[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                          LEGAL WORKFORCE ACT

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

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                   IMMIGRATION POLICY AND ENFORCEMENT

                                 OF THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                                   ON

                               H.R. 2164

                               __________

                             JUNE 15, 2011

                               __________

                           Serial No. 112-44

                               __________

         Printed for the use of the Committee on the Judiciary








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                       COMMITTEE ON THE JUDICIARY

                      LAMAR SMITH, Texas, Chairman
F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
    Wisconsin                        HOWARD L. BERMAN, California
HOWARD COBLE, North Carolina         JERROLD NADLER, New York
ELTON GALLEGLY, California           ROBERT C. ``BOBBY'' SCOTT, 
BOB GOODLATTE, Virginia                  Virginia
DANIEL E. LUNGREN, California        MELVIN L. WATT, North Carolina
STEVE CHABOT, Ohio                   ZOE LOFGREN, California
DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
MIKE PENCE, Indiana                  MAXINE WATERS, California
J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
TRENT FRANKS, Arizona                  Georgia
LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
JIM JORDAN, Ohio                     MIKE QUIGLEY, Illinois
TED POE, Texas                       JUDY CHU, California
JASON CHAFFETZ, Utah                 TED DEUTCH, Florida
TIM GRIFFIN, Arkansas                LINDA T. SANCHEZ, California
TOM MARINO, Pennsylvania             DEBBIE WASSERMAN SCHULTZ, Florida
TREY GOWDY, South Carolina
DENNIS ROSS, Florida
SANDY ADAMS, Florida
BEN QUAYLE, Arizona
[Vacant]

      Sean McLaughlin, Majority Chief of Staff and General Counsel
       Perry Apelbaum, Minority Staff Director and Chief Counsel
                                 ------                                

           Subcommittee on Immigration Policy and Enforcement

                  ELTON GALLEGLY, California, Chairman

                    STEVE KING, Iowa, Vice-Chairman

DANIEL E. LUNGREN, California        ZOE LOFGREN, California
LOUIE GOHMERT, Texas                 SHEILA JACKSON LEE, Texas
TED POE, Texas                       MAXINE WATERS, California
TREY GOWDY, South Carolina           PEDRO R. PIERLUISI, Puerto Rico
DENNIS ROSS, Florida

                     George Fishman, Chief Counsel

                   David Shahoulian, Minority Counsel















                            C O N T E N T S

                              ----------                              

                             JUNE 15, 2011

                                                                   Page

                            TEXT OF THE BILL

H.R. 2164, the ``Legal Workforce Act''...........................     2

                           OPENING STATEMENTS

The Honorable Elton Gallegly, a Representative in Congress from 
  the State of California, and Chairman, Subcommittee on 
  Immigration Policy and Enforcement.............................     1
The Honorable Zoe Lofgren, a Representative in Congress from the 
  State of California, and Ranking Member, Subcommittee on 
  Immigration Policy and Enforcement.............................    19
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Chairman, Committee on the Judiciary.......    21
The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Ranking Member, Committee on 
  the Judiciary..................................................    22

                               WITNESSES

The Honorable Ken Calvert, a Representative in Congress from the 
  State of California
  Oral Testimony.................................................    53
  Prepared Statement.............................................    56
Barry Rutenberg, First Vice Chairman of the Board, National 
  Association of Home Builders
  Oral Testimony.................................................    57
  Prepared Statement.............................................    60
Craig S. Miller, Chair, National Restaurant Association (2005-
  2006), Current Member, Board's Jobs and Careers Committee
  Oral Testimony.................................................    68
  Prepared Statement.............................................    71
Tyler Moran, Policy Director, National Immigration Law Center
  Oral Testimony.................................................    81
  Prepared Statement.............................................    83

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Material submitted by the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................    25
Material submitted by the Honorable Zoe Lofgren, a Representative 
  in Congress from the State of California, and Ranking Member, 
  Subcommittee on Immigration Policy and Enforcement.............    97
Material submitted by the Honorable Elton Gallegly, a 
  Representative in Congress from the State of California, and 
  Chairman, Subcommittee on Immigration Policy and Enforcement...   111

                                APPENDIX
               Material Submitted for the Hearing Record

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Ranking Member, Committee on the Judiciary.....................   115
Prepared Statement of the Honorable Judy Chu, a Representative in 
  Congress from the State of California, and Member, Committee on 
  the Judiciary..................................................   117
Prepared Statement of the Honorable Michael M. Honda, a 
  Representative in Congress from the State of California........   119
Prepared Statement of Dunkin' Brands, Inc........................   120

 
                          LEGAL WORKFORCE ACT

                              ----------                              


                        WEDNESDAY, JUNE 15, 2011

              House of Representatives,    
                    Subcommittee on Immigration    
                            Policy and Enforcement,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Subcommittee met, pursuant to call, at 10:19 a.m., in 
room 2141, Rayburn House Office Building, the Honorable Elton 
Gallegly (Chairman of the Subcommittee) presiding.
    Present: Representatives Gallegly, Smith, King, Lungren, 
Poe, Lofgren, Jackson Lee and Conyers (ex officio).
    Staff Present: (Majority) Andrea Loving, Counsel; Marian 
White, Clerk; and David Shahoulian, Minority Counsel.
    Mr. Gallegly. We will move ahead with our opening 
statements in order to facilitate getting the meeting going. I 
will call the hearing to order. Good morning.
    Currently there are nearly 14 million unemployed Americans. 
Making sure that they have every opportunity to find work is 
more important now than ever. One way to do this is it to 
reduce the number of jobs that go to illegal immigrants. The E-
Verify program will clearly do just that.
    E-Verify allows employers to check the work eligibility of 
new hires by running the employee's Social Security number or 
alien identification number against Department of Homeland 
Security and Social Security Administration records.
    In 1995, I chaired the Congressional Task Force on 
Immigration Reform. We published a 200-plus-page report with 
more than 80 specific recommendations. One of those was an 
electronic employment eligibility verification system, which 
was included in Chairman Smith's 1996 immigration reform bill. 
The system is now known as E-Verify. It is currently a 
voluntary program for most of the almost 250,000 employers who 
use it. It is free, Internet-based, and very easy to use, and 
the employers who use it all agree.
    I am pleased to be an original cosponsor of the Legal 
Workforce Act. The bill mandates that all employers in the 
United States use E-Verify to help make sure their workforce is 
legal. The result of that will be that jobs are reserved for 
citizens and legal residents.
    The bill requires that employers be notified when they 
submit one or more mismatched W-2 statements. Once the employer 
receives the notice, they must use E-Verify to check the 
employee's work eligibility and are subject to penalty if they 
do not then follow the requirements of E-Verify in good faith.
    And the Legal Workforce Act requires employees who submit a 
Social Security number for which there is a pattern of unusual 
multiple use to be notified of the use so that the rightful 
owner can be determined. The employer must then be notified of 
the unusual use and follow the E-Verify procedures for that 
employee.
    Another important change the bill makes to the E-Verify 
process will help alleviate some of the burden on business. 
Currently an employer is prohibited from using E-Verify until 
after they have hired the employee. So sometimes they invest 
time, money and resources into an employee only to have it turn 
out that the employee is not work eligible. But the Legal 
Workforce Act allows the employer to make a job offer 
conditioned on an E-Verify confirmation. This change is simply 
common sense.
    The Legal Workforce Act implements a process whereby 
employers can help ensure a legal workforce, and Americans will 
have a chance to get every job possible in the U.S.
    I look forward to the testimony of our witnesses today. And 
at this point, I will recognize my friend, the Ranking Member 
from California, Ms. Lofgren.
    [The text of the bill, H.R. 2164, follows:]

HR 2164 IH  ___________________________________________________

                                                                      I
112th CONGRESS
    1st Session

                                H. R. 2164

To amend the Immigration and Nationality Act to make mandatory and 
    permanent requirements relating to use of an electronic employment 
    eligibility verification system, and for other purposes.
                               __________
                    IN THE HOUSE OF REPRESENTATIVES
                             June 14, 2011
Mr. Smith of Texas (for himself, Mr. Calvert, Mr. Gallegly, Mr. 
    Chaffetz, Mr. Bilbray, Mr. Royce, Mr. Gary G. Miller of California, 
    Mrs. Myrick, Mr. Sensenbrenner, Mr. Franks of Arizona, Mr. Carter, 
    Mr. Kingston, Mr. Daniel E. Lungren of California, and Mr. 
    Goodlatte) introduced the following bill; which was referred to the 
    Committee on the Judiciary, and in addition to the Committees on 
    Education and the Workforce and Ways and Means, for a period to be 
    subsequently determined by the Speaker, in each case for 
    consideration of such provisions as fall within the jurisdiction of 
    the committee concerned
                               __________

                                 A BILL

To amend the Immigration and Nationality Act to make mandatory and 
    permanent requirements relating to use of an electronic employment 
    eligibility verification system, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Legal Workforce Act''.

SEC. 2. EMPLOYMENT ELIGIBILITY VERIFICATION PROCESS.

