November 1987 IMMIGRATION 

REFORM I 

Status of Implementing 

Employer Sanctions 

After One Year ._ 
+ I. 

.i- I .’ 

. . 

1 
Comptroller General 

oftheUnitedStatea 

E1260Fl 

November 6,1987 

President of the Senate and 

Speaker of the House of Representatives 

This is the first of three annual GAO reports required by section 101(a) of the Immigration 

Reform and Control Act of 1986. The act prohibits employers from knowingly hiring 

unauthorized workers. Noncompliance can result in penalties (sanctions). Cur report 

describes the initial efforts to implement and enforce the employer sanctions provisions of 

the act. 

The act requires us to review the implementation and enforcement of employer sanctions 

for the purpose of determining if such provisions (1) have been carried out satisfactorily, 

(2) have caused a pattern of discrimina tion against U.S. citizens or other eligible workers, 

and (3) have caused an unnecessary regulatory burden on employers. Since the act has not 

yet been fully implemented, this report presents information on actions to date and describes 

our plans to address these questions in our future work. In addition, we discuss several 

methodological problems that may preclude us from making conclusive determinations on 

these matters in our two subsequent reports. 

Copies of this report are being sent to the Attorney General; the Secretary, Department of 

Labor; the Chairman, Equal Employment Opportunity Commission; the Chairman, U.S. 

Commission on Civil Rights; the Director, Office of Management and Budget; and other 

interested parties. 

Charles A. Bowsher 

Comptroller General 
Executive Summ~ 

To reduce the flow of aliens illegally entering the United States to find 

work, Congress passed a law in 1986 prohibiting employers from hiring 

any alien not authorized to work. Employers who violate this law can be 

fined and/or imprisoned. The law requires GAO to issue three annual 

reports to Congress on its implementation and establishes procedures 

for Congress to repeal provisions of the act based on GAO'S third report. 

This is the first report. (See p. 18.) 

Background During the past 16 years, Congress has been increasingly concerned that 

aliens notauthorized to work were taking jobs away from authorized 

workers and adversely affecting the U.S. economy. In recent years the 

Immigration and Naturalization Service (INS) has been arresting 

thousands of aliens who were working in the country illegally. However. 

federal law did not provide penalties for employers who knowingly 

hired unauthorized aliens. GAO reported in 1986 that most countries that 

had enacted laws penalizing employers of unauthorized aliens believed 

that these sanctions were a deterrent to unauthorized alien employment. 

(f- P. 8.1 

On November 6,1986, the Immigration Reform and Control Act of 1986 

became law. This law (1) contains civil and criminal penalties for 

employers of unauthorized aliens and (2) requires all employers in the 

nation to complete an employment eligibility verification form (I-9) for 

each new employee. 

Because of concern that employers-to avoid being sanctioned-would 

not hire “foreign-looking’* U.S. citizens or legal aliens, Congress added a 

provision to the law that prohibits employers with four or more employees from discrimina ting on the basis of a person’s national origin or citizenship status. This provision expanded the percentage of the nation’s 

employers who could be charged with discrimination under federal law 

from about 13 to 48 percent. Employers who violate this provision can 

be fined. 

The law and implementing regulations establish timetables for enforcement and related penalties. The implementation has three phases: a 6- 

month education period; a l-year period during which warnings will be 

issued to first-time violators; and full enforcement of sanctions without 

a warning against those who violate the law. (See pp. 10 to 17.) 

The law requires that each of GAO’S annual reports review the implemen 

tation and enforcement of the employer sanctions law for the purpose of 

Pye 2 GAO/GGlM&14 Employer Srnctlon 
determining whether (1) the law has been carried out satisfactorily, 

(2) a pattern of discrimination has resulted against authorized workers, 

and (3) an unnecessary regulatory burden has been created for employers. GAO will also attempt to determine if the anti-discrimination provision creates an unreasonable burden for employers. 

