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



                                                   S. Hrg. 102-000 
 
         IMMIGRANT EMPLOYMENT VERIFICATION AND SMALL BUSINESS


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

                                HEARING

                               before the

      SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT & GOVERNMENT PROGRAMS

                                 of the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                     WASHINGTON, DC, JUNE 27, 2006

                               __________

                           Serial No. 109-58

                               __________

         Printed for the use of the Committee on Small Business


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house



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                      COMMITTEE ON SMALL BUSINESS

                 DONALD A. MANZULLO, Illinois, Chairman

ROSCOE BARTLETT, Maryland, Vice      NYDIA VELAZQUEZ, New York
Chairman                             JUANITA MILLENDER-McDONALD,
SUE KELLY, New York                    California
STEVE CHABOT, Ohio                   TOM UDALL, New Mexico
SAM GRAVES, Missouri                 DANIEL LIPINSKI, Illinois
TODD AKIN, Missouri                  ENI FALEOMAVAEGA, American Samoa
BILL SHUSTER, Pennsylvania           DONNA CHRISTENSEN, Virgin Islands
MARILYN MUSGRAVE, Colorado           DANNY DAVIS, Illinois
JEB BRADLEY, New Hampshire           ED CASE, Hawaii
STEVE KING, Iowa                     MADELEINE BORDALLO, Guam
THADDEUS McCOTTER, Michigan          RAUL GRIJALVA, Arizona
RIC KELLER, Florida                  MICHAEL MICHAUD, Maine
TED POE, Texas                       LINDA SANCHEZ, California
MICHAEL SODREL, Indiana              JOHN BARROW, Georgia
JEFF FORTENBERRY, Nebraska           MELISSA BEAN, Illinois
MICHAEL FITZPATRICK, Pennsylvania    GWEN MOORE, Wisconsin
LYNN WESTMORELAND, Georgia
LOUIE GOHMERT, Texas

                  J. Matthew Szymanski, Chief of Staff

          Phil Eskeland, Deputy Chief of Staff/Policy Director

                  Michael Day, Minority Staff Director

     SUBCOMMITTEE ON WORKFORCE, EMPOWERMENT AND GOVERNMENT PROGRAMS

MARILYN MUSGRAVE, Colorado Chairman  DANIEL LIPINSKI, Illinois
ROSCOE BARTLETT, Maryland            TOM UDALL, New Mexico
BILL SHUSTER, Pennsylvania           DANNY DAVIS, Illinois
MICHAEL FITZPATRICK, Pennsylvania    RAUL GRIJALVA, Arizona
LYNN WESTMORELAND, Georgia           MELISSA BEAN, Illinois
THADDEUS McCOTTER, Michigan          GWEN MOORE, Wisconsin
JEB BRADLEY, New Hampshire

                     Joe Hartz, Professional Staff

                                  (ii)


                            C O N T E N T S

                              ----------                              

                               Witnesses

                                                                   Page
Calvert, The Honorable Ken (CA-44), Congressman, U.S. House of 
  Representatives................................................     4
Divine, Mr. Robert, Acting Deputy Director, U.S. Citizenship and 
  Immigration Services, U.S. Department of Homeland Security.....     6
Shandley, Mr. Jack, Senior Vice President, Human Resources, Swift 
  & Company......................................................    17
Amador, Mr. Angelo, Director for Immigration Policy, U.S. Chamber 
  of Commerce, Essential Worker Immigration Coalition............    19
Krikorian, Mr. Mark, Executive Director, Center for Immigration 
  Studies........................................................    22
Malara, Mr. Toby, Government Affairs Counsel, American Staffing 
  Association....................................................    24
Lake, Mr. Monte, Partner, McGuiness, Norris & Williams, LLP......    26

                                Appendix

Opening statements:
    Musgrave, Hon. Marilyn.......................................    33
    Velazquez, Hon. Nydia (Ex Officio)...........................    37
Prepared statements:
    Calvert, The Honorable Ken (CA-44), Congressman, U.S. House 
      of Representatives.........................................    39
    Divine, Mr. Robert, Acting Deputy Director, U.S. Citizenship 
      and Immigration Services, U.S. Department of Homeland 
      Security...................................................    42
    Shandley, Mr. Jack, Senior Vice President, Human Resources, 
      Swift & Company............................................    49
    Amador, Mr. Angelo, Director for Immigration Policy, U.S. 
      Chamber of Commerce, Essential Worker Immigration Coalition    53
    Krikorian, Mr. Mark, Executive Director, Center for 
      Immigration Studies........................................    65
    Malara, Mr. Toby, Government Affairs Counsel, American 
      Staffing Association.......................................    73
    Lake, Mr. Monte, Partner, McGuiness, Norris & Williams, LLP..    80

                                 (iii)
      



          IMMIGRANT EMPLOYMENT VERIFICATION AND SMALL BUSINESS

                              ----------                              


                         TUESDAY, JUNE 27, 2006

                   House of Representatives
        Subcommittee on Workforce, Empowerment and 
                                Government Programs
                                Committee on Small Business
                                                     Washington, DC
    The Subcommittee met, pursuant to call, at 2:30 p.m., in 
Room 2360 Rayburn House Office Building, Hon. Marilyn Musgrave 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Musgrave, Lipinski, Udall, Davis.
    Also Present: Representative Akin.
    Chairman Musgrave. I think I will go ahead and call the 
meeting to order, out of respect to Congressman Calvert's time, 
and the witnesses. Mr. Lipinski is on his way, so he will join 
us shortly.
    I call this meeting to order. I thank you all for being 
here, especially those of you that have traveled great 
distances to provide the Committee with testimony.
    While I've been traveling around my district, and I hear 
this from most Congressmen, the problem of illegal immigration 
is constantly one of the top concerns. Individuals, community 
leaders, law enforcement leaders, healthcare providers, 
educators, all recognize the effects that illegal immigration 
has on our country, and they talk to us about passing laws to 
promote America's tradition of waffle immigration.
    The increasing number of immigrants crossing our borders 
illegally is a burden to our economy and a threat to our 
national security. The official census data predicts there are 
8.7 million individuals living here illegally. However, some 
unofficial estimates predicted closer to 12 million. There are 
also approximately 500,000 illegal aliens that enter the United 
States every year.
    Because this is a pressing issue, the House of 
Representatives passed H.R. 4437, the Border Protection, Anti-
Terrorism and Illegal Immigration Control Act, prior to the 
recess of Congress in December of `05. In May of 2006, the 
Senate also passed a significant immigration reform bill, 
S.2611, the Comprehensive Immigration Reform Act of 2006. Both 
bills make numerous significant changes to our immigration law 
and border security efforts.
    H.R. 4437 also aims to crack down on alien smugglers and 
the alien gang members who terrorize our communities. In the 
addition, the bill would direct the Secretary of Homeland 
Security to devise a plan to provide systematic surveillance 
coverage, and within one year introduce a plan for border 
security, including risk assessment of ports of entry. This 
plan would include a description of border security roles of 
federal, state, regional, local and tribal authorities in ways 
to ensure such security efforts would not impede commerce.
    The focus of the hearing today, however, will be on the 
expansion of the Basic Pilot program for employee verification 
that is contained in both bills. The Immigration Reform and 
Control Act of 1986 made it unlawful for employers to knowingly 
hire or employ aliens not eligible to work, and required 
employers to check the identity and work eligibility documents 
of new employees.
    This Act was designed to end the ``job-magnet'' that draws 
the vast majority of illegal aliens to the United States. 
Unfortunately, the easy availability of counterfeit documents 
has made a mockery of that legislation that was passed in 1986. 
Fake documents are produced by the millions, and they can be 
bought very cheaply.
    Through the Illegal Immigration Reform and Immigrant 
Responsibility Act of 1996, Congress responded to the 
deficiencies of the 1986 Act by establishing three employment 
eligibility verification pilot programs for volunteer employers 
in selected areas. This is known as the Basic Pilot program.
    Since November of 1997, the Social Security Administration 
and the Systemic Alien Verification for Entitlements program 
have been conducting the Basic Pilot program in the states of 
California, Florida, Illinois, Nebraska, New York and Texas. 
The program was made available to all employers in all states 
starting in December of 2004. The Basic Pilot involves 
verification checks of the SSA and the now Department of 
Homeland Security databases of all newly-hired employees, 
regardless of citizenship.
    The Basic Pilot is currently a voluntary program, and is 
free to employers who volunteer to participate. It is now used 
by over 4,000 employers and at least 15,000 work sites 
nationwide.
    The recently passed House and Senate legislation both 
change the name of the Basic Pilot program to the Employment 
Eligibility Verification System, and would require all 
businesses to use it when making new hires. The legislation 
also increases fines for companies failing to comply with the 
new law.
    While the House bill prescribes lower penalties for small 
and medium-sized businesses, the Senate bill does not, nor does 
the Senate bill have an exemption or fines for a ``good faith 
effort'' to comply.
    Our purpose here today is not to compare and contrast the 
merits of either bill. All too often when these gigantic 
reform-minded pieces of legislation are formulated, small 
businesses are just an after thought. While the House did take 
small and medium-sized businesses into consideration when they 
constructed the legislation, there are many questions we need 
to ask to ensure that this bill, should it become law, will not 
unjustly overburden America's small businesses.
    We need to answer questions such as, will making 
participation mandatory increase the paperwork burden for small 
businesses? How accurate will it be, and how can we ensure the 
number of false positives and negatives will be extremely 
minimal? How long will it take to certify someone, and will the 
Department of Homeland Security be ready for it if it happens, 
and what do we need to do in Congress to make sure they are?
    I'm eager to hear today's testimony, and I would like to 
sincerely thank Representative Calvert from California for 
coming to testify before the Committee today. I know you are 
very busy, and when you need to leave we will appreciate your 
time that you've spent with us today.
    Now, I'd like to recognize the Ranking Member, Mr. 
Lipinski, for an opening statement.
    [Chairman Musgrave's opening statement may be found in the 
appendix.]
    Mr. Lipinski. Thank you, Madam Chairman.
    There's no question that immigration is a serious issue for 
Americans, it has a significant impact on our economy. It's 
estimated there are at least 7.2 million people who are working 
illegal in the U.S., which is about 5 percent of the U.S. labor 
force.
    While this has been an issue for quite some time, the House 
recently passed a bill to address this problem. The bottom line 
is this, our borders simply are not as secure as they should 
be. More than 500,000 individuals enter our country illegally 
every year. We need to know who is coming into our country, and 
prevent unauthorized people from entering.
    I believe strongly that if a nation does not control its 
borders, it is not fully protected. Border security legislation 
is absolutely necessary.
    But, before I go any further, I want to make it clear that 
I believe that most who come into our country illegally, and 
are here working illegally, are in this country illegally, are 
here to work and to make a better life for themselves and for 
their families. But, although this is the case, this does not 
mean that we can just ignore the situation. For the sake of our 
national and economic security, we can't allow the current 
situation to continue.
    H.R. 4437, the Border Protection, Anti-Terrorism and 
Illegal Immigration Control Act of 2006 attempts to address 
immigration problems by enhancing border security, or requiring 
employers to verify the employment eligibility of its workers. 
It is a critical step, but it's important that we carefully 
examine all proposals and try to mitigate any unintended 
consequences for small businesses.
    Under Title VII of H.R. 4437, a new employee verification 
system will be created that will make sure that employees are 
legal and have proper documentation to work in the United 
States.
    During roundtables that I have had with small business 
owners in my district, there's one clear message that they keep 
giving me regarding employee verification. It's this, whatever 
you do, make sure that when I follow the law my competitors are 
also following the law, so I can compete on a level playing 
field.
    This new system is designed to accomplish this goal, but as 
we consider the impact of new regulations on our entrepreneurs, 
we must remember that the cost of regulation compliance is 
already 60 percent higher for small businesses than their big 
business counterparts. We need to make sure that any new 
regulations do not add an unnecessary burden for small 
businesses. Some additional burden will, unfortunately, be 
necessary. We need to do all we can to minimize it.
    In addition, small business owners need to know and 
understand what the rules are regarding their work force. If 
small business owners are not provided with a full 
understanding of the verification system, it can lead to 
significant confusion. Well-intentioned entrepreneurs may 
inadvertently fail to comply, resulting in fines and possibly 
criminal liability. We must do all we can so that those who are 
breaking the law know it, and know that they will be punished.
    Small businesses are the most important engines of our 
economy. We must always be extremely careful when establishing 
new regulations. We also have responsibility to secure and 
protect our borders, and make sure that Americans are given the 
opportunity to work.
    I look forward to hearing the testimony from our witnesses 
today about how we can best meet all of these goals.
    Thank you.
    Chairman Musgrave. Thank you, Mr. Lipinski, and now we will 
hear from our first panel, starting out with Congressman 
Calvert, and then we'll hear from Robert Divine. Thank you.