    Section 274A(b) of the Immigration and Nationality Act (8 U.S.C. 
1324a(b)) is amended to read as follows:
    ``(b) Employment Eligibility Verification Process.--
            ``(1) New hires, recruitment, and referral.--The 
        requirements referred to in paragraphs (1)(B) and (3) of 
        subsection (a) are, in the case of a person or other entity 
        hiring, recruiting, or referring an individual for employment 
        in the United States, the following:
                    ``(A) Attestation after examination of 
                documentation.--
                            ``(i) Attestation.--During the verification 
                        period (as defined in subparagraph (F)), the 
                        person or entity shall attest, under penalty of 
                        perjury and on a form, including electronic and 
                        telephonic formats, designated or established 
                        by the Secretary by regulation not later than 6 
                        months after the date of the enactment of the 
                        Legal Workforce Act, that it has verified that 
                        the individual is not an unauthorized alien 
                        by--
                                    ``(I) obtaining from the individual 
                                the individual's social security 
                                account number and recording the number 
                                on the form (if the individual claims 
                                to have been issued such a number), 
                                and, if the individual does not attest 
                                to United States citizenship under 
                                subparagraph (B), obtaining such 
                                identification or authorization number 
                                established by the Department of 
                                Homeland Security for the alien as the 
                                Secretary of Homeland Security may 
                                specify, and recording such number on 
                                the form; and
                                    ``(II) examining--
    ``(aa) a document described in clause (ii); or
    ``(bb) a document described in clause (iii) and a document 
    described in clause (iv).
                            ``(ii) Documents evidencing employment 
                        authorization and establishing identity.--A 
                        document described in this subparagraph is an 
                        individual's--
                                    ``(I) unexpired United States 
                                passport or passport card;
                                    ``(II) unexpired permanent resident 
                                card that contains a photograph;
                                    ``(III) unexpired employment 
                                authorization card that contains a 
                                photograph;
                                    ``(IV) in the case of a 
                                nonimmigrant alien authorized to work 
                                for a specific employer incident to 
                                status, a foreign passport with Form I-
                                94 or Form I-94A bearing the same name 
                                as the passport and containing as 
                                endorsement of the alien's nonimmigrant 
                                status, as long as the period of 
                                endorsement has not yet expired and the 
                                proposed employment is not in conflict 
                                with any restrictions or limitations 
                                identified on the form;
                                    ``(V) passport from the Federated 
                                States of Micronesia (FSM) or the 
                                Republic of the Marshall Islands (RMI) 
                                with Form I-94 or Form I-94A indicating 
                                nonimmigrant admission under the 
                                Compact of Free Association Between the 
                                United Sates and the FSM or RMI; or
                                    ``(VI) other document designated by 
                                the Secretary of Homeland Security, if 
                                the document--
    ``(aa) contains a photograph of the individual and biometric 
    identification data from the individual and such other personal 
    identifying information relating to the individual as the Secretary 
    of Homeland Security finds, by regulation, sufficient for purposes 
    of this clause;
    ``(bb) is evidence of authorization of employment in the United 
    States; and
    ``(cc) contains security features to make it resistant to 
    tampering, counterfeiting, and fraudulent use.
                            ``(iii) Documents evidencing employment 
                        authorization.--A document described in this 
                        subparagraph is an individual's social security 
                        account number card (other than such a card 
                        which specifies on the face that the issuance 
                        of the card does not authorize employment in 
                        the United States).
                            ``(iv) Documents establishing identity of 
                        individual.--A document described in this 
                        subparagraph is--
                                    ``(I) an individual's unexpired 
                                State issued driver's license or 
                                identification card if it contains a 
                                photograph and information such as 
                                name, date of birth, gender, height, 
                                eye color, and address;
                                    ``(II) an individual's unexpired 
                                U.S. military identification card;
                                    ``(III) an individual's unexpired 
                                Native American tribal identification 
                                document; or
                                    ``(IV) in the case of an individual 
                                under 18 years of age, a parent or 
                                legal guardian's attestation under 
                                penalty of law as to the identity and 
                                age of the individual.
                            ``(v) Authority to prohibit use of certain 
                        documents.--If the Secretary of Homeland 
                        Security finds, by regulation, that any 
                        document described in clause (i), (ii), or 
                        (iii) as establishing employment authorization 
                        or identity does not reliably establish such 
                        authorization or identity or is being used 
                        fraudulently to an unacceptable degree, the 
                        Secretary may prohibit or place conditions on 
                        its use for purposes of this paragraph.
                            ``(vi) Signature.--Such attestation may be 
                        manifested by either a hand-written or 
                        electronic signature.
                    ``(B) Individual attestation of employment 
                authorization.--
                            ``(i) In general.--During the verification 
                        period (as defined in subparagraph (F)), the 
                        individual shall attest, under penalty of 
                        perjury on the form designated or established 
                        for purposes of subparagraph (A), that the 
                        individual is a citizen or national of the 
                        United States, an alien lawfully admitted for 
                        permanent residence, or an alien who is 
                        authorized under this Act or by the Secretary 
                        of Homeland Security to be hired, recruited, or 
                        referred for such employment. Such attestation 
                        may be manifested by either a hand-written or 
                        electronic signature. The individual shall also 
                        provide that individual's social security 
                        account number (if the individual claims to 
                        have been issued such a number), and, if the 
                        individual does not attest to United States 
                        citizenship under this subparagraph, such 
                        identification or authorization number 
                        established by the Department of Homeland 
                        Security for the alien as the Secretary may 
                        specify.
                            ``(ii) Criminal penalty.--
                                    ``(I) Offenses.--Any individual 
                                who, pursuant to clause (i), provides a 
                                social security account number or an 
                                identification or authorization number 
                                established by the Secretary of 
                                Homeland Security that belongs to 
                                another person, knowing that the number 
                                does not belong to the individual 
                                providing the number, shall be fined 
                                under title 18, United States Code, 
                                imprisoned not less than 1 year and not 
                                more than 15 years, or both. Any 
                                individual who, pursuant to clause (i), 
                                provides, during and in relation to any 
                                felony violation enumerated in section 
                                1028A(c) of title 18, United States 
                                Code, a social security account number 
                                or an identification or authorization 
                                number established by the Secretary of 
                                Homeland Security that belongs to 
                                another person, knowing that the number 
                                does not belong to the individual 
                                providing the number, in addition to 
                                the punishment provided for such 
                                felony, shall be fined under title 18, 
                                United States Code, imprisoned for a 
                                term of 2 years, or both.
                                    ``(II) Consecutive sentence.--
                                Notwithstanding any other provision of 
                                law--
    ``(aa) a court shall not place on probation any individual 
    convicted of a violation of this clause;
    ``(bb) except as provided in item (dd), no term of imprisonment 
    imposed on an individual under this section shall run concurrently 
    with any other term of imprisonment imposed on the individual under 
    any other provision of law, including any term of imprisonment 
    imposed for the felony enumerated in section 1028A(c) of title 18, 
    United States Code, during which the violation of this section 
    occurred;
    ``(cc) in determining any term of imprisonment to be imposed for 
    the felony enumerated in section 1028A(c) of title 18, United 
    States Code, during which the violation of this clause occurred, a 
    court shall not in any way reduce the term to be imposed for such 
    crime so as to compensate for, or otherwise take into account, any 
    separate term of imprisonment imposed or to be imposed for a 
    violation of this clause; and
    ``(dd) a term of imprisonment imposed on an individual for a 
    violation of this clause may, in the discretion of the court, run 
    concurrently, in whole or in part, only with another term of 
    imprisonment that is imposed by the court at the same time on that 
    individual for an additional violation of this clause, except that 
    such discretion shall be exercised in accordance with any 
    applicable guidelines and policy statements issued by the United 
    States Sentencing Commission pursuant to section 994 of title 28, 
    United States Code.
                    ``(C) Retention of verification form and 
                verification.--
                            ``(i) In general.--After completion of such 
                        form in accordance with subparagraphs (A) and 
                        (B), the person or entity shall--
                                    ``(I) retain a paper, microfiche, 
                                microfilm, or electronic version of the 
                                form and make it available for 
                                inspection by officers of the 
                                Department of Homeland Security, the 
                                Special Counsel for Immigration-Related 
                                Unfair Employment Practices, or the 
                                Department of Labor during a period 
                                beginning on the date of the hiring, 
                                recruiting, or referral of the 
                                individual and ending--
    ``(aa) in the case of the recruiting or referral of an individual, 
    3 years after the date of the recruiting or referral; and
    ``(bb) in the case of the hiring of an individual, the later of 3 
    years after the date of such hire or one year after the date the 
    individual's employment is terminated; and
                                    ``(II) during the verification 
                                period (as defined in subparagraph 
                                (F)), make an inquiry, as provided in 
                                subsection (d), using the verification 
                                system to seek verification of the 
                                identity and employment eligibility of 
                                an individual.
                            ``(ii) Verification.--
                                    ``(I) Verification received.--If 
                                the person or other entity receives an 
                                appropriate verification of an 
                                individual's identity and work 
                                eligibility under the verification 
                                system within the time period 
                                specified, the person or entity shall 
                                record on the form an appropriate code 
                                that is provided under the system and 
                                that indicates a final verification of 
                                such identity and work eligibility of 
                                the individual.
                                    ``(II) Tentative nonverification 
                                received.--If the person or other 
                                entity receives a tentative 
                                nonverification of an individual's 
                                identity or work eligibility under the 
                                verification system within the time 
                                period specified, the person or entity 
                                shall so inform the individual for whom 
                                the verification is sought. If the 
                                individual does not contest the 
                                nonverification within the time period 
                                specified, the nonverification shall be 
                                considered final. The person or entity 
                                shall then record on the form an 
                                appropriate code which has been 
                                provided under the system to indicate a 
                                tentative nonverification. If the 
                                individual does contest the 
                                nonverification, the individual shall 
                                utilize the process for secondary 
                                verification provided under subsection 
                                (d). The nonverification will remain 
                                tentative until a final verification or 
                                nonverification is provided by the 
                                verification system within the time 
                                period specified. In no case shall an 
                                employer terminate employment of an 
                                individual because of a failure of the 
                                individual to have identity and work 
                                eligibility confirmed under this 
                                section until a nonverification becomes 
                                final. Nothing in this clause shall 
                                apply to a termination of employment 
                                for any reason other than because of 
                                such a failure. In no case shall an 
                                employer rescind the offer of 
                                employment to an individual because of 
                                a failure of the individual to have 
                                identity and work eligibility confirmed 
                                under this subsection until a 
                                nonconfirmation becomes final. Nothing 
                                in this subclause shall apply to a 
                                recission of the offer of employment 
                                for any reason other than because of 
                                such a failure.
                                    ``(III) Final verification or 
                                nonverification received.--If a final 
                                verification or nonverification is 
                                provided by the verification system 
                                regarding an individual, the person or 
                                entity shall record on the form an 
                                appropriate code that is provided under 
                                the system and that indicates a 
                                verification or nonverification of 
                                identity and work eligibility of the 
                                individual.
                                    ``(IV) Extension of time.--If the 
                                person or other entity in good faith 
                                attempts to make an inquiry during the 
                                time period specified and the 
                                verification system has registered that 
                                not all inquiries were received during 
                                such time, the person or entity may 
                                make an inquiry in the first subsequent 
                                working day in which the verification 
                                system registers that it has received 
                                all inquiries. If the verification 
                                system cannot receive inquiries at all 
                                times during a day, the person or 
                                entity merely has to assert that the 
                                entity attempted to make the inquiry on 
                                that day for the previous sentence to 
                                apply to such an inquiry, and does not 
                                have to provide any additional proof 
                                concerning such inquiry.
                                    ``(V) Consequences of 
                                nonverification.--
    ``(aa) Termination or notification of continued employment.--If the 
    person or other entity has received a final nonverification 
    regarding an individual, the person or entity may terminate 
    employment of the individual (or decline to recruit or refer the 
    individual). If the person or entity does not terminate employment 
    of the individual or proceeds to recruit or refer the individual, 
    the person or entity shall notify the Secretary of Homeland 
    Security of such fact through the verification system or in such 
    other manner as the Secretary may specify.
    ``(bb) Failure to notify.--If the person or entity fails to provide 
    notice with respect to an individual as required under item (aa), 
    the failure is deemed to constitute a violation of subsection 
    (a)(1)(A) with respect to that individual.
                                    ``(VI) Continued employment after 
                                final nonverification.--If the person 
                                or other entity continues to employ (or 
                                to recruit or refer) an individual 
                                after receiving final nonverification, 
                                a rebuttable presumption is created 
                                that the person or entity has violated 
                                subsection (a)(1)(A).
                    ``(D) Continuation of seasonal agricultural 
                employment.--An individual shall not be considered a 
                new hire subject to verification under this paragraph 
                if the individual is engaged in seasonal agricultural 
                employment and is returning to work for an employer 
                that previously employed the individual.
                    ``(E) Effective dates of new procedures.--
                            ``(i) Hiring.--Except as provided in clause 
                        (iii), the provisions of this paragraph shall 
                        apply to a person or other entity hiring an 
                        individual for employment in the United States 
                        as follows:
                                    ``(I) With respect to employers 
                                having 10,000 or more employees in the 
                                United States on the date of the 
                                enactment of the Legal Workforce Act, 
                                on the date that is 6 months after the 
                                date of the enactment of such Act.
                                    ``(II) With respect to employers 
                                having 500 or more employees in the 
                                United States, but less than 10,000 
                                employees in the United States, on the 
                                date of the enactment of the Legal 
                                Workforce Act, on the date that is 12 
                                months after the date of the enactment 
                                of such Act.
                                    ``(III) With respect to employers 
                                having 20 or more employees in the 
                                United States, but less than 500 
                                employees in the United States, on the 
                                date of the enactment of the Legal 
                                Workforce Act, on the date that is 18 
                                months after the date of the enactment 
                                of such Act.
                                    ``(IV) With respect to employers 
                                having 1 or more employees in the 
                                United States, but less than 20 
                                employees in the United States, on the 
                                date of the enactment of the Legal 
                                Workforce Act, on the date that is 24 
                                months after the date of the enactment 
                                of such Act.
                            ``(ii) Recruiting and referring.--Except as 
                        provided in clause (iii), the provisions of 
                        this paragraph shall apply to a person or other 
                        entity recruiting or referring an individual 
                        for employment in the United States on the date 
                        that is 12 months after the date of the 
                        enactment of the Legal Workforce Act.
                            ``(iii) Agricultural labor or services.--
                        With respect to an employee performing 
                        agricultural labor or services (as defined for 
                        purposes of section 101(a)(15)(H)(ii)(a)), this 
                        paragraph shall not apply with respect to the 
                        verification of the employee until the date 
                        that is 36 months after the date of the 
                        enactment of the Legal Workforce Act. An 
                        employee described in this clause shall not be 
                        counted for purposes of clause (i).
                            ``(iv) Transition rule.--Subject to 
                        paragraph (4), the following shall apply to a 
                        person or other entity hiring, recruiting, or 
                        referring an individual for employment in the 
                        United States until the effective date or dates 
                        applicable under clauses (i) through (iii):
                                    ``(I) This subsection, as in effect 
                                before the enactment of the Legal 
                                Workforce Act.
                                    ``(II) Subtitle A of title IV of 
                                the Illegal Immigration Reform and 
                                Immigrant Responsibility Act of 1996 (8 
                                U.S.C. 1324a note), as in effect before 
                                the effective date in section 7(c) of 
                                the Legal Workforce Act.
                                    ``(III) Any other provision of 
                                Federal law requiring the person or 
                                entity to participate in the E-Verify 
                                Program described in section 403(a) of 
                                the Illegal Immigration Reform and 
                                Immigrant Responsibility Act of 1996 (8 
                                U.S.C. 1324a note), as in effect before 
                                the effective date in section 7(c) of 
                                the Legal Workforce Act, including 
                                Executive Order 13465 (8 U.S.C. 1324a 
                                note; relating to Government 
                                procurement).
                    ``(F) Verification period defined.--
                            ``(i) In general.--For purposes of this 
                        paragraph:
                                    ``(I) In the case of recruitment or 
                                referral, the term `verification 
                                period' means the period ending on the 
                                date recruiting or referring commences.
                                    ``(II) In the case of hiring, the 
                                term `verification period' means the 
                                period beginning on the date on which 
                                an offer of employment is extended and 
                                ending on the date that is 3 business 
                                days after the date of hiring. The 
                                offer of employment may be conditioned 
                                in accordance with clause (ii).
                            ``(ii) Job offer may be conditional.--A 
                        person or other entity may offer a prospective 
                        employee an employment position that is 
                        conditioned on final verification of the 
                        identity and employment eligibility of the 
                        employee using the procedures established under 
                        this paragraph.
            ``(2) Reverification for individuals with limited work 
        authorization.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), a person or entity shall make an 
                inquiry, as provided in subsection (d), using the 
                verification system to seek reverification of the 
                identity and employment eligibility of all individuals 
                with a limited period of work authorization employed by 
                the person or entity during the 30-day period ending on 
                the date the employee's work authorization expires as 
                follows:
                            ``(i) With respect to employers having 
                        10,000 or more employees in the United States 
                        on the date of the enactment of the Legal 
                        Workforce Act, beginning on the date that is 6 
                        months after the date of the enactment of such 
                        Act.
                            ``(ii) With respect to employers having 500 
                        or more employees in the United States, but 
                        less than 10,000 employees in the United 
                        States, on the date of the enactment of the 
                        Legal Workforce Act, beginning on the date that 
                        is 12 months after the date of the enactment of 
                        such Act.
                            ``(iii) With respect to employers having 20 
                        or more employees in the United States, but 
                        less than 500 employees in the United States, 
                        on the date of the enactment of the Legal 
                        Workforce Act, beginning on the date that is 18 
                        months after the date of the enactment of such 
                        Act.
                            ``(iv) With respect to employers having 1 
                        or more employees in the United States, but 
                        less than 20 employees in the United States, on 
                        the date of the enactment of the Legal 
                        Workforce Act, beginning on the date that is 24 
                        months after the date of the enactment of such 
                        Act.
                    ``(B) Agricultural labor or services.--With respect 
                to an employee performing agricultural labor or 
                services (as defined for purposes of section 
                101(a)(15)(H)(ii)(a)), subparagraph (A) shall not apply 
                with respect to the reverification of the employee 
                until the date that is 36 months after the date of the 
                enactment of the Legal Workforce Act. An employee 
                described in this subparagraph shall not be counted for 
                purposes of subparagraph (A).
                    ``(C) Reverification.--Paragraph (1)(C)(ii) shall 
                apply to reverifications pursuant to this paragraph on 
                the same basis as it applies to verifications pursuant 
                to paragraph (1), except that employers shall--
                            ``(i) use a form designated or established 
                        by the Secretary by regulation for purposes of 
                        this paragraph in lieu of the verification form 
                        under paragraph (1); and
                            ``(ii) retain a paper, microfiche, 
                        microfilm, or electronic version of the form 
                        and make it available for inspection by 
                        officers of the Department of Homeland 
                        Security, the Special Counsel for Immigration-
                        Related Unfair Employment Practices, or the 
                        Department of Labor during the period beginning 
                        on the date the reverification commences and 
                        ending on the date that is the later of 3 years 
                        after the date of such reverification or 1 year 
                        after the date the individual's employment is 
                        terminated.
                    ``(D) Notice.--The Secretary of Homeland Security 
                shall notify a person or entity employing a person with 
                limited work authorization of the date on which the 
                limited work authorization expires.
            ``(3) Previously hired individuals.--
                    ``(A) On a mandatory basis for certain employees.--
                            ``(i) In general.--Not later than the date 
                        that is 6 months after the date of the 
                        enactment of the Legal Workforce Act, an 
                        employer shall make an inquiry, as provided in 
                        subsection (d), using the verification system 
                        to seek verification of the identity and 
                        employment eligibility of any individual 
                        described in clause (ii) employed by the 
                        employer whose employment eligibility has not 
                        been verified under the E-Verify Program 
                        described in section 403(a) of the Illegal 
                        Immigration Reform and Immigrant Responsibility 
                        Act of 1996 (8 U.S.C. 1324a note).
                            ``(ii) Individuals described.--An 
                        individual described in this clause is any of 
                        the following:
                                    ``(I) An employee of any unit of a 
                                Federal, State, or local government.
                                    ``(II) An employee who requires a 
                                Federal security clearance working in a 
                                Federal, State or local government 
                                building, a military base, a nuclear 
                                energy site, a weapons site, or an 
                                airport or other facility that requires 
                                workers to carry a Transportation 
                                Worker Identification Credential 
                                (TWIC).
                                    ``(III) An employee assigned to 
                                perform work in the United States under 
                                a Federal or State contract, except 
                                that this subclause--
    ``(aa) is not applicable to individuals who have a clearance under 
    Homeland Security Presidential Directive 12 (HSPD 12 clearance), 
    are administrative or overhead personnel, or are working solely on 
    contracts that provide Commercial Off The Shelf goods or services 
    as set forth by the Federal Acquisition Regulatory Council, unless 
    they are subject to verification under subclause (II); and
    ``(bb) only applies to contacts over the simple acquisition 
    threshold.
                    ``(B) On a mandatory basis for multiple users of 
                same social security account number.--In the case of an 
                employer who is required by this subsection to use the 
                verification system described in subsection (d), or has 
                elected voluntarily to use such system, the employer 
                shall make inquiries to the system in accordance with 
                the following:
                            ``(i) The Commissioner of Social Security 
                        shall notify annually employees (at the 
                        employee address listed on the Wage and Tax 
                        Statement) who submit a social security account 
                        number to which more than one employer reports 
                        income and for which there is a pattern of 
                        unusual multiple use. The notification letter 
                        shall identify the number of employers to 
                        which, and the States in which, income is being 
                        reported as well as sufficient information 
                        notifying the employee of the process to 
                        contact the Social Security Administration 
                        Fraud Hotline if the employee believes the 
                        employee's identity may have been stolen. The 
                        notice shall not share information protected as 
                        private, in order to avoid any recipient of the 
                        notice being in the position to further 
                        identity theft.
                            ``(ii) If the person to whom the social 
                        security account number was issued by the 
                        Social Security Administration has been 
                        identified and confirmed by Commissioner, and 
                        indicates that the social security account 
                        number was used without their knowledge, the 
                        Secretary and the Commissioner shall lock the 
                        social security account number for employment 
                        eligibility verification purposes and shall 
                        notify the employers of the individuals who 
                        wrongfully submitted the social security 
                        account number that the employee may not be 
                        work eligible.
                            ``(iii) Each employer receiving such 
                        notification of invalid social security account 
                        number shall use the verification system 
                        described in subsection (d) to check the work 
                        eligibility status of the applicable employee 
                        within 10 business days of receipt of the 
                        notification of invalid social security account 
                        number under clause (ii).
                    ``(C) On a mandatory basis for certain mismatched 
                wage and tax statements.--
                            ``(i) In general.--In the case of an 
                        employer who is required by this subsection to 
                        use the verification system described in 
                        subsection (d), or has elected voluntarily to 
                        use such system, and who receives a notice 
                        described in clause (ii) identifying an 
                        individual employee, the employer shall, not 
                        later than 30 calendar days after receipt of 
                        such notice, use the verification system 
                        described in subsection (d) to verify the 
                        employment eligibility of the employee in 
                        accordance with the instructions in such notice 
                        if the individual is still on the payroll of 
                        the employer.
                            ``(ii) Notice.--The Commissioner of Social 
                        Security shall issue a notice to an employer 
                        submitting one or more mismatched wage and tax 
                        statements or corrected wage and tax statements 
                        containing the following:
                                    ``(I) A description of the 
                                mismatched information.
                                    ``(II) An explanation of the steps 
                                that the employer is required to take 
                                to correct the mismatched information.
                                    ``(III) An explanation of the 
                                employment eligibility verification 
                                requirement described in clause (i).
                    ``(D) On a voluntary basis.--Subject to paragraph 
                (2), and subparagraphs (A) through (C) of this 
                paragraph, beginning on the date that is 30 days after 
                the date of the enactment of the Legal Workforce Act, 
                an employer may make an inquiry, as provided in 
                subsection (d), using the verification system to seek 
                verification of the identity and employment eligibility 
                of any individual employed by the employer. If an 
                employer chooses voluntarily to seek verification of 
                any individual employed by the employer, the employer 
                shall seek verification of all individuals so employed. 
                An employer's decision about whether or not voluntarily 
                to seek verification of its current workforce under 
                this subparagraph may not be considered by any 
                government agency in any proceeding, investigation, or 
                review provided for in this Act.
                    ``(E) Verification.--Paragraph (1)(C)(ii) shall 
                apply to verifications pursuant to this paragraph on 
                the same basis as it applies to verifications pursuant 
                to paragraph (1), except that employers shall--
                            ``(i) use a form designated or established 
                        by the Secretary by regulation for purposes of 
                        this paragraph in lieu of the verification form 
                        under paragraph (1); and
                            ``(ii) retain a paper, microfiche, 
                        microfilm, or electronic version of the form 
                        and make it available for inspection by 
                        officers of the Department of Homeland 
                        Security, the Special Counsel for Immigration-
                        Related Unfair Employment Practices, or the 
                        Department of Labor during the period beginning 
                        on the date the verification commences and 
                        ending on the date that is the later of 3 years 
                        after the date of such verification or 1 year 
                        after the date the individual's employment is 
                        terminated.
            ``(4) Early compliance.--
                    ``(A) Former e-verify required users, including 
                federal contractors.--Notwithstanding the deadlines in 
                paragraphs (1) and (2), beginning on the earlier of the 
                date that is 6 months after the date of the enactment 
                of the Legal Workforce Act and the date on which the 
                Secretary implements the system under subsection (d), 
                the Secretary is authorized to commence requiring 
                employers required to participate in the E-Verify 
                Program described in section 403(a) of the Illegal 
                Immigration Reform and Immigrant Responsibility Act of 
                1996 (8 U.S.C. 1324a note), including employers 
                required to participate in such program by reason of 
                Federal acquisition laws (and regulations promulgated 
                under those laws, including the Federal Acquisition 
                Regulation), to commence compliance with the 
                requirements of this subsection (and any additional 
                requirements of such Federal acquisition laws and 
                regulation) in lieu of any requirement to participate 
                in the E-Verify Program.
                    ``(B) Former e-verify voluntary users and others 
                desiring early compliance.--Notwithstanding the 
                deadlines in paragraphs (1) and (2), beginning 30 days 
                after the date of the enactment of the Legal Workforce 
                Act, the Secretary shall provide for the voluntary 
                compliance with the requirements of this subsection by 
                employers voluntarily electing to participate in the E-
                Verify Program described in section 403(a) of the 
                Illegal Immigration Reform and Immigrant Responsibility 
                Act of 1996 (8 U.S.C. 1324a note) before such date, as 
                well as by other employers seeking voluntary early 
                compliance.
            ``(5) Copying of documentation permitted.--Notwithstanding 
        any other provision of law, the person or entity may copy a 
        document presented by an individual pursuant to this subsection 
        and may retain the copy, but only (except as otherwise 
        permitted under law) for the purpose of complying with the 
        requirements of this subsection.
            ``(6) Limitation on use of forms.--A form designated or 
        established by the Secretary of Homeland Security under this 
        subsection and any information contained in or appended to such 
        form, may not be used for purposes other than for enforcement 
        of this Act and any other provision of Federal criminal law.
            ``(7) Good faith compliance.--
                    ``(A) In general.--Except as otherwise provided in 
                this subsection, a person or entity is considered to 
                have complied with a requirement of this subsection 
                notwithstanding a technical or procedural failure to 
                meet such requirement if there was a good faith attempt 
                to comply with the requirement.
                    ``(B) Exception if failure to correct after 
                notice.--Subparagraph (A) shall not apply if--
                            ``(i) the failure is not de minimus;
                            ``(ii) the Secretary of Homeland Security 
                        has explained to the person or entity the basis 
                        for the failure and why it is not de minimus;
                            ``(iii) the person or entity has been 
                        provided a period of not less than 30 calendar 
                        days (beginning after the date of the 
                        explanation) within which to correct the 
                        failure; and
                            ``(iv) the person or entity has not 
                        corrected the failure voluntarily within such 
                        period.
                    ``(C) Exception for pattern or practice 
                violators.--Subparagraph (A) shall not apply to a 
                person or entity that has or is engaging in a pattern 
                or practice of violations of subsection (a)(1)(A) or 
                (a)(2).''.

