E-Verify: Much More than the Cost of Doing Business

[Editor’s Note: today’s blog is courtesy of Dawn Lurie and Kevin Lashus of Greenberg Traurig]

In Thursday’s late edition of the Bloomberg news, the group released the findings of a report on a proposal to require every U.S. employer to use E-Verify to confirm the legal status of all new hires (just new hires, mind you).

In summary: “Businesses with fewer than 500 workers bear the greatest burden (of such a proposal), according to the data, spending about $2.6 billion a year to use the government’s web-based verification system, E-Verify, compared with less than $100 million for the 4 percent that used it in 2010.”

That’s “billion” with a B.  In a recent survey commissioned by the government, Westat reported that employers spent about $43 million in the fiscal year ending September 30, 2008, to interact with the employment verification program.

The Westat study was commissioned by the Government as part of a multi-year evaluation of the E-Verify program, and presents the results of (1) surveys of participants and (2) focus groups of nonusers—the recently-published report was a result of their 2009 findings. What Westat found was that those employers aware of the E-Verify program decided not to use the system because they perceived no benefit from participating compared to the cost and logistics burden to participate.

The case study participants generally opposed a mandatory program for all employers, particularly for small business owners; and, a substantial minority of those small business owners indicated that they lacked sufficient resources to participate, with about one-fourth of the case study participants saying they did not have the staff with sufficient skills available to manage down-stream tentative non-confirmation (TNC) resolution. In addition, one-tenth stated they lacked the computers to connect to the E-Verify system.

Interestingly, some businesses artfully noted in their survey responses that they did not see E-Verify as beneficial for their business because they viewed participation as a government priority rather than a business priority.  Of note, one employer requested that:

[O]ur elected officials begin to make it the government’s responsibility (not the employers’) to control illegal immigration.  Our government has a history of allowing illegal immigration to flourish and then relying on the businesses to bear the cost and exposure of controlling it.

But, the most telling response from a business owner may be this one:

Hold me, personally, and my company harmless from any loopholes in the system that become exploited by the undocumented population . . . bottom line . . . I don’t want to make the 5 o’clock news by complying with a broken system.

E-Verify was not designed to identify identity theft issues, but rather to verify employment eligibility.  That’s a big difference and it appears some people don’t understand the difference.   USCIS must be intending to redesign the system in an effort to deal with this serious issue- but right now these loopholes cause serious concerns over the integrity of the program.  Savvy business owners are well aware of the current flaws in  E-Verify that allow for employees, with stolen identities, to pass undetected through the system.  These are the same business owners that don’t want to be held responsible for the flaws and their sentiments are echoed above.

According to Bloomberg’s estimates, assuming E-Verify costs remained constant during the time frame, (and usage of the system was adjusted for growth), employers spent an estimated $95 million in fiscal 2010 to participate “for free” in E-Verify.

Businesses with fewer than 500 workers bear the greatest cost burden because the fixed costs are spread over fewer hires.  The Bloomberg report concluded that E-Verify cost small businesses that enrolled in E-Verify in 2008 an average of $127 to run each new hire query [and respond timely to a TNC/final non-confirmation (FNC) situation], compared with $63 for all firms—projected outward, Bloomberg calculated that those figures would be $147 and $73, respectively.

Most HR professionals are aware of the increased burden associated with a mandated E-Verify process.  State and local governments, frustrated by a lack of federal action, are considering mandating additional verification compliance requirements, including E-Verify, upon employers as a cost of doing business there.  It is critical that executives, management, and stakeholders be aware of the significant costs associated with “free” E-Verify participation.

So, add value to your relationship with your business: share as much of this information as is available with decision-makers so that they understand the ramifications of decisions relating to E-Verify; and more notably, they become community leaders in educating our politicians that E-Verify is not as “free” as is advertised.  On the other hand, E-Verify is immigration compliance best practice and should be considered by all businesses that can afford to do so and by businesses that cannot afford not to.