The law states that Congress may use expedited procedures to repeal 

both the employer sanction and anti-discrimination provisions if GAO'S 

third annual report fmda a “widespread pattern” of discrimination 

caused “solely” by the sanctions provision. If GAO'S third annual report 

finds “no significant discrimination,” or alternatively finds an unreasonable burden for employers, the law provides expedited procedures for 

Congress to repeal the anti-discrimination provision. (See p. 18.) 

Results in Brief In GAO’S opinion, the general approach followed during the first year to 

implement the law has been satisfactory. So far, the data on discrimination related to the law has not shown a pattern of discrimination or 

unreasonable burden on employers. However, because of the many factors involved, GAO may not be able to isolate and measure the effects of 

employer sanctions on any identified discrimination. Insufficient data 

exist for OAO to determine if the act’s regulatory burden on employers is 

unnecessaq and it is unlikely such data will be available. 

Principal Findings 

Satisfactory Progress in 

Educational Phase of 

Implementing New 

Employer Sanctions Law 

During First Year 

INS efforts to implement the law have primarily focused on educating 

the public about the law to help assure voluntary compliance. Handbooks explaining the law have been mailed to the nation’s estimated 7 

million employers and INS has begun a national media campaign to educate the public. (See p. 33.) 

Planned Enforcement 

Approach 

ms plana to allocate about $60 million during fiscal year 1988 to implement the law’s employer sanction3 provision. With this amount, INs 

plans to target about 20,000 employers for compliance investigations. In 

addition, Department of Labor employees, who visit 60,000 employers 

annually to enforce various labor laws, began on September 1,1987, to 

also inspect employers’ I-9 forms for compliance. 

Page 8 GAO/GGD8tH4 Employer Snnctlom 
As of October 7,1987, two employers have been served notices under 

the law for lmowingly hiring unauthorized aliens. (See pp. 27 to 29.) 

No Pattern of 

Discrimination 

As of September 1987,67 alleged employer violations of the law’s antidiscrimination provisions have been filed with federal agencies-44 are 

in process and 23 were closed. 

The Equal Employment Opportunity Commission-the agency that 

administers title VII of the Civil Rights Act of 1964 prohibiting national 

origin discrimination-had received 62 charges related to employer 

sanctions. Most of these charges were still in process as of September 

1987. 

The Office of Special Counsel in the Department of Justice-responsible 

under the law for prosecuting discrimination charges-had received 16 

charges related to employer sanctions. Two have been dismissed, one 

withdrawn, and the rest are under investigation. An additional 34 

charges have been filed with four state and local government agencies. 

(See pp. 34 to 36.) 

The discrimination charges under investigation do not, in GAO'S opinion, 

constitute (1) a pattern of discrimination or (2) an unreasonable regulatory burden for employers. INS has just begun to enforce the law’s sanction provision. Thus, until now, employers have had little reason to not 

hire “foreign-looking” citizens or legal aliens to avoid being sanctioned. 

(See p. 38 and 47.) 

Once full enforcement begins, GAO may still not be able to determine if 

any discrimination that doea occur is caused “solely” by employers’ fear 

of sanctions. Various federal officials with experience in discrimination 

cases said that normally judges’ decisions in cases of dkrimination do 

not specify what caused the discriminatory act. Furthermore, no data 

exist on the number of persons who applied for the estimated 67.6 million jobs filled each year who are not hired because of employers’ fear of 

sanctions. Without this information, it may not be possible for GAO to 

determine what is a ‘widespread pattern” of discrimination versus “no 

significant” discrimination. (See p. 31.) 

P-4 GAO/GGD-8&14 Employer Smwtions 
Data Limitations May GAO believes that the ultimate test of whether the burden imposed on 

Preclude Determining If an employers is worth the costs involved is the extent to which these activUnnecessary Regulatory ities are accompanied by and contribute to desired reductions in unauBurden Exists thorized alien employment and illegal immigration. Unfortunately, it 

will be extremely difficult, if not impossible, to conclusively establish 

such a cause/effect relationship. Further, even if no progress is realized, 

the employer requirements may still be a necessary part of a revised 

strategy. 

GAO has selected three indicators of the law’s effect on illegal immigration and will use these and other data in its subsequent annual reports. 