SEC. 3. EMPLOYMENT ELIGIBILITY VERIFICATION SYSTEM.

    Section 274A(d) of the Immigration and Nationality Act (8 U.S.C. 
1324a(d)) is amended to read as follows:
    ``(d) Employment Eligibility Verification System.--
            ``(1) In general.--Patterned on the employment eligibility 
        confirmation system established under section 404 of the 
        Illegal Immigration Reform and Immigrant Responsibility Act of 
        1996 (8 U.S.C. 1324a note), the Secretary of Homeland Security 
        shall establish and administer a verification system through 
        which the Secretary (or a designee of the Secretary, which may 
        be a nongovernmental entity)--
                    ``(A) responds to inquiries made by persons at any 
                time through a toll-free telephone line and other toll-
                free electronic media concerning an individual's 
                identity and whether the individual is authorized to be 
                employed; and
                    ``(B) maintains records of the inquiries that were 
                made, of verifications provided (or not provided), and 
                of the codes provided to inquirers as evidence of their 
                compliance with their obligations under this section.
            ``(2) Initial response.--The verification system shall 
        provide verification or a tentative nonverification of an 
        individual's identity and employment eligibility within 3 
        working days of the initial inquiry. If providing verification 
        or tentative nonverification, the verification system shall 
        provide an appropriate code indicating such verification or 
        such nonverification.
            ``(3) Secondary verification process in case of tentative 
        nonverification.--In cases of tentative nonverification, the 
        Secretary shall specify, in consultation with the Commissioner 
        of Social Security, an available secondary verification process 
        to confirm the validity of information provided and to provide 
        a final verification or nonverification within 10 working days 
        after the date of the tentative nonverification. When final 
        verification or nonverification is provided, the verification 
        system shall provide an appropriate code indicating such 
        verification or nonverification.
            ``(4) Design and operation of system.--The verification 
        system shall be designed and operated--
                    ``(A) to maximize its reliability and ease of use 
                by persons and other entities consistent with 
                insulating and protecting the privacy and security of 
                the underlying information;
                    ``(B) to respond to all inquiries made by such 
                persons and entities on whether individuals are 
                authorized to be employed and to register all times 
                when such inquiries are not received;
                    ``(C) with appropriate administrative, technical, 
                and physical safeguards to prevent unauthorized 
                disclosure of personal information;
                    ``(D) to have reasonable safeguards against the 
                system's resulting in unlawful discriminatory practices 
                based on national origin or citizenship status, 
                including--
                            ``(i) the selective or unauthorized use of 
                        the system to verify eligibility; or
                            ``(ii) the exclusion of certain individuals 
                        from consideration for employment as a result 
                        of a perceived likelihood that additional 
                        verification will be required, beyond what is 
                        required for most job applicants; and
                    ``(E) to limit the subjects of verification to the 
                following individuals:
                            ``(i) Individuals hired, referred, or 
                        recruited, in accordance with paragraph (1) or 
                        (4) of subsection (b).
                            ``(ii) Employees and prospective employees, 
                        in accordance with paragraph (2), (3), or (4) 
                        of subsection (b).
                            ``(iii) Individuals seeking to confirm 
                        their own employment eligibility on a voluntary 
                        basis.
            ``(5) Responsibilities of commissioner of social 
        security.--As part of the verification system, the Commissioner 
        of Social Security, in consultation with the Secretary of 
        Homeland Security (and any designee of the Secretary selected 
        to establish and administer the verification system), shall 
        establish a reliable, secure method, which, within the time 
        periods specified under paragraphs (2) and (3), compares the 
        name and social security account number provided in an inquiry 
        against such information maintained by the Commissioner in 
        order to validate (or not validate) the information provided 
        regarding an individual whose identity and employment 
        eligibility must be confirmed, the correspondence of the name 
        and number, and whether the individual has presented a social 
        security account number that is not valid for employment. The 
        Commissioner shall not disclose or release social security 
        information (other than such verification or nonverification) 
        except as provided for in this section or section 205(c)(2)(I) 
        of the Social Security Act.
            ``(6) Responsibilities of secretary of homeland security.--
        As part of the verification system, the Secretary of Homeland 
        Security (in consultation with any designee of the Secretary 
        selected to establish and administer the verification system), 
        shall establish a reliable, secure method, which, within the 
        time periods specified under paragraphs (2) and (3), compares 
        the name and alien identification or authorization number which 
        are provided in an inquiry against such information maintained 
        by the Secretary in order to validate (or not validate) the 
        information provided, the correspondence of the name and 
        number, and whether the alien is authorized to be employed in 
        the United States.
            ``(7) Offenses.--
                    ``(A) In general.--Any person or entity that, in 
                making an inquiry under subsection (b)(1)(C)(i)(II), 
                provides to the verification system a social security 
                account number or an identification or authorization 
                number established by the Secretary of Homeland 
                Security that belongs to a person other than the 
                individual whose identity and employment authorization 
                are being verified, knowing that the number does not 
                belong to the individual whose identity and employment 
                authorization are being verified, shall be fined under 
                title 18, United States Code, imprisoned not less than 
                1 year and not more than 15 years, or both. If the 
                person or entity, in making an inquiry under subsection 
                (b)(1)(C)(i)(II), during and in relation to any felony 
                violation enumerated in section 1028A(c) of title 18, 
                United States Code, provides to the verification system 
                a social security account number or an identification 
                or authorization number established by the Secretary of 
                Homeland Security that belongs to a person other than 
                the individual whose identity and employment 
                authorization are being verified, knowing that the 
                number does not belong to the individual whose identity 
                and work authorization are being verified, in addition 
                to the punishment provided for such felony, shall be 
                fined under title 18, United States Code, imprisoned 
                for a term of 2 years, or both.
                    ``(B) Consecutive sentence.--Notwithstanding any 
                other provision of law--
                            ``(i) a court shall not place on probation 
                        any person or entity convicted of a violation 
                        of this paragraph;
                            ``(ii) except as provided in clause (iv), 
                        no term of imprisonment imposed on a person or 
                        entity under this section shall run 
                        concurrently with any other term of 
                        imprisonment imposed on the person or entity 
                        under any other provision of law, including any 
                        term of imprisonment imposed for the felony 
                        enumerated in section 1028A(c) of title 18, 
                        United States Code, during which the violation 
                        of this paragraph occurred;
                            ``(iii) in determining any term of 
                        imprisonment to be imposed for the felony 
                        enumerated in section 1028A(c) of title 18, 
                        United States Code, during which the violation 
                        of this section occurred, a court shall not in 
                        any way reduce the term to be imposed for such 
                        crime so as to compensate for, or otherwise 
                        take into account, any separate term of 
                        imprisonment imposed or to be imposed for a 
                        violation of this paragraph; and
                            ``(iv) a term of imprisonment imposed on a 
                        person or entity for a violation of this 
                        paragraph may, in the discretion of the court, 
                        run concurrently, in whole or in part, only 
                        with another term of imprisonment that is 
                        imposed by the court at the same time on that 
                        person or entity for an additional violation of 
                        this paragraph, except that such discretion 
                        shall be exercised in accordance with any 
                        applicable guidelines and policy statements 
                        issued by the United States Sentencing 
                        Commission pursuant to section 994 of title 28, 
                        United States Code.
            ``(8) Updating information.--The Commissioner of Social 
        Security and the Secretary of Homeland Security shall update 
        their information in a manner that promotes the maximum 
        accuracy and shall provide a process for the prompt correction 
        of erroneous information, including instances in which it is 
        brought to their attention in the secondary verification 
        process described in paragraph (3).
            ``(9) Limitation on use of the verification system and any 
        related systems.--
                    ``(A) In general.--Notwithstanding any other 
                provision of law, nothing in this section shall be 
                construed to permit or allow any department, bureau, or 
                other agency of the United States Government to utilize 
                any information, data base, or other records assembled 
                under this subsection for any other purpose other than 
                as provided for under this section.
                    ``(B) No national identification card.--Nothing in 
                this section shall be construed to authorize, directly 
                or indirectly, the issuance or use of national 
                identification cards or the establishment of a national 
                identification card.
            ``(10) Remedies.--If an individual alleges that the 
        individual would not have been dismissed from a job but for an 
        error of the verification mechanism, the individual may seek 
        compensation only through the mechanism of the Federal Tort 
        Claims Act, and injunctive relief to correct such error. No 
        class action may be brought under this paragraph.''.

SEC. 4. RECRUITMENT, REFERRAL, AND CONTINUATION OF EMPLOYMENT.

    (a) Additional Changes to Rules for Recruitment, Referral, and 
Continuation of Employment.--Section 274A(a) of the Immigration and 
Nationality Act (8 U.S.C. 1324a(a)) is amended--
            (1) in paragraph (1)(A), by striking ``for a fee'';
            (2) in paragraph (1), by amending subparagraph (B) to read 
        as follows:
                    ``(B) to hire, continue to employ, or to recruit or 
                refer for employment in the United States an individual 
                without complying with the requirements of subsection 
                (b).'';
            (3) in paragraph (2), by striking ``after hiring an alien 
        for employment in accordance with paragraph (1),'' and 
        inserting ``after complying with paragraph (1),''; and
            (4) in paragraph (3), by striking ``hiring,'' and inserting 
        ``hiring, employing,'' each place it appears.
    (b) Definition.--Section 274A(h) of the Immigration and Nationality 
Act (8 U.S.C. 1324a(h)) is amended by adding at the end the following:
            ``(4) Definition of recruit or refer.--As used in this 
        section, the term `refer' means the act of sending or directing 
        a person or transmitting documentation or information to 
        another, directly or indirectly, with the intent of obtaining 
        employment in the United States for such person. Only persons 
        or entities referring for remuneration (whether on a retainer 
        or contingency basis) are included in the definition, except 
        that union hiring halls that refer union members or nonunion 
        individuals who pay union membership dues are included in the 
        definition whether or not they receive remuneration, as are 
        labor service entities or labor service agencies, whether 
        public, private, for-profit, or nonprofit, that refer, 
        dispatch, or otherwise facilitate the hiring of laborers for 
        any period of time by a third party. As used in this section 
        the term `recruit' means the act of soliciting a person, 
        directly or indirectly, and referring the person to another 
        with the intent of obtaining employment for that person. Only 
        persons or entities referring for remuneration (whether on a 
        retainer or contingency basis) are included in the definition, 
        except that union hiring halls that refer union members or 
        nonunion individuals who pay union membership dues are included 
        in this definition whether or not they receive remuneration, as 
        are labor service entities or labor service agencies, whether 
        public, private, for-profit, or nonprofit that recruit, 
        dispatch, or otherwise facilitate the hiring of laborers for 
        any period of time by a third party.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect on the date that is 1 year after the date of the enactment of 
this Act, except that the amendments made by subsection (a) shall take 
effect 6 months after the date of the enactment of this Act insofar as 
such amendments relate to continuation of employment.

SEC. 5. GOOD FAITH DEFENSE.

    Section 274A(a)(3) of the Immigration and Nationality Act (8 U.S.C. 
1324a(a)(3)) is amended to read as follows:
            ``(3) Good faith defense.--
                    ``(A) Defense.--An employer (or person or entity 
                that hires, employs, recruits or refers for fee, or is 
                otherwise obligated to comply with this section) who 
                establishes that it has complied in good faith with the 
                requirements of subsection (b)--
                            ``(i) shall not be liable to a job 
                        applicant, an employee, the Federal Government, 
                        or a State or local government, under Federal, 
                        State, or local criminal or civil law for any 
                        employment-related action taken with respect to 
                        a job applicant or employee in good-faith 
                        reliance on information provided through the 
                        system established under subsection (d); and
                            ``(ii) has established compliance with its 
                        obligations under subparagraphs (A) and (B) of 
                        paragraph (1) and subsection (b) absent a 
                        showing by the Secretary of Homeland Security, 
                        by clear and convincing evidence, that the 
                        employer had knowledge that an employee is an 
                        unauthorized alien.
                    ``(B) Failure to seek and obtain verification.--
                Subject to the effective dates and other deadlines 
                applicable under subsection (b), in the case of a 
                person or entity in the United States that hires, or 
                continues to employ, an individual, or recruits or 
                refers an individual for employment, the following 
                requirements apply:
                            ``(i) Failure to seek verification.--
                                    ``(I) In general.--If the person or 
                                entity has not made an inquiry, under 
                                the mechanism established under 
                                subsection (d) and in accordance with 
                                the timeframes established under 
                                subsection (b), seeking verification of 
                                the identity and work eligibility of 
                                the individual, the defense under 
                                subparagraph (A) shall not be 
                                considered to apply with respect to any 
                                employment, except as provided in 
                                subclause (II).
                                    ``(II) Special rule for failure of 
                                verification mechanism.--If such a 
                                person or entity in good faith attempts 
                                to make an inquiry in order to qualify 
                                for the defense under subparagraph (A) 
                                and the verification mechanism has 
                                registered that not all inquiries were 
                                responded to during the relevant time, 
                                the person or entity can make an 
                                inquiry until the end of the first 
                                subsequent working day in which the 
                                verification mechanism registers no 
                                nonresponses and qualify for such 
                                defense.
                            ``(ii) Failure to obtain verification.--If 
                        the person or entity has made the inquiry 
                        described in clause (i)(I) but has not received 
                        an appropriate verification of such identity 
                        and work eligibility under such mechanism 
                        within the time period specified under 
                        subsection (d)(2) after the time the 
                        verification inquiry was received, the defense 
                        under subparagraph (A) shall not be considered 
                        to apply with respect to any employment after 
                        the end of such time period.''.

SEC. 6. PREEMPTION.

    Section 274A(h)(2) of the Immigration and Nationality Act (8 U.S.C. 
1324a(h)(2)) is amended to read as follows:
            ``(2) Preemption.--The provisions of this section preempt 
        any State or local law, ordinance, policy, or rule, including 
        any criminal or civil fine or penalty structure, insofar as 
        they may now or hereafter relate to the hiring, continued 
        employment, or status verification for employment eligibility 
        purposes, of unauthorized aliens. A State, locality, 
        municipality, or political subdivision may exercise its 
        authority over business licensing and similar laws as a penalty 
        for failure to use the verification system described in 
        subsection (d) to verify employment eligibility when and as 
        required under subsection (b).''.

SEC. 7. REPEAL.

    (a) In General.--Subtitle A of title IV of the Illegal Immigration 
Reform and Immigrant Responsibility Act of 1996 (8 U.S.C. 1234a note) 
is repealed.
    (b) References.--Any reference in any Federal law, Executive order, 
rule, regulation, or delegation of authority, or any document of, or 
pertaining to, the Department of Homeland Security or the Social 
Security Administration, to the employment eligibility confirmation 
system established under section 404 of the Illegal Immigration Reform 
and Immigrant Responsibility Act of 1996 (8 U.S.C. 1324a note) is 
deemed to refer to the employment eligibility confirmation system 
established under section 274A(d) of the Immigration and Nationality 
Act, as amended by section 3 of this Act.
    (c) Effective Date.--This section shall take effect on the date 
that is 36 months after the date of the enactment of this Act.

SEC. 8. PENALTIES.