 STATEMENT OF THE HONORABLE KEN CALVERT (CA-44), U.S. HOUSE OF 
                        REPRESENTATIVES

    Mr. Calvert. Thank you, Chairman Musgrave, Ranking Member 
Lipinski, and certainly Members of the Committee. Thank you for 
inviting me to speak today on employment verification.
    I'm very pleased that the Small Business Committee is 
taking a look at this program, because I strongly believe that 
businesses need to use the program in order to retain and 
regain confidence in their work force.
    Before coming to Congress, I was a small business 
restaurant owner in California. Like all employers, I required 
my employees to present documents authenticating their identify 
and employment eligibility as far of the I-9 Immigration 
policy. There's a form process that you are aware of.
    Since I've never been an expert on documents, I had no way 
of knowing whether the documents presented were authentic or 
fraudulent, so when I was elected to Congress I wrote 
legislation to create the Basic Pilot program with the 
intention of giving employers a reliable tool to verify their 
employees' eligibility to work.
    In the 109th Congress, I introduced H.R. 19, which would 
make the Basic Pilot program mandatory, and phase in over time 
by the size of the employer. The bill became the backbone of 
Title VII of H.R. 4437, and Title III of the Senate Bill, 
S.2611.
    For a decade, the Basic Pilot program has been tested, 
improved and expanded. The program began as a telephone system, 
then became a modem-based system, with software installed on 
each user's computers. Today, the program is an internet-based, 
and as easy to use as buying a book off amazon.com. I can 
attest how easy the program is, since I'm one of the first 
members of Congress to sign up and use the program in my 
Congressional Office.
    I appreciate the opportunity to clear up some 
misconceptions about the program, and highlight several key 
facts.
    The Basic Pilot program, and its possible successor, the 
Employment Eligibility Verification System, as outlined in both 
the House and Senate passed versions of the Immigration Reform 
bills, works to ensure a legal work force by verifying 
information used in the I-9 form. This program does not target 
people, but rather confirms the voracity of the information on 
documents people present. It is important to remember that the 
program does not discriminate against people, but instead gives 
employers confidence that the work force is legal and free to 
work.
    It's been noted that the Basic Pilot cannot detect identity 
theft, yet I believe it can if the new program is used 
properly. Immigration Customs enforcements must be able to 
monitor the program's data to look for suspicious patterns, 
just as credit card companies can flag suspicious activity, the 
Basic Pilot program can be used to detect possible identity 
theft by flagging a name and a Social Security number that is 
being used over, and over, and over again.
    Concerns over identity theft have led many to conclude that 
we need a national identification card. I disagree. By 
monitoring the data and flagging suspicious activity, a 
mandatory program can combat identity theft without a new ID 
card. It is true that no program will ever be perfect, but the 
concerns about identity theft and program or document fraud can 
be adequately addressed through a thorough and thoughtful 
mandatory system, as reflected in the House passed Immigration 
Reform Bill.
    Some of the individuals testifying today may question the 
accuracy, ease of use, speed, or cost of the program, and may 
ask whether the program can be expanded for all employers 
quickly enough. According to the 2005 GAO Report, the U.S. 
Citizenship and Immigration Services has reduced their data 
entry backlog from nine months to approximately ten to 12 days, 
significantly improving the speed and accuracy of the program.
    Additional reports found that 98.5 percent of all queries 
receive an immediate response, and the program is 98.6 percent 
accurate.
    Striving for 100 percent accuracy is necessary, but we 
should not make the perfect the enemy of the good. The accuracy 
rate is already very good, and it will improve as the system is 
implemented. Inaccurate results indicate there is a discrepancy 
between the information presented by the employees and the data 
on record.
    Notification of a discrepancy is an opportunity for the 
employee to correct the record. Adequate time is mandated to 
allow an employee to clear up discrepancies. No one is 
dismissed because of an initial negative.
    I might add here that all employees with mismatched data 
will receive a chance to correct the record, because employers 
cannot use the system to pre-screen employees. They can only 
use the program after they hire a new employee, which is 
another safeguard against discrimination. If an employee is 
wrongfully terminated, currently existing remedies remain 
available to them.
    Think of this as a similar to use of a credit report, which 
are vital to our financial system, yet may contain errors. We 
do not demand 100 percent perfection in the credit report 
system in order to find it useful, because we understand that 
credit reports are viable tools and that errors can be 
corrected.
    The Basic Pilot program is a good tool, and the accuracy of 
the information will continue to improve as individuals have a 
chance to correct the record. The Basic Pilot program has 
experienced incredible success since it was launched ten years 
ago, and that success is even more incredible when you consider 
that Congress has not appropriated funds specifically for the 
Basic Pilot program, instead requiring the Department of 
Homeland Security to use funds from its discretionary accounts.
    Yet, the lack of funding is changing. For the first time, 
the House appropriated $114 million for FY07 to expand and 
improve the Basic Pilot program to ensure it is ready to handle 
a huge spike in demand. There are right now about 10,000 
employers using the program today, up from 2,300 in 2004, and 
more employers are signing up each and every day.
    Based on the program's superior performance at this point, 
it is clear that the program will be adequately prepared to 
quickly and accurately handle queries from every employer in 
this Nation.
    I believe the U.S. Government needs to better enforce their 
immigration laws, including employer sanctions and work site 
enforcement. If we are going to hold employers responsible for 
following the law, we must give them a tool which they can use 
in good faith. The Basic Pilot program is a tool that all 
employers should use.
    A vital component of immigration reform is to make sure 
everyone who works in the United States is doing so legally, by 
turning off the ``job-magnet.'' Making the Basic Pilot program 
mandatory is an essential component of our national policy that 
de-incentivizes illegal employment in the United States, and 
without it all other efforts to enforce immigration laws, in my 
opinion, will fall short.
    Thank you for allowing me an opportunity to speak with you 
today, and I'll be happy to answer any questions when the time 
comes.
    Chairman Musgrave. Congressman Calvert, would you be able 
to answer questions after Mr. Divine speaks? Can you stay that 
long?
    Mr. Calvert. Sure.
    Chairman Musgrave. Okay, thank you so much.
    [Congressman Calvert's testimony may be found in the 
appendix.]
    Chairman Musgrave. Now we'll hear from Mr. Robert Divine, 
Acting Deputy Director of U.S. Citizenship and Immigration 
Services. Thank you for appearing before the Committee.