Although these indicators are the best available, they are difficult to 

measure and may be influenced by many factors other than employer 

sanctions. Therefore, it is likely that the results of GAO’s future analysis 

of the law’s effect on illegal immigration may be inconclusive. 

Based on public comments, INS revised its regulations to reduce the burden on employers and placement agencies who recruit or refer job applicants to employers for a fee. (See pp. 39 to 48.) 

; Recommendations available on many of its key features, GAO is not making recommendations in this report. 

I Agency Comments agency comments on the draft report. However, GAO discussed the contents of the report with officials from INS, Office of Special Counsel, 

Department of Labor, and the Equal Employment Opportunity Commission and included their comments where appropriate. These officials 

generally concurred with the report. 

Pye 5 GAO/GGD8814 Employer !3u1ctlom 
Contents . 

Executive Summary 

Chapter 1 : 

Introduction The Immigration Reform and Control Act of 1986 l( 

Chapter 2 l! 

Objectives, Scope, and 

Methodology 

Chapter 3 

Implementing 

Employer Sanctions 

INS Actions to Implement Employer Sanctions 

DOL Actions to Implement Employer Sanctions 

Conclusions 

Chapter 4 

Diskimination and 

Employers’ Fear of 

Sanctions 

One Employer Ordered to Reinstate Employees 

OSC Investigation Activities 

Charges Piled With EEOC 

State and Local Agencies’ Activities 

Other Organizations Involved With Mscrimination 

Charges 

Anti-Discrimination Burden on Employers 

Service Placement Rates and IRCA-Related Mscrimination 

Alienage Discrimination Issue 

Conclusions 

3 

3: 

3. 

3. 

3, 

5 

Chapter 5 

Employer Sanctions’ Cast Associated With I-9 4 

Bwden On hP1oYers Potential Indicators of Employer sanctions’ Effwtiveness 4 

Regulatory Issue for States 4 

Conclusions 4 

Appendixes Appendix I: Fiscal Year 1987 and 1988 INS Budgets for 5 

Employer Sanctions 

Tables Table 4.1: Charges Piled With Selected Agencies 

Table 4.2: Puerto Rican Job Referral Data ln New York 

City 

3 

3 

P8ge 6 GAO/QGM&l4 Employer 98nctlo~ 
Table 6.1: INS Cost Estimate 40 

Table 6.2: SBA Cost Estimate 41 

Figures Figure 1.1: INS Apprehensions at U.S. Borders 

Figure 6.1: Apprehensions Per Work Hour (Border Patrol) 

FY 1983-86 

8 

42 

Figure 6.2: Illegally Employed Alien Arrests Per Work 

Hour 

43 

Figure 6.3: Nonimmigrant Visa Violations (By Country FY 

1984-s) 

44 

Figure 6.4: Non-work Social Security Cards With Wage3 

Reported the Previous Year for 19833-87 

46 

Abbrevlatione 

Department of Justice 

Department of Labor 

Equal Employment Opportunity Commission 

Employer and Labor Relations Division 

Fair Labor Standards Act 

Immigration and Naturalization Service 

Immigration Reform and Control Act of 1986 

Internal Revenue Service 

Office of Federal Contract Compliance Programs 

Office of Management and Budget 

office of special Counsel 

SmalI Business Administration 

Social Security Administration 

Wage and Hour Division 

GAO/GGD=SSl4 Employer Smctiolu 
Chapter 1 

Introduction 

During the past 16 years Congress has been increasingly concerned ovc 

the inability to control the illegal flow of aliens across our borders and 

the economic consequences of aliens who are not authorized to work 

taking jobs away from authorized workers.’ Figure 1.1 shows the 

increase in the number of aliens INS apprehended at U.S. borders as the 

tried to enter the country illegally. However, some research has also 

concluded that the presence of unauthorized aliens has aided the U.S. 

economy.* 

Flguro 1.1: INS -aion, at U.S. 