    Section 274A of the Immigration and Nationality Act (8 U.S.C. 
1324a) is amended--
            (1) in subsection (e)(4)--
                    (A) in subparagraph (A), in the matter before 
                clause (i), by inserting ``, subject to paragraph 
                (10),'' after ``in an amount'';
                    (B) in subparagraph (A)(i), by striking ``not less 
                than $250 and not more than $2,000'' and inserting 
                ``not less than $2,500 and not more than $5,000'';
                    (C) in subparagraph (A)(ii), by striking ``not less 
                than $2,000 and not more than $5,000'' and inserting 
                ``not less than $5,000 and not more than $10,000'';
                    (D) in subparagraph (A)(iii), by striking ``not 
                less than $3,000 and not more than $10,000'' and 
                inserting ``not less than $10,000 and not more than 
                $25,000''; and
                    (E) by amending subparagraph (B) to read as 
                follows:
                    ``(B) may require the person or entity to take such 
                other remedial action as is appropriate.'';
            (2) in subsection (e)(5)--
                    (A) in the paragraph heading, strike ``paperwork'';
                    (B) by inserting ``, subject to paragraphs (10) 
                through (12),'' after ``in an amount'';
                    (C) by striking ``$100'' and inserting ``$1,000'';
                    (D) by striking ``$1,000'' and inserting 
                ``$25,000'';
                    (E) by adding at the end the following: ``Failure 
                by a person or entity to utilize the employment 
                eligibility verification system as required by law, or 
                providing information to the system that the person or 
                entity knows or reasonably believes to be false, shall 
                be treated as a violation of subsection (a)(1)(A).'';
            (3) by adding at the end of subsection (e) the following:
            ``(10) Exemption from penalty for good faith violation.--In 
        the case of imposition of a civil penalty under paragraph 
        (4)(A) with respect to a violation of subsection (a)(1)(A) or 
        (a)(2) for hiring or continuation of employment or recruitment 
        or referral by person or entity and in the case of imposition 
        of a civil penalty under paragraph (5) for a violation of 
        subsection (a)(1)(B) for hiring or recruitment or referral by a 
        person or entity, the penalty otherwise imposed may be waived 
        or reduced if the violator establishes that the violator acted 
        in good faith.
            ``(11) Authority to debar employers for certain 
        violations.--
                    ``(A) In general.--If a person or entity is 
                determined by the Secretary of Homeland Security to be 
                a repeat violator of paragraph (1)(A) or (2) of 
                subsection (a), or is convicted of a crime under this 
                section, such person or entity may be considered for 
                debarment from the receipt of Federal contracts, 
                grants, or cooperative agreements in accordance with 
                the debarment standards and pursuant to the debarment 
                procedures set forth in the Federal Acquisition 
                Regulation.
                    ``(B) Does not have contract, grant, agreement.--If 
                the Secretary of Homeland Security or the Attorney 
                General wishes to have a person or entity considered 
                for debarment in accordance with this paragraph, and 
                such an person or entity does not hold a Federal 
                contract, grant or cooperative agreement, the Secretary 
                or Attorney General shall refer the matter to the 
                Administrator of General Services to determine whether 
                to list the person or entity on the List of Parties 
                Excluded from Federal Procurement, and if so, for what 
                duration and under what scope.
                    ``(C) Has contract, grant, agreement.--If the 
                Secretary of Homeland Security or the Attorney General 
                wishes to have a person or entity considered for 
                debarment in accordance with this paragraph, and such 
                person or entity holds a Federal contract, grant or 
                cooperative agreement, the Secretary or Attorney 
                General shall advise all agencies or departments 
                holding a contract, grant, or cooperative agreement 
                with the person or entity of the Government's interest 
                in having the person or entity considered for 
                debarment, and after soliciting and considering the 
                views of all such agencies and departments, the 
                Secretary or Attorney General may refer the matter to 
                any appropriate lead agency to determine whether to 
                list the person or entity on the List of Parties 
                Excluded from Federal Procurement, and if so, for what 
                duration and under what scope.
                    ``(D) Review.--Any decision to debar a person or 
                entity under in accordance with this paragraph shall be 
                reviewable pursuant to part 9.4 of the Federal 
                Acquisition Regulation.'';
            (4) by amending paragraph (1) of subsection (f) to read as 
        follows:
            ``(1) Criminal penalty.--Any person or entity which engages 
        in a pattern or practice of violations of subsection (a)(1) or 
        (2) shall be fined not more than $15,000 for each unauthorized 
        alien with respect to which such a violation occurs, imprisoned 
        for not less than one year and not more than 10 years, or both, 
        notwithstanding the provisions of any other Federal law 
        relating to fine levels.''; and
            (5) in subsection (f)(2), by striking ``Attorney General'' 
        each place it appears and inserting ``Secretary of Homeland 
        Security''.

SEC. 9. PROTECTION OF SOCIAL SECURITY ADMINISTRATION PROGRAMS.

    (a) Funding Under Agreement.--Effective for fiscal years beginning 
on or after October 1, 2012, the Commissioner of Social Security and 
the Secretary of Homeland Security shall enter into and maintain an 
agreement which shall--
            (1) provide funds to the Commissioner for the full costs of 
        the responsibilities of the Commissioner under section 274A(d) 
        of the Immigration and Nationality Act (8 U.S.C. 1324a(d)), as 
        amended by section 3 of this Act, including (but not limited 
        to)--
                    (A) acquiring, installing, and maintaining 
                technological equipment and systems necessary for the 
                fulfillment of the responsibilities of the Commissioner 
                under such section 274A(d), but only that portion of 
                such costs that are attributable exclusively to such 
                responsibilities; and
                    (B) responding to individuals who contest a 
                tentative nonconfirmation provided by the employment 
                eligibility verification system established under such 
                section;
            (2) provide such funds quarterly in advance of the 
        applicable quarter based on estimating methodology agreed to by 
        the Commissioner and the Secretary (except in such instances 
        where the delayed enactment of an annual appropriation may 
        preclude such quarterly payments); and
            (3) require an annual accounting and reconciliation of the 
        actual costs incurred and the funds provided under the 
        agreement, which shall be reviewed by the Office of Inspector 
        General of the Social Security Administration and the 
        Department of Homeland Security.
    (b) Continuation of Employment Verification in Absence of Timely 
Agreement.--In any case in which the agreement required under 
subsection (a) for any fiscal year beginning on or after October 1, 
2012, has not been reached as of October 1 of such fiscal year, the 
latest agreement between the Commissioner and the Secretary of Homeland 
Security providing for funding to cover the costs of the 
responsibilities of the Commissioner under section 274A(d) of the 
Immigration and Nationality Act (8 U.S.C. 1324a(d)) shall be deemed in 
effect on an interim basis for such fiscal year until such time as an 
agreement required under subsection (a) is subsequently reached, except 
that the terms of such interim agreement shall be modified by the 
Director of the Office of Management and Budget to adjust for inflation 
and any increase or decrease in the volume of requests under the 
employment eligibility verification system. In any case in which an 
interim agreement applies for any fiscal year under this subsection, 
the Commissioner and the Secretary shall, not later than October 1 of 
such fiscal year, notify the Committee on Ways and Means, the Committee 
on the Judiciary, and the Committee on Appropriations of the House of 
Representatives and the Committee on Finance, the Committee on the 
Judiciary, and the Committee on Appropriations of the Senate of the 
failure to reach the agreement required under subsection (a) for such 
fiscal year. Until such time as the agreement required under subsection 
(a) has been reached for such fiscal year, the Commissioner and the 
Secretary shall, not later than the end of each 90-day period after 
October 1 of such fiscal year, notify such Committees of the status of 
negotiations between the Commissioner and the Secretary in order to 
reach such an agreement.

SEC. 10. FRAUD PREVENTION.

    (a) Blocking Misused Social Security Account Numbers.--The 
Secretary of Homeland Security and the Commissioner of Social Security 
shall establish a program in which social security account numbers that 
have been identified to be subject to unusual multiple use in the 
employment eligibility verification system established under section 
274A(d) of the Immigration and Nationality Act (8 U.S.C. 1324a(d)), as 
amended by section 3 of this Act, or that are otherwise suspected or 
determined to have been compromised by identity fraud or other misuse, 
shall be blocked from use for such system purposes unless the 
individual using such number is able to establish, through secure and 
fair additional security procedures, that the individual is the 
legitimate holder of the number.
    (b) Allowing Suspension of Use of Certain Social Security Account 
Numbers.--The Secretary of Homeland Security, in consultation with the 
Commissioner of Social Security, shall establish a program which shall 
provide a reliable, secure method by which victims of identity fraud 
and other individuals may suspend or limit the use of their social 
security account number or other identifying information for purposes 
of the employment eligibility verification system established under 
section 274A(d) of the Immigration and Nationality Act (8 U.S.C. 
1324a(d)), as amended by section 3 of this Act. The Secretary may 
implement the program on a limited pilot program basis before making it 
fully available to all individuals.
    (c) Blocking Use of Certain Social Security Account Numbers.--
            (1) In general.--The Secretary of Homeland Security shall 
        establish a program in which the social security account 
        numbers of an alien described in paragraph (2) shall be blocked 
        from use for purposes of the employment eligibility 
        verification system established under section 274A(d) of the 
        Immigration and Nationality Act (8 U.S.C. 1324a(d)), as amended 
        by section 3 of this Act, unless the alien is subsequently 
        admitted lawfully to the United States in, or the Secretary has 
        subsequently changed the alien's status lawfully to, a status 
        that permits employment as a condition of the alien's admission 
        or subsequent change of status, or the Secretary has 
        subsequently granted work authorization lawfully to the alien.
            (2) Aliens described.--An alien is described in this 
        paragraph if the alien--
                    (A) has a final order of removal from the United 
                States;
                    (B) voluntarily departs the United States;
                    (C) is voluntarily returned; or
                    (D) is a nonimmigrant described in section 
                101(a)(15) of the Immigration and Nationality Act (8 
                U.S.C. 1101(a)(15)) whose work authorization has 
                expired and who is not the subject of an application or 
                petition that would authorize the alien's employment.

SEC. 11. BIOMETRIC EMPLOYMENT ELIGIBILITY VERIFICATION PILOT PROGRAM.

    (a) In General.--Not later than 18 months after the date of the 
enactment of the Legal Workforce Act, the Secretary of Homeland 
Security, after consultation with the Commissioner of Social Security 
and the Director of the National Institute of Standards and Technology, 
shall establish by regulation a Biometric Employment Eligibility 
Verification pilot program (the ``Biometric Pilot''). The purpose of 
the Biometric Pilot shall be to provide for identity authentication and 
employment eligibility verification with respect to enrolled new 
employees which shall be available to subject employers who elect to 
participate in the Biometric Pilot. Any subject employer may cancel the 
employer's participation in the Biometric Pilot after one year after 
electing to participate without prejudice to future participation.
    (b) Minimum Requirements.--In accordance with the regulations 
prescribed by the Secretary pursuant to subsection (a), the following 
shall apply:
            (1) Identity authentication and employment eligibility 
        verification by enrollment providers.--The Biometric Pilot 
        shall utilize the services of private sector entities 
        (``enrollment providers''), with appropriate expertise, which 
        shall be subject to initial and periodic certification by the 
        Secretary, to provide--
                    (A) enrollment under the Biometric Pilot of new 
                employees by means of identity authentication in a 
                manner that provides a high level of certainty as to 
                their true identities, using immigration and 
                identifying information maintained by the Social 
                Security Administration and the Department of Homeland 
                Security, review of identity documents, and background 
                screening verification techniques using publicly 
                available information;
                    (B) protection of the authenticated information 
                through biometric technology; and
                    (C) verification of employment eligibility of such 
                new employees.
            (2) Database management.--The Biometric Pilot shall provide 
        for databases of identifying information which may be retained 
        by the enrollment providers. Databases controlled by the 
        Commissioner and Secretary of Homeland Security shall be 
        maintained in a manner to capture new entries and new status 
        information in a timely manner and to interact with the private 
        enrollment databases to keep employment authorization status 
        and identifying information current on a daily basis. The 
        information maintained in such databases shall be subject to 
        the requirements established pursuant to subsection (e), except 
        that--
                    (A) use of the data shall be limited to obtaining 
                employment eligibility verification only, unless the 
                new employee consents to use the data for other 
                purposes, as provided in regulations prescribed by the 
                Secretary; and
                    (B) other identifying traits of the new employees 
                shall be stored through an encoding process that keeps 
                their accurate names, dates of birth, social security 
                numbers, and immigration identification numbers (if 
                any) separate, except during electronic verification.
            (3) Accessibility to employers.--Availability of data 
        maintained in the Biometric Pilot shall be managed so that any 
        subject employer who participates in the Biometric Pilot can 
        obtain verification with respect to any new employee enrolled 
        with any enrollment provider serving in the Biometric Pilot.
            (4) Limitations relating to biometric data.--Any biometric 
        data maintained in the Biometric Pilot relating to any new 
        employee shall be--
                    (A) encrypted and segregated from identifying 
                information relating to the new employee, and
                    (B) maintained and linked to identifying 
                information relating to the new employee only by 
                consent of the new employee for the purpose of 
                verifying employment eligibility or approved correction 
                processes or for other purposes specifically authorized 
                by the employee as provided in regulations prescribed 
                by the Secretary.
            (5) Accuracy of association of data with enrolled new 
        employees.--The enrollment process under the Biometric Pilot 
        shall be managed, in the case of each new employee enrolled in 
        the Biometric Pilot, so as to result in the accurate 
        association of data consisting of name, date of birth, social 
        security number, and immigration identification number (if any) 
        with the established identity of the new employee.
            (6) Limitations on accessibility of information.--Data 
        stored in Biometric Pilot relating to any enrolled new employee 
        shall not be accessible to any person other than those 
        operating the Biometric Pilot and for the sole purpose of 
        identity authentication and employment eligibility verification 
        in connection with the new employee, except--
                    (A) by the written consent of the new employee 
                given specifically for each instance or category of 
                disclosure for any other purpose as provided in 
                regulations prescribed by the Secretary; or
                    (B) in response to a warrant issued by a judicial 
                authority of competent jurisdiction in a criminal 
                proceeding.
            (7) Public education.--The Secretary shall conduct a 
        program of ongoing, comprehensive public education campaign 
        relating to the Biometric Pilot.
    (c) Employer Responsibilities.--In accordance with the regulations 
prescribed by the Secretary pursuant to subsection (a), the following 
shall apply:
            (1) Use limited to enrolled new employees.--Use of the 
        Biometric Pilot by subject employers participating in the 
        Biometric Pilot shall be limited to use in connection with the 
        hiring of new employees occurring after their enrollment in the 
        Biometric Pilot.
            (2) Use for limited period.--Use of the Biometric Pilot by 
        any subject employer participating in the Biometric Pilot in 
        connection with any new employee may occur only during the 
        period beginning on the date of hire and ending at the end of 
        the third business day after the employee has reported for 
        duty. Use of the Biometric Pilot with respect to recruitment or 
        referral for a fee may occur only until the first day of such 
        recruitment or referral.
            (3) Responsibility of employers to enroll new employees.--
        In connection with the hiring by any subject employer of a new 
        employee who has not been previously enrolled in the Biometric 
        Pilot, enrollment of the new employee shall occur only upon 
        application by the subject employer submitted to an enrollment 
        provider, together with payment of any costs associated with 
        the enrollment.
            (4) Limitations on selective use.--No subject employer may 
        use the Biometric Pilot selectively to verify any class, level, 
        or category of new employees. Nothing in this subparagraph 
        shall be construed to preclude subject employers from utilizing 
        the Biometric Pilot in connection with hiring at selected 
        employment locations without implementing such usage at all 
        locations of the employer.
    (d) Employee Protections.--In accordance with the regulations 
prescribed by the Secretary pursuant to subsection (a), the following 
shall apply:
            (1) Access for employees to correct and update 
        information.--Employees enrolled in the Biometric Pilot shall 
        be provided access to the Biometric Pilot to verify information 
        relating to their employment authorization and readily 
        available processes to correct and update their enrollment 
        information and information relating to employment 
        authorization.
            (2) Right to cancel enrollment.--Each employee enrolled in 
        the Biometric Pilot shall have the right to cancel such 
        employee's enrollment at any time after the identity 
        authentication and employment eligibility verification 
        processes are completed by the subject employer described in 
        subsection (c)(3). Such cancellation shall remove from the 
        Biometric Pilot all identifying information and biometrics in 
        connection with such employee without prejudice to future 
        enrollments.
    (e) Maintenance of Security and Confidentiality of Information.--
            (1) In general.--Every person who is a subject employer 
        participating in the Biometric Pilot or an officer or 
        contractor of such a subject employer and who has access to any 
        information obtained at any time from the Department of 
        Homeland Security shall maintain the security and 
        confidentiality of such information. No such person may 
        disclose any file, record, report, paper, or other item 
        containing information so obtained at any time by any such 
        person from the Secretary or from any officer or employee of 
        the Department of Homeland Security except as the Secretary may 
        by regulations prescribe or as otherwise provided by Federal 
        law.
            (2) Penalty for disclosure in violation of subparagraph 
        (a).--Any person described in paragraph (1) who knowingly 
        violates paragraph (1) shall be guilty of a felony and, upon 
        conviction thereof, shall be punished by a fine not exceeding 
        $10,000 for each occurrence of a violation, or by imprisonment 
        not exceeding 5 years, or both.
            (3) Penalty for knowing disclosure of fraudulent 
        information.--Any person who willfully and knowingly accesses, 
        discloses, or uses any information which such person purports 
        to be information obtained as described in paragraph (1) 
        knowing such information to be false shall be guilty of a 
        felony and, upon conviction thereof, shall be punished by a 
        fine not exceeding $10,000 for each occurrence of a violation, 
        or by imprisonment not exceeding 5 years, or both.
            (4) Restitution.--
                    (A) In general.--Any Federal court, when sentencing 
                a defendant convicted of an offense under this 
                paragraph, may order, in addition to or in lieu of any 
                other penalty authorized by law, that the defendant 
                make restitution to the victims of such offense 
                specified in subparagraph (B). Sections 3612, 3663, and 
                3664 of title 18, United States Code, shall apply with 
                respect to the issuance and enforcement of orders of 
                restitution to victims of such offense under this 
                subparagraph. If the court does not order restitution, 
                or orders only partial restitution, under this 
                subsection, the court shall state on the record the 
                reasons therefor.
                    (B) Victims specified.--The victims specified in 
                this clause are the following:
                            (i) Any individual who suffers a financial 
                        loss as a result of the disclosure described in 
                        paragraph (2) or (3).
                            (ii) The Secretary of Homeland Security, to 
                        the extent that the disclosure described in 
                        paragraph (2) or (3) results in the 
                        inappropriate payment of a benefit by the 
                        Commissioner of Social Security.
                    (C) Deposit in the trust funds of amounts paid as 
                restitution to the commissioner.--Funds paid to the 
                Commissioner as restitution pursuant to a court order 
                under this subparagraph shall be deposited in the 
                Federal Old-Age and Survivors Insurance Trust Fund or 
                the Federal Disability Insurance Trust Fund, as 
                appropriate.
                                 



