law.
Dunkin' Brands' Decision to Embrace the Basic Pilot Program:
    Many of our franchisees do not have large, centralized human 
resources apparatus available to them. Because of the prevalence of 
counterfeit documents, it is not always easy for our franchisees to be 
confident that a new hire is lawfully entitled to work, especially if 
they do not have the benefit of a well-resourced human resources 
department staffed by experienced hiring professionals. We determined 
that our franchisee community needed help to comply with the law in the 
hiring process. We began to examine the Basic Pilot Program in the 
summer of 2005. I would like to say that the personnel of the 
Department of Homeland Security were very helpful to us, and went out 
of their way to familiarize us with all aspects of the program. When we 
determined to implement Basic Pilot as a mandatory standard, DHS 
employees played an important role in training our personnel and our 
franchisees, making themselves available at our convention earlier this 
year and at many of our regional meetings. They have also done a great 
job with their telephone help line. The assistance of DHS has 
contributed to the broad acceptance of the program by franchisees 
across our system. In fact, I can characterize the response broadly as 
enthusiastic.
    As of June 1, the use of the Basic Pilot Program has been required 
of all of our franchisees and we have gotten broad-based acceptance. We 
do not have a wealth of experience so far, but based on preliminary 
canvassing of our system, the franchisees are finding the tool easy to 
learn and use. They have not experienced any real difficulty with 
resolving tentative non-confirmations (mismatches). Usually, the issue 
is caused by an input error by the franchisee, perhaps mixing up a 
first and middle name. In those situations in which there is a genuine 
mismatch, the circumstances strongly suggest that the employee was not 
a documented worker, meaning that they do not contest the results and 
do not return to work. I would add that if the mismatch is truly a 
record error, and the employee is entitled to work, then resolving the 
issue ensures that the employee gets proper credit for social security 
contributions, which is to his or her benefit.
    I cannot say that a database error may not result in an arduous and 
even costly effort by someone to establish his or her rightful 
entitlement to work; this could happen. I can only say that we have not 
seen those situations yet. The Basic Pilot Program appears to be 
working well for our franchisees and their applicants.
Basic Pilot Program--Support and Evolution:
    While the Basic Pilot Program is working for Dunkin' Brands, I want 
to emphasize that we and our industry need a comprehensive solution to 
deal with our need for an adequate employee base. The National 
Restaurant Association projects that over the next decade, the number 
of jobs in the foodservice business will grow one and a half times as 
fast as the U.S. labor force. At the same time, the number of 16- to 
24-year-olds in the labor force--half our industry's workforce--will 
not grow at all. Unfortunately, America's legal immigration system does 
not easily satisfy our need for workers. Our economy provided 134 
million jobs last year, yet the federal government makes only 10,000 
green cards available for service-industry workers each year.
    An enforcement-only solution could have severe economic 
consequences for the restaurant industry. According to some estimates, 
undocumented workers account for approximately five percent of the U.S. 
workforce. Although never documented for the restaurant industry, if 
this same ratio holds true, then roughly 625,000 of the 12.5 million 
restaurant and foodservice jobs are held by undocumented workers.
    We need a comprehensive solution, one that will realistically come 
to terms with the needs of our industry and the presence of millions of 
undocumented workers already here in the United States.
    Recently, President Bush visited one of our restaurants to commend 
our system for adopting the Basic Pilot Program. While there he noted 
that the owners of the franchise and several of their managers were 
first-generation Americans, and the President noted that it was a 
healthy sign that the pattern of immigration and assimilation that has 
always been the strength of our country is well represented at Dunkin' 
Brands. Indeed, I am very proud to say that our system was, in 
substantial part, built by first-generation Americans, and the success 
of our system represents the achievement of the American dream for 
thousands of families.
    I hope that, working together, government and industry can fashion 
and enact a comprehensive solution that ensures the continued vibrancy 
of our economy and the perpetuation of this country's unique role as a 
safe harbor for those seeking a better life.
                                 ______
                                 