1.7s Numbuot rppnhrnJon wlknr) 

1.50 

In 1978, Congress passed a law establishing the Select Commission on 

Immigration and Refugee Policy. The Commission’s purpose included 

assessing the impact of legal and illegal immigrants on the United State 

Suggma Illegal Akm May Displace Native Workers (GAOIPEMD 

*Julian Simon, How Do lmml@mta Mfect Us Economfl!, pubhhed by the Center for immigratepdlcy Md RcfueEe Asaistuwr of t&orgemm University (1986); and The 1986 Economic Report of 

thePye 8 GAO/GGDBB14 Employer Smctio 
and recommending changes in immigration policy. Among the Commission’s recommendations in its 1981 report was that Congress enact legislation making it illegal for employers to knowingly hire undocumented 

aliens (referred to hereafter as employer sanctions).3 

In 1981, the U.S. Senate Committee on the Judiciary requested that we 

survey employer sanction laws in other countries. Our report’ concluded 

that, at that time, such laws were not an effective deterrent to illegal 

employment in the countries surveyed for primarily two reasons. First, 

employers either were able to evade responsibility for illegal employment or, once apprehended, were penalized too little to deter such acts. 

Second, the laws generally were not being enforced because of strict 

legal constraints on investigations, noncommunication between govemment agencies, and lack of enforcement personnel. 

In a subsequent 1986 report: we surveyed some of the same countries. 

The situation had changed. Five of the eight countries reported that 

employer sanction laws were a moderate or great deterrent against ille 

gal alien employment. The other three countries reported that their laws 

were less of a deterrent because of problems in their enforcement. Six of 

the eight countries reported that if they had not enacted employer sanction laws, the problem of aliens working illegally would be greater. All 

countries reported that little or no discrimination against citizens or 

legal aliens had resulted from employer sanction laws. 

After a series of hearings in the 198Os, the Immigration Reform and 

Control Act of 1986 @CA) became law on November 6,1986. 

Page 8 GAO/GGD-ZWU Employer Su~etlons 
The Immigration 

Reform and Control 

Act of 1986 

IRCA affects each of the nation’s estimated 7 million employers and the 

estimated 67.6 million people hired annuall~.~ Specifically, the act’s 

employer sanction provision prohibits employers from hiring persons 

who are not authorized to work in the United States, requires employer: 

to verify the employment status of each new person hired, and prohibit: 

employment discrimination based on national origin and citizenship status. IRCA establishes a new enforcement unit-the Office of the Special 

Counsel for Immigration-Related Unfair Employment Practices (osc)- 

within the Department of Justice (DOJ) to prosecute complaints alleging 

national origin and citizenship discrimination and authorizes the Attorney General to designate administrative law judges to hear such cases. 

The following section provides a brief introduction to the act’s employe 

sanction provisions and INS’ implementing regulations. For purposes of 

this report, we are defining an unauthorized alien as an alien who does 

not have proper documents to authorize employment in the United 

States. This definition includes aliens who enter the United States illegally as well as aliens who enter the country legally, but are not authorized to work (e.g., visitors). 

Unlawful Employment 

Practices 

The law states that it is unlawful to knowingly hire for employment an: 

alien not authorized to work in the United States or to hire any person 

(including U.S. citizens) without verifying the person’s legal employment status. It is also unlawful to knowingly continue to employ an alie 

who has become unauthorized to work or to knowingly obtain the services of an unauthorized alien through a contract. Noncompliance can 

result in civil and criminal penalties. However, the law permits employ 

ers to continue to employ unauthorized aliens hired before November 6 

1986, without fear of being sanctioned (i.e., “grandfathered” aliens). oh 

can deport “grandfathered” aliens who are in the country illegally. 

IRCA places certain responsibilities on employers when hiring employees 

Generally, for employees hired after November 6,1986, IRC4 requires 

employers to verify the employee’s identity and their eligibility to worl 

in the United States. Employers must complete the Employment Eligibi 

ity Verification Form (Form I-9) for each employee, certifying that docl 

ments used to verify their identity and eligibility were reviewed. They 

must retain the I-9 for at least 3 years from date of hire or 1 year after 

Vhe number of employers ia baaed on lntemal Revenue Servlce data on oqanimion3 filing tax 

ivturns The esdmate of people hired annually is bmd on a study by Malcolm Cohen, Employer 

service Potenlial (Inslitut.e of IndustU and Labor Rehtiom Ann Arbor, Michigan, 1979). 