    Ms. Lofgren. Thank you, Mr. Chairman.
    Since the beginning of this new Congress, the new majority 
has repeatedly emphasized four key priorities: growing our 
economy, creating new jobs, decreasing spending and reducing 
the size of government. These are the crucial needs they say 
that must be focused on; nothing else matters. They say this, 
but then we see this bill, a bill that undermines every one of 
their stated priorities.
    Rather than grow the economy and reduce the size of 
government, this bill seems to confuse those goals. It grows 
the government, dramatically increases government intrusion 
into all of our lives, and adds tens of billions to the burden 
already shouldered by taxpayers. At the same time it shrinks 
our economy, decimates at least one industry, and destroys 
millions of jobs. All that, and the program it mandates doesn't 
even work half the time.
    There is no greater proponent of technology in this 
Congress than me. It makes sense to have an electronic system 
for checking work authorization that works and contains 
sufficient safeguards. Since 2005, every serious proposal to 
fix our broken immigration laws has included such an electronic 
system to ensure we have a legal workforce, but it can't be 
done alone. Our system has been broken far too long for one-
sided solutions. The E-Verify provisions in each of those 
former bills were paired with other reforms to fix the entire 
system. Without those other reforms, mandatory E-Verify would 
wreak tremendous damage.
    The majority says this bill is meant to protect American 
jobs. They claim that every time we remove an undocumented 
worker from the country, we open that job for a native-born 
worker, but this ignores the realities of our complex economy. 
A bill cannot be said to protect jobs when it destroys many 
more jobs than it ostensibly saves.
    Let us be clear, mandatory E-Verify does not mean that 
undocumented works will pack up and leave the country. Most of 
these workers have been here for many years, and they have 
family and other ties to the country. They aren't just going to 
leave because this bill passes. Instead employers will simply 
move these workers off the books or misclassify them as 
independent contractors, which this bill does nothing about. 
This is exactly what happened in Arizona after it made E-Verify 
mandatory. Rather than leave for other States that don't 
mandate E-Verify, the vast majority of undocumented workers 
stayed right in Arizona and either went off the books or became 
independent contractors.
    If implemented nationwide, this would have tremendous 
costs. The Congressional Budget Office has scored other 
mandatory E-Verify bills such as the SAVE Act of 2008, and it 
has concluded that mandating E-Verify without other reforms 
would cost taxpayers $17.3 billion in lost tax revenues as 
employers and employees move into the underground economy. We 
would also see depressed wages and working conditions for all 
workers as unscrupulous employers are further able to abuse 
workers and undercut employers that play by the rules.
    This bill also disproportionately affects small businesses, 
the engines of job creation in America, just when we needs 
those businesses to create jobs the most. A recent Bloomberg 
government study concluded that mandatory E-Verify would cost 
small businesses about $2.6 billion every year to verify new 
hires through E-Verify. But because the bill requires checks on 
many existing hires as well, the cost of small business would 
be even greater.
    If the intent is to provide jobs, it makes no sense to 
impose massive costs on small businesses when they would be 
spending this money to actually create jobs. This is 
essentially economic suicide.
    We also need to take into account that E-Verify is not a 
perfect system. The Social Security Administration has 
estimated that mandatory E-Verify would force 3.6 million 
workers to go to the Social Security Administration to correct 
their records or lose their jobs. This assumes the worker is 
even told by an employer that there is a discrepancy. An 
independent study by the Department of Homeland Security shows 
that up to 42 percent of applicants who receive tentative 
nonconfirmations are not informed of the discrepancy by the 
employer, thereby denying them the right to contest the 
finding. At a time of 9 percent unemployment, putting millions 
of American workers' jobs on the line is grossly irresponsible.
    Finally we must consider that some industries like 
agriculture are at least partially dependent on undocumented 
workers. Up to 75 percent of migrant farm workers are 
undocumented, and the percentage is growing. Losing those 
workers would be devastating. American farms would go under, 
America would be less secure, and we would see a mass 
offshoring of jobs, including all of the upstream and 
downstream American jobs supported by agriculture.
    This bill appears to recognize this by delaying 
implementation in agriculture and providing some special carve-
outs to protect the industry. But upon closer inspection, those 
carve-outs are just illusions. Carve-outs to the carve-outs 
require the eventual verification of all workers, turning this 
bill into a ticking time bomb for agriculture and all of the 
jobs supported by it.
    On this I must make one more point. The bill recognizes 
that our farmers need undocumented farm workers, but the bill 
then does nothing, absolutely nothing, to address this. Instead 
the bill actual increases criminal penalties on farmers and 
farm workers alike, making each of them even more vulnerable 
than they already are. What kind of bill recognizes our 
dependence on certain workers and then ups jail time and fines 
on those workers and those that hire them?
    After paying them lip service, this bill leaves American 
farms and American jobs at risk, and it makes both American and 
immigrant farm workers further vulnerable to exploitation. 
Please tell me we can do better than that. And please don't 
tell me the solution is the H2A reform. Don't tell me that the 
solution to this problem is to deport 1.5 million experienced 
farm workers who are already doing this important work just to 
replace them with millions of new temporary guest workers which 
would have to come and go every single year. This would be a 
massive and terribly expensive undertaking and is simply just 
never going to work.
    Now I think we have reached a milestone here. We have 
finally recognized that undocumented farm workers fill a need 
that we desperately need filled, and now that we have 
recognized that, let us do something about it.
    Thank you, Mr. Chairman. I yield back the balance of my 
time.
    Mr. Gallegly. I thank the gentlelady.
    The gentleman from Texas, the Chairman of the full 
Committee and sponsor of this important bill, Lamar Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    The Legal Workforce Act will open up jobs for millions of 
unemployed Americans. With unemployment at 9 percent, jobs are 
scarce, especially for low-skilled Americans.
    Twenty-four million Americans are unemployed or have given 
up looking for work, yet according to the Pew Hispanic Center, 
7 million people are working in the United States illegally. 
These jobs should go to legal workers.
    The E-Verify system allows Social Security numbers and 
alien identification numbers of new hires to be checked against 
Social Security Administration and Department of Homeland 
Security databases. This will help employers determine who is 
eligible to work in the U.S. The program is free, quick and 
easy to use.
    You have to show your Social Security number to visit the 
doctor, go to the bank, or buy a home. It makes sense that 
businesses would use the same identification to ensure they 
have a legal workforce by checking the legal status of their 
employees.
    The E in E-Verify could just as well stand for easy and 
effective. It takes just a few minutes to use and easily 
confirms 99.5 percent of work-eligible employees.
    The Legal Workforce Act requires that all U.S. employers 
use E-Verify to check the work eligibility of new hires in the 
U.S.
    H.R. 2164 balances immigration enforcement priorities and 
legitimate employer concerns. It gives employers a workable 
system under which they cannot be held liable if they use the 
system in good faith.
    The bill preempts State E-Verify laws, but respects States' 
and localities' inherent authority to condition business 
license issuance and maintenance on compliance with the Federal 
E-Verify mandate.
    The Legal Workforce Act increases penalties on employers 
who knowingly violate the requirements of E-Verify. It creates 
a fully electronic employment eligibility verification system, 
and it allows employers to voluntarily check their current 
workforce if done in a nondiscriminatory manner.
    Furthermore, the Legal Workforce Act gives USCIS additional 
tools to help prevent identity theft. For example, the bill 
requires DHS to allow individuals to lock their own Social 
Security number so that it cannot be used by imposters to 
verify work eligibility. And it requires USCIS to lock the 
individual Taxpayer Identification Number or Social Security 
number of non-U.S. Citizens who are deported are voluntarily 
returned, voluntarily depart, or whose work authorization 
expires so that no one can get a job using those same numbers. 
It also imposes criminal penalties on employers and employees 
who engage in or facilitate identity theft.
    Studies by Westat and USCIS showed that E-Verify's work 
eligibility confirmation rates continue to improve as the 
system is upgraded.
    Last year's USCIS data shows that 98.3 percent of employees 
were confirmed as work authorized within 24 hours. And a 2009 
Westat report found that those eligible to work are immediately 
confirmed 99.5 percent of the time.
    And importantly, the American people support E-Verify. A 
recent Rasmussen poll found that 82 percent of likely voters 
``think businesses should be required to use the Federal 
Government's E-Verify system to determine if a potential 
employee is in the country legally.''
    Unfortunately, many States do not enforce their own E-
Verify laws, and others only apply E-Verify in a very limited 
way. The Legal Workforce Act will help ensure that employers 
from every State are on equal footing when it comes to hiring 
employees. This bill could open up millions of jobs for 
unemployed Americans.
    Mr. Chairman, before I yield back, I want to thank our 
witnesses for being here today and look forward to a very 
informative hearing, but I would also like to single out and 
especially thank our colleague Ken Calvert, who has been a 
partner in this effort for--Ken, how many years now have we 
been working on this?
    Mr. Calvert. A long time.
    Mr. Smith. A long time, many years. And I think we are 
getting to the point where we can pass a good bill. But thank 
you for being here.
    Thank you, Mr. Chairman, I yield back.
    Mr. Gallegly. I thank the gentleman from Texas.
    Our next speaker will be the gentleman from Michigan, the 
former Chairman of the full Committee and current Ranking 
Member of the full Committee, my good friend Mr. Conyers.
    Mr. Conyers. Thanks, Chairman Gallegly.
    This is in some ways a traditional breakdown of views 
between labor and the business sector in our country. I have 
statements from the president of the AFL-CIO, the United Farm 
Workers, church organizations, American Civil Liberties Union, 
the National Immigration Forum all telling me that this is a 
measure that we ought to move very carefully on. And so from 
the outset, since there is always a possibility that this bill 
might happen to get accepted or get through the Senate some 
kind of way, we are dangerously close to the possibility of 
getting legislation. What that means to me is we are going to 
need more than one hearing.
    I want to say that very clearly in advance, and I say that 
in the presence of the distinguished full Committee Chairman as 
well as the Subcommittee Chairman. I can see now we are going 
to need another hearing on this matter. But why?
    Mr. Gallegly. Would the gentleman yield on that?
    Mr. Conyers. Of course.
    Mr. Gallegly. Just to set the record straight, and, of 
course, we want to make sure that we fully review the text of 
this bill, but I would remind the gentleman that this 
Subcommittee already had a hearing on E-Verify in February, so 
this is our second hearing.
    Mr. Conyers. Well, there wasn't any legislation then.
    Ms. Lofgren. Would the gentleman yield?
    We did raise a concern with the Chairman of the full 
Committee that the bill kept changing. And our staff was up 
until early hours of the morning every day this week. The 
actual final bill was not received by us until 3 o'clock 
yesterday afternoon. And so I understand there are many things 
that need to be worked out, but to have a legislative hearing 
on a bill that didn't exist in its current form before 3 
yesterday I find troubling and something that when we were in 
the majority we did not do. And I yield back.
    Mr. Gallegly. Well, would the gentlelady yield on that, or 
the gentleman? The Committee, the minority did receive a copy 
of the draft bill, if I am not mistaken, a week ago today. 
Subsequent to that there were some changes, I don't believe of 
any significant substance, which was gone over with your staff 
yesterday morning. And this is not----
    Ms. Lofgren. Mr. Chairman, that is incorrect, and I like 
your staff.
    Mr. Gallegly. I do, too.
    Ms. Lofgren. I am not critical of the staff, but the bill 
was changed in ways we consider significant and less than 24 
hours ago. So I just point that out. It is something that we 
think is a problem. We think there are significant changes. I 
understand your staff has worked very hard to try and refine 
this. I don't criticize them for that, I just note that the 
policy of having a legislative hearing on a bill that didn't 
exist 24 hours ago I find problematic. And it is something that 
when we were in the majority we did not do. And I yield back to 
Mr. Conyers.
    Mr. Conyers. What I am suggesting in asking for another 
hearing in advance isn't whether we had one before when there 
wasn't a bill or not. So we have three hearings on a measure; 
what is so awful about that? I mean, there are huge 
implications involved in what we are doing here. We get 5 
minutes to question four witnesses, to ask them questions. We 
seldom have time to even have a second round because the 
demands on the floor are so pressing.
    So anyway, I am just throwing it out. Please don't 
foreclose that possibility. That is why I am asking for it now 
instead of waiting until we all start running out of here and 
then say, can I have a second hearing; and you will say, well, 
I think this is enough. And I think it is not enough.
    Now, back to the substance here. There is one overriding 
problem with this bill: It won't work. Outside of that it is 
pretty good. But we have some very serious considerations.
    Could I have an extra couple minutes, sir?
    Mr. Gallegly. Without objection, the gentleman will be 
given an additional 2 minutes.
    Mr. Conyers. Thank you very much.
    The first thing is it is going to create an increasing 
underworld of employers going off the books to classify workers 
as independent contractors. In other words, the gamesmanship, 
if you think there's some going on in immigration and 
agriculture now, you haven't seen anything yet if the bill that 
is before us becomes law. It would cost lots of tax money that 
we would lose. It would push undocumented workers--and, by the 
way, I hope somebody mentions the fact that if it weren't for 
undocumented workers, I think our agricultural system would 
collapse. I would like any of the witnesses who would like to 
react to that, please do, and any of my colleagues as well.
    I remember we had a hearing once, Ms. Lofgren, where one 
fellow said that you could get American workers, you don't even 
need undocumented workers. And we said, well, where would you 
get American workers to do stoop labor in the United States in 
the 21st century? I think everybody here acknowledges the 
answer is that you couldn't get anybody. You have got to use 
immigrant labor. The question is how do you make it as legal as 
possible. And the way that it is being done here, as our 
witness Attorney Moran will explain in more detail, is that 
this isn't going to work. As a matter of fact, it is going to 
cost American jobs because this system won't work, the 
immigrant system won't work as it is created here. Why? And I 
conclude because of the error rate that everyone in this hall 
knows is around 30 percent. You can't have a system with a 30 
percent error rate. It won't work no matter how many hearings 
we have. And therein lies the problem.
    And so I ask unanimous consent, Chairman Gallegly, to put 
in a Trumka statement, and an American Civil Liberties Union 
statement, and some church statements as well.
    Mr. Gallegly. Without objection, they will be made a part 
of the record of the hearing.
    [The information referred to follows:]

    

    Mr. Gallegly. And I thank the gentleman for his testimony, 
and we will move on with our witnesses.
    Mr. Conyers. Thank you very much.
    Mr. Gallegly. We are very fortunate to have a very 
distinguished panel of witnesses today. Each of the witnesses' 
written statements will be entered into the record in its 
entirety. And I would ask the witnesses to make every effort to 
summarize his or her testimony to 5 minutes in order that we 
can get into the questioning session. And as I said, your 
entire statement will be made a part of the record of the 
hearing. We provided the lights there to kind of give you a 
guideline to see how the 5 minutes is moving along.
    Our witnesses today, the first one is a very good friend of 
mine and colleague of mine from California, Ken Calvert, who 
represents the 44th District. He was first elected to Congress 
in 1992. Rep Calvert is a graduate of San Diego State 
University, where he received his bachelor of arts degree in 
economics; a former small business owner, employer of 17 years, 
and currently sits on the House Committee on Appropriations.
    Mr. Barry Ruttenberg serves as the 2011 first vice 
president of the board of National Association of Home 
Builders. He also is president of the Barry Ruttenberg & 
Associates, Incorporated, in Florida, which has developed more 
than 1,000 homes in the Gainesville area. He is a graduate of 
Northwestern University and earned his MBA from Harvard 
University. I won't hold that against you.
    Mr. Craig Miller is the former president and chief 
executive officer of Ruth's Chris Steakhouse, Incorporated, and 
was the founder and chairman of the Miller Partners Restaurant 
Solutions. From May 2005 to May 2006, Mr. Miller served as 
chairman of the National Restaurant Association, and he holds a 
bachelor's degree from the University of Central Florida.
    And our fourth witness, Ms. Tyler Moran, is policy director 
at the National Immigration Law Center, where she coordinates 
the development and implementation of the center's policy 
agenda. Prior to being appointed policy director, Ms. Moran 
directed the National Immigration Law Center employment policy 
work.
    With that, we will start with my friend from California Mr. 
Calvert.

  TESTIMONY OF THE HONORABLE KEN CALVERT, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Calvert. Thank you, Mr. Chairman, and I apologize in 
advance if I have to leave. We are having a markup at the 
present time, so I may have to go for a vote before questions. 
Hopefully I will be able to be here for the entire hearing.
    I would like to thank you and my good friend Chairman 
Gallegly, Ranking Member Lofgren, the entire Subcommittee for 
inviting me to testify on the Legal Workforce Act, which would 
require employers to conduct mandatory employment eligibility 
verification. I would like to thank Chairman Smith for the hard 
work that he and his staff have put into the Legal Workforce 
Act.
    As mentioned, before I came to Congress, I operated several 
restaurant businesses. I was required by law to hire a legal 
workforce, but there was no tool available to determine if 
identifying documentation presented at the time of employment 
was fraudulent. As someone here who has actually owned a small 
business and employed people, I am somewhat offended to say 
that I would actively illegally--or businessmen in general 
would go off the books and hire people. By the way the illegal 
element would be involved in doing such a thing is pretty bad. 
Most small businessmen are honest people, and they would do the 
right thing.
    When I first created employment verification in 1996, we 
wanted to build a system that would utilize existing 
information processes that were reliable, fair and simple to 
use. At that time and still today, every employer is required 
to file an I-9 form on paper identification documents. The 
solution was simple: Provide employers a way to check that a 
given name and a Social Security number match government 
records.
    Today E-Verify has over 268,000 employers, representing 
900,000 hiring sites. In fiscal year 2011, they have documented 
more than 2.9 million queries run through the system.
    The Legal Workforce Act would essentially make E-Verify 
mandatory by requiring the Secretary of the Homeland Security 
to implement a verification process for a mandatory employment 
verification. Of the millions run through the computer E-based 
system--let us get this off the table about this error rate. Of 
the millions run through the E-verification system, 98.3 
percent of employees are instantly verified, instantly. 
Individuals who are given a tentative nonconfirmation are given 
8 business days to contact the Social Security Administration 
or Department of Homeland Security regarding their case.
    Currently 1 percent, 1 percent, of all queried employees 
choose to contest the E-Verify result, and only one-half of 
them, that is 1/2 of 1 percent, are successful in contesting 
that the government's information was incorrect. E-Verify is 
doing its job it was intended to do: denying employment to 
people in the United States not authorized to work. E-Verify is 
ready for mandatory use.
    The Legal Workforce Act would phase in mandatory 
requirement over 24 months for most employers, with the 
exception for agricultural labor, which will be given 36 months 
to comply. As a Member from an agricultural State, as is the 
Chairman, I think it is important to ensure our agricultural 
community has the labor they need. I support parallel 
legislation to provide a workable guest labor program that 
includes the necessary safeguards to ensure that guest workers 
leave on time. This should be easier to do, because with 
mandatory employment verification, guest workers will not be 
able to secure a legal job in the United States after their 
seasonal work visa expires.
    The Legal Workforce Act also implements worker protections 
for mismatched Social Security numbers and use of multiple 
Social Security numbers. The bill provides a good faith 
exemption for employers who use the program, while increasing 
the penalties for employers who knowingly, knowingly, hire 
illegal immigrants.
    The Legal Workforce Act is a thoughtful, comprehensive 
approach to mandatory employment verification, and E-Verify is 
ready to fulfill that obligation. America is ready for 
mandatory employment verification. Over 80 percent of Americans 
support this program, as mentioned by the Chairman. Employers 
are required by law to hire a legal workforce, and mandatory E-
Verify will ensure they are complying with the law.
    While the legal name of the current program is the basic 
pilot program, the effective brand name is E-Verify. Many 
businesses have incorporated the term ``E-Verify'' into their 
business and marketing plans. I would strongly suggest we 
enshrine that name to provide clarity and continuity for 
businesses currently using E-Verify.
    E-Verify is an extremely effective program, as we have seen 
from recent actions all over the country. Arizona to Rhode 
Island, mandatory employment verification is quickly becoming a 
reality.
    As Members of Congress responsible for controlling the 
border and enforcing legal employment, let us build upon what 
works and give the American people what they want, a Federal 
law mandating employment verification.
    Thank you, and I will be happy to answer any questions.
    Mr. Gallegly. Thank you, Ken.
    [The prepared statement of Mr. Calvert follows:]
    
    
    
                               __________

    Mr. Gallegly. Mr. Ruttenberg.