 STATEMENT OF ROBERT DIVINE, U.S. CITIZENSHIP AND IMMIGRATION 
         SERVICES, U.S. DEPARTMENT OF HOMELAND SECURITY

    Mr. Divine. Thank you, Madam Chairman.
    Chairman, Ranking Member Lipinski, Members of the 
Subcommittee, my name is Robert Divine. I'm Acting Deputy 
Director of U.S. Citizenship and Immigration Services. I'm 
honored to have this opportunity to talk with the Subcommittee 
about the basic Employment Verification Pilot, which we call 
the Basic Pilot, which confirms information for participating 
employers concerning the work eligibility of their newly-hired 
workers.
    I'll also describe the agency's plans to improve and expand 
the Basic Pilot, and to implement a nationwide mandatory 
Employment Eligibility Verification System.
    I appreciate your interest in the program, I appreciate 
Congressman Calvert's involvement in creating it.
    Chairman Musgrave. Could you move the mic just a little 
closer, we are having a little bit of a hard time hearing.
    Mr. Divine. There we go.
    Chairman Musgrave. Okay, thank you.
    Mr. Divine. Let me put it in my mouth and it will work.
    And, we look forward to seeing the participation in the 
program of every one of the Committee and Subcommittee's 
Members' offices.
    The Employment Verification System, as we conceive it, is a 
critical step in improving work site enforcement, and it 
directly supports the President's goal of achieving 
comprehensive immigration reform.
    In his speech to the U.S. Chamber on June 1, President Bush 
endorse the Basic Pilot as a quick and practical way to verify 
Social Security numbers that gives employers confidence that 
their workers are legal, improve the accuracy of wage and tax 
reporting, and helps ensure that those who obey our laws are 
not under cut by illegal workers.
    Today, an illegal immigrant with a fake ID and a Social 
Security card can find work almost anywhere in the country 
without difficulty. It is the prospect of jobs that leads 
people to risk their lives, crossing hundreds of 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 System 
and Employers Sanctions Program as part of the President's call 
for a comprehensive immigration reform.
    Quick history, Congress established the Basic Pilot as part 
of the IIRIRA law 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, and in 1999, Nebraska 
was added. It was twice extended, most recently in 2003, valid 
and effective until 2008, and at that time it was also made 
available to participating employers in all 50 states, not just 
those five original. A small percentage of employers 
participate, but the program is growing by about 200 employers 
a month, as Congressman Calvert stated, about 9,300 Memorandums 
of Agreement with employers who are verifying over a million 
new hires per year at more than 34,000 work sites.
    Madam Chairman, I understand you have said, that ``Small 
businesses are the backbone of Colorado's economy,'' and, of 
course, that's true for the Nation as well. Most of our 
participating employers have 500 or fewer employees. In 
Colorado, there are 207 participating employers, including the 
U.S. Olympic Committee, Alsco Laundry Service and the New World 
Restaurant Group, as examples. Ranking Member Lipinski, in 
Illinois, there are 407 participating employers, including 
Staffmark Employment Agency, Judson College, and St. Joseph's 
Medical Center, and we welcome your support in reaching out to 
enroll even more employers into the program.
    Now, here's how the program 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 a noncitizen, 
and if a noncitizen they provide either the Alien number of 
some other DHS number to give a tie in to a system about their 
status. And, through the system the employer receives an 
initial verification within seconds, electronically. The system 
first electronically sends the information to the Social 
Security Administration's Numident database, and if the new 
hire claims to a citizen, then that's the end of it. It stops 
with the Social Security Administration's confirmation in the 
database.
    If the new-hires SSN, name and date of birth to the Social 
Security Administration (SSA) to match that data, and SSA will 
confirm citizenship status (if the employee claimed to be a 
U.S. citizen) based on data in the Social Security 
Administration's Numident database. If the Social Security 
database cannot immediately verify electronically, then that 
system sends an SSA tentative non-confirmation to the employer, 
and then the employer must notify the employee of the tentative 
non-confirmation and give the employee an opportunity to 
contest that filing, a very important part of the procedure as 
the Congressman has mentioned.
    In the case of a noncitizen, after the Social Security 
Administration has--after its system has verified, and only if 
it verifies, then the system will go forward to the DHA Basic 
Pilot database, and seek to verify electronically. And, if the 
system cannot electronically verify the status of the 
noncitizen as lawfully able to work in the United States, then 
an Immigration Status Verifier, a human being in U.S. 
Citizenship and Immigration Services, will personally research 
the case, usually providing a response within one business day, 
I think in 90 percent of the cases that's the turnaround time, 
either verifying work authorization or issuing a DHS tentative 
non-confirmation. If the employer receives a tentative non-
confirmation, the employer must notify the employee of that 
finding and give the employee an opportunity to contest that 
finding.
    When USCIS receives a response to that, USCIS normally 
resolves the case within three business days, issuing either a 
verification or a DHS final non-confirmation. So, whether it's 
to the Social Security Administration initially or to USCIS for 
a noncitizen who verified with Social Security if there is a 
non-confirmation, if the system can't confirm then the employee 
is given a chance to contest and cure the problem, and correct 
the database.
    As you know, the House and the Senate have both passed 
significant immigration legislation this session, including an 
agreement on the idea of a mandatory electronic Employment 
Eligibility Verification Program for all 7 million U.S. 
employers. Although the proposals differ in some significant 
ways, both bills would require an expansion of the electronic 
Employer Verification System Program that is, basically, an 
expansion of the Basic Pilot to all employers.
    Therefore, USCIS is already planning for the expansion of 
the program, planning. The President's Fiscal Year `07 budget 
requests $110 million to expand and improve the Basic Pilot, so 
that it can be used for all employers, including components for 
outreach, systems monitoring and compliance.
    So, let me briefly outline what those improvements and 
expansions that we are planning. First, ensuring that all 
employment-authorized aliens have secure biometric cards with 
an enumerator, and phasing out the production of locally-
produced cards that are too vulnerable to counterfeiting, and 
that are not tied reliably to the verification system. The idea 
is to reduce manual secondary checks, which slow down everybody 
in the system and cost the system money and time.
    Second, we are working on tapping into our card databases 
for verification. That means, a worker who has a card, a 
permanent resident card, or an employment card, would present 
that card for verification and would be required to do so, and 
when doing so would be--that card and its data would be 
validated against the database from which the card was made. In 
other words, it's a one-to-one match directly against the 
information that it arose from, and it should be instantaneous. 
That would again reduce the number of manual secondary checks.
    The third thing is to add more DHS information about the 
status of temporary workers in the Basic Pilot Verification 
System. Right now, our system is not pointed to every--to a 
real-time database about entries that has recently become 
available, so we need to point to that system and get the 
information.
    We also need to include information about people who have 
changed or extended their status within the United States, and 
when we do that we will reduce the number of manual secondary 
checks that have to be performed. More people will get an 
instantaneous response.
    [Mr. Divine's testimony may be found in the appendix.]
    Chairman Musgrave. Okay, I think I'll go ahead and open it 
up for questions. We want to be very respectful of the time 
here.
    Congressman Calvert, in H.R. 19 there was a tiered 
implementation program that I thought was very reasonable for 
small businesses, and it started out with bigger companies the 
first year, clear down to seven years for the smallest of the 
small businesses.
    Do you have any insight as to why that was not included in 
the final product? It just seemed to be so reasonable and 
something that people could appreciate your concern for small 
businesses and the burden.
    Mr. Calvert. As I mentioned, as an employer myself and 
recognizing the fact that we have 12 million--up to 12 million 
people working in the United States today, that you can't just 
immediately cut that labor off without having some negative 
effect in the economy.
    And so, we tried to work out a legislative fix where we 
would phase in this program over a period of time, starting 
with 10,000 employees and more, the Wal-Marts of the world, and 
5,000 the next year, 2,500 the year after that, so forth and so 
on, until we got to zero over seven years time. That would give 
enough time for the agencies to gear up for a program of some 
significance.
    Fight now, as was mentioned, we have approximately 10,000 
employers on the program, that would go to millions when we get 
to this program as a mandatory system.
    Chairman Sensebrenner wanted to move this program sooner 
rather than later. He has a two-year phase in for all employers 
in the United States in the final version that came out of the 
Judiciary Committee and was reported off the floor. The Senate, 
I'm not quite sure of how they, you know, will phase that in. 
That would have to be negotiated in the conference report, in 
fact, there is a conference report.
    But, I think that, quite frankly, realistically, I think 
that a phase in would not be a bad idea, to make sure we give 
employers enough time in order to do the right thing. I'm not 
out to punish employers. You know, as an employer, we run into 
government agencies often, and we want to make sure that we use 
a carrot approach rather than a stick approach, and get 
employers to do the right thing, which I think most employers 
want to do, and not to get into a punitive mode as far as how 
we get people to initiate this program.
    Chairman Musgrave. Thank you very much.
    Mr. Lipinski?
    Mr. Lipinski. Thank you, Madam Chairman.
    I want to first thank Representative Calvert for his expert 
testimony here, not just as a Member of Congress, but also your 
experience as a small business owner. We very much appreciate 
that.
    I want to focus my questions primarily on Mr. Divine. 
Representative Calvert, you can jump in here, if you would 
like. A couple of things that I'm wondering about. It seems 
that we are really going to have to expand from this pilot 
program if we are going to be covering everybody, 407 employers 
in Illinois just seems like a very small number.
    You were saying the requests for FY07 from the 
Administration is $110 million to expand the pilot program. How 
much is going to be needed, what kind of appropriations are we 
going to need to be able to make this a system that can cover 
everybody?
    Mr. Divine. Well, we are already making the systems changes 
in terms of the technology, so that, as I said, the employer 
gets an immediate answer the first time almost every single 
time, and we reduce the delay for the employer, the cost for 
the agency to try to run that down.
    The rest of it includes outreach to employers who need to 
participate, assistance, training, and also monitoring and 
compliance, because as the Congressman mentioned it's not 
foolproof, and we have to have some compliance capability to 
monitor trends and detect patterns of abuse.
    Mr. Lipinski. Do you have any idea how much this is going 
to cost? We certainly have, up until this point, been cutting 
back on the amount of money towards, you know, any type of 
enforcement. Now, turning around to what really needs to be a 
really huge investment it would seem, to be able to make this 
work, do you have any idea how much it may cost?
    Mr. Divine. Well, the President's request for `07 is $110 
million, and--
    Mr. Lipinski. But, down the line, do you have any idea how 
much more it's going to cost?
    Mr. Divine. I can't say specifically, because we don't have 
experience with the system to roll that out to every employer, 
but, that's the plan.
    Mr. Lipinski. I'm not trying to--you know, I think that it 
will be money well spent, I just wanted to try to get some 
sense of that.
    Congressman Calvert?
    Mr. Calvert. Yes, Mr. Lipinski, I would point out, by the 
way, and just to confirm what the gentleman is saying, that 
right now the program is at 98.6 percent accuracy rate. It's 
almost 99 percent. Obviously, if you expand the program very 
quickly that may affect accuracy, but still I think we can make 
it very accurate.
    Millions of credit card transactions every single day take 
place in America, with virtually--everyone has a high degree of 
confidence in using their credit card. I mean, you know, at 
least, you know, most of us anyway.
    But, the cost of this, I think eventually, can be borne by 
those who are not following the system. You know, there is, for 
those who knowingly hire people illegally, and I think we ought 
to give a lot of discretion to the regulators in making sure 
that we don't fine people immediately, give them every 
opportunity to follow the law, but the fact is, is that there 
are people out here, believe it or not, that knowingly hire 
people that are here illegally. And, in my opinion, they should 
be fined, and those fines should help offset the cost of 
running this program. And, I think that that can go a long way 
to doing that.
    In the initial period of time, we really don't know what 
it's going to cost, until we get this up and operating, but 
it's really not that complicated a system, though it seems 
complicated, simplistically we are checking a name against a 
number.
    Mr. Lipinski. I certainly agree with you that those who 
are--who are really violating the law, they should be fined, 
good place to get the money, we should be serious about 
enforcement.
    I think, Mr. Divine, did you have more information there?
    Mr. Divine. Hot off the presses, as it were, I'm told by 
people who will have to get it done, that the $110 million gets 
all 7 million employers on board by the end of the Fiscal Year 
`07, and that for `08 the cost would probably go up a little to 
fully fund the positions that were obtained in `07, and hire 
about 40 more status verifiers. You know, when you talk about 
the scale that you expand to for all employers, even though we 
reduce the percentages the numbers go up, in terms of the work 
you have to do to run down. That's the best information I've 
got.
    Mr. Lipinski. Thank you, I see my time is up. I have 
another question, but we'll get on to other people asking 
questions.
    Chairman Musgrave. Okay.
    While we are talking about the cost of the system, in your 
written testimony, Mr. Divine, you talked about a fee that 
would be assessed to pay for the system, and I have a huge 
problem with someone having to pay a fee to comply with the 
law. And so, elaborate a little bit on that, if you would, 
please.
    Mr. Divine. Well, I guess for USCIS, which is 
overwhelmingly a fee-funded agency, and if the budget request 
is granted for this year, it will be one of the only 
appropriated activities in this agency. And so, I guess there's 
sort of a theory that we come to things with that, if the cost 
of it can be borne by those who are using it, as is in the rest 
of our business, then that's something to consider. It 
certainly would reduce the amount of appropriations. It's 
certainly a policy call for the appropriators to make, but it 
certainly would ensure the integrity and funding of the process 
if we had that funding stream.
    Mr. Calvert. I would point out one thing, Ms. Musgrave. The 
system as it exists today is voluntary, and as was pointed out 
in the testimony it's been phased in over a period of ten 
years. And so, employers have to voluntarily involve themselves 
in the system and pay that fee if they so choose.
    If it becomes a mandatory system, in my opinion, there 
should not be a fee, and that the appropriators should find 
money, as we have for this year, and I believe that any 
penalties, and, hopefully, we don't have penalties, hopefully, 
the employers do the right thing, but those penalties should go 
toward the agency to help offset their costs.
    Chairman Musgrave. Thank you.
    Mr. Calvert. Offset the appropriation.
    Chairman Musgrave. Thank you.
    Mr. Davis?
    Mr. Davis. Thank you very much, Madam Chairman, and I thank 
you and Mr. Lipinski for calling this hearing. Let me thank 
both of our witnesses.
    Representative Calvert, let me begin with you, and ask what 
exactly is it that you are trying to accomplish with your 
legislation?
    Mr. Calvert. Well, I'll just give you an example. When I 
was in the restaurant business, you know, I had many people 
come in and apply for work, and we would always file the I-9 
forms that we were obligated to under the law, under the 1986 
Immigration Act, and people would hand me identification.
    As required under the law, you have to--we need to xerox 
two identifications, stick it on the back of the I-9 form, 
usually a driver's license, or a Green Card, but in every case 
a Social Security card.
    There's no way for me to tell whether that Social Security 
card was a valid card or not. We are not checking people, we 
are checking documents, and many people I knew were using 
invalid Social Security cards.
    Well, let me tell you, there is no way that you could tell 
the difference between an invalid Social Security card and one 
that is a valid Social Security card. The counterfeit business 
is pretty good, and the documents that the folks use to get 
work are very good.
    And, as you probably know, Mr. Davis, it's illegal for me 
as an employer to ask a person's status, an individual status, 
I can't check an individual under the law, under the Civil 
Rights Act. The only thing I want to do is check the voracity 
of the document.
    So, this legislation does, it doesn't check people, it 
checks whether or not the Social Security number that's being 
used is a valid number, that's all it does, and that's all we 
are attempting to do, is that people use legal documents when 
they apply for work, and I think that's important, not just for 
the employer who wants to hire people who are here legally, but 
also for national security reasons. People use invalid 
documents, and so that's what this legislation attempts to do.
    Mr. Davis. And now, the potential employer knows at least 
in his or her mind that the document used by the applicant is 
not matching, as being a legal document.
    Mr. Calvert. Once I determine to hire an individual, I 
check that number and find out that it's an invalid number, 
I'll give that--under the law, the employee has some time to 
try to fix it, if, in fact, the employee says, well, Social 
Security made a mistake, or whoever, some agency made a 
mistake.
    But, yes, it's just making sure that the Social Security 
number is a valid number.
    Mr. Davis. Now, if we should find, and that's not 
necessarily a part, though, that the employer, then goes ahead 
and willfully hires an individual, do we seek any kind of 
additional penalty?
    Mr. Calvert. Well, under existing law, under the law that 
exists today, that if an employer knowingly hires someone here, 
someone that's here illegally, they can be fined today. The 
problem is, is how you prove they hired somebody knowingly 
illegally.
    Right now, before the Basic Pilot program, there was no way 
you could determine whether or not the documents were valid or 
not, so you couldn't fine the employer if he filed the I-9 form 
properly, put the forms on the back of the file, so it was kind 
of a wink and nod system, quite frankly, since 1986. Everybody 
did it, everybody knew it, including myself. I'm probably the 
biggest sinner in Congress. I mean, I hired a lot of people, 
but there was no way that I could tell whether or not the 
documents that were being used were valid documents or not, 
until we had the Basic Pilot program.
    Mr. Davis. And now, we would know, and so this could 
actually cut down on illegal immigrants filtering into the job 
market, which could take away the concerns expressed by people 
that illegal immigrants are undercutting the labor force 
because they are not illegal anymore.
    Mr. Calvert. Yes, sir, you are exactly right. I mean, 
people who are using fraudulent documents to get work will not 
longer be able to do so, and people who have correct documents 
will be able to get work, and that would remove the ``job-
magnet'' from people coming from outside of the United States 
into the United States to obtain employment.
    Mr. Davis. So, I would then hope that the outcome of that 
would ultimately be that some individuals who take the harshest 
views and positions, relative to non-entry of immigrants, that 
might lighten them up a little bit. They may not be as opposed, 
because they don't have that factor to say, here's part of our 
rationale.
    Mr. Calvert. I might point out, my district is 45--was 45 
percent Hispanic. Most of the people that are in my 
congressional district are in favor, most of the Hispanics are 
in favor of a verification program, because they want--they 
don't want to be discriminated against, quite frankly, the 
people that are here legally.
    And so, they believe that it's a good system to verify 
whether or not the documents are correct when people apply for 
work.
    Mr. Davis. Well, I want to thank you very much, because it 
certainly has helped me. I view myself as not being opposed to 
individuals coming into the country, but I certainly don't have 
any problem with finding out who is legal and who is illegal. 
So, thank you very much.
    Mr. Lipinski. Thank you, gentlemen.
    Chairman Musgrave. Thank you, Mr. Davis.
    Maybe, I don't know which one of you wants to answer this, 
but there is a tension between Immigration and the Department 
of Justice. You know, the Department of Justice assuring that 
there's not discrimination in hiring, and Immigration making 
sure that people are legal. This is the tension that we always 
come down to. Could you comment on that, please?
    Mr. Calvert. I think the important difference here is, we 
are not checking people. We are not checking Ken Calvert, or 
Ms. Musgrave, we are checking documents. We are checking 
documents to see whether or not they are valid or not. And so, 
when people use invalid documents to obtain work, unless they 
can fix that problem by finding proper documents, that they 
cannot have work. We are not checking individuals, that's the 
difference here.