    Chairman Johnson. Thank you, sir. I would like to ask how 
you know all your owners are legal?
    Mr. Luther. We use the Basic Pilot Program also to verify--
--
    Chairman Johnson. When someone tries to buy into your 
system, you check them out?
    Mr. Luther. That is right. We have a very vigorous 
selection process, and one of those selection processes for new 
franchisees is to be run through the Basic Pilot Program to 
ensure that they are legal.
    Chairman Johnson. OK. You have the ability to do that at 
your headquarters, I am sure, and how do you provide that 
capabilities to the small business owner? I mean, do you 
provide a computer system for them?
    Mr. Luther. No. When a franchisee--we know who they are 
because they have signed franchise agreements, so when they 
sign these agreements, we then make sure that they are 
validated and verified through the----
    Chairman Johnson. Yes, but when they hire somebody, how do 
they get into the system?
    Mr. Luther. They have to go directly to the Basic Pilot 
Program. Most, if not all, have computer systems, or because 
they are located in geographies where they can go and use one, 
they are able to use the Basic Pilot Program in that manner.
    Chairman Johnson. And do they have delays, such as you 
spoke of earlier?
    Mr. Luther. Well, again, I said we started in June, we 
mandated and made a requirement in June, for all franchisees to 
subscribe to that, or they would be violating the laws, that we 
made sure that they comply. But it is early. It is only since 
June we put it in. But in our canvassing, we have not heard of 
any incidences so far, and we continue to monitor.
    Chairman Johnson. Let me ask about ICE. You have to work 
with other Federal agencies and departments. Do you believe 
cooperation is existing between those other Federal entities 
and, you know, the no-match data--are we sure that we are 
checking that information positively, and is Social Security 
working with it?
    Mr. Chakwin. Congressman, ICE is working very closely with 
our state and local and Federal partners. Here, in Dallas, we 
were one of the Document and Benefit Fraud Task Forces that 
were stood up by DHS, and we have 22 individual participants, 
Government agencies, from the Department of Labor, Social 
Security Administration's OIG office, a cadre of state and 
local agencies with us.
    So cooperation is immense. There are 32 people that are 
there, either full time or part time, working on Document and 
Benefit Fraud Task Force. So the interagency cooperation is 
great. Even the United States Attorney's Office sends over two 
assistants to meet with us on a monthly basis for these 
meetings. So cooperation is great in the Dallas area, and the 
dialog between the agencies is great.
    As far as the no-match data, we certainly need total access 
to the no-match data. We have got to be able to drill down and 
see what companies are the most egregious violators.
    We spend a lot of time looking and researching what 
companies we should be looking at, who are the most egregious 
violators. People involved in smuggling, human smuggling, 
trafficking, what have you, and if we had access to this data, 
it would cutoff all that research time.
    Chairman Johnson. Who is keeping you from getting it? Is it 
the IRS? Social Security? Who?
    Mr. Chakwin. Well, what we have to do is, in writing, we 
can ask for it and we will get it, and we have forged a good 
relationship. But it has to go to their headquarters in 
Washington and all that data has to be run out of Washington.
    We would like to have total access to it, without having to 
go back and ask the Social Security Administration for 
permission.
    Chairman Johnson. I agree with you. But are you working 
with IRS as well?
    Mr. Chakwin. Yes, we are. They are one of the members of 
the Document and Benefit Fraud Task Forces, a matter of fact.
    Chairman Johnson. OK. Thank you.
    You know, Mr. Martinez, you alluded to the difficulty an 
employee faces in dealing with Federal bureaucracy, when he is 
denied work authorization, but you refer earlier, that the 
Social Security administration or CIS must resolve the 
employee's situation within 10 working days. Is that turnaround 
figure being met?
    Mr. Martinez. From what I understand, Chairman, the 
difficulty is in getting that information fast enough on a 
plan. When you first make the request, a good number--I mean, I 
think the Basic Pilot Program is making some good steps and 
getting information quickly, but it is not always within those 
first 10 days on the confirmation or non-conformation. So, I 
mean, that is an issue.
    What we would like to see is just ensure that the system is 
faster and working toward a goal of turning those requests 
within 24 hours. That would be extremely helpful.
    Chairman Johnson. Are you getting it?
    Mr. Martinez. In some cases, yes. We have just signed up, 
again, for the Basic Pilot Program, so I don't have a wealth of 
knowledge on how quickly.
    Chairman Johnson. Well, is any one agency stiffing you more 
than another one?
    Mr. Martinez. No. No, not at all, and I will say that they 
are all equal. No, I will say that they are much, much better 
now. They are more responsive, and so I think there are some 
substantial improvements to be made, but I still think we have 
got to have goals in place and hold people accountable, for 
making sure that they can create a system that is staffed 
appropriately and the resources are used to make sure we have 
got an accurate, fast, and efficient system.
    Chairman Johnson. Thank you.
    Mr. Tierney, you are recognized for questions.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Chakwin, I want to thank you for your service on that. 
One of my other roles is on the Intelligence Committee, so I 
know the great work that ICE is doing, and the stress that you 
are under.
    Mr. Chakwin. Thank you.
    Mr. Tierney. And you heard me in my testimony talk about 
our efforts to get you more border patrol agents, and 2700 more 
immigration agents to hep you with that work.
    I think once we enforce it, and have the people out there 
doing it, then the laws are going to be somewhat meaningless on 
that.
    Are you aware that--this slide here just basically shows 
that under the Bush administration, they have cut personnel for 
worksite immigration forces by 63 percent.
    Now I assume that you could use more agents to assist you 
in your job. Am I right?
    Mr. Chakwin. Well, under the administration's proposal, the 
administration has proposed 171 additional agent positions and 
35 auditor positions, which we could use. You know, we are 
always willing to work with Congress and the administration to 
get more, or whatever.
    Mr. Tierney. So we are going to make an effort to increase 