TESTIMONY OF BARRY RUTENBERG, FIRST VICE CHAIRMAN OF THE BOARD, 
             NATIONAL ASSOCIATION OF HOME BUILDERS

    Mr. Ruttenberg. Thank you, Chairman Gallegly, Ranking 
Member Lofgren, Chairman Smith and Members of the Subcommittee. 
Thank you for this opportunity to testify on H.R. 2164, the 
Legal Workforce Act. My name is Barry Rutenberg, and I am the 
first vice chairman of the Board of Directors of the National 
Association of Home Builders. NAHB appreciates the efforts of 
Chairman Smith and the Subcommittee to work proactively to 
craft E-Verify legislation that will be workable for U.S. 
employers.
    The immigrant community has historically played a vibrant 
and important role in the construction industry, comprising 
about 21 percent of our workforce. However, the influx of 
illegal immigrants into the U.S. is a concern, and NAHB members 
do not support illegal immigration. Our members do seek 
workable solutions to effective employment verification, such 
as the legislation being considered today which would mandate 
E-Verify for all employees.
    As Congress considers mandating E-Verify, we want to share 
some of our key concerns. First, the program must continue to 
work on the direct employer/employee relationship, holding 
every employer accountable for the work authorization status of 
direct employees, only those whom they had the power to hire 
and fire. The legislation maintains current law in this regard, 
and NAHB strongly supports that decision.
    Second, the legislation must require all entities who refer 
workers to employers, like union hiring halls and day labor 
centers, to also verify workers. We are pleased to note that 
legislation does create that requirement.
    And third, legislation must have a strong preemption clause 
creating one set of Federal rules and preventing State and 
local governments from creating their own patchwork of 
differing verification requirements. NAHB is pleased to note 
that the legislation includes language to expressly preempt 
State or local laws relating to hiring, employment or status 
verification of unauthorized aliens; however, we urge the 
Subcommittee to provide clarity regarding limits to the States' 
use of business licensing laws to ensure that States through 
licensing do not create a new conflicting series of immigration 
regulations related to enforcement.
    Fourth, a mandatory program must contain a robust safe 
harbor for employers in order to ensure that those who use the 
system in good faith will not be held accountable by DHS or by 
employees for errors in the E-Verify system. The draft 
legislation provides employers with a good faith defense to 
prosecution and limits employees to recourse under the Federal 
Tort Claims Act. NAHB believe that these safe harbors fairly 
protect employers who are using the system in good faith.
    And fifth, any attempt to mandate E-verify must include 
provisions to ensure the system is workable for all U.S. 
employers, including small employers. To that end E-Verify must 
permit telephonic access to the system so that employers who do 
not have high-speed Internet access, who do not work in 
traditional office settings can comply. The legislation 
specifically requires the system to operate through toll-free 
telephone and other toll-free electronic media.
    E-Verify should allow employers to begin the worker 
verification process as soon as possible in the hiring process 
to provide businesses with enough time to rectify a tentative 
nonconfirmation before an employee's start date. This will also 
prevent instances where an employee has completed training and 
started working, only to be terminated due to the belatedly 
received final nonconfirmation.
    NAHB appreciates that the final legislation provides 
employers with the opportunity to begin the E-Verify process on 
the date on which an offer of employment is extended, and also 
provides that the job offer can be conditioned on final 
verification of the worker's work authorization.
    A mandatory E-verify system must be phased in based on 
business size, with larger, better equipped employers first. 
This will provide a test of E-Verify's ability to handle 
increased demand and provide smaller employers time to learn 
about the system.
    The draft legislation has a 2-year phase-in based on 
business size. With over 7 million employers being brought into 
the system and the possibility of overload issues occurring, 
NAHB urges the Subcommittee to consider extending the total 
phase-in time period.
    In conclusion, NAHB recognizes the importance of the 
employer's role in addressing the illegal immigration issues 
and looks forward to working with you as you move forward on 
this legislation. While mandatory E-Verify must be a first step 
toward addressing illegal immigration issues, it should not be 
the only step. Congress must improve the Nation's broken 
immigration and visa system to find a better way for workers to 
legally enter the U.S. For employment when our economy needs 
them.
    I appreciate the opportunity to speak with the Subcommittee 
today, and I look forward to any questions.
    Mr. Gallegly. Thank you, Mr. Rutenberg.
    [The prepared statement of Mr. Rutenberg follows:]
    
    
    


                               __________
    Mr. Gallegly. Mr. Miller.

   TESTIMONY OF CRAIG S. MILLER, CHAIR, NATIONAL RESTAURANT 
   ASSOCIATION (2005-2006), CURRENT MEMBER, BOARD'S JOBS AND 
                       CAREERS COMMITTEE

    Mr. Miller. Good morning, Ranking Member Lofgren and 
distinguished Members of the Subcommittee, thank you very much 
for allowing me to testify today.
    Mr. Gallegly. Mr. Rutenberg, could you turn your mic off? 
Thank you very much.
    Mr. Miller. I could run a dishwasher, but these microphones 
sometimes.
    Distinguished Members of the Committee, thank you for 
allowing me to testify today on behalf of the National 
Restaurant Association on the Legal Workforce Act, which would 
create a national E-Verify mandate. My name is Craig Miller. I 
am a lifetime restaurateur that has directly created over 
40,000 jobs during my restaurant career. I served as chairman 
of the board of directors of the National Restaurant 
Association from 2005 to 2006, and I am currently serving as a 
member of the Board's Jobs and Careers Committee, which has 
policy oversight at the association over employment 
verification issues.
    For many years the National Restaurant Association has 
provided input on the best ways to improve the E-Verify 
program. After reviewing a draft of the Legal Workforce Act, we 
are pleased to see that our concerns are being taken seriously, 
while so many other attempts to move forward without careful 
consideration of the impact of such a mandate on employers 
could have had devastating effects.
    As you may know, many of our members and their suppliers 
have been earlier adopters of the voluntary E-Verify program. 
Some owners have been requiring the use of E-Verify by their 
operations back as early as 2006. Our members use the program, 
and the association itself also uses the program and have found 
E-Verify to be both cost-effective and fast in helping 
guarantee a legal authorized workforce.
    I would like to outline some improvements that the Federal 
E-Verify program should have to gain broad support within our 
industry and compare those potential improvements to the 
version of the Legal Workforce Act we have been able to review.
    First, there needs to be one law of the land. Out of 
frustration, States and local communities have responded to the 
lack of action at the Federal level with a patchwork of 
employment verification laws, leaving employers who must deal 
with a broken legal structure exposed to unfair liability and 
the burden of numerous State and local laws. Under this act 
States and localities are preempted, preempted, from 
legislating different requirements or imposing additional 
penalties. But they may decide to revoke a business license for 
failure to participate in the program as required under Federal 
law.
    Second, special consideration for small business must be 
made. Smaller employers do not have universal access to high-
speed Internet connections, are less likely to have human 
resource staffs or legal staffs, and in our industry, unlike 
others, management does not work at a desk or behind a computer 
all day. Thus we are glad to see that the Legal Workforce Act 
calls for the creation of a toll-free telephonic option for 
doing E-Verify inquiries and allows, but does not mandate, the 
copying of additional documents.
    Third, to maintain an equal playing field, the association 
believes an E-Verify mandate should be applicable to all 
employers in our industry, all employers. However, we 
understand that small businesses may need more help and more 
time to adapt. Thus we are encouraged by the Legal Workforce 
Act tiered approach for rolling out E-Verify, starting with 
employers having more than 10,000 employees and ending 3 years 
after enactment with agricultural employees.
    As the president and CEO of Ruth's Chris Steakhouse, I 
implemented E-Verify in 2006, and I can tell you it works.
    Fourth, there is a good tool that employers should be 
allowed to use that is unavailable under the current E-Verify 
framework. Currently employers are not allowed to preverify 
prior to hire. In essence, a business owner has to hire someone 
before they can even check whether they are legally able to 
work in this country. The association supports the options to 
check the employment authorization status of job applicants at 
the time of a job offer. Encouraging job applicants to self-
check and allowing them to fix any errors before they begin 
employment is a very good approach.
    Fifth, the association supports the inclusion of the 
strictly voluntary reverification provision, but objects to 
mandatory reverification provisions of the entire workforce. We 
have been using I-9s since the late 1990's. One of the 
association's foremost concerns is to ensure that any new E-
Verify mandate does not become overly costly or burdensome for 
our industry and others.
    Sixth, the employer needs to be able to affirmatively rely 
on the responses to the inquiries into the E-Verification 
system. With the rate of acceptance now well into over 99 
percent, as Chairman Smith said, employers would like to have 
the tools to determine in real time or near real time the legal 
status of a prospective employee or applicant to work. The 
association appreciates that, as we understand the Legal 
Workforce Act, 13 days after the initial inquiry there will be 
a final response for those that do not come back as work 
authorized during the initial inquiry.
    The association agrees that employers who knowingly employ 
unauthorized aliens ought to be prosecuted under the law. 
Respect for the law is very important. The current ``knowing'' 
legal standard for liability, also found in the Legal Workforce 
Act, is fair and objective and gives employers some degree of 
certainty regarding their responsibilities under the law and 
should therefore be maintained. Penalties should not be 
inflexible, and we would urge you to incorporate statutory 
language that allows enforcement agencies to mitigate penalties 
based on the size of the employer and the good-faith effort 
that employers are taking to comply, rather than tying to 
specific, nonnegotiable dollar amounts.
    Eight, the association objects to the expansion of 
antidiscrimination provisions beyond what is found in current 
law. However, we understand that those wrongfully harmed by the 
system should have some mechanism to seek relief. Thus we 
support the Legal Workforce Act's provision that allows these 
wrongfully harmed employees to seek relief under the Federal 
Torts Claims Act.
    Ninth, the Federal Government will need adequate funding to 
maintain and implement an expansion of E-Verify. The cost 
should not be passed on to the employer with fees or inquiries 
or through other mechanisms. This association supports the 
Legal Workforce Act provision that keeps the requirements as in 
current law where an employer does not need to keep copies of 
driver's license, Social Security cards, et cetera.
    Mr. Gallegly. Mr. Miller.
    Mr. Miller. Part of the government's effort to roll out E-
Verify to all employers should be closing loopholes for 
unauthorized workers. In the National Restaurant Association's 
opinion, notwithstanding a few clarifications, a broad Federal 
E-Verify mandate that is both fast and workable for business of 
every size under practical, real-world working conditions. I 
thank you for the opportunity to speak with you today.
    Mr. Gallegly. Thank you, Mr. Miller.
    [The prepared statement of Mr. Miller follows:]
    
    
    

                               __________
    Mr. Gallegly. Ms. Moran.

          TESTIMONY OF TYLER MORAN, POLICY DIRECTOR, 
                NATIONAL IMMIGRATION LAW CENTER

    Ms. Moran. Thank you. Thank you, Chairman Gallegly and 
Ranking Member Lofgren, for the opportunity to testify on E-
Verify and share my thoughts on the Legal Workforce Act. The 
National Immigration Law Center has analyzed and advocated for 
improvements in E-Verify since it was first implemented, and I 
have personally work on the program since 2003.
    Despite what we have heard today, the Legal Workforce Act 
is not going to create jobs, but it will result in the loss of 
jobs for hundreds of thousands of American workers at a time of 
9 percent unemployment. And because the bill doesn't legalize 
the 8 million undocumented workers in our economy, it is going 
to result in billions of dollars in lost tax revenue, in 
addition to criminalizing both farmers and workers in the 
agricultural industry. And as Mr. Conyers points out, it 
doesn't work. Fifty-four percent of undocumented workers who 
are put through the system are not detected.
    So I want to start out by addressing the error rates. As a 
percentage it might sound very impressive and like the system 
works, but when you look at the actual numbers, it is very, 
very concerning. Making E-Verify mandatory is going to force 
anywhere conservatively from 1.2 million to 3.4 million workers 
to stand in line at a government agency or lose their jobs, and 
close to a million workers are going to lose their jobs.
    And I think that the Legal Workforce Act is actually going 
to increase the number of workers that are going to lose their 
jobs because it now allows and even encourages prescreening of 
employment eligibility. Right now this is prohibited. It is 
very concerning that it would be allowed because currently of 
the employers that illegally prescreen workers and discover 
that their worker has an error, 33 percent of them never offer 
them the job. And of those workers who aren't offered a job, it 
takes almost half of them 2 months or longer to find their next 
job.
    I want to highlight a story of a U.S. citizen that called 
us for help because she is one of 80,000 workers that lost 
their jobs in FY 2010. Her name is Jessica. She applied for a 
job at a good-paying telecommunications company in Florida. Her 
employer told her that she had an error, so she went to the 
Social Security Administration. She had her name changed, and 
so she had to fix the record. They told her it was okay.
    She went back to the employer. The employer said, sorry, 
you are not confirmed. She drove back to Social Security. 
Social Security said, our records are fine, you should be fine. 
She went back to her employer, and the employer said, I am 
sorry, but the system can't confirm you, I have to fire you. 
Despite pleas to SSA, DHS, the toll-free hotline, she didn't 
get her job back, and she was out of work for 3 months over the 
Christmas holiday. And she now has a lower-paying job.
    Like Jessica's experience with E-Verify, the Legal 
Workforce Act doesn't include any real due process for workers 
who were fired due to this system.
    I also want to point out that this bill provides absolutely 
no protections for workers. Sixty-six percent of workers report 
that their employer has taken some type of adverse action 
against them by firing them, demoting them, giving them lesser 
pay. And, in fact, I think, Mr. Smith, you highlighted that if 
you reverify the workforce, you have to do so in a 
nondiscriminatory manner. That language is not in the final 
copy of the bill, if I am correct.
    On the economy, if the Legal Workforce Act is passed 
without legalizing the workforce, the results are going to be 
devastating. Undocumented workers are not going to leave the 
country because of the Legal Workforce Act. They and their 
employers are simply going to move off the books into the cash 
economy, or they are going to be misclassified as independent 
contractors.
    I think Ms. Lofgren noted the CBO score of $17 billion in 
lost tax revenue. Arizona, that law has been in effect for 3 
years, and guess what? It hasn't worked. People didn't go home, 
they didn't leave the State. Eighty-three percent of workers 
still in the State, and they have gone off the tax rolls, or 
they have reappeared as independent contractors.
    The Legal Workforce Act also fails to recognize the needs 
of agriculture, I think, as Mr. Conyers and Ms. Lofgren have 
pointed out, up to 75 percent of which is undocumented. There 
is this illusion of a carve-out that really isn't a carve-out 
because of the reverification. And the bill incentivizes 
companies to rely on labor contractors who aren't the true 
employer to get around the verification requirements. So while 
the bill goes after union hiring halls and day labor centers, 
it lets these labor contractors get off scott-free.
    So what are the solutions? I know this bill has been sold 
as a commonsense solution, but it is anything but that. I know 
people are frustrated with unemployment, everyone is 
frustrated, but this just isn't the answer. It is just a 
fantasy to think that if we put an employment verification 
system on line that people are going to leave the country. It 
is just not going to happen. It is not how the labor market 
works, and I think Cato Institute has testified that it is not 
a 1-to-1.
    So I have included a number of recommendations in my 
written testimony, but I want to highlight three for what it 
takes to create a system that works, and I have done a lot of 
thinking about this. One, you have to do it when you legalize 
the undocumented workforce so you don't just kick them off the 
rolls. An immigration reform bill would increase GDP by a 
cumulative amount of $1.5 trillion over 10 years.
    Two, you have to have real due process. Workers cannot be 
fired because of a system and have no recourse.
    And three, the system needs to be phased in over a longer 
period of time, with performance evaluation, database accuracy, 
employer misuse to ensure that it is working as you all 
actually intend it to.
    So this bill doesn't make sense for a lot of reasons. Not 
only is it the antithesis of big government conservatism, but 
in a year when Congress is talking about cutting budgets and 
only funding high-performance programs, this program just 
doesn't make the cut. Thank you.
    Mr. Gallegly. Thank you very much, Ms. Moran.
    [The prepared statement of Ms. Moran follows:]
    
