News
New State and Federal Employment Eligibility Verification Requirements
June, 06 2008
On June 4, 2008, the Governor signed the General Assembly’s immigration reform bill. The state law will, among other things, eventually require all employers in the state to verify by one of two methods the eligibility of employees to work in the United States. In addition, on June 6, 2008, the President issued an executive order requiring employers who contract with the federal government to use the federal government’s “E-Verify” program to verify the eligibility of their employees to work in the United States.
State Immigration Reform Bill
The state law will eventually require all employers in South Carolina to verify their employees’ eligibility to work. Initially, however, the law is phased in based on the employer’s status as a public or private employer, whether it has contracts with the government, and its number of employees. A breakdown of the law is below.
Public Employers (the State and its Political Subdivisions)
Beginning January 1, 2009, all public employers must register and use the E-Verify program (or any successor program) that is maintained by the U.S. Department of Homeland Security and the Social Security Administration.
Public employers must also take steps to ensure that their contractors comply with the law’s verification requirements for contractors. To meet the law’s obligations, public employers must obtain a written statement from their contractors that (1) the contractors will comply with the verification requirements and (2) the contractors will provide to the public employer any documentation needed to establish either compliance by, or that the law does not apply to, the contractor (and any subcontractors or sub-subcontractors). Public employers are not, however, required to audit contractors’ compliance with the law.
Private Employers Having Contracts with State or Local Governments
Private employers who provide services to the state with a total value in a 12 month period of $25,000, or to any political subdivisions with a total value in a 12 month period of $15,000, must begin verifying employment eligibility as follows:
- contractors with 500 or more employees must comply by January 1, 2009;
- contractors with 100 to 499 employees must comply by July 1, 2009; and
- contractors with fewer than 100 employees must comply by January 1, 2010.
Important: This provision applies not only to contractors but to subcontractors and sub-subcontractors who perform work on public contracts.
Contractors may use one of two methods to verify eligibility: (1) the federal government’s E-Verify program, or (2) require a new hire to possess, or be eligible to possess, a valid S.C. driver’s license or identification card, or posses a valid driver’s license or identification card from a state with license requirements at least as strict as South Carolina. Non-complying contractors may be subject to having their bid or the award of a contract challenged under procurement procedures, or may risk being shut out of public contracts by the state or political subdivision. In addition, the provisions applicable to all private employers (discussed below) will be applicable to private employers who are contractors.
All Private Employers
All private employers with 100 or more employees must begin verifying employment eligibility on July 1, 2009. Those with fewer than 100 employees must comply by July 1, 2010. Employment eligibility may be verified in one of two ways: (1) by using the federal government’s E-Verify system, or (2) by requiring a new hire to possess, or be eligible to possess, a valid S.C. driver’s license or identification card, or posses a valid driver’s license or identification card from a state with license requirements at least as strict as South Carolina. Employers who use E-Verify must submit their new hires’ names for verification within 5 days of hiring.
Private employers who do not comply with the verification requirements of the law may be fined by the Department of Labor, Licensing and Regulation (LLR). Fines range from $100 to $1000 per violation, and each failure to verify a new employee’s eligibility is a separate violation. The law also creates an “employment license” which employers must have to employ individuals in South Carolina. All employers are deemed to have the license, which may be revoked or suspended by LLR if a private employer is found to have knowingly or intentionally employed an unauthorized alien. Suspensions range from 10 to 60 days, depending on whether the violation is a first or second violation. Revocation occurs for a third offense, and the employer may not reapply for the license before 90 days from revocation. For subsequent offenses, the employer may not reapply for a period of 5 years following revocation.
Wrongful Discharge Lawsuit
A provision of the new state law creates a new cause of action for “wrongful discharge of an authorized worker” where that worker is replaced by an unauthorized alien. However, the law provides that such suits may not be brought against an employer who uses the E-Verify system.
Tax Changes
The new state law provides that businesses may not deduct from their state taxes sums of $600 or more paid for labor to unauthorized aliens. In addition, an employer who reports sums paid on a Form 1099 to an unauthorized alien must withhold 7% of such sums if the unauthorized worker has not provided the employer with a correct taxpayer identification number or social security number or who provides a taxpayer identification number provided to the IRS for non-resident aliens. If the employer fails to withhold, it is liable for the amount that should have been withheld.