those numbers, and to increase the number of audits as well.
    Mr. Chakwin. But I might say that that statistic is a 
little misleading. We haven't gotten out of the worksite 
enforcement arena at all. In fact, we have become more vigilant 
in going after the most egregious violators. As a matter of 
fact, last year, I believe it was 445 criminal arrests and 
worksite enforcements. The year before, it was 176. You know, 
we are targeting the most egregious violators and working well 
with the United States Attorney's Office.
    So I think we have made great strides. Now critical 
infrastructure has always been a priority with us. National 
security and public safety, of course, and along with that is 
critical infrastructure, and we have not lost focus of that we 
are still going after the most egregious violators in worksite 
enforcement.
    Mr. Tierney. And you are talking a bit of a change of 
strategy, then, as to how you go about on that?
    Mr. Chakwin. Well, before the merger, we went after, we had 
fines, civil fines. We are getting away from civil fines. They 
are a nuisance. Most employers think of them as a nuisance 
fine. What we have done is have worked with the United States 
Attorney to go after people criminally, and use the asset 
forfeiture laws to take away their ill-gotten gains.
    Mr. Tierney. Now with the expense of our friends here 
getting a little out of control, but the number that we had had 
with 1999 was 2849 arrests on that. It had fallen, in 2003, to 
445. Is that going to be reversed?
    Mr. Chakwin. Well, so far this year, administrative 
arrests, we have made over 2100 administrative arrests.
    Mr. Tierney. So you are moving back up to the numbers of 
the last decade, then?
    Mr. Chakwin. And plus, we have got to add in those criminal 
arrests. We are going after criminal indictments and working 
with the United States Attorneys. There is a lot of work 
involved in, you know, working with the United States 
Attorney's Office in prosecuting these corporations, and the 
officers of the corporation.
    Mr. Tierney. Mr. Beardall, under the Sensenbrenner bill, 
the House bill, the employment verification system indicates 
that every citizen, every citizen and lawful permanent resident 
of the country will have to be, I think, forced to obtain the 
Government's consent to work; is that right? Essentially, all 
have to go through the system?
    Mr. Beardall. Right. If the system is going to work, then 
every single employee in the United States has to go through 
this verification system. You can't just single out people you 
think might be immigrants.
    Mr. Tierney. OK. Now Mr. Chakwin, again, I think you would 
be the one to answer this. What would the National Data base 
contain? I assume it would have the personally identifiable 
information regarding every citizen and every visa holder. So 
it would have their name, their birth date, their Social 
Security number, their address. What else would it have?
    Mr. Chakwin. You are talking about what is on an I-9?
    Mr. Tierney. Was it an I-9? And what would be needed for 
the new system when we go through a pilot to a full-blown 
system where everybody has to be checked?
    Mr. Chakwin. That is really a CIS matter. Citizenship and 
Immigration Services is developing that system and----
    Mr. Tierney. Will it be more information than is on the 
current pilot program, or the same?
    Mr. Chakwin. You know, I am not really sure. I have been to 
a meeting at headquarters recently in reference to that, and it 
is a work in progress on what they are going to be needing on 
that.
    Mr. Tierney. Thank you.
    Mr. Chakwin. But that should be directed, really, toward 
CIS.
    Mr. Tierney. Mr. Martinez, the Basic Pilot Program, we 
understand, has about a 20 percent--I think you mentioned, that 
is why I come to you, but it could be any one of the 
witnesses--had about a 20 percent error rate.
    Now the Chairman and I were talking about how we think this 
ought to be instantaneous and so we ought to be able to check. 
But it is, I think, a little bit unnerving, to think that if 
everybody in the country has to go into this system, there is a 
20 percent error rate, and that happens not just in the pilot 
program but into the full-blown program, we have 150 million 
working age U.S. citizens, that looks like about 30 million of 
them are going to have trouble on their job, I mean, probably 
most of them improperly so.
    They are going to have to go through some sort of a 
verification system and a corrections system, or whatever.
    Mr. Martinez. That is correct, Congressman, and that is the 
issue that concerns us most, is what we call these false 
negatives. Those are people that are authorized to work in the 
United States, whose family, whose livelihood is being impacted 
because somebody typed in the wrong spelling of the name. They 
had a situation where they reversed the middle name or the 
first name. We have had a situation--I hope they don't mind me 
using their name--but an individual at work called, the last 
name is Van Brandt. We had to send them off to the Social 
Security office to get their information checked on these 
mismatch letters because there was no space in between Van 
Brandt. And so that type of information comes up and is shown 
as an error.
    So that individual has to spend time, effort, to go down to 
the Social Security office to get that information corrected, 
and it probably would have been easier for them to change their 
name than to go in and try to get it corrected.
    Mr. Tierney. So if 5 percent of the workforce are 
immigrants but 30 percent of the workforce could end up with 
problems in this system, unless we correct that error rate.
    Mr. Martinez. Correct. Right. And when it comes to those 
that are foreign born, the percentages from the reports I have 
read indicate that there is a 30 to 35 percent error rate among 
foreign-born individuals.
    Mr. Tierney. Tens of millions of people, and employers, 
numerous employers going through this and having to spend all 
this time correcting it.
    Mr. Martinez. Absolutely. And that's why the reverification 
system becomes extremely burdensome on everyone, if you have to 
go back and reverify.
    Chairman Johnson. The time of the gentleman has expired.
    Mr. Tierney. Thank you.
    Chairman Johnson. Mr. Wilson, you are recognized.
    Mr. Wilson. Thank you, Mr. Chairman.
    Mr. Chakwin, we appreciate very much your service and 
professionalism. You have indicated that the Immigration and 
Customs Enforcement agency provides training tools for 
employers, to help avoid violating the law. Can you explain how 
ICE is available to employers?
    Mr. Chakwin. Well, recently, the assistant secretary rolled 
out IMAGE, which stands for ICE Mutual Agreement Between 
Government and Employers, and what it is is we will go out and 