    So, it's non-discriminatory, because every single person 
who applies for work, every single one, must use valid 
documents in order to obtain work. And so, the question you've 
got to ask yourself, and maybe there are some people in this 
room, who is in favor of using invalid documents to obtain 
work? I mean, how can you say I'm for using invalid Social 
Security cards, or invalid driver's license, or whatever, in 
this case a Social Security card because we can check the 
number versus the name.
    Chairman Musgrave. Mr. Udall.
    Mr. Udall. Thank you, Madam Chair.
    This is a good opportunity, I think, for us, Mr. Calvert, 
having you here, and having actual experience on this, and I 
applaud your effort to try to improve the system.
    My memory is when we passed that 1986 law, and maybe you 
can help enlighten me here, early on there was a major effort 
by the Federal Government to prosecute employers for knowingly 
hiring illegals. And, it seems like that was dropped very 
quickly. I mean, and I'm wondering what changed in that period. 
I mean, the law went into effect, I believe what the consensus 
that was reached, is that employers were the magnet that were 
drawing people here, and in order to solve the overall illegal 
immigration problem you had to deal with the employer part of 
it.
    And then, somehow that was dropped, and now we are trying 
to get back to it again, but do you remember what I'm talking 
about and what happened there?
    Mr. Calvert. I remember as an employer. Now, you may want 
to hear from the agency itself to give their perspective on it, 
but I'll give you my anecdotal information.
    Back in the days when the program first began, Immigration 
would come in and they would pick up your I-9 forms and they 
would check those I-9 forms to try to verify whether or not 
people had status to be working, say, within my restaurant, 
restaurants. And then, they would notify you of a list of 
names, and then they may come down and visit your restaurant 
one day and pick those folks up without any announcement.
    Well, employers started yelling and screaming, saying, hey, 
look, you know, we did the right thing, we filed the I-9 form, 
we put identification on the back, just like you told us to, 
and then you come in and, you know, say a farmer in the middle 
of harvest, or a restaurant guy in the middle of the lunch 
shift, or a manufacturer in the middle of the day, and you pick 
up all of our employees, you know, and then we lose a day's 
work and it puts us, you know, in a bad position.
    So, I think there was a lot of pressure on the agencies and 
they kind of stopped.
     Now, the agency might want to give their perspective, but 
that's my opinion about what happened in those days, and there 
were huge pressures because companies needed these employees 
here.
    Mr. Udall. Right.
    Mr. Calvert. I mean, that was the basic response that 
people were saying, there was no way for the employer to know 
who they were hiring.
    Mr. Udall. Yes, but, please, thank you, Mr. Calvert, 
please, go ahead.
    Mr. Divine. I have to say that for 18 of the 20 years that 
have ensued in the meantime I was a practicing lawyer, so I can 
say, similarly to Mr. Calvert, from the private sector point of 
view I was advising clients about whether to participate in 
this program when it became available. And, echoing what 
Congressman Calvert said, one of the primary reasons for a 
human resources manager to push participation in this program 
was to avoid that moment when the INS would come in and raid 
the place and take away half the workers, and make it 
impossible to make any kind of production. That's the kind of 
event that gets the human resources manager fired, and that's 
the kind of event that they would try to plan against.
    And, this system allows for an employer to weed out clearly 
unauthorized workers on the front end, and to do that in lock 
step with every other employer in the industry, so that there's 
not a competitive disadvantage from compliance.
    And so, it all makes sense.
    Mr. Udall. There's been a lot of discussion about a tamper-
proof verification card. I mean, where does that fit in this 
picture?
    Mr. Divine. We make tamper-proof cards, we make some that 
aren't tamper-proof, and we are going to quit making the kind--
    Mr. Udall. Mr. Calvert is smiling, so I'm going to get him 
to comment on this one.
    Mr. Divine. Well, tamper resistant, may I say, we make 
tamper-resistant cards in the form of what we call the ``green 
card'' that hasn't been green for a long time, but is the 
Permanent Resident Card, and we also make a work authorization 
card. We make two kinds. One is a kind that's issued out of a 
secure facility that has a lot better features in it, and the 
other is a kind that's made in local offices that can be 
counterfeited quite easily. And, we want to quit making that 
second kind, not only because it's counterfeitable, but because 
the systems out of which it's made are not tied in well with, 
and can't be tied in well with, the verification database.
    So, we'll have more tamper-resistant cards when we have 
only those two kinds, and whatever other similar kinds we make 
for any other program that comes down the pike, but I think I 
want to make clear, that is not foolproof, and there is no card 
that can be made that cannot be counterfeited, or at least 
can't be attempted to be counterfeited, and someone who wants 
to make a card that has a stolen identity in it, and present 
that to an employer, may still be able to get away with that, 
because the data will verify in the system, because it's a real 
human being. But, we'll get more sophisticated, because we will 
be detecting patterns of use of those identities and will be 
able to take action and make investigation with our partner at 
ICE to sort that out when we detect that pattern.
    Mr. Calvert. I would just point out that this bill, I mean, 
Basic Pilot Employment Verification, does not get into tamper 
proof, that's separate. However, I will say that somewhere down 
the line we may want to look at that, but this legislation 
doesn't get into national ID or tamper-free identification.
    To get into that, you need--the only way to have a surety 
in the program is to have a biometric identifier on the card 
itself for each individual, and that gets into a whole 
different debate, which is not this legislation.
    Mr. Divine. And, I apologize if I misled you, when I say 
``we,'' Department of Homeland Security makes those cards, that 
doesn't apply to citizens who would not be having a Permanent 
Resident Card or a work card to present.
    Chairman Musgrave. Mr. Lipinski, I'm going to recognize you 
for your second question.
    Mr. Lipinski. Appropriate follow up on what we were just 
talking about, I don't quite understand, if these cards you are 
talking about, tamper-resistant cards, are going to go to 
people who--they are not going to go to U.S. citizens, because 
we are not going down the line of a national ID card, well 
then, if you are impersonating, if you are coming in and you 
are saying, I am a citizen, gives false documents, then how 
does that help, because you are not going to come in and say, 
well, I--if someone is not really eligible to work, aren't they 
going to claim that they--probably going to claim that they are 
a citizen, so then they don't have to, you know, bring you a 
card that you are talking about?
    Mr. Divine. That's an excellent question, and it gets to 
the heart of it, and, again, it's not a foolproof system, and 
people may very well claim to be citizens, and present 
documents like that, just as well as they may claim to be a 
permanent resident with a card that looks like the kinds of 
cards that we give out, and that contains data of a real human 
being whose information will match.
    But, if you are working and living in Illinois, and the 
same person--a person who uses the same data as you to validate 
in Miami, and in Ohio, and in Minnesota, within a short period 
of time, then our system will be improved to recognize that and 
to cause action to be taken.
    Mr. Lipinski. Yes, I agree, that is the key, as 
Representative Calvert had talked about earlier, so as long as 
there is that type of tracking to make sure that there isn't 
duplications like that, and I certainly hope that that can and 
will be done.
    Thank you.
    Mr. Divine. That's certainly the plan.
    Chairman Musgrave. Mr. Davis, did you have another 
question?
    Mr. Udall?
    Mr. Udall. No, no more.
    Chairman Musgrave. Okay.
    I'd like to thank our panel, thank you, Congressman, thank 
you, Mr. Divine, for your testimony today.
    Mr. Calvert. Thank you.
    Chairman Musgrave. I'd like to call up the second panel, 
please. We are going to have Mr. Jack Shandley on the panel, 
Senior Vice President of Human Resources at Swift & Company, 
from Greeley, Colorado; Mr. Mark Krikorian, Executive Director, 
Center for Immigration Studies, here in Washington, D.C.; Mr. 
Monte Lake, Partner, McGuiness Norris & Williams, American 
Nursery and Landscape Association; Mr. Angelo Amador, Director 
of Immigration Policy, U.S. Chamber of Commerce; Mr. Toby 
Malara, Government Affairs Counsel, American Staffing 
Association, from Alexandria, Virginia.
    I'm going to ask you all when you speak to get the 
microphones as close as you can, it's kind of difficult to 
hear, and, Mr. Shandley, we'll start with you. Welcome to 
Committee.