Private Employers Having Federal Contracts
The executive order issued by the President requires federal contractors to verify employment eligibility using the system designated by the Department of Homeland Security (DHS). DHS has designated E-Verify as the system to use. The executive order also requires DHS to issue regulations governing the implementation of the executive order.
The General Services Administration, the Department of Defense and NASA have issued final changes to the Federal Acquisition Regulation (FAR) implement the executive order. The regulations apply to federal contractors with contracts for $100,000 or more and that are to be performed in 120 days or more. Originally scheduled to take effect in January 2009, legal challenges by the U.S. Chamber of Commerce and aligned interest groups and review by the Obama Administration have delayed implementation several times, most recently to September 8, 2009. It is still possible that the Administration will revise the regulations before they are implemented. For more information on the delay to implementation, click here.
If you have any questions about any of these new laws, please contact us.
Contractors may use one of two methods to verify eligibility: (1) the federal government’s E-Verify program, or (2) require a new hire to possess, or be eligible to possess, a valid S.C. driver’s license or identification card, or posses a valid driver’s license or identification card from a state with license requirements at least as strict as South Carolina. Non-complying contractors may be subject to having their bid or the award of a contract challenged under procurement procedures, or may risk being shut out of public contracts by the state or political subdivision. In addition, the provisions applicable to all private employers (discussed below) will be applicable to private employers who are contractors.
All Private Employers
All private employers with 100 or more employees must begin verifying employment eligibility on July 1, 2009. Those with fewer than 100 employees must comply by July 1, 2010. Employment eligibility may be verified in one of two ways: (1) by using the federal government’s E-Verify system, or (2) by requiring a new hire to possess, or be eligible to possess, a valid S.C. driver’s license or identification card, or posses a valid driver’s license or identification card from a state with license requirements at least as strict as South Carolina. Employers who use E-Verify must submit their new hires’ names for verification within 5 days of hiring.
Private employers who do not comply with the verification requirements of the law may be fined by the Department of Labor, Licensing and Regulation (LLR). Fines range from $100 to $1000 per violation, and each failure to verify a new employee’s eligibility is a separate violation. The law also creates an “employment license” which employers must have to employ individuals in South Carolina. All employers are deemed to have the license, which may be revoked or suspended by LLR if a private employer is found to have knowingly or intentionally employed an unauthorized alien. Suspensions range from 10 to 60 days, depending on whether the violation is a first or second violation. Revocation occurs for a third offense, and the employer may not reapply for the license before 90 days from revocation. For subsequent offenses, the employer may not reapply for a period of 5 years following revocation.
Wrongful Discharge Lawsuit
A provision of the new state law creates a new cause of action for “wrongful discharge of an authorized worker” where that worker is replaced by an unauthorized alien. However, the law provides that such suits may not be brought against an employer who uses the E-Verify system.
Tax Changes
The new state law provides that businesses may not deduct from their state taxes sums of $600 or more paid for labor to unauthorized aliens. In addition, an employer who reports sums paid on a Form 1099 to an unauthorized alien must withhold 7% of such sums if the unauthorized worker has not provided the employer with a correct taxpayer identification number or social security number or who provides a taxpayer identification number provided to the IRS for non-resident aliens. If the employer fails to withhold, it is liable for the amount that should have been withheld.
Private Employers Having Federal Contracts
The executive order issued by the President requires federal contractors to verify employment eligibility using the system designated by the Department of Homeland Security (DHS). DHS has designated E-Verify as the system to use. The executive order also requires DHS to issue regulations governing the implementation of the executive order.
The General Services Administration, the Department of Defense and NASA have issued final changes to the Federal Acquisition Regulation (FAR) implement the executive order. The regulations apply to federal contractors with contracts for $100,000 or more and that are to be performed in 120 days or more. Originally scheduled to take effect in January 2009, legal challenges by the U.S. Chamber of Commerce and aligned interest groups and review by the Obama Administration have delayed implementation several times, most recently to September 8, 2009. It is still possible that the Administration will revise the regulations before they are implemented. For more information on the delay to implementation, click here.
If you have any questions about any of these new laws, please contact us.
Gignilliat, Savitz & Bettis, LLP
900 Elmwood Avenue, Suite 100
Columbia, South Carolina 29201
p. 803-799-9311 f. 803-254-6951
firm@gsblaw.net Contact Us
900 Elmwood Avenue, Suite 100
Columbia, South Carolina 29201
p. 803-799-9311 f. 803-254-6951
firm@gsblaw.net Contact Us