work with the employers to establish what we consider the ten 
best hiring practices.
    One of the cornerstones of the ten best hiring practice is 
the use of the basic pilot verification program. And what we 
will do is we will have individuals go out and meet with the 
employer on what documents to look for, you know, detection 
for--we don't expect that people are going to be fraud experts.
    I am not a fraud expert. I don't think that the employer 
should be a fraud expert. But, you know, every state requires a 
biometric on their driver's license, and if the person has a 
driver's license, doesn't look like them, well, I guess maybe 
that's not their driver's license. Something basic like that.
    We will work with the employer, what documents to look for, 
we train them, we'll go out--anybody who is interested in it, 
you know, we will be more than willing to work with that 
company.
    Mr. Wilson. And this is for small and large businesses?
    Mr. Chakwin. That is correct.
    Mr. Wilson. Mr. Luther, I want to thank you for your 
commitment to comply with the law, and I have worked, 
firsthand, with first generation Americans from India, who are 
very proud to be Dunkin' Donuts franchisees, and your company 
has a great reputation.
    Mr. Luther. Thank you.
    Mr. Wilson. Before your company enrolled in the Basic Pilot 
Program, your human resource managers had to review all 
documents and simply maintain I-9 records.
    How did your company or franchise owners ensure that they 
were not accepted fraudulent documents, and are there ways to 
improve the documents, to ensure that your personnel are 
comfortable with the documents presented?
    Mr. Luther. Prior to the Basic Pilot Program, the 
requirement was a Social Security number and an I-9, and all 
that was verified. The problem was we didn't know if that 
verification met that actual employee. And these are small 
business owners. Like I mentioned before, we don't have large 
human resources departments. So it is the individual small 
business owner who is required to make that determination, and 
when it is difficult to determine counterfeit documents, 
sometimes they would just have to use their own judgment, which 
is why the Basic Pilot Program, when it came along, was, we 
felt, the only true verification system we could use, and we 
have required that and mandated that to all franchisees to 
comply with. So we have taken a little bit of that guesswork 
away, and although there may be errors, many of those errors, 
as my good counterpart here, Abel, has just said, there is a 
lot of mismatches, but those mismatches get corrected pretty 
easily.
    So the millions of people you are talking about get reduced 
pretty significantly on that first mismatch round. And what we 
do find, though, is after a mismatch, and it is a true 
mismatch, they don't come back for employment verification. 
They rule themselves out. So that helps our small business 
owner as well.
    Mr. Wilson. Saves time and complies with the law.
    Mr. Luther. Right.
    Mr. Wilson. Ms. Simmons, your testimony highlights a 
serious flaw in the Reid-Kennedy bill passed by the Senate. 
When non-confirmation is given by a verification system, the 
Senate bill allows for up to 30 days to determine eligibility. 
As you point out, this could expose employers to provide 
someone who is not in our country benefits.
    What do you believe is the appropriate time limit for non-
confirmation?
    Ms. Simmons. The system that we use right now, it gives you 
the 10 days for non-conformation. By that time, we should have 
it. When I run BPI, it is almost instantaneous, so I don't have 
an issue when people are run through the system. We did have a 
few mismatches. I guess I like, you know, looking at the 
shorter timeframe, without the 30 days. Or 43 days.
    Mr. Wilson. And how short could it be?
    Ms. Simmons. I guess I like the system right now. You know, 
I like the 10 days for the second verification, reverification.
    Mr. Wilson. Thank you.
    And Mr. Martinez, in your testimony you highlight the error 
rates of the Government data bases. We all rely on major credit 
card companies to provide almost instantaneous approval. From 
your experience, is there a solution to update the data bases 
and provide for better accuracy and speed?
    Mr. Martinez. Absolutely, Congressman. I think we have just 
got to make sure we recognize that we need the resources, both 
from the Government side, and be committed to spending those 
resources to hire the people we need to, and involve the 
consultants that we need to to develop the software that will 
be accurate. That is the big issue, is can we make it as 
accurate as possible? Because we are going to have some issues, 
and we will continue to have issues. We all realistic about 
that.
    But making sure we have got a system in place, that is 
going to be accurate, is really the biggest issue, and I think 
when we look at rolling in the process, and right now there is 
an eighteen--I think it is basically either a 180 day, or 18 
month roll-in process, of phase-in for this new system, the 
bigger the ship, the harder it is for a corporation. The more 
you employ, to turn around and phase in everyone into this new 
system. So I ask, and a side point is, to really consider the 
phase-in, and look at a 2-year phase-in based upon the size of 
the employer, to make sure we can get these accurate results, 
and then making sure that when people come in and apply for 
their visas or their work permits, that we can input that 
information into the system as quickly as possible.
    Waiting 3 months, 6 months, really affects everybody, if 
you cannot verify, when somebody comes in, gets an updated 
visa, put that information into the system, so that when you 
check to see whether or not they are authorized, you can get 
that information quickly.
    Mr. Wilson. Thank you.
    Chairman Johnson. The gentleman's time has expired.
    I want to thank the witnesses for their valuable time and 
testimony, and both the witnesses and the members for their 
participation. A couple of our members from out of state have 
airplanes to catch. Thankfully, we have a transportation system 
in this country that can get us back and forth pretty rapidly.
    So I appreciate that and I would just like to point out 
that, you know, Visa and Mastercard can have instantaneous 
recognition of who is right and who is wrong----
    [Applause.]
    Chairman Johnson. This points out that free enterprise and 
freedom do work, and that is what America is all about.
    If there is no further business, the subcommittee stands 
adjourned. Thank you all.
    [Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
    [Additional submissions for the record follow:]
    [Prepared statement of the U.S. Citizenship and Immigration 
Services follows:]

