DOL, EEOC, and I-9 Audits on the Rise for Employers

Last Updated: June 8, 2010


“The government will hold accountable those employers who violate the law.” While this statement was made by a U.S. Attorney regarding its prosecution of employers for civil and criminal infractions, numerous federal agencies have significantly increased their investigations into, and prosecutions of employers in a variety of areas. With this current administration, it is clear that federal as well as state employment-related audits will be on the rise. Coupled with a high unemployment rate that historically trends towards employees filing more complaints and lawsuits, employers should be on heightened alert to get their employment practices into compliance as soon as possible.

The Department of Labor received increased funding through the American Recovery and Reinvestment Act enacted on February 17, 2009, which funded 50 full-time employees to enhance its enforcement efforts through its Wage and Hour Division (WHD).

The Department of Labor’s proposed 2011 budget, incorporated in the federal budget pending before Congress, includes 90 new full-time employees to address violations related to themisclassification of workers as independent contractors. In a joint initiative with the Treasury Department, these new employees would work to detect and deter misclassification of employees as independent contractors and to strengthen and coordinate federal and state efforts to enforce resulting labor violations, such as regardingfamily and medical leave, overtime, civil rights laws, unemployment insurance, Social Security, and Medicare. WHD would focus their efforts in the following industries: construction; janitorial; home healthcare; child care; transportation and warehousing; meat and poultry processing; and other professional and personnel service industries.

Another effort targets labor law enforcement in the construction industry; the WHD will emphasize prevailing wage enforcement and proper classification of workers. The Department of Labor is also concentrating its occupational safety and health standards enforcement efforts in the agricultural industry and in the agricultural and young worker populations. The WHD will increase enforcement to ensure compliance with applicable labor standards statutes, such asminimum and prevailing wages, overtime, and child labor provisions in the agricultural industry and among farm labor contractors in particular.

WHD will work to deter non-compliance among employers and will target repeat or persistent violators in all areas for which this agency has responsibility. The Department of Labor also seeks to better respond to Family and Medical Leave Act.

The Equal Employment Opportunity Commission (EEOC)

The EEOC enforces federal laws which prohibit an employer from discriminating against applicants and employees because that person is a member of a protected category under federal law, such as race, national origin, color, religion, sex, age, disability, and genetic information. The EEOC investigates and resolves discrimination complaints raised by individual employees or by the agency itself.

In the federal budget pending in Congress, the EEOC proposes another increase in its funding for 100 new investigators in fiscal year 2011 in order to reduce its backlog while simultaneously investigating, conciliating, and litigating new charges, such as allegedage discrimination and violations of equal pay. The EEOC will now focus on combating systemic discrimination, as opposed to individual cases of discrimination, to broadly impact an industry, profession, company, or geographic location. The EEOC will utilize recent legislation in these enforcement efforts, such as the Lilly Ledbetter Fair Pay Act of 2009 (discriminatory compensation decisions or other unlawful practices occur each time compensation is paid) and the 2008 Amendments to theAmericans with Disability Act or ADA (which more broadly construe “disability”). In regard to the latter, the EEOC expects to file more than 9,000 additional ADA charges in fiscal year 2011. The EEOC will also enforce Title II of the Genetic Information Nondiscrimination Act of 2008 (GINA), which became effective on November 21, 2009, which prohibits public and private employers from collecting or disclosing such information. With increased funding, the Equal Employment Opportunity Commission would also further challenge employment practices such ashiring tests, credit checks, criminal background information, and medical tests that may adversely impact protected employees.

Wake-Up Call for Employers who Employ Unauthorized Workers

To further its goal in reducing demand for illegal workers and protecting job opportunities for the nation’s lawful workforce, the U.S. Attorney Office in San Diego, California recently filed a criminal action against The French Gourmet, Inc. The federal criminal action contends that this restaurant, bakery, and catering company allegedly engaged in an intentional pattern and practice of hiring unauthorized workers. The U.S. Attorney Office alleges 16 further violations by this employer, including the following felonies: conspiracy, eight counts of false attestation, and three counts of harboring illegal aliens against the president and manager of the company.

Here, the named and other managers arguably hired undocumented workers and falsely certified Employment Eligibility Verification Forms (I-9 Forms) under penalty of perjury. After receiving “no-match” letters from the Social Security Administration (stating that the Social Security Numbers provided by the employees did not match the associated names), the Company paid those named employees in cash rather than by paycheck until the employees produced new sets of employment documents with new social security numbers. The named manager and other unnamed individuals then signed new I-9 Forms for the employees, falsely certifying that their new documents, including new social security numbers, appeared to be genuine. The Company faces significant fines and penalties ($500,000 alone for harboring illegal aliens and another $500,000 for false attestation), as well as forfeiture of the proceeds gained from the unlawful activities and the facilitating (business) property. Their president and the named manager face a maximum of five years imprisonment per count, a $250,000 fine per count, and three years of supervised release.

What This Means for Employers

In Hawaii alone, seven new Department of Labor investigators were recently hired, including two in Maui, who will focus their investigations on the outer islands.

In California, the government is cracking down on employers with unauthorized workers.

Gone are the days when employers can afford to have less-than-perfect employment practices and policies. Employers should self-audit, seek expert guidance where needed, and resolve any violations. An employer could expend significant resources, including staff time and legal fees and expenses, to defend against a suit which may be brought by a current or former employee, or by a governmental agency.

If you need help from Vantaggio in getting into compliance, we have a number of products and services that can be of assistance, from full HR Audits to Leave Administration and COBRA kits to our monthly consultation hotline, relax™. Please let us help you before the government knocks at your door!

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