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I-9 and E-Verify Decisions Can Lead to Unfair Labor Practices

When employers think about I-9 compliance risks, they inevitably conjure up thoughts of a government agent, pouring through boxes of neglected I-9 forms with a red pen in one hand and a calculator in the other. Errors are spotted; notices are issued; and at the end of the day, the employer is looking at a (potentially) sizeable fine for all of those I-9 transgressions – many of which occurred long ago before anyone even cared about our beloved one (or two) page employment eligibility verification form.

But recently, we’ve been seeing an entirely new risk associated with I-9s, originating (ironically) from employers’ often-diligent attempts to prevent mistakes in the first place. This particular threat emerges from within – from the employer’s own workforce in the form of a claim of unfair labor practices before the National Labor Relations Board (NLRB).

Now I know what you’re thinking – the National Labor Relations Act (NLRA) doesn’t apply to us since we don’t have a unionized workforce. But even if your employees are not currently represented by a union, the NLRA can still impact your business operations and those crucial planning decisions with respect to I-9 and E-Verify compliance. Let’s take a look at a recent case (out of Arizona) where an employer faced this difficult balancing act.


The Case of the “Not so Fresh” Workforce

Today’s story revolves around Farm Fresh, a produce-packaging company in Phoenix, Arizona that sells carrots, onions, and other produce to restaurants and school cafeterias. Gary, a long-time employee, bought the company from his boss in 2013 for roughly $1.2 million. Upon taking the helm, Gary’s first order of business was to address potential immigration concerns – especially since the Department of Homeland Security (DHS) had raided the company in the not too distant past.

Gary contacted the DHS to inquire about whether he could submit all of his existing employees (roughly 50 in total) to E-Verify to ensure he had a legal workforce. In response, DHS stated that since Gary had acquired the business, he could treat all of the employees as “new hires,” require them to complete a new I-9 form, and submit them to E-Verify (as required under Arizona law for new hire employees). So far so good. Then the trouble began…

After learning about the company’s E-Verify plans, several employees immediately quit, and Farm Fresh terminated at least 2 others (one in response to a final nonconfirmation in the E-Verify system). Around the same time, several employees sought unionization with the United Food and Commercial Workers Union. Soon thereafter, a complaint was filed with the NLRB, alleging unfair labor practices and retaliatory firing. The fun begins…


Legal Action

According to court filings, the NLRB argued that Farm Fresh had unlawfully interfered with its employees’ rights to organize and join the union and had terminated the employees because of their pro-union sympathies (and not because of E-Verify). So as mentioned above, here we have a case where a non-unionized employer is suddenly ensnared in a legal battle, stemming from I-9 and E-Verify decisions. But wait, there’s more.

The NLRB sought “unconditional reinstatement” of the employees, meaning they expected the employer to rehire them regardless of what the E-Verify system returned. The NLRB administrative law judge sided with the union and ordered the company to reinstate the employees without conditions. Farm Fresh agreed to rehire the employees (and even stated that they really wanted to do so anyway), but only if they passed the E-Verify check required of all of its new hires. Stalemate, yet again.

Subsequently, the NLRB sought injunctive relief from the Arizona Federal District Court in the case of Overstreet v. Farm Fresh Co. Target One LLC, No. 2:13-cv-02358. After examining all of the evidence, the district court ruled in favor of Farm Fresh with respect to the reinstatement issue, noting that the NLRB has “no authority to require employers to forgo lawful and nondiscriminatory use of E-Verify.” In addition, the court also awarded Farm Fresh over $55,000 in attorney’s fees since the NLRB’s position regarding E-Verify in particular was not substantially justified.


The Union vs. E-Verify

So does this mean that employers (unionized or not) can safely re-I-9 employees and enroll in E-Verify without issue? Not necessarily.  It’s important to note that the employer in this particular case had two very important justifications for requiring employees to be submitted to E-Verify: (1) DHS had expressly advised the company that it could treat its acquired employees as new hires (a position which is also summarized online here) and (2) the employer was required to use E-Verify for all new hires by Arizona law.

In many other situations, however, the NLRB has found that enrolling in E-Verify is in fact a mandatory subject of bargaining under the NLRA since it affects the terms and conditions of employment – namely when an employee can or cannot be terminated (as specified under the MOU and program rules). In addition, the NLRB has noted that since E-Verify participation impacts the timeframe under which an employee must present genuine work authorization documents, the union should be made aware so that they can negotiate accordingly.


Lessons Learned

While union participation has been declining over the years, employers may still find themselves in the crosshairs of the NLRB – particularly in relation to any kind of employer activity which may affect an employee’s right to work. This is especially true in the context of I-9 and E-Verify policy decisions, which ultimately determine whether or not you can continue to employ a person lawfully in the United States. Here are just a few examples of “routine” I-9 and E-Verify decisions which may run afoul of the NLRA (depending upon the circumstances):

  • Your company decides to participate in E-Verify even though you are not required to do so by state or federal law
  • You’ve just been awarded a federal contract with the E-Verify FAR clause and you decide to E-Verify the entire workforce (as is permitted by DHS)
  • After conducting an internal audit, you decide to re-I-9 the entire workforce even though some I-9s are perfectly fine
  • You acquire another company and decide to treat all of the acquired employees as new hires (as described in our case above)

The bottom line is that NLRA issues (particularly as they relate to employment eligibility verification and immigration) are very tricky indeed. As we’ve said in the past, your best bet is to adopt the following 3-prong approach to ensure you minimize all potential I-9 and E-Verify related risks:

  1. Regularly review and audit your I-9 and E-Verify policies to ensure compliance with often-conflicting government regulations and rules (including the NLRA)
  2. Contact experienced immigration and labor counsel before making any broad-scale I-9 and E-Verify decisions
  3. Adopt a smart electronic I-9 and E-Verify system to prevent compliance mistakes and ensure you’re following all of the rules – including the ones designed to protect workers’ rights.


About John Fay

John Fay is an immigration attorney and technologist with a deep applied knowledge of I-9 compliance and E-Verify rules and procedures. During his career, John has advised human resource managers and executives on a wide variety of corporate immigration compliance issues, including the implementation of electronic I-9 systems. In his current role, John serves as President at the LawLogix division of Hyland Software, Inc., where he oversees all aspects of the division’s operations and provides strategic leadership and direction in the development and support of Form I-9, E-Verify, and immigration case management software solutions.

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