 Prepared Statement of U.S. Citizenship and Immigration Services, U.S. 
                    Department of Homeland Security

I. Introduction
    Mr. Chairman, Ranking Member Miller, and Members of the Committee: 
We appreciate the opportunity to submit testimony for the record to the 
Committee about the U.S. Citizenship and Immigration Services' (USCIS) 
Basic Pilot Employment Verification Program (Basic Pilot), which 
provides information to participating employers about the work 
eligibility of their newly hired workers. We will also describe the 
agency's plans to improve and expand the Basic Pilot in preparation for 
a nationwide mandatory Employment Verification Program.
    An Employment Verification Program is a critical step to improving 
worksite enforcement and directly supports the President's goal of 
achieving comprehensive immigration reform. In his speech to the U.S. 
Chamber of Commerce on June 1, President Bush endorsed the Basic Pilot 
as ``a quick and practical way to verify Social Security numbers'' that 
``gives employers confidence that their workers are legal, improves the 
accuracy of wage and tax reporting, and helps ensure that those who 
obey our laws are not undercut by illegal workers.''
    Clearly, if we are to control illegal immigration, we can't just 
focus on the border. Illegal immigrants are living and working in every 
state of the nation, and our solution must be just as comprehensive. We 
must make sure that our immigration laws are enforced in New York and 
Ohio and Georgia, not just along the southwest border. Today, an 
illegal immigrant with a fake ID and Social Security card can find work 
almost anywhere in the country without difficulty. It's the prospect of 
jobs that leads people to risk their lives crossing a hundred miles of 
desert or to spend years in the shadows, afraid to call the authorities 
when victimized by criminals or exploited by their boss.
    That is why the Administration has proposed a comprehensive 
overhaul of the employment verification and employer sanctions program 
as part of the President's call for comprehensive immigration reform.
    There is much we can do in advance of the enactment of 
comprehensive immigration reform. Here's what we are working on at 
USCIS to improve and expand the Basic Pilot:
     Ensuring that more aliens authorized to work have secure 
biometric cards.
     Accessing our card databases for verification of work 
authorization--which will decrease the number of Basic Pilot queries 
that require a manual check.
     Streamlining the enrollment process for employers by 
making it completely electronic.
     Creating monitoring and compliance units that will search 
Basic Pilot and Employment Verification Program data for patterns to 
detect identification fraud and employer abuse.
    The President's FY07 budget requests $110 million for expansion of 
the Basic Pilot to make it easier for employers to verify 
electronically the employment eligibility of workers. Based on our 
planning to date, we believe a feasible timetable allowing for phased-
in expansion of mandatory verification along with flexible, user-
friendly program requirements are essential to expand and operate the 
program as efficiently and effectively as possible.
    We will also reach out to employers, including small businesses, 
for feedback and real-world input, such as ideas on the best ways to 
submit data on new hires with the least collective burden and how to 
make electronic employment verification as user-friendly as possible.
II. The Current Basic Pilot Program and Employment Verification Program
    With that backdrop, we would like to take this opportunity to 
outline how the current Basic Pilot works and the plans USCIS is 
putting in place to expand and improve it in preparation for a national 
mandatory program.
    Congress established the Basic Pilot as part of the Illegal 
Immigration Reform and Immigrant Responsibility Act (IIRIRA) in 1996, 
creating a program for verifying employment eligibility, at no charge 
to the employer, of both U.S. citizens and noncitizens. The Basic Pilot 
program began in 1997 as a voluntary program for employers in the five 
states with the largest immigrant populations--California, Florida, 
Illinois, New York and Texas. In 1999, based on the needs of the meat-
packing industry as identified through a cooperative program called 
Operation Vanguard, Nebraska was added to the list. The program was 
originally set to sunset in 2001, but Congress has twice extended it, 
most recently in 2003 extending its duration to 2008 and also ordering 
that it be made available in all 50 States. However, the program 
remains only voluntary, with very limited exceptions. A small 
percentage of U.S. employers participate, although the program is 
growing by about 200 employers a month to a current 10,000 agreements 
between USCIS and employers. These employers are verifying over a 
million new hires per year at more than 35,000 work sites.
    We seek in operating the Basic Pilot program to encourage the 
voluntary participation of small businesses, and to be responsive to 
their needs and concerns. Most (87%) of our participating employers 
have 500 or fewer employees. We would welcome your support in reaching 
out to enroll even more employers in the program. Interested employers 
can register by going to our Basic Pilot Employer Registration Site at: 
https://www.vis-dhs.com/employerregistration.
            How the Basic Pilot Works
    After hiring a new employee, an employer submits a query including 
the employee's name, date of birth, Social Security account number 
(SSN) and whether the person claims to be a U.S. citizen or work-
authorized noncitizen (for noncitizens, DHS issued identifying # is 
also submitted) and receives an initial verification response within 
seconds. For an employee claiming to be a U.S. citizen, the system 
transmits the new hire's SSN, name and date of birth to the Social 
Security Administration (SSA) to match that data, and SSA will confirm 
citizenship status on the basis of its Numident database. For the 88% 
of employees whose status can be immediately verified electronically, 
the process terminates here; in the remaining cases, the system issues 
a tentative nonconfirmation to the employer. The employer must notify 
the employee of the tentative nonconfirmation and give him or her an 
opportunity to contest that finding. If the employee contests the 
tentative nonconfirmation, he or she has eight days to visit an SSA 
office with the required documents to correct the SSA record.
    Noncitizen employees face a more elaborate process. Once SSA 
verifies the name, date of birth, and SSN, the system will attempt to 
verify the person's work authorization status against the Basic Pilot 
database. (If a noncitizen's SSN information does not match, the 
individual is first referred to SSA) If the system cannot 
electronically verify the information, an Immigration Status Verifier 
will research the case, usually providing a response within one 
business day,\1\ either verifying work authorization or, in 19 percent 
of cases, issuing a DHS tentative nonconfirmation. If the employer 
receives a tentative nonconfirmation, the employer must notify the 
employee and provide an opportunity to contest that finding. An 
employee has eight days to call a toll-free number to contest the 
finding and cannot be fired during that time because of the tentative 
nonconfirmation. Once the necessary information from the employee has 
been received, USCIS generally resolves the case within three business 
days,\2\ by issuing either a verification of the employee's work 
authorization status or a DHS Final Nonconfirmation.