Pyle 10 GAO/GGD8814 Employer Sawtic 
employment is terminated, whichever is later. INS and the Department of 

Labor (DOL) are responsible for inspecting the forms for compliance with 

the act’s requirements. 

Job applicants may use a number of documents to establish employment 

eligibility, some of which INS issues. To prove their identity, job seekers 

may furnish such documents as a driver’s license or school identification 

card with a photograph. F’urther, some documents (e.g., U.S. passport) 

can be used to establish employment eligibility and identification. 

AccordingtoaChamber of Commerce report, a combination of a driver’s 

license and either a & security card or U.S. birth certificate are the 

documents likely to be used by most people. In signing the I-9, employers 

must certify that they “have examined the documents presented . . . 

[and] they appear to be genuine.” 

Employers may be exempted from completing the I-9 if they use the services of state employment agencies who choose to do the verification for 

job applicants they refer to employers. These agencies may elect to pro 

vide job appkants they refer to employers with a certification of 

employment eligibility. An employer who hires such a person does not 

have to complete an I-9 form but does have to retain the state employment certificate and present it for inspection if requested. According to 

JNS regu&ions, employers who hire persons with employment certificates generally cannot later be sanctioned for hiring them if INS determines that such employees are unauthorizd workers unless INS proves 

the employer was not acting in good faith. 

Timetable for Employer 

Verification Requirements 

The law and implementing regulations establish timetables for enforce 

ment of the law and related penalties. The implementation is generally 

divided into three phases: a 6-month education period; a l-year period 

during which wamings will be issued to first-time violators; followed by 

fbll enforcement of sanctions against those who violate the law. 

l From December 1,198f3, through May 31,1987, the act established a 

public education period for the publication of regulations and dissemination of forma and information to the public. During this period, employers aMd not be sanctioned for noncompliance with the act. 

. From June 1,1987, through May 31,1988, employers can receive citations (warning notices) for first offense violations. During this l-year 

period INS will work with groupa, such as employer associations and 

labor unions, to provide assistance in understanding the law, develop 
voluntary cooperation, and encourage efforts to hire authorized employees. The warning citation that is issued explains the nature of the violation. For subsequent or repeated violations, civil or in some cases 

criminal penalties can be imposed. When INS imposes a penalty, it issues 

a Notice of Intent to Fine. 

l First Violation: Not less than $260 and not more than $2,000 for each 

unauthorized employee. 

. Second Violation: Not less than $2,000 and not more than $6,000 for 

each unauthorized employee. 

9 Subsequent Violations: Not less than $3,000 and not more than 

$10,000 for each unauthorized employee. 

Criminal penalties can be imposed on employers engaging in a pattern or 

practice of knowingly hiring or continuing to employ unauthorized 

employees (except for grandfathered aliens). Employers convicted for 

having engaged in a pattern or practice of knowingly hiring or continuing to employ unauthorized aliens after November 6,19S6, may face 

fines of up to $3,000 per employee and/or up to 6 months imprisonment. 

Criminal sanctions will be reserved for serious or repeated violations. 

Also, persons who use fraudulent identification or employment eligibility documents, or documents that were lawfully issued to another, or 

who make a false statement or attestation for purposes of satisfying the 

employment eligibility requirements may be imprisoned for up to 6 

years, or fined, or both. 

Employers who fail to properly complete, retain, and present for inspectiBn the Form I-9 as required by law may face civil fmes of not less than 

$100 and not more than d 1,090 for each employee for whom the form 

was not completed, retained, or presented. In determining penalties, consideration shall be given to the size of the business, good faith efforts to 

comply, the seriousness of the violation, and whether the violation 

involved unauthorized employees. 

l After June 1,19SS, the act will be fully enforced.’ Citations will no 

longer be issued for first violations. Employers who violate the law may 

face the civil or uiminal penalties described above. 