          STATEMENT OF JACK SHANDLEY, SWIFT & COMPANY

    Mr. Shandley. The penalty for sitting on the end, I guess.
    Chairman Musgrave. You get to go first, yes.
    Mr. Shandley. Thank you, Chairman Musgrave, Congressman, 
members of the Committee, and other esteemed guests good 
afternoon. My name is Jack Shandley, and I am Swift & Company, 
as Senior Vice President of Human Resources. Thank you for 
inviting me to testify today.
    I will begin with some background information on Swift. 
Swift is the third largest processor of both fresh beef and 
pork in the United States. Our annual sales are close to $10 
billion, and we employ 15,000 people domestically and 20,000 
worldwide. We operate nine domestic processing plants in eight 
states.
    Today's meat processing industry is nothing like it was 10 
years ago, much less 100 years ago. Our production facilities 
are safe, clean, and pay wages and provide benefits that enable 
our people to achieve the American dream.
    Swift's production wages are at or above average rates in 
the communities within which we operate. We offer affordable 
healthcare benefits to employees who have been with us for at 
least six months, and approximately 80 percent of our qualified 
employees participate in our healthcare plans.
    Our production employee turnover rate is lower than 
industry figures for leisure and hospitality, construction, and 
retail trade. All but one of our domestic plants are unionized.
    Our safety rates, as measured by lost time injury 
incidence, are comparable to all manufacturing businesses in 
the U.S. Our Greeley beef facility recently completed 5.4 
million operating hours without a lost time injury!
    Simply put, this isn't the meat processing industry you 
hear and read about in the media.
    Regarding immigration reform, the ongoing highly charged 
debate highlights the importance of this issue to the American 
public. Similar to a large percentage of the electorate, Swift 
& Company supports the development of common sense, balanced 
and comprehensive immigration reform legislation that: 1.
    Recognizes the U.S. economy's current and future needs for 
workers to support growth; 2.
    Protects employers that act in good faith to comply with 
all legal hiring requirements; and 3.
    Contains border security and guest-worker provisions.
    Today's hearing clearly touches on my second point with 
respect to the role of employers in the current immigration 
debate. While Swift is clearly not a `small business'` by 
definition, we do have a wealth of experience in the area of 
employee identity verification that is relevant to today's 
hearing.
    Under the current U.S. law, employers assume responsibility 
for verifying the identity and employment eligibility of newly 
hired employees. As part of the hiring process, we are required 
to complete and retain individual I-9 forms. When completing 
the I-9 form, a total of 29 distinct documents may be used by 
the employee to properly establish his or her identity. It is 
important to note that we as employers are limited in our 
ability to verify the identity of a new employee: we can't ask 
for a specific identification document; we can't ask for 
additional forms of identification; and we can't refuse to 
accept any single eligible identification document.
    Two federal departments enforce the verification and non-
discrimination provisions of existing immigration legislation: 
the Department of Homeland Security's Immigration and Customs 
Enforcement branch is charged with enforcing verification 
provisions, and the Department of Justice's Office of Special 
Counsel enforces anti-discrimination provisions.
    This enforcement structure creates significant policy 
tension between the need for employers to accurately determine 
workers' eligibility versus the need to address privacy and 
non-discrimination concerns.
    In 2002 we experienced this policy tension first hand when 
the Office of Special Counsel cited Swift for $2.5 million for 
allegedly acting too aggressively when verifying the work 
authorization status of new hires. To repeat, our company found 
itself in hot water for allegedly pushing too hard to ensure 
employees possessed the status they claimed! After two years of 
close cooperation with Federal officials we ultimately settled 
the case with no admission of guilt for approximately $200,000.
    Since 1999 Swift has voluntarily participated in the 
government's Basic Pilot Program to supplement our efforts to 
properly verify the identity of all new hires. This program, 
along with increased employer sophistication in processing 
identity documents, was reasonably effective in helping to 
eliminate the use of counterfeit paperwork.
    However, over time weaknesses in the Basic Pilot weaknesses 
came to light. As currently structured, the Basic Pilot Program 
cannot detect duplicate active records in its database. The 
same Social Security number could be in use at another 
employer, and potentially multiple employers, across the 
country.
    The underground market responded by replacing counterfeit 
documents with genuine identification documents obtained under 
fraudulent terms--for example, state identification cards 
obtained with valid copies of birth certificates. As an 
employer, we must accept such cards on face value. Yet valid 
birth certificates can be resold to another undocumented worker 
for reuse in obtaining yet another official state 
identification card.
    As you can see, employers have no foolproof way to 
determine if a new hire is presenting valid identification 
documents created under fraudulent circumstances. Furthermore, 
attempts to use additional means to determine employee 
eligibility place employers in jeopardy with law enforcement 
agencies. From our point of view, employers like ourselves who 
are trying to abide by the law are not the problem in the 
immigration reform debate--the current immigration system is 
the problem.
    In light of these problems we have three recommendations 
for Congress on how to improve the current system:
    First, create enhancements to federally-endorsed programs 
that aid employers in their efforts to determine the work 
eligibility of new hires. This could be achieved in a variety 
of ways, from improving the Basic Pilot Program to creating a 
tamper-proof, biometric national identification card. It is 
unfair to blame employers for the failings of the system and it 
is unreasonable to assume we can identify fraudulently obtained 
documents. Give us a comprehensive, workable solution and we 
will execute against it.Second, reconcile the policy tension 
that exists for employers when managing the boundaries between 
employee verification and non-discrimination. Remove the burden 
of enforcement on both sides of the issue by granting safe 
harbor to employers that participate in federal worker 
identification programs.
    Finally, continue the practice of voluntary participation 
in federal worker identification programs. We have chosen to 
participate in the Basic Pilot program because the large number 
of applicants we process makes it cost-effective for us to do 
so. Small business owners in America may not benefit from the 
increased costs and delays associated with mandatory 
participation in a verification program. Give business owners a 
fair choice: risk breaking the law and suffer stiff penalties, 
or participate in a federal identification program and gain 
protection from liability.
    Thank you for inviting me to speak today and for your 
ongoing efforts to implement common sense, balanced and 
comprehensive immigration reform legislation.
    Thank you.
    Chairman Musgrave. Thank you for your testimony, Mr. 
Shandley.
    [Mr. Shandley's testimony may be found in the appendix.]
    Chairman Musgrave. Now we'll hear from Mr. Amador. Welcome.