---------------------------------------------------------------------------
    \1\ Statistics gathered from the Basic Pilot database, Oct. 1, 2005 
to March 31, 2006.
    \2\ Ibid.
---------------------------------------------------------------------------
    As you know, the House and Senate have both passed significant 
immigration legislation this Congress, including provisions that 
require a mandatory electronic employment eligibility verification 
program for all 7 million U.S. employers. Although the House and Senate 
provisions differ in some significant ways, both bills would require 
the eventual expansion to all U.S. employers of an Employment 
Verification Program generally modeled on the Basic Pilot.
    USCIS is already planning for the expansion of the program. The 
President's FY07 budget request includes $110 million to begin 
expanding and improving the Basic Pilot, including conducting outreach, 
instituting systems monitoring, and compliance functions. USCIS is 
exploring ways to improve the completeness of the immigration data in 
the Basic Pilot database, including adding information about 
nonimmigrants who have extended or changed status and incorporating 
arrival information in real time from U.S. Customs and Border 
Protection. In addition, USCIS is enhancing the Basic Pilot system to 
allow an employer to query by the new hire's card number, when that 
worker has a secure I-551 (``green card'') or secure Employment 
Authorization Document. This enhancement will improve USCIS' ability to 
verify promptly the employment eligibility of noncitizens because the 
system will validate the card number against the repository of 
information that was used to produce the card, thereby instantly 
verifying all legitimate card numbers.
            Planned Monitoring and Compliance Functions
    No electronic verification system is foolproof or can fully 
eliminate document fraud, identity theft, or intentional violation of 
the required procedures by employers for the purpose of hiring 
unauthorized persons or keeping them on the payroll. But an Employment 
Verification Program that includes all U.S. employers, along with 
monitoring and compliance functions and a fraud referral process for 
potential ICE Worksite Enforcement cases, can substantially deter and 
detect the use of fraud by both employers and employees as the 
Administration works to strengthen its overall interior enforcement 
strategy.
    The current Basic Pilot is not fraud-proof and was not designed to 
detect identity fraud. In fact, a recent analysis of Basic Pilot 
systems data found multiple uses of certain I-94 numbers, A-numbers, 
and SSNs in patterns that could suggest fraud. As currently envisioned, 
the Employment Verification Program will include robust processes for 
monitoring and compliance that will help detect and deter the use of 
fraudulent documents, imposter fraud, and incorrect usage of the system 
by employers (intentionally and unintentionally). USCIS will forward 
enforcement leads to ICE Worksite Enforcement in accordance with 
referral procedures developed with ICE. The monitoring unit will 
scrutinize individual employers' use of the system and conduct trend 
analysis to detect potential fraud. Findings that are not likely to 
lead to enforcement action (e.g., a user has not completed training) 
will be referred to USCIS compliance officers for follow-up. Findings 
concerning potential fraud (e.g., SSNs being run multiple times in 
improbable patterns; employers not indicating what action they took 
after receiving a final nonconfirmation) will be referred to ICE 
Worksite Enforcement investigators.
    It is essential that DHS have the authority to use information 
arising from the Employment Verification Program to enforce our 
Nation's laws, including prosecuting fraud and identifying and removing 
criminal aliens and other threats to public safety or national 
security. It is also important that the system contain security and 
other protections to guard personal information from inappropriate 
disclosure or use, and to discourage use of the system to discriminate 
unlawfully or otherwise violate the civil rights of U.S. citizens or 
work-authorized noncitizens.
            Planning for the Employment Verification Program
    We are confident in our ability to get a substantially expanded 
Employment Verification Program operational with the President's budget 
request.
    The Administration supports a phased-in Employment Verification 
Program implementation schedule on a carefully drawn timeframe to allow 
employers to begin using the system in an orderly and efficient way. We 
favor having the discretion to phase in certain industry employers 
ahead of others. As noted elsewhere in my testimony, USCIS already is 
working to improve and expand the Basic Pilot program to support the 
proposed expansion.
    USCIS is also committed to constructing a system that responds 
quickly and accurately. In order for this system to work, it must be 
carefully implemented and cannot be burdened with extensive 
administrative and judicial review provisions that could effectively 
tie the system, and DHS, up in litigation for years.
III. Improved Documentation
    In the President's May 15, 2006 address to the nation on 
comprehensive immigration reform, he indicated that businesses often 
cannot verify the legal status of their employees because of widespread 
document fraud. We need, he said, ``a better system for verifying 
documents and work eligibility. A key part of that system should be a 
new identification card for every legal foreign worker. This card 
should use biometric technology...to make it tamper-proof. A tamper-
proof card would help us enforce the law, and leave employers with no 
excuse for violating it.''
    Many foreign workers already possess a secure, biometric card 
evidencing their immigration status as either an immigrant (an I-551 
card, commonly known as a ``green card'') or a work-authorized 
nonimmigrant (an Employment Authorization Document or EAD). Some 
nonimmigrants currently have non-secure EADs, but USCIS is planning to 
eliminate the issuance of these cards in favor of secure cards. In 
addition, USCIS is considering requiring more classes of work-
authorized nonimmigrants to obtain a secure EAD. Requiring all work-
authorized nonimmigrants to obtain secure documentation would help 
ensure that their work eligibility can be instantly verified in the 
Basic Pilot or Employment Verification Program. As discussed 
previously, USCIS already is developing the system capability to verify 
a new hire's immigration card number against the card information 
repository. Under this new system, a legitimate card number matched 
with a name and date of birth will electronically verify in a matter of 
seconds--and only a fraudulent card would fail to verify.
IV. Conclusion
    We in USCIS are in a unique position to understand the importance 
of having legal means for individuals to enter and work in the United 
States. That is why we, and the President, support comprehensive 
immigration reform that includes interior and border enforcement in 
addition to a temporary worker program.
    We thank both the House and the Senate for recognizing the need for 
change in this area. With a strong cooperative effort now, the prospect 
of a truly effective national mandatory Employment Verification 
Program, combined with improved documentation, will reduce pressure on 
border and interior enforcement, simplify today's processes, put 
employers on an equal footing, and support a temporary worker program 
that is vital to our economy.
                                 ______
                                 