    
    
                               __________

    Mr. Gallegly. Ms. Moran, in your written testimony, and as 
you elaborated in your verbal testimony that workers won't 
leave the country if E-Verify is mandated, you did say that 
pretty specifically in your opinion.
    Ms. Moran. Yes.
    Mr. Gallegly. But isn't it true that illegal immigrants are 
leaving States that institute E-Verify mandates? In fact, just 
last week in the Atlantic Journal Constitution published an 
article entitled ``Many Illegal Immigrants Leaving''--or ``Many 
Immigrants Leaving Georgia Behind,'' outlining how illegal 
immigrants are leaving the State since they cannot find jobs 
after the State mandated businesses use E-Verify. That is a 
common known thing at least in the State of Georgia.
    In your written testimony, page 3, you point out that the 
construction industry has a 20 percent unemployment rate. The 
home builders who are actually in the construction trade are 
sitting at this table with you, to your right, now supporting 
Legal Workforce Act. Do you think that you know better what is 
best for the industry than those who actually are in the 
industry?
    Ms. Moran. Well, I don't purport to know that, but let me 
first address the issue about people leaving. There have been 
no formal studies about E-Verify except in Arizona. And I think 
that you received a letter from one of the authors of the study 
from the Public Policy Institute of California, which said that 
83 percent of workers actually stayed in the State. And I 
believe he said that if it is mandated, that you wouldn't even 
see as many people leave who they left in Arizona, because 
interstate migration is much different than leaving the 
country. So that is the only real actual study that we have.
    Again, I know people are frustrated with unemployment, but 
this program doesn't solve it.
    Mr. Gallegly. What will they do if they can't find a job?
    Ms. Moran. What will who do?
    Mr. Gallegly. Those that are illegal, and they are E-
Verified, and the employer won't hire them, what will they do?
    Ms. Moran. Well, what will happen is the employers will 
just move them off the books in the cash economy. I mean, our 
economy would be decimated if 8 million workers simply 
disappeared. I mean, think of not only----
    Mr. Gallegly. Even with the increased penalties.
    Ms. Moran. Excuse me?
    Mr. Gallegly. Even with the increased penalties.
    Ms. Moran. In Arizona you lose your business license, you 
are fined, you got the sheriff going after you. Half the 
employers in Arizona aren't even using the program, and of 
those who do, ICE has found that employers are coaching workers 
about how to get around the system and teaching them which 
documents to present to get around the system, and this doesn't 
bill doesn't address that.
    Mr. Gallegly. I thank the gentlelady.
    Mr. Miller, you know, there is a lot of discussion among 
the ranks that illegal immigrants only take jobs that American 
citizens will not take. We continue to hear that.
    Recently a company in your industry, Chipotle, a large 
national corporation formerly owned by, I believe, the 
McDonald's Corporation, and I think--what do they have, 1,000 
stores, plus or minus? A large, large operation. ICE found out 
that they had many illegals working for them and cracked down, 
and they were terminated. And, of course, Chipotle executives 
and the corporation was fined, and that process is going on.
    Now, with thousands of employees that were illegal that 
were put away from--taking their jobs away, how in the world is 
Chipotle able to survive now that all of these illegal 
immigrants that were working there--did they have to close down 
their doors, or did they have any Americans that applied for 
any of those jobs?
    Mr. Miller. I didn't hear, Mr. Chairman, that any of the 
restaurants closed. In reality what has been happening, and it 
happened with personal experiences in the business that I owned 
and operated, is in using E-Verify, when an undocumented worker 
is exposed, they go across the street and get another job. That 
is what has been happening. That is in real life.
    Mr. Gallegly. That is really kind of where I wanted to go, 
and my time is running out, but the fact is there were American 
unemployed people standing in line to take those jobs; is that 
correct?
    Mr. Miller. Yes, sir.
    Mr. Gallegly. Number two, when ICE went in and did the 
enforcement, they enforced sanctions against the employers, 
which is all well and good, and I support that, but they didn't 
do a doggone thing to the thousands of people that working 
there illegally. They just went down the street or across the 
street and went to work somewhere else; is that correct?
    Mr. Miller. That is correct.
    Mr. Gallegly. That is under current law, correct?
    Mr. Miller. Yes.
    Mr. Gallegly. Thank you very much.
    At this time I would yield to the gentlelady from 
California Ms. Lofgren.
    Ms. Lofgren. Thank you, Mr. Chairman.
    I was reading the op-ed piece that Mr. Miller posted in the 
Fort Worth Star Tribune a number of years ago, and here is what 
that op-ed piece that he wrote says: ``The economic 
consequences of removing the 1 in 20 employees who are 
undocumented from America's workforce would be devastating. The 
restaurant industry, the Nation's largest private-sector 
employer, sustains 12.5 million jobs in restaurants directly 
and millions more in other industries.''
    It goes on to say, ``Clearly we can't fix our broken 
immigration laws simply by enforcing them more stringently. We 
need to make them reflect the law of supply and demand and the 
need to secure our borders. Only by reforming immigration 
policy in this way will we improve enforcement and strengthen 
America's economy, securities and values.''
    I ask unanimous consent to put this op-ed piece into the 
record.
    Mr. Gallegly. Without objection.
    [The information referred to follows:]
    
    
    