STATEMENT OF ANGELO AMADOR, U.S. CHAMBER OF COMMERCE, ESSENTIAL 
                  WORKER IMMIGRATION COALITION

    Mr. Amador. Thank you.
    Chairman Musgrave, and, Ranking Member Lipinski, I'm Angelo 
Amador, Director of Immigration Policy at the U.S. Chamber of 
Commerce.
    Chairman Musgrave. A little closer, please.
    Mr. Amador. More than 96 percent of our over 3 million 
members are small businesses with 100 or fewer employees, 70 
percent of which have ten or fewer employees. I am also 
testifying on behalf of the Essential Worker Immigration 
Coalition, which is the business coalition working on 
comprehensive immigration reform.
    I would like to start by clarifying that the Chamber does 
support a new employment verification system, but like 
President Bush we support such a program within the context of 
comprehensive immigration reform. It has to be emphasized that 
the overall system must be fast, accurate and reliable on the 
practical real-work conditions.
    As to the competing versions now in the Senate and the 
House Immigration Bills, the Chamber prefers the Senate version 
with some important exceptions, since both versions, as stated 
earlier, relied on the same databases used in the Basic Pilot, 
the discussion shall start there.
    It is worth noting that on under both the House and the 
Senate versions these electronic programs will retain proper 
work requirements to verify the identity of workers, so it is 
not like the credit card, as a lot of people have the 
misconception that you can just run through the system.
     Meanwhile, the Basic Pilot program's underlying databases 
continue to be a problem. The records are not quickly updated, 
there are often errors, particularly, with name changes due to 
marriage, or compound names which are common among Latinos.
    The most comprehensive independent study on the Basic Pilot 
program found that 20 percent of properly work authorized 
individuals are told initially that they are not authorized to 
work.
    Congress needs to ensure that any new system minimizes 
errors and contains the mechanism in which errors can be 
quickly rectified. Even an extremely low error rate of 1 
percent would translate into the improper disqualification of 
about 1.4 million potential workers, including U.S. citizens.
    As to expenses, the GAO estimated that a mandatory Basic 
Pilot program will cost about $11.7 billion per year, with 
employers bearing most of the cost. In addition to 
infrastructure and training, a great deal of staff time will 
probably be spent verifying and reverifying worker Eligibility, 
resolving data errors, and dealing with wrongful denials of 
eligibility.
    However, employers should not also be burdened with a fee 
to pay for the cost of building the system itself. That is a 
government function and should be paid for by the government.
    There are five key components to create a workable 
employment eligibility system within the context of 
comprehensive reform.
    First, the system should have a default confirmation, non-
confirmation procedure when the government is unable to reach a 
final decision within a reasonable time frame. Keeping 
employees in a tentative non-confirmation limbo is unfair to 
everyone. Forbidding employers from filing tentatively non-
confirmed employees, but then using this data to investigate 
employers is unacceptable.
    To address this issue, 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 extremely important.
    To reduce the lag time to a more reasonable time frame, the 
time allowed for the government to reply should be reduced and 
employers should be allowed to submit the initial inquiry about 
two weeks before the first day of employment.
    These changes will let the employer have a final 
determination within two weeks of an employee's first day at 
work, as opposed to two months.
    Second, there should be a reasonable approach to the 
contractor/subcontractor relationship and protections for 
unintentional violations. Perhaps, the most important language 
found in the House version was a result of an amendment by 
Congressman Westmoreland of this Committee. The language 
provides an exemption from liability for initial good faith 
violations, which you mentioned at the beginning of the 
hearing, and a safe harbor for general contractors who have 
subcontractors that hire unauthorized workers without their 
knowledge.
    Third, the new system should be facing or tiered to 
guarantee proper implementation at every level. GAO continues 
to call attention to the weaknesses in the Basic Pilot program, 
including delays in updating immigration records, false 
negatives, and program software that is not user friendly. The 
system should be expanded to the next phase only when 
identified problems have been resolved.
    Recently, GAO reiterated its conclusion that as of now the 
Basic Pilot is not ready for the kind of implementation called 
for in H.R. 4437.
    Fourth, it needs an investigative system without 
artificially creative incentive in favor of automatic fines and 
frivolous litigation. We oppose the so-called employer 
compliance fund found in the Senate version, which creates an 
incentive for litigation, because under this scheme the fines 
and fees supplement the agency's budget. Instead, in addition 
to civil fines and criminal penalties being commensurate to the 
violation, the system should allow for the issuance of warnings 
and/or reasonable time for employers to correct administrative 
errors without automatically being subject to an enforcement 
action.
    Fifth, there should be accountability structures for all 
involved including our government. The possible harm to 
employers, United States citizens and legal immigrants due to a 
flawed system should not be taken lightly. The Senate version 
holds the government accountable through the creation of a 
review process that allows employers and employees opportunity 
to contest findings. Workers could seek compensation for lost 
wages due to agency error, and an employee fined by the 
government due to an unfounded allegation could recover some 
attorneys fees and costs that they prevail in their appeal.
    Finally, employers will be at the forefront of all 
compliance issues and should, therefore, be consulted into 
shaping up a new system, to ensure that it's workable, reliable 
and easy to use.
    Thank you.
    Chairman Musgrave. Thank you for your testimony.
    [Mr. Amador's testimony may be found in the appendix.]
    Chairman Musgrave. Mr. Krikorian.

  STATEMENT OF MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES

    Mr. Krikorian. Thank you, Madam Chairman and Mr. Lipinski.
    I'm the Executive Director of the Center for Immigration 
Studies. We are a think tank here in town that examines 
immigration and, incidentally, also a small business. I 
appreciate the chance to testify today.
    I wanted to ask three questions about employment, a 
mandatory Employment Verification System. Would it be practical 
to do? Would it be burdensome for business, and would it be 
good or bad for business?
    The first point is, would it be practical? I think the 
answer is clearly yes, with adequate resources and adequate 
political support, both from Congress and from the Executive 
Branch, there is no reason that this shouldn't--we shouldn't be 
able to implement a workable verification system.
    Now, there were something like 56 million hiring decisions 
last year made in the United States, average of 200,000 plus 
each business day. Now, that sounds like a lot, but when you 
put it in context it really isn't that big. Customers of iTunes 
download five times that many songs every day. Wal-Mart checks 
out 50 times that many customers every day, and VISA processes 
500 times that many credit card transactions each day.
    Now, obviously, there are going to have to be improvements 
in the system, and some of the witnesses already referred to 
those. The capacity will have to be increased. The speed of 
entering in new information into DHS databases will have to be 
increased. Most importantly, there's going to have to be 
monitoring of the patterns of use, so that multiple uses of the 
same legitimate numbers are exposed. But, those are things that 
DHS is already working on and are achievable objectives.
    Secondly, is it likely to be burdensome for business? As a 
small businessman, I appreciate the multitude of government 
mandates that are placed on small business. As I was writing 
this testimony, I went into our break room and I looked on the 
wall of all the disclaimers that we're required to post on the 
wall, and there were references to the Civil Rights Act, the 
Occupational Safety and Health Act, the Family and Medical 
Leave Act, the Employee Polygraph Protection Act, the Drug Free 
Workplace Act, the Youth Employment Act, Uniform Services 
Employment and Re-employment Rights Act, among others.
    Even George McGovern, when he became a small business man, 
wrote that legislators and government regulators need to more 
carefully consider the economic and management burdens that we 
have been imposing on U.S. business. I couldn't agree more, and 
that's why it's a good thing that such a program would not, in 
fact, place disproportionate burdens on business.
    The National Federation of Independent Business, the 
authoritative voice of small business here in Washington, 
polled its members and found overwhelmingly they were concerned 
about illegal immigration, they wanted increased penalties 
against crooked employers, and that a centralized verification 
system like this would minimize whatever extra burdens that 
verification might place on them. And, this isn't just 
theoretical, because my own small business actually 
participates in the verification program, and we have for more 
than a year, and it represents no extra burden really for us at 
all.
    A growing number of businesses agree, voluntarily flocking 
to the program over the past three years the number of 
participants has quadrupled, including most notably in the news 
Dunkin Donuts and Baskin Robbins now require all of their 
franchisees to participate.
    And, if and when Congress does make verification mandatory 
for all employers, what we are going to see is creation of a 
market for entrepreneurs to actually make whatever burden does 
exist be even less and simplify it more, especially for small 
business that doesn't have the infrastructure in place, the 
H.R. departments, to do it on their own. DHS has already 
provided for this, they have designated agents, they call them, 
or at least an opportunity for companies to step forward as 
designated agents to make it their job to do the Basic Pilot 
process for others.
    The first one that--there's already a firm that's been 
approved as a designated agent, not only for doing Basic Pilot, 
but for paperless I-9 forms as well. It's called Form I-9 
Compliance in southern California, and other firms will follow 
in their wake. And, they not only provide a paperless web-based 
I-9 form that checks with Basic Pilot, but includes extra 
services that entrepreneurs are going to think of that 
government employees may not have thought of, for instance, 
periodic reminders of upcoming expiration date for a temporary 
alien worker. And, in a sense, what these firms do is what 
Turbo Tax does for tax filing, they offer a user friendly, a 
more user friendly interface, eliminate paper, reduce errors, 
and file electronically.
    The third and final point is, is this good for business? 
And, you might say that, well, this isn't all that big a 
burden, it's root canal, but the root canal doesn't hurt too 
much. Actually, it's quite the opposite. A verification program 
is good for businesses. I can see why business, small business 
in particular, would be alarmed about all of this talk of 
penalizing employers as part of enforcing immigration laws, 
but, in fact, the verification system is not intended to 
penalize employers, but to empower employers, so that they know 
who they are hiring. It takes the guess work out of 
establishing a legal work force, so they build their work force 
on concrete, not on sand, a work force that doesn't run away 
when there's an immigration raid, won't be arrested when the 
inevitable immigration, broad national immigration crackdown 
does come.
    In fact, I would submit that public companies that are not 
participating or exploring participation in the Basic Pilot are 
neglecting their fiduciary responsibility to shareholders by 
imprudent labor practices that jeopardize the stability of 
their labor force. And, even privately-held companies, which is 
what most small businesses are, while not answerable to 
shareholders, nonetheless, have a moral responsibility to their 
employees, their customers, their creditors, to conduct due 
diligence in their hiring decisions.
    And, let me just, my last point, to point out that 
Congressman Lipinski's point of it being mandatory, so that 
there's a level playing field for all business, is essential. I 
remember hearing about a landscaper in southern California who 
enrolled in the program, he was a patriotic employer, wanted to 
do the right thing, but was undercut by competitors not in the 
program. So, making it mandatory for all employers is, in fact, 
a pro business measure.
    Chairman Musgrave. Thank you for your testimony.
    [Mr. Krikorian's testimony may be found in the appendix.]
    Chairman Musgrave. Mr. Malara, we'll go to you now, welcome 
to Committee.