    [News release and fact sheet from the U.S. Citizenship and 
Immigration Services follow:]

                              News Release

  Proven Employment Verification Tool Attracts More Than 10,000 U.S. 
                               Employers

   Record Numbers Now Using the Basic Pilot Employment Verification 
                                Program

    Washington, DC--U.S Citizenship and Immigration Services (USCIS) 
today announced that more than 10,000 U.S. employers are now 
participating in the Basic Pilot Employment Verification Program. The 
program allows employers to remove the guesswork involved with the 
hiring process by running online employment authorization checks 
against Social Security Administration and DHS databases.
    ``Participation in the Employment Verification Program is the 
solution for businesses committed to maintaining a legal workforce,'' 
said USCIS Director Emilio Gonzalez. ``Through the program, DHS is 
providing employers with information needed to ensure their newly hired 
employees are fully eligible to work in the United States. In the 
process, we're protecting jobs for authorized U.S. workers.''
    Participation in this free program has more than doubled during the 
first three quarters of this fiscal year. Nearly 200 new employers are 
joining the Employment Verification Program each month. These 
businesses are verifying the work authorization of more than one-
million new hires a year at 36,000 hiring sites across the United 
States.
    Employers can register for the Employment Verification Program on-
line at https://www.vis-dhs.com/EmployerRegistration. Additional 
information for employers about the program is available by calling 
202-272-8720 or visiting www.uscis.gov.
    On March 1, 2003, U.S Citizenship and Immigration Services became 
one of three legacy INS components to join the U.S. Department of 
Homeland Security. USCIS is charged with fundamentally transforming and 
improving the delivery of immigration and citizenship services, while 
enhancing the integrity of our nation's security.
                                 ______
                                 

                               Fact Sheet

              Basic Pilot Employment Verification Program

        Removing the Guess Work from Employment Document Review

          The Employment Verification Program * * * ``is a quick and 
        practical way to verify social security numbers giving 
        employers confidence that their workers are legal * * * ''
                                     President George Bush,
                                                      June 1, 2006.
    The Basic Pilot Employment Verification Program allows employers to 
remove the guesswork involved with hiring new employees. Conducted 
jointly by the Department of Homeland Security (DHS) and the Social 
Security Administration (SSA), the Employment Verification Program 
allows employers to use an automated Internet-based system to run 
employment authorization checks against DHS and SSA databases during 
the hiring process. In the process, it assists employers in maintaining 
a legal workforce and protects jobs for authorized U.S. workers. The 
program is administered by U.S. Citizenship and Immigration Services.
    The Employment Verification Program became available to all 
employers in California, Florida, Illinois, New York and Texas in 
November 1997, and to Nebraska employers in March 1999. On December 20, 
2004, the program expanded to allow employers in all 50 states and the 
District of Columbia to voluntarily participate.
    More than 10,000 employers are currently using the program to 
verify that their new hires are authorized to work in the United 
States. There is no charge to participate. The President's FY07 budget 
request includes $110 million to expand and improve the Employment 
Verification Program.
    Employers can register on-line at https://www.vis-dhs.com/
EmployerRegistration, which provides instructions for completing the 
Memorandum of Understanding (MOU) needed to officially register for the 
program.
    Once registered, employers use the Employment Verification Program 
through a simple search function which asks for information captured on 
the I-9 Form (Employment Verification form). Each Employment 
Verification search compares employee information against more than 
425-million records in the SSA database and more than 60-million 
records in DHS databases. Most responses are returned within seconds.
    The Basic Pilot Extension and Expansion Act of 2003 extended the 
Basic Pilot Employment Verification Program until November 2008. The 
Illegal Immigration Reform and Immigrant Responsibility Act of 1996 
(IIRIRA) authorized the program. Additional information for employers 
about the Employment Verification Program is available by calling 202-
272-8720 or visit www.uscis.gov.
    On March 1, 2003, U.S Citizenship and Immigration Services became 
one of three legacy INS components to join the U.S. Department of 
Homeland Security. USCIS is charged with fundamentally transforming and 
improving the delivery of immigration and citizenship services, while 
enhancing the integrity of our nation's security.
                                 ______
                                 
    [Prepared statement of the American Staffing Association 
follows:]