                               __________

    Ms. Lofgren. Ms. Moran, you studied this over a period of 
time as an academic, and we throw--what is it they said? There 
are lies, darn lies, in statistics? But I think it would be 
helpful if we could get actually a picture that is complete, 
because--and I am asking you to do that. In fact, it is true 
that most of the people who use this system get an instant 
verification. I mean, it is in the nineties, that is correct. 
There are two questions about that. We have, I believe, an 
analysis I would like you to address that somewhere in the 
neighborhood of half of the people who really aren't eligible 
to work are cleared in that system anyhow. That is one of 
statistics that has been thrown out.
    The other thing, DHS had an independent study done, and 
they said that in the case--that about 42 percent of applicants 
who are dinged on the system are never told, and so they don't 
have a chance. If they actually are eligible to work, they 
don't have a chance to prove that up because nobody ever told 
them what the issue was.
    And then the second statistic I would like to you throw 
some light on is that when there are contests, what is the 
outcome? And I think that when people contest the dinging, my 
understanding is that more than half of them actually prove up 
that they are lawfully here. So if 42 percent are never told, 
that is a bunch of Americans presumably who actually had a 
right to work, but they weren't told, and now the government is 
going to keep them unemployed at a time of 9 percent 
unemployment.
    The second statistic I would like you to--set of 
statistics--to identify is what this means across the entire 
American workforce. I talked to my daughter, a lawyer in San 
Jose. I say, look, there is an error rate of about a percent. 
She said, oh, my God, you would never do that in business. She 
is a corporate lawyer. I mean, if you had that kind of error 
rate in the business she is in, it would be catastrophic. Could 
you address how many millions of American citizens are likely 
to be unemployed because of defects in the database?
    Ms. Moran. Okay. Let me try to break this down. So a lot of 
us have been operating off this the Westat study, which DHS 
commissioned over a number of years, and they use a statistical 
model. And so their model says, as I think someone pointed out, 
a little under 1 percent of U.S. Citizens and legal workers are 
improperly dinged by the system, and about half of those who 
are improperly dinged never correct their records--never are 
able to correct their records for numerous reasons. Forty-two 
percent of employers don't notify them, they just can't correct 
their records with SSA like Jessica did. And so if you 
extrapolate those out, it is a little bit over a million people 
in a mandatory system having to go to correct records.
    I want to point out, though, whenever employers have 
audited their own data, they have come up with much higher 
rates. So L.A. County, for example, audited their own use of E-
Verify and found a 2.3 percent error rate, not a .8 percent 
error rate. And Intel a couple of years ago announced that they 
had a 12 percent error rate, all of these people that had been 
cleared.
    So I guess the point is that we do have a statistical 
model, and I think it is alarming in and of itself that there 
are a few million workers that could be affected, but then you 
also have real-life experiences. And I think you know SSA did 
their own run on the numbers, and they said 3.6 million people 
would come to their offices.
    What happens when people contest, I think that was your 
question, sort of what is the outcome? So approximately 1 
percent are authorized, they should never have been dinged, and 
half of them can correct. That means half can't correct. We 
estimate that a little under a million people in a mandatory 
system will not be able to correct their records, and they will 
lose their jobs. This is why the lack of due process is really, 
really concerning, because they can't get their job back, they 
can't get their wages back. And that is what is happening under 
the current system.
    On the 54 percent of workers that can get through, I mean, 
right now if I present a legitimate document, the system can't 
detect that, and that is what is happening in Arizona. 
Employers know that, you know, the State driver's license won't 
be detected by the system, and so they coach workers in 
providing that document. This bill doesn't address that at all. 
And I think, you know, getting all 50 States to give up their 
driver's license data, I think we tried that in REAL ID, and 
they said no.
    Mr. Gallegly. The time of the gentlelady has expired.
    Mr. Smith.
    Mr. Smith. Thank you, Mr. Chairman.
    First of all, I want to thank our witnesses. We heard some 
powerful testimony in favor of the bill today, and that is much 
appreciated.
    Congressman Calvert, let me address my first comment to 
you. You made a very good case for why E-Verify works, both 
from a personal business owner's point of view, as well as 
being able to quote the various figures that back up our case. 
You actually updated my figures. I didn't realize there are now 
268,000 employers who voluntarily use E-Verify, and I know that 
about 1,300 more businesses are now voluntarily using the 
program every week. So clearly it works.
    And you and I both use the figure that 99.5 percent of 
work-eligible employees are immediately confirmed. By the way, 
that may make it the most effective government program in 
existence. I don't know of any other government program that 
works 99.5 percent of the time.
    I basically just want to give you an opportunity to see if 
there is any other way you feel that we can demonstrate that 
the program works.
    Mr. Calvert. Well, first let me just make a point, too, Mr. 
Chairman. Thank you for your question. I certainly take 
exception to the assumption that mandatory E-Verify would turn 
law-abiding employers into lawbreakers because they don't want 
to comply with the law.
    I was in private business, I was in the restaurant 
business, all my life as a family business. We comply with the 
law. And most small business people I know, 99 percent of them 
comply with the law. They don't go out of their way to put 
employees off the books in the so-called cash economy, whatever 
the hell that is.
    These academics that make these arguments never been in 
business in their life. They have never employed a person in 
their life. They don't even know how the system works to employ 
an individual or how the economy works. So I just want to make 
that point.
    One thing about preemption. I think it is important. My own 
county, we have cities and communities that are doing their own 
preemption, I mean, their own law on E-Verify, because they are 
frustrated with the Federal Government. We do need a national 
law because it is pushing--like a State of California which 
will never put an E-Verify law in--pushing a lot of these 
people that are unemployed in the State of California. It 
already has a 12-1/2 percent unemployment rate. So bordering 
States that are putting in mandatory E-Verify are pushing folks 
into the State of California. So it is an important bill.
    Mr. Smith. Thank you, Mr. Calvert.
    Mr. Rutenberg, I appreciated your testimony. Let me ask you 
the question, can small businesses just as well as large 
businesses comply with E-Verify? I know home builders go from 
small businesses to large entities, and I wanted to see if you 
thought it was going to be equally applicable to both.
    Mr. Rutenberg. Thank you, Mr. Chairman.
    I believe it is going to be much harder for the small 
businesses to comply. I know that Monday, as a builder, I 
worked 15 hours and was only in my office for about 15 minutes 
at one point. We are on the mobile, on the go, and we would 
have to count on our subcontractors and our vendors to do the 
E-Verify for themselves. We would not be able to control that.
    Mr. Smith. Mr. Miller made the same point and also pointed 
out that in the bill we have the phase-in last for the small 
businesses to give them an opportunity to gear up. So we 
actually changed the approach on it just because we had 
understood that small businesses needed a little bit more time, 
so we took that direction.
    Mr. Rutenberg. I appreciate that.
    Mr. Smith. Mr. Miller, let me ask you, you mentioned as far 
as the National Restaurant Association goes and the owners, why 
don't you support an exemption for some employers of the E-
Verify system? You made the case, I think correctly, that 
everybody has to play by the same rules. But why don't you 
support an exemption for some other entity?
    Mr. Miller. As someone that voluntarily put in e-
verification, I saw what happened when it was not equally 
applied to all businesses. The employees that did not qualify 
to be employed by my company would literally walk across the 
street to a competing business. And this is one of those cases 
where we need a Federal law that will provide equal playing 
fields for all businesses to tap into the legal workforce.
    Mr. Smith. Thank you, Mr. Miller.
    Ms. Moran, let me direct my last question to you. Let me 
give you some figures that I think are indisputable. If you do 
question them, let me know.
    The first is I believe that there are 24 million Americans 
who are unemployed or so discouraged they have given up looking 
for work. Of those 24 million unemployed Americans, 19 million 
do not have a college degree, have a high school diploma. There 
are roughly 7- to 8 million people working illegally in the 
United States. And according to my figures, the most recent 
unemployment rates for Americans with only a high school 
education--these are the Americans that are competing with 
these jobs taken by illegal workers--21 percent for all 
Americans, but it is 25 percent unemployment rate for Hispanic 
Americans, 30 percent unemployment rate for Black Americans.
    It seemed to me that almost everything you have said--and 
it is a legitimate point of view from your perspective--but 
almost everything you said seemed to me to put the interest of 
illegal workers ahead of the interest of unemployed American 
workers. Why wouldn't we want to do everything we could for 
these unemployed Hispanic Americans and Black Americans and 
open up jobs for them?
    Ms. Moran. I am putting the interest of the economy first 
and the impact that it would have. In terms of the numbers 
about those without a high school diploma, I am not an 
economist. I mean, you know, Dan Griswold from Cato, you know, 
we are not best buds on most things, he is the one that says 
this is not how the economy works, and that, yes, there would 
be some workers that get jobs, but generally it is just not a 
1-to-1, and that those workers----
    Mr. Smith. I wasn't talking about 1-1. Thirty percent Black 
Americans with only a high school education are unemployed, 25 
percent Hispanic Americans. They are the ones that would 
benefit from the E-Verify program when we free up those jobs.
    Ms. Moran. I hear what you are saying. All I am telling you 
is what the economists are saying. Conservative, libertarian, 
liberals are all saying the same thing, which is that it is 
just not going to create jobs for all of those workers. I am 
not an economist so I can't----
    Mr. Smith. I don't think all economists are saying that, 
and, again, when we hear from employers, when we hear from 
people who had practical experience, it is just the opposite. 
Those jobs are being freed up. But we just have to agree to 
disagree on that.
    Ms. Moran. Okay.
    Mr. Smith. Thank you, Mr. Chairman.
    Mr. Gallegly. Thank you, Mr. Chairman.
    Mr. Conyers.
    Mr. Conyers. Thank you so much.
    Is there something I am missing in Mr. Miller's example of 
Chipotle or any other restaurant where they find an illegal 
working and fire him, and that he advises the Committee that 
the illegal just walks across the street and gets another job? 
Is that the way it happens in your estimation or in your 
experience? This is to Attorney Moran. Am I missing something 
there that people that get fired just go get another job 
somewhere else where they are not checked, and that is why he 
likes mandatory.
    Ms. Moran. I am an employer, and I would be affected by E-
Verify because I have a babysitter, so I just want to put that 
on the record.
    Yeah. I mean, this is going to hurt employers that abide by 
the rules. If you abide by the rule, you are going to use E-
Verify. You know, half of them will be detected, half of them 
won't. But a lot of employers simply are not going to comply 
with the law.
    And I can't remember if, Chairman Gallegly, you just made 
this point or someone made the point about employers are going 
to comply. In Arizona, half aren't complying. Half are not 
using the system. So it is not like these are bad employers; 
they just need their workforce, and they don't want to go 
under.
    Mr. Conyers. And a person that doesn't--that can't get a 
job through E-Verify just goes to an employer that doesn't use 
E-Verify.
    Well, maybe that is a case for Mr. Miller arguing that we 
ought to make it mandatory, and then everybody will----
    Ms. Moran. What I am saying is when it is mandatory, 
employers still aren't complying with the law. In Arizona it is 
mandatory for every employer, and half of them are not using 
it, and others are using it improperly. So just because you say 
it is mandatory doesn't mean it is mandatory.
    That is why the real solution is legalizing the 8 million 
undocumented workers in our economy. Otherwise everyone is just 
going to be figuring out how to get around the system until you 
find a real solution.
    Mr. Conyers. So, now, if we effect comprehensive 
immigration reform and get a pathway to legalizing people, then 
it seems to me that you might not even need E-Verify after 
that.
    Ms. Moran. Well, you know, we think that is the first thing 
that has to happen if you put E-Verify on line. There are a lot 
of other things. I mean, I would write a very different bill 
than the Legal Workforce Act that included worker protections 
and phase-ins. There are just lots of things that need to do to 
make it work. It has made a lot of improvements, but it is just 
not there.
    Mr. Conyers. Well, Mr. Rutenberg, do you think that we 
could work toward an immigration reform system that would clear 
up some of the fundamental problems? You know, the way I am 
understanding the lawyer here is that this is a kind of an 
attempt to put a band-aid over a bigger problem. Until we deal 
with immigration as a big subject, with millions of people now 
having no way to get to citizenship, we are going to always be 
in this fix.
    Mr. Rutenberg. What we tried to do in our testimony was to 
say that we are starting to see a quiltwork patch of different 
regulations at the State and the local level, which has the 
danger of becoming a very difficult environment to work within. 
We think that it is preferable to have a national E-Verify 
program which still--it is in the process of being refined and 
has made serious improvement.
    Mr. Conyers. Do you support comprehensive immigration 
reform?
    Mr. Roberts. We believe that we need to have a sustainable, 
workable immigration policy.
    Mr. Conyers. Well, that means depending on what I mean by 
comprehensive immigration reform.
    Mr. Miller, do you believe in comprehensive immigration 
reform; that is, working out a way for the 8 million people, 
especially the ones that have kids here and been working for 
years and paying their taxes, that we get it straightened out 
once and for all.
    Mr. Miller. The first thing I believe in is the rule of 
law.
    Mr. Conyers. We all, you know----
    Mr. Miller. I question whether everyone takes the same 
position that I do that if the law exists, that you are 
supposed to enter this country in a legal way----
    Mr. Conyers. Wait a minute. Do you support comprehensive 
immigration reform or not?
    Mr. Miller. No. I don't think that that is the answer.
    Mr. Conyers. Okay. That is fair enough.
    Thanks, Mr. Chairman.
    Mr. Gallegly. Thank you, Mr. Chairman.
    Mr. King.
    Mr. King. Thank you, Mr. Chairman.
    I want to thank all of the witnesses for your testimony and 
your presence here.
    I would like to first start off with having noted in the 
opening remarks, of which I did not offer one, that Mr. 
Conyers' statement that agriculture would collapse if we didn't 
have illegal workers, I represent a big chunk of Iowa, and we 
do a lot of agriculture, and I can tell you that America is not 
going to go hungry if we enforce the rule of law. We will raise 
the food we need to feed the people in this country, and we 
will export a lot of food to feed people in many other 
countries. We have that ability, and we are resilient enough 
and entrepreneurial enough to take advantage of the 
opportunities there and create new ones. And with the genetic 
design that we have, we are increasing corn yields 3 to 4 
percent a year, for example, and we need fewer people instead 
of more people.
    What happens in business is that you follow the path of 
least resistance to maximize your profits. For example, I have 
a constituent that has a 16-row corn planter, and he is a 
master marketer, sitting at the Internet and on the phones on a 
regular basis maximizing his profits. He bought land in Brazil 
because it was an investment that looked good, and in spite of 
his big equipment he has in Iowa, he has 96 one-row cultivators 
down there. These are men with hoes that work cheaper than he 
can run equipment.
    So we will do the things necessary as an example to raise 
the food and feed this country and feed the world. I just 
wanted to bring that part up and make an early comment on that.
    I have a number of questions.
    Mr. Miller, I appreciate your testimony, especially on your 
statement about the approval of the language in the bill that 
allows for a preemployment check. And I have long been 
aggrieved by existing E-Verify law that requires you to hire 
the illegals before you can verify that you have hired illegal 
employees, as I appreciate your reinforcement of that component 
of it. And there are a number of standards out there. One of 
them is Iowa's drug testing law as I wrote the language that 
would be as a condition of employment, a preemployment test for 
drug testing or preemployment test for legal status.
    I am interested in what you might say about the difference 
between mandatory and voluntary testing of current or legacy 
employees. If we don't make it mandatory for legacy employees, 
then what do you think is the result on the illegal workforce 
that exists in employment today.
    Mr. Miller. Well, Mr. King, coming from the restaurant 
industry where people and employees change positions, change 
companies very frequently, if you looked at it from the way we 
do in terms of turnover of jobs, a lot of entry-level workers, 
a lot of people work for different companies. Some of our 
employees work for two or three different companies at a time.
    I believe that if we start this process the way this bill 
is intended, and that we don't require a pre--that we verify 
all of the existing employees, that this is the best way that 
we can implement this system on a broad basis and accomplish 
over a period of time what we want to accomplish, and that is 
make sure that all workers in America are legally--are here 
legally and have the right to work in America.
    Mr. King. Not the whole step, but a good step in the right 
in the right direction, then, to summarize.
    And then there is also a provision in there for 
agricultural seasonal employees, that if they have been 
employed by the employer in the past in a seasonal business, 
that they don't need to be verified again. And as an employer 
in the restaurant business, does that--do you look at that and 
think that that is a special provision for an individual 
profession? I will see it from a seasonal construction business 
that if I have seasonal employees that have worked for me in 
the past, and they have to be verified when the frost goes out 
every spring, but workers that come in in the San Joaquin 
Valley would not, what is your view on that from a justice or 
equity standpoint?
    Mr. Miller. Well, we have a process called the H2B visa for 
seasonal workers. Our industry, particularly the resort part of 
our industry, unfortunately right now the Department of Labor 
is actually creating even higher barriers that prevent the HB2 
visa program to work effectively. So I believe that the way 
this act is written, that we can get through over time and be 
able to make sure that we maintain the viability of all of our 
businesses. And agriculture is special, to Mr. Conyers' point.
    Mr. King. Thank you.
    If I could quickly ask Ms. Moran, you made the comment that 
the bill, the language came out of it that was a 
nondiscriminatory language. And I would point out that if you 
read the language closely, that the words ``nondiscriminatory'' 
came out, but the substance of the effect of it remain that one 
would have to test all the employees similarly situated or 
within that. And as the interpretation that I have is that if 
you are an employer, and you employ 10,000 or more, or any 
number for that matter, and you think that you have a problem 
with illegal workers in a certain area, might be sanitation 
within the plant, you would still be required to run all 10,000 
of those employees through--under the language that I see in 
this bill, all 10,000 employees through E-Verify if you thought 
you might have had a problem within a small segment of your 
employment base, perhaps 100 of your 10,000.
    You are concerned about nondiscrimination. I think that 
discriminates against the employer, who in good faith would 
want to have a legal workforce, but would be prohibited from 
that by the burden of having to punch 10,000 names through the 
computer to be able to clean up one segment of this factory. 
What would be your thoughts on that?
    Ms. Moran. Well, I think we saw from IRCA that there was a 
lot of hiring discrimination when they implemented the employer 
sanctions. I think there was a series of 3 or so GAO reports 
that documented that that actually did happen. So I do think it 
is important that if the employer is going to reverify someone, 
they have to reverify everyone.
    Mr. King. So, what is the problem with an employer 
reverifying a segment of their workforce if, say, it is 
sanitation, or mechanics, or my truck drivers, or bulldozer 
operators? If I have got no problem with the white collar part 
of this, but I do have a problem with the blue collar, why 
would you disagree with that philosophically? And if I could 
ask unanimous consent for an additional 1 minute so the 
gentlelady could respond?
    Ms. Moran. Because from a worker's perspective, it is 
really a problem. So let us say that you wanted--you know, 
certain workers you expect are undocumented, maybe they are 
Latino, so you decide to reverify them. Already we have a super 
high, I would say, error rate.
    Mr. King. Ms. Moran, how would an employee know if they are 
being reverified, and how would an employer discriminate 
against an employee who was a legal worker?
    Ms. Moran. Because they would be the subject of a database 
error. Naturalized U.S. citizens are 30 times more likely than 
native-born----
    Mr. King. Mr. Smith's testimony in his opening statement 
resolved that issue. So how does an employer discriminate 
against an employee? If the employee doesn't know they are 
using E-Verify to verify that they are a legal worker, the only 
thing they can do is take action against an illegal.
    Mr. Gallegly. The time of the gentleman has expired. I will 
give her an opportunity to try to respond, and then we will go 
to the next speaker.
    Ms. Moran. I am a little bit confused by the question, 
because I am not quite sure how you can know that someone is an 
illegal worker unless you reverify them. It would result in 
discriminatory use. And there aren't any worker protections. I 
think there is a line that says that you can't take adverse 
action or something. There are no penalties attached, so right 
now there is a high level of employer misuse with voluntary 
users.
    Mr. King. Mr. Chairman, I would ask unanimous consent to 
clarify this significant point that we have here. There has 
been an allegation of discrimination, and I think the witness 
is the expert and can answer.
    Mr. Gallegly. Without objection, the gentleman will have 1 
minute for the purpose of clarifying his question.
    Mr. King. Thank you, Mr. Chairman.
    My point is this, that as an employer, if you had one or 
several employees that you suspected were illegal, and the 
documentation would give you that lack of confidence, so their 
lawful ability to work in the United States, an employer 
under--the way I would propose this language--could then sit 
down in their HR department, light up their computer, punch the 
I-9 information into the E-Verify database, and verify that 
they could lawfully work in this country for their company.
    If an employer did that, the employee would have no idea 
that that process was taking place. Therefore, if they were a 
legal employee, zero discrimination could possibly take place. 
And if they were illegal, they would be dismissed according to 
the intent of this congressional legislation. So how does 
discrimination take place under E-Verify?
    Mr. Gallegly. Ms. Moran.
    Ms. Moran. So, first of all, the Westat study, I can't 
remember if it was this one or the last one, found that when 
employers--when workers who are foreign born, Latino, Asian, 
foreign-born workers, are the subject of an error, they make an 
automatic assumption that they are undocumented.
    And so the point I am trying to make is that people of 
color, foreign-born workers are going to be more likely to be 
the subject of this reverification, and when they are, they are 
therefore going to receive more errors and be the subject of 
more adverse action. So it is not direct--it is unintended 
maybe, or it is indirect discrimination, but it is 
discrimination.
    Mr. King. The computer doesn't know what color they are. I 
yield back.
    Ms. Moran. But the employer does.
    Mr. Gallegly. Ms. Jackson Lee.
    Ms. Jackson Lee. Thank you, Mr. Chairman.
    I ask unanimous consent to have an additional 1 minute to 
be able to yield to the Ranking Member Mr. Conyers, please.
    Mr. Gallegly. Without objection.
    Ms. Jackson Lee. Thank you. I yield 1 minute to the 
gentleman from Michigan.
    Mr. Conyers. Thank you.
    To my friend Steve King, and I don't know much about Iowa 
except that last time I went in with Obama to carry your State, 
you guys there deal in corn, and corn is a machine-sensitive 
operation. There isn't any stoop labor. You are not picking 
apples.
    Mr. King. We used to plant it by hand.
    Mr. Conyers. You used to. But it is mostly machinery. So 
the kinds of questions that involve the restaurant business and 
home-building is a little bit different, Steve. And that is the 
only thing I wanted to point out. That is why you don't have 
this kind of problem much in your State.
    And, by the way, I will probably be back in your State next 
year.
    Mr. Gallegly. Good luck, Mr. Conyers.
    I would yield to the gentlelady from Texas Ms. Jackson Lee.
    Ms. Jackson Lee. I thank the Chairman very much. And I 
thank the Ranking Member. And let me thank all of the witnesses 
as well. And thank you for allowing me to acknowledge that I 
was in a Homeland Security hearing on radical Muslim issues 
that delayed me coming here. Another opportunity to set the 
record straight.
    But in any event, in his absence, and I hope to speak to 
him directly on H.R. 2164, to Mr. Smith, I would greatly 
appreciate having the opportunity to expand the horizons of E-
Verify for an amendment that would add comprehensive 
immigration reform. I think it is an excellent vehicle to amend 
it with the comprehensive immigration reform language that many 
of us have been working on for more than a decade. If this is 
going to be the vehicle that is going to travel dealing with 
the question of immigration, why not look at it comprehensively 
to answer a number of concerns.
    The other question I would like to put on the record--Mr. 
Smith, I am sorry, I didn't see you there--is I cannot find the 
basis of funding in this particular legislation. And from my 
perspective--and I will ask Ms. Moran at a certain point--it 
looks as if this bill is going to exponentially add costs to 
the government. And as I understand it, my colleagues on the 
other side of the aisle are looking to slash the budget and, in 
fact, have no money.
    So I don't see how we are going to effectively use this 
without tying comprehensive immigration reform, which, Ms. 
Moran--and I am not posing a question--to my knowledge all the 
bills that I have reviewed, including my legislation and other 
legislation, assesses fees which go back into the Treasury, and 
therefore it is self-providing.
    Let me ask Mr. Rutenberg. I am a strong supporter of the 
home builders. I work a lot on the home building issues. I want 
you to build, build, build and employ, employ, employ. We have 
a strong contingent in Texas, as you well know.
    My simple question to you is do you or do you know of your 
State organization, local organization that support 
comprehensive immigration reform? Do you have that body of 
thought among your members?
    Mr. Rutenberg. I don't think that we have a consensus on 
comprehensive.
    Ms. Jackson Lee. But you do have some sectors that agree 
with that?
    Mr. Roberts. In 160,000 members, I have somebody who agrees 
with almost everything.
    Ms. Jackson Lee. Well, do you know--have you visited--I am 
not sure, where are you from?
    Mr. Rutenberg. Florida.
    Ms. Jackson Lee. Are you familiar with those in Texas?
    Mr. Rutenberg. I know a quite a number. I have attended 
your meetings frequently.
    Ms. Jackson Lee. All right. So I would imagine you have 
seen some body of thought in Texas agreeing of comprehensive 
immigration reform.
    Mr. Rutenberg. I cannot speak to that. I do know that we 
thought that E-Verify was a good start to this point.
    Ms. Jackson Lee. Are you against comprehensive immigration 
reform that would allow people to get in line in a second line 
and pay fees, and continue to contribute to the American 
public, and serve in the United States military?
    Mr. Rutenberg. I personally do not have an opinion for this 
Committee on comprehensive reform. I will tell you----
    Ms. Jackson Lee. I thank you. My time is short. Thank you.
    Mr. Miller, I understand you represent restaurants, and is 
that the National Restaurant Association?
    Mr. Miller. Yes, ma'am.
    Ms. Jackson Lee. All right. And what is your position on 
comprehensive immigration reform?
    Mr. Miller. We tried that back in 2005 and 2006, as I am 
sure you recall.
    Ms. Jackson Lee. Who tried it? The restaurants tried it?
    Mr. Miller. No. Our Congress tried it.
    Ms. Jackson Lee. I don't know who tried it then. You must 
not be reading the legislation. But what is your answer?
    Mr. Smith. I think he is referring to the Senate bill. I 
would give him a chance to respond if I were you.
    Ms. Jackson Lee. The Senate bill didn't pass.
    Mr. Miller. Having lived on the front lines of an 
immigration policy or a lack of an immigration policy for my 
entire career as a restaurateur, I looked at this bill----
    Ms. Jackson Lee. You are trying to--I don't want to cut you 
off, but I need to get to Ms. Moran. But what you are saying is 
I am taking anything I can get because you need to have some 
order. Is that my understanding?
    Mr. Miller. I am here in support of this bill because I 
think it will move----
    Ms. Jackson Lee. I got it. When you are desperate, you 
gotta get something, and I appreciate it.
    Ms. Moran, can you now just pose the question to help Mr. 
Miller, because as I recall, the National Restaurant 
Association did support comprehensive immigration reform during 
my lifetime in the United States Congress.
    Tell us how bad this bill will be in terms of cost, in 
terms of small businesses, and in particular the errors that 
will now burden the Social Security office in order to handle 
people who are going to be discriminated against.
    Ms. Moran. Yeah. I talked a bit about the error rates, but 
definitely the impact on the Social Security Administration is 
going to be enormous. And I testified at the hearing last month 
about that, and we can submit that testimony for the record. 
You know, the only----
    Ms. Jackson Lee. Maybe you can help Mr. Miller, because 
that is why he is here.
    Ms. Moran. We have worked together in the past on 
comprehensive immigration reform--not ``we'' personally, but 
certainly we have worked with the businesses on a comprehensive 
immigration reform bill that included E-Verify and legalization 
in the past. I think you are referencing the Senate efforts in 
2006 and 2007.
    Regarding the costs, we only have one real score on the 
mandatory E-Verify program, and it is $17 billion in lost tax 
revenue. We have another score that puts about 5- or 6 billion 
it costs to actually run the program.
    Ms. Jackson Lee. Five- or six billion?
    Ms. Moran. To actually sort of put it on line; not the tax 
loss, but actually running the program.
    I have--I would like to submit for the record, I have got 
four pages of quotes from small businesses saying, ``I don't 
want this,'' testifying in Florida and other States saying that 
they don't want E-Verify; that they don't have an HR 
department, that their sister does it or their mom does it; 
that they don't have the expenses; that they can't handle 
helping people fix their errors.
    So I know that we have got some business associations here, 
but the Main Street Alliance submitted a letter to this 
Committee saying this is not good for small business. So I 
think we have got some sort of like big business insider D.C. 
groups and we have got some Main Street groups that are saying 
this isn't for them.
    Mr. Gallegly. I thank the gentlelady. The gentlelady's time 
has expired.
    I ask unanimous consent that a June 14, 2011, letter, 
support for the Legal Workforce Act, from the American Council 
on International Personnel; a June 14, 2011, press release from 
the U.S. Chamber of Commerce supporting the Legal Workforce 
Act; and a June 15, 2011, letter to Chairman Smith from the 
Society for Human Resource Management supporting the Legal 
Workforce Act be made a part of the record for this hearing.
    [The information referred to follows:]

    



    Mr. Conyers. Mr. Chairman, in view of the fact that one of 
the major authors of the bill wasn't able to stay here for the 
hearing, I would like to renew my consideration of the 
leadership here that we have another hearing on this subject.
    Mr. Gallegly. The gentleman from Michigan's request is duly 
noted.
    Ms. Jackson Lee. Mr. Chairman?
    Mr. Gallegly. Yes, Ms. Jackson Lee.
    Ms. Jackson Lee. I would like to submit some information 
into the record, and I would like to add, if you would, to Mr. 
Conyers' request, and I thank you for duly noting it, is the 
opportunity to have a hearing--and, Ms. Lofgren, let me thank 
you for your leadership--but to have a hearing on a number of 
comprehensive immigration reform legislation offered by a 
number of individuals in this Congress, some of which had 
bipartisan support. I would like your consideration.
    But I would like to put into the record two points made 
with the present E-Verify structure. It is indicated that a 
million people will be unemployed, and that the loss of revenue 
will total now $23 billion based upon the implementation of 
H.R. 2164.
    Mr. Gallegly. With respect to the lady's first comment, 
that will be so noted.
    As it relates to the unanimous consent request, that will 
be placed into the record under unanimous consent.
    Ms. Jackson Lee. I thank the gentleman.
    Mr. Gallegly. I would like to thank our witnesses today for 
their testimony, and without objection, all Members will have 5 
legislative days to submit to the Chair additional written 
questions for the witnesses, which will be forwarded, and ask 
the witnesses to respond as promptly as they can so that the 
questions and answers will be made a part of the record of the 
hearing.
    Without objection, all Members have 5 legislative days to 
submit additional materials for inclusion in the record. And 
with that, again I thank the witnesses. And the Subcommittee 
stands adjourned.
    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]





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