    STATEMENT OF TOBY MALARA, AMERICAN STAFFING ASSOCIATION

    Mr. Malara. Thank you, Madam Chairman Musgrave, Ranking 
Member Lipinski. My name is Toby Malara, and I'm the Government 
Affairs Counsel for the American Staffing Association, and we 
appreciate the opportunity to offer comments on the Employment 
Verification System provisions contained in H.R. 4437.
    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 
percent of U.S. staffing industry sales.
    The staffing industry employs almost 3 million employees a 
day ad more than 12 million each year. Staffing firms recruit 
and hire their employees and assign them to businesses to 
assist in special work situations. Employees work in virtually 
every skill level and job category, including industrial labor, 
office support, engineering, IT, legal accounting and 
healthcare.
    Most of ASA's members earn less than $12.5 million in 
annual revenue and thus qualify as small businesses under SBA 
guidelines. Like all staffing firms, they have unusually large 
numbers of employees relative to revenue due to their workers' 
short tenure. For example, it's not uncommon for a staffing 
firm with annual revenue of $10 million to employee more than 
1,000 employees each year. As you can see, any new employment 
verification system will have a great impact on our members.
    ASA also represents hundreds of firms that recruit and 
refer individuals for hire by others. Unlike temporary and 
contract staffing firms, traditional placement and executive 
recruiters do not hire the individuals seeking employment and, 
therefore, as we note later, such firms currently are not 
subject to employment verifications, nor should they be.
    While there are a number of points that we raise in our 
written testimony, I would like to touch on two major points 
today.
    Under current law, staffing firms and other employers have 
the option of verifying employment eligibility upon either the 
offer of employment or at the time work actually commences. For 
example, a person will walk into a staffing firm to apply for a 
job. They'll go through an interview process, and the staffing 
firm will determine if they are qualified for work assignments. 
At that point, the person has been made an offer of employment 
for the purpose of I-9 verification process, even though a 
specific job assignment is not immediately available.
    When an assignment does come up that the person is 
qualified for, the staffing firm will call and notify the 
employee, who will then go directly to the client's work site. 
Many employees never return to the staffing firm's office.
    Because these assignments must be filled on short notice, 
it would be difficult, if not impossible, for employees to 
return to the staffing firm's office to complete the 
attestation and document examination process prior to going on 
assignment.
    Moreover, getting to the staffing firm's office would be a 
significant hardship for employees who live far away from that 
office or who rely on public transportation.
    Staffing firms and other similarly situated employers have 
the option of completing the attestation and document 
examination phase of the verification process at the time that 
they are offered employment. They should continue to have the 
same flexibility in using any new electronic employment 
verification system enacted by Congress.
    Also 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. There is a minor exception for those who recruit 
agricultural or farm workers.
    Traditional placement agencies and executive search firms 
help match candidates looking for jobs with our clients, who 
are perspective employers. Once a candidate is hired for a job, 
they become the employee of the client, and the client assumes 
the obligation of verifying their employment eligibility.
    Currently, there's language in the House bill that 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 improperly as expanding the verification requirement 
to all recruiters.
    While there is other language in the House bill that 
appears to limit the reference to recruiting and referring to 
labor service agencies that operate day labor hiring halls, we 
urge that the bill be amended to make that unequivocally clear 
to avoid any misinterpretation.
    We do not think that employers should have to pay a fee for 
using the system, or that employers should have to reverify 
their entire work force, unless there are extraordinary 
circumstances, such as significant past immigration violations. 
These issues are discussed in greater detail in our written 
statement.
    The American Staffing Association strongly supports 
Congress' efforts to develop a new Employment Verification 
System that is effective, efficient, accurate and reliable, and 
we look forward to working with members of Congress and others 
to bring such a system to fruition.
    Thank you very much.
    [Mr. Malara's testimony may be found in the appendix.]
    Chairman Musgrave. Thank you for your testimony.
    Mr. Lake, welcome to Committee.