        Prepared Statement of the American Staffing Association

Introduction
    The American Staffing Association appreciates the opportunity to 
offer comments on the topic of enforcing employee work eligibility laws 
and implementing a stronger employment verification system. While we 
strongly support an electronic employment verification system, such as 
the type proposed in both House and Senate immigration reform bills, 
there are several issues that need to be addressed to make such a 
system fair and workable.
    ASA has been the voice of the U.S. staffing industry for 40 years. 
Along with its affiliated chapters, ASA promotes the interests of the 
industry and flexible employment opportunities through legal and 
legislative advocacy, public relations, education, and the 
establishment of high standards of ethical conduct.
    ASA members provide a wide range of employment-related services and 
solutions, including temporary and contract staffing, recruiting and 
placement, outsourcing, training, and human resource consulting. Member 
companies operate more than 15,000 offices across the nation and 
account for more than 85% of U.S. staffing industry sales.
    The staffing industry employs almost 3 million employees a day and 
more than 12 million each year. Staffing firms recruit and hire their 
employees and assign them to businesses to assist in special work 
situations such as employee absences, skill shortages, and seasonal 
workloads, or to perform special assignments or projects. Employees 
work in virtually every skill level and job category, including 
industrial labor, office support, engineering, IT, legal, accounting 
and health care.
Problems with the Current Employment Verification Efforts
    The current employment verification process is based on the 
employers' review of documents presented by new employees to prove 
their identity and work eligibility. Employers use a form known as the 
I-9 form to certify that they have reviewed documents presented by 
their employees and that the documents appear genuine and relate to the 
individual presenting the documents. However, as technology continues 
to improve, document fraud and identity fraud have undermined the 
employment verification process. Simple proposals to revise the I-9 
process, such as reducing the number of acceptable work eligibility 
documents, have yet to be acted on.
Worksite Enforcement Issues
    According to a recent GAO report, the worksite enforcement program 
has been a low priority under both the former Immigration and 
Naturalization Services (INS) and its successor the Immigration and 
Customs Enforcement (ICE). During fiscal year 1999, INS devoted about 9 
percent of its total investigative agents' time to worksite 
enforcement, while in fiscal year 2003 it allocated about 4 percent. 
ICE officials reported difficulties in proving employer violations and 
setting and collecting fine amounts that meaningfully deter employers 
from knowingly hiring unauthorized workers. In addition, INS and then 
ICE shifted its worksite enforcement focus to critical infrastructure 
protection after September 11, 2001.\1\
---------------------------------------------------------------------------
    \1\ United States Government Accountability Office, Immigration 
Enforcement: Preliminary Observations on Employment Verification and 
Worksite Enforcement Efforts, June 21, 2005.
---------------------------------------------------------------------------
The Need for a Stronger Employment Verification System
    Throughout the entire debate on immigration reform, one of the few 
points that both members of the House and Senate agree on is the need 
to expand the current voluntary Basic Pilot program into a mandatory 
electronic employment verification system.
    While the basic pilot program has been very successful with 
enhancing the employment verification process, there are still several 
issues that need to be addressed before a mandatory system can be 
introduced. The cost and time table for creating and implementing an 
electronic verification system that every employer in the United States 
was required to use is a major concern. Also, while the pilot program 
helps detect document fraud, it is unable to detect identity fraud.
    In implementing a new employment verification system, Congress 
needs to address not only the issues raised above, but they must also 
address the following issues that affect staffing firms in particular.
As Under Current Law, Employers Should Have the Option of Verifying 
        Employees Upon Offer of Employment Or When They Actually 
        Commence Work
    Under current law, staffing firms and other employers have the 
option of verifying employment eligibility upon offer of employment or 
at the time work actually commences. [52 F.R. 16218, May 1, 1987] 
Staffing firms generally opt to treat individuals who successfully 
complete a job application and are deemed qualified for job assignments 
as having been offered employment for the purpose of completing the I-9 
verification, even though a specific job assignment is not immediately 
available.
    Most temporary and contract workers wait anywhere from a day to 
several weeks before being contacted by the staffing firm for a job 
assignment with a staffing firm customer and most never have an 
occasion to return to the staffing firm's offices. Once notified of a 
job assignment, employees typically go from home directly to the 
customer's work site. Because many assignments must be filled on short 
notice, it would be difficult if not impossible for most employees to 
return to the staffing firm's office to complete the attestation and 
document examination process prior to going on the job. Moreover, 
getting to the staffing firm's office would be a significant hardship 
for employees who live far from the staffing firm's offices or who rely 
on public transportation.
    Accordingly, staffing firms and other similarly situated employers 
must continue to have the option of completing the attestation and 
document examination phase of the verification process at the time they 
are offered employment.
    Employers should have the same flexibility in using the new 
electronic employment verification system. Staffing firms and other 
employers whose employees do not commence work immediately should have 
the option of accessing the system at the time the individual is 
offered employment (e.g., when the individual has successfully 
completed the application process and been approved for employment) or 
when work actually commences.
The Employment Verification System Should Not Apply to All Recruiters 
        and Referrers
    Under current law, the obligation to verify employment eligibility 
generally applies only to employers, not to those who merely recruit or 
refer individuals for employment by others. The only exception is for 
those who recruit agriculture or farm workers. [8 U.S.C. Section 
1324a(a)(1)(B)(ii).] Congress narrowed the verification requirements to 
agriculture or farm recruiters in 1991 recognizing that it was 
unnecessary to also impose those requirements on traditional placement 
agencies and executive recruiting firms whose clients already have the 
obligation to verify eligibility upon hire.
    Both House and Senate immigration reform bills would make it 
unlawful to hire ``or to recruit or refer for employment'' an 
individual without complying with the employment verification 
requirements. We are concerned that this broad reference to those who 
recruit and refer could again be construed inappropriately as expanding 
the verification obligations to all recruiters. While we have been 
advised by staff members of the House and Senate Judiciary Committee 
that this is not the intent of the legislation, in order to avoid any 
misinterpretation, we urge that the bill be amended to make that 
unequivocally clear.\2\
---------------------------------------------------------------------------
    \2\ Sections 705 and 708 of H.R. 4437 appears to limit the 
reference to recruiting and referring in Section 703 to labor services 
agencies that operate hiring halls or day labor shelters, which would 
be appropriate. But the Senate bill contains such limitation.
---------------------------------------------------------------------------
Employers Should Not be Charged a Fee for Using The System
    According to a Congressional Budget Office cost estimate report, 
the cost to develop and fully implement a viable electronic employment 
verification system will be more than $400 million over a 4-year 
period. While some believe employers should be charged a fee for using 
this system, we believe that would place an unwarranted burden on 
businesses. A fee-based system will also have an unfair and 
disproportionate impact on employers with large numbers of part-time 
and temporary employees and high employee turnover, such as staffing 
firms, restaurants, and retail establishments.
Businesses Should Not be Required to Reverify Current Employees
    Any new verification system must be fair to all employers. The new 
system proposed in the House immigration bill requires all employers to 
verify their entire work force through the new system by the year 2012. 
This requirement is unnecessary because these employees will have 
already been verified by their employers through the current I-9 
process. It will also cost employers time and money and will 
discriminate against employers with disproportionately large temporary 
and part-time work forces and high turnover. Instead of requiring 
blanket reverification for all employers, Congress should allow the 
Secretary of Homeland Security to require reverification only if an 
employer has engaged in material violations of the law.
Conclusion
    Efforts to reduce the employment of unauthorized workers in the 
United States require both a strong employment eligibility verification 
process and a credible worksite enforcement program to ensure that 
employers meet verification requirements. The American Staffing 
Association strongly supports Congress's efforts to achieve this goal, 
and we look forward to working with members of Congress and others to 
bring such a system to fruition.

                                 