   STATEMENT OF MONTE LAKE, MCGUINESS, NORRIS & WILLIAMS, LLP

    Mr. Lake. Thank you, Madam Chair and Ranking Member 
Lipinski. I appreciate the opportunity to testify on behalf of 
the Agriculture Coalition for Immigration Reform, including the 
American Nursery and Landscape Association and National Council 
of Agricultural Employers.
    The coalition includes over 150 state, regional and 
national agricultural organizations, representing thousands of 
small farming, ranching and nursery businesses. It was formed 
six years ago for the purpose of promoting comprehensive 
immigration reform as it relates to agricultural employers.
    My name is Monte Lake. I'm a Partner in the labor and 
employment law firm of McGuiness Norris & Williams in 
Washington, D.C., and I have represented many small businesses 
engaged in agricultural and horticultural operations throughout 
the U.S., in their efforts to comply with the requirements of 
federal immigration and employment law over the past 20 years 
since IRCA was enacted.
    I appreciate the opportunity to address the issue of 
employment verification. American agriculture will support 
electronic verification of employment eligibility, as long as 
the process is simple, manageable, and provides clear-cut 
compliance responsibilities.
    It is also imperative that Congress pass comprehensive 
reform that ensures American agriculture an adequate supply of 
legal workers to replace those that likely will be screened out 
by an electronic verification system.
    My comments on H.R. 4437, the House passed bill, are made 
in the light of the failures of the legal compliance morass 
that currently surrounds the Verification of work authorization 
that's been addressed by some of the witnesses before me. 
Employers should not face discrimination charges as a result of 
trying to hire legal workers, but that's been the history.
    Small employers want clarity, simplicity and a rational 
system that facilitates legal compliance, and now is the time 
to get it right after 20 years.
    I ask that my written statement be submitted into the 
record, and I'll be glad to answer questions after the 
presentation of these brief oral remarks.
    A new verification system should achieve, at a minimum, 
seven goals.
    One, it must screen out undocumented workers and provide 
employers certainty that they have a legal work force, that 
their training costs will not be wasted, and their businesses 
later disrupted by revelations that certain workers are 
illegal.
    Two, it must reduce the number of employment documents. The 
current menu of 29 different documents to establish legality is 
confusing and leads to discrimination charges. ACIR supports 
the establishment of a single Social Security type card for 
purposes of employment verification, similar to the approach of 
H.R. 98 introduced by Representative Drier. It would simplify 
the hiring process, and help eliminate the problem of 
discrimination that is a problem under current law. It's 
simplicity that we seek.
    Three, the new verification system should be implemented 
over time, and should not be applied retroactively. Placing too 
many demands, too soon, has the potential to overwhelm the 
system creating compliance challenges and defeating its 
purpose. The approach taken in H.R. 19, introduced by 
Representative Calvert, who we heard here today, and commented 
on by the Chairman, is a reasonable one that anticipates the 
problem and would phase in perspective verification over a 
number of years. The largest employers would be subject to the 
system first, and the smallest employers several years later.
    Four, because of the inherent tension that's been 
referenced between verification and discrimination under the 
law, the new law should set forth clearly any new duties and 
rights related to discriminatory practices based on national 
origin and citizenship status. H.R. 4437 merely directs the 
Secretary of Homeland Security to evaluate the problems related 
to this issue, but doesn't provide employers and workers any 
guidelines.
    Five, agricultural businesses often hire farm labor 
contractors, which they consider to be the employers of the 
workers they provide. Contractors have an obligation to verify 
the status of the workers they supply. The law should make 
clear that the agricultural business does not have a duplicate 
verification obligation and can rely upon the verification of 
the contractor.
    Six, the penalties for verification paperwork violations 
should be reasonable. Inadvertent mistakes, often repeated 
through the hiring process, could incur fines between $1,000 
and $25,000 per violation, per piece of paper, under the bill. 
Small employers that span from family to hundreds of seasonal 
workers each year, face hundreds of thousands of dollars in 
fines under the provisions. We believe that Congress should 
revisit this issue and provide a more reasonable approach.
    And finally, seven, the legislation also must provide a 
viable means for agricultural employers to obtain legal 
workers. An effective verification system would screen out a 
majority of the agricultural work force. The U.S. agricultural 
work force has become increasingly populated by foreign workers 
who lack work authorization, as reported by the last report of 
the United States Department of Labor.
    In anticipation of this problem, American agriculture came 
to Congress ten years ago, when IIRIRA was considered, and 
expressed support for electronic verification, as long as it 
was accompanied by substantial reform of the H.288 Agricultural 
Guest Worker Program. Because of the difficulties in using that 
program, less than 2 percent of the seasonal agricultural work 
force are brought in through it.
    An employer enforcement only, or enforcement first approach 
to immigration reform, that does not include a reform worker 
program, will be disastrous for American agriculture. Not only 
will field production jobs be lost, but for every field job the 
three to four jobs in cities and suburban areas that provide 
processing, packaging, chemicals, farm equipment, 
transportation, and ports also will be lost.
    We hope that America is not willing to export its labor-
intensive agriculture and rely upon foreign imports.
    Thank you very much for the opportunity to testify.
    [Mr. Lake's testimony may be found in the appendix.]
    Chairman Musgrave. Thank you for your testimony. We may be 
called for votes right away, so we'll quickly move through 
questions.
    Mr. Shandley, I was amazed when I heard you talking about 
the incident in 2002, and the original fine was cited at $2.5 
million because allegedly you had been too aggressive in 
seeking proper verification for new hires, and I'm trying to--
it's kind of the darned if you do and darned if you don't 
situation.
    Could you elaborate a little bit on that experience, and I 
assume a great deal of frustration that you were going through 
with that?
    Mr. Shandley. Thank you, Chairman Musgrave.
    In elaboration, one of the things Swift & Company does, 
both as a domestic employer as well as a global employer, is we 
do want to have a very strong working relationship with all 
agencies, and comply with the laws.
    In the situation at hand, it basically was the tension that 
was alluded to earlier, where circumstances at one of our 
facilities, where they had documentation, they suspected that 
they had passed the Basic Pilot program, they suspected that 
there may be some problems with it, they tried to look into it 
further, and ultimately got us in hot water through the Office 
of Special Counsel.
    And, I will sit there and say that at the end of the day 
the working relationship between the INS then, or ICE now, and 
the Office of Special Counsel, succeeded in working through the 
issues, and the ultimate fine was really just--it was really a 
cost avoidance of further litigation, not an admission by any 
means. But, it does spell out the simple fact that we can 
hire--we'll hire people using legal documents that were 
obtained fraudulently, and that becomes, you know, part of the 
issue that an employer faces. Our staffs are not trained to be 
detectives at that level.
    Chairman Musgrave. Well, Mr. Divine had said that if many 
people were using the same documentation, you know, in a number 
of states, I believe it was his example that it would be 
caught. And, I noticed in your testimony that you see, however, 
any kind of duplicate use of valid documents as a real problem. 
Is that the case?
    Mr. Shandley. Yes, basically, we have a lot of experience 
with the Basic Pilot program, but it does have its flaws as 
we've heard today.
    The biggest flaw really is the person could take a 
legitimate birth certificate, go to an office and get a 
legitimate Social Security card, and that legitimate Social 
Security card then goes to a state to get a state ID with a 
picture on it. At that point on, that Social Security card and 
the state ID, by law, we are required to accept, even though it 
was fraudulently obtained.
    The other issue that comes up is really the fact that has 
already been mentioned, is unless you individually look at your 
Social Security statement at the end of the year, and look at 
where the income flow is coming from, you don't know how many 
times or how many employers that same Social Security number is 
being used.
    The Basic Pilot is very good, and it's very quick in its 
turnaround, and it's the right start and the right step, but it 
doesn't go into the active Social Security numbers, and so 
those active Social Security numbers, as it stands today, could 
be used elsewhere and fraudulently. And so, that's the issue 
that we have.
    Chairman. Musgrave. Thank you.
    Mr. Lipinski?
    Mr. Lipinski. Well, let me first go through and just 
quickly ask each one of you whether or not you think that the 
pilot program can be expanded and can be used to cover 
everybody, just very quickly, just say yes or no, and then 
we'll get into more details.
    Mr. Shandley?
    Mr. Shandley. The answer is yes, but I'd like to expand on 
that, if I had an opportunity.
    Mr. Amador. It could be expanded, but in phases, if all the 
problems are fixed. If not, it will be expanded but it will be 
flawed.
    Mr. Krikorian. Yes.
    Mr. Malara. Yes.
    Mr. Lake. I think it has to be expanded over time. It's 
being used by 9,000 employers as I understand now, and we are 
looking at 7 million, and we need to phase it in gradually.
    Mr. Lake. Mr. Shandley, you seem to have the most concerns 
about it. What are you most concerned about? We just talked 
about the fact that, you know, on our first panel we talked 
about you can pull out multiple times a Social Security number 
is being used, you can flag that, pull that out, find the 
problem. You said that can't be done right now. So, what do you 
sort of boil it down to? Very quickly, what do you think are 
the most important changes that need to be made?
    Mr. Shandley. Let me qualify, Your Honor, it absolutely can 
be and should be expanded, and I believe it should be expanded 
immediately, sooner rather than later.
    We've taken it upon ourselves, as a major employer, with, 
you know, our payroll is over a half a billion dollars, and if 
you simply use the force multipliers that's a lot of economic 
impact in the regions that we operate.
    We've taken it upon ourselves to force our subcontractors, 
and I use the word force figuratively, or push our 
subcontractors to use the Basic Pilot program. By law, they are 
not required to do that. And yet, it's our effort, as a private 
employer, to try to get the Basic Pilot used in a broader 
fashion, so that's my point of clarification. I believe it can 
be, and should be, accelerated, enhanced. It's a procedural 
issue, it's a process issue, it's a database issue, like we 
talked about earlier today.
    Mr. Lipinski. Mr. Amador, would you want to add?
    Mr. Amador. Yes, I would like to add that it's important to 
mention that in both bills, and all through immigration law, as 
the fees increase for enforcement there's also fee increases in 
fines and broader investigations for civil rights violations.
    So, we are looking for a way, you know, and we are looking 
for fast answers as well. You know, when you have people on the 
tentative non-confirmation, and we read in the paper of a 
member being sued by an employee because they fired him, the 
moment they got a tentative non-confirmation the reaction from 
the employer is, I don't want anything to do with this, I want 
to fire the individual. And, we want to be able to get a fast 
and reliable response so the employer can either hire and keep 
the individual, or fire the individual.
    And, right now, on the Basic Pilot, this tentative non-
confirmation that can go on forever doesn't give you that 
security.
    Mr. Lipinski. Did you say there's a 25 percent false 
negative?
    Mr. Amador. 20 percent of the first initial response is a 
tentative non-confirmation, that end up being later on 
confirmed as work authorized. And, we understand that the 
numbers have gone down, but we haven't seen any new official 
data come out from DHS saying what the new number is.
    Mr. Lipinski. And, what needs to be done to change that?
    Mr. Amador. Well, the databases have to be improved, but 
the mechanisms and the procedures, as Calvert said, shouldn't 
be just penalties and penalties, there should be incentives 
there, and there should be some form of default confirmations.
    You know, the employer at some point needs to feel 
confident that they use the system, they did everything they 
were told to do, and then they can rely that, you know, they 
are not going to come and do an investigation based on the 
tentative non-confirmation of employees they are by law not 
allowed to fire.
    So, there are many things that we recommend could be done 
to improve it, but one thing that we must point out again is 
that we are talking within the context of a comprehensive 
immigration reform. One of the things Congressman Calvert 
testified to was that there would be a cost to the economy to 
get out these workers from the economy right away, and I would 
expand and say, not just if you take them right away, if you 
take them out of our economy period.
    Mr. Lipinski. Mr. Lake, how long do you think it's going to 
take?
    Mr. Lake. I think hearing Congressman Calvert, who has a 
lot of experience with this, and put a lot of time into it, a 
seven-year period phased in, with largest employers first, 
makes sense. We've gotten 20 years in trying to adopt this, ten 
years since IIRIRA started the pilot. Let's do it right. The 
problem if we don't do it right is that small employers can't 
get responses from the system, and they have the ongoing duty 
to try to follow up each day to get into the system, and 
meanwhile they are making new hires, and the problem is 
compounding. You are going to have system break down of its own 
weight, and it's going to breed disrespect, and we are trying 
to make it work right.
    So, I think start with the largest employers, and I 
represent them, who want computer-based systems, who want to 
copy the documents electronically, who want to have electronic 
signatures, they are equipped to do it, and ready to do it, 
start with the big ones first, and gradually phase in.
    If there's a capacity to do it more quickly, as the 
experience demonstrates, Congress can come back and, perhaps, 
accelerate it.
    Mr. Lipinski. Thank you.
    Chairman Musgrave. Mr. Akin?
    Mr. Akin. Thank you, Madam Chairman, especially allowing a 
guest in to your hearing.
    Chairman Musgrave. Happy to have you.
    Mr. Akin. When we voted on the Comprehensive Immigration 
Bill the end of last year, as a guy that used to work in 
business, and used to work for IBM, my understanding of what we 
were talking about, and maybe I'm wrong, was something that's 
pretty straightforward for an employer. You simply call up, 
they have a prospective employee sitting there, they call up 
and they say, what's your Social Security number, they check it 
and find out what his name is and his birthday is, and see if 
they all match.
    If they do, they can hire him. If they don't, they say, 
we're sorry, we've got some sort of a problem, you need to go 
talk to some government office.
    I was thinking of something that would be very simple, an 
immediate test, and second of all, that's foolproof for many 
lawsuits, either from the government in terms of fines, or from 
anybody else who says you are threatening somebody's rights, 
because every single employee, just do the same process.
    That was my concept of what they were talking about. Is 
that your concept of what's going on, or are you talking about 
something where you hire somebody and later on try and figure 
out whether they are legal or not?
    Mr. Amador. If I may add, the House bill is written within 
the context of current law, so all of the other penalties still 
apply. They actually increased the penalties for civil rights 
violations, but they all fall within the INA.
    Mr. Akin. What I'm talking about, could you ever have a 
civil right violation for doing that, what I just said?
    Mr. Lake. I think, Congressman, the issue is this, as Mr. 
Divine from the Administration, who is implementing the system, 
talked about, you have citizens who are putting forth a Social 
Security card, and that's more straightforward, and I think 
it's the simplicity that you talk about.
    But, some of the discrimination lawsuits we've seen involve 
alien cards, which are also a part of the system, and which 
goes through the Department of Homeland Security's database. 
And, as we heard from some of the witnesses previously, a lot 
of these cards either have temporary status, they are expired 
as a matter of law, but the person may not have a new document, 
and the government doesn't get in the updates on the status as 
readily as they do, for example, on Social Security cards.
    And so, if an employer believes that a person is an alien 
and has an expired card, and terminates them, when, in fact, 
they are still legal, but it hasn't gotten into the database, 
that's when you are looking at problems that arise that raise 
the problem of discrimination.
    So, it's a matter of the government having time to get the 
capacity up on the alien side, as well as the Social Security 
side, to make the system work, and that's why we hope that it's 
done right so that people aren't discriminated against 
unfairly, and that employers don't make mistakes that get them 
into that position.
    Mr. Akin. And, you are saying that's going to take seven 
years to get that up and going properly, is your guess?
    Mr. Lake. I'm just relying upon the study of Congressman 
Calvert, who has looked at this issue, put a lot of time into 
it, was a small employer, and I think that's a reasonable 
approach.
    Mr. Akin. And, this system would apply to any American that 
wants to get a job, right? It makes it hard to say you are 
discriminating, because anybody that you are going to hire you 
are basically doing the same check on that.
    Mr. Lake. It applies to any American citizen, as well as 
any alien, whoever it is, anybody's warm body walks up, we are 
not discriminating against anybody. You just basically check 
everyone.
    Mr. Akin. Okay. Well, I've heard similar estimates that 
that database is hard to--it's a lot harder to bring it up and 
make it work than what it would appear that it should be simple 
on the surface, it's not so simple.
    Okay, well, I think that answers you questions.
    Chairman Musgrave. Thank you.
    Mr. Lipinski, did you have another question?
    Mr. Lipinski. No, I have no further questions.
    Chairman Musgrave. I want to thank the panel for your very 
good testimony. You've given us good information today, and 
thank you for appearing before the Committee.
    This meeting is adjourned.
    [Whereupon, the Subcommittee was adjourned at 4:17 p.m.]
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