Pqe14 
clwpter 1 

IllRecruiters for a Fee The new law also applies to those who recruit or refer persons to potential employers in return for a fee. Unions using hiring halls to refer 

members or dues-paying nonunion individuals to employen are not considered to be “recruiters or referrers for a fee.” 

Recruiters and referrers for a fee are not required to verify the status of 

persons referred between November 6,1986, and May 31,1987. Starting 

June 1,1987, they are required to complete a Form I-9 when a person 

they refer to an employer is hired by that employer. Generally, the form 

is to be completed within 3 business days of the hire. 

Recruiters and referrers may designate agents to complete the verification procedures on their behalf, such as national associations or employers. If the employer who hires the referred individual is designated as 

the agent, the employer needs only to provide the recruiter or referrer 

with a photocopy of the Form I-9. Recruiters or referrers who designate 

someone to complete the verification procedures on their behalf are still 

responsible for compliance with the law and may be found liable for 

violations of the law. 

Recruiters and referrers must retain the I-9 for at least 3 years after the 

date the referred individual was hired by the employer. They must also 

present 1-9s to an INs or DoL officer after 3 days advance notice. 

The civil and aiminal penalties described above apply to instances of 

recruiting and referring unauthorized employees for a fee occurring on 

or after June 1,1987. 

Unlawful Discrimination The new immigration law also prohibits discrimination. Under this law, 

employers with four or more employees may not discriminate against 

any individual (other than an unauthorized alien) in hiring, discharging, 

recruiting or referring for a fee because of that individual’s national origin or, in the c89e of a citizen or intending (prospective) citizen, because 

of his or her citizenship status. 

Title VII of the Civil Rights Act of 1964 and the remedies against discrimination it provides remain in effect. Title VII prohibits discrimination on the basis of national origin in hiring, discharging, recruiting, 

assigning, compensating, and other terms and conditions of employment. 

Charges of national origin discrimination against employers with 16 or 

more employees are generally to be filed with the Equal Employment 

Opportunity Commission (EEOC). 

P8ge 13 GAO/mm-&H4 Employer s8ncuona 
Under the new immigration law, charges of national origin discrimination against employers with 4 through 14 employees and charges of citizenship disc rimination against employers with 4 or more employees are 

to be filed with 08~. This office began operations in April 1987. It has set 

up a toll free “SOO” telephone number to provide information on the 

law’s provisions. Final regulations implementing the office’s responsibilities under [RCA were issued on October 6,1987. The regulations discuss 

the standard of proof 08~ will use in deciding discrimination cases. 

According to CBC officials, the law prohibits only knowing intentional 

discrimination (i.e., disparate treatment on the basis of national origin 

and citizenship). o&s regulations state that an employer’s act of discrimination may be shown by direct, cir cumstantial, or statistical 

evidence. 

Discrimination charges may be filed by persons who believe they were 

discrMnated against in employment on the basis of national origin or 

citizenship status (or by an authorized representative on their behalf) OK 

by INS officers who believe that dk&&ation has occun~L DiscrMnation charges that are filed with 08c must be Ned within 180 days of the 

discriminatory act. After invesQ@ng the charge, 08c may file a complaint with an administrative law judge. If the Special Counsel does not 

file a complaint within 120 days of receiving the charge, the person 

making the charge (other than an tN8 officer) may file a complaint 

directly with an administrative law judge. 

The administrative law judge will conduct a hearing and issue a decision. The Department of Justice appointed the first administrative law 

judge to hear ~~~+related casts on August 2,1987, and has approval to 

hire up to eight judges, if needed. IRCCI requires that the administrative 

law judges have special tr&ning in employment discrimination. The 

Chief AdminMrative Hearing Officer said that the Office of Personnel 

Management agreed to provide adminisbative law judges from other 

agencies, if needed. He added that 36 judges from other agencies 

received the required traUng. According to Justice officials, regulation 

implementing the judge’s responsibilities under IRCA had not been published as of October 1,1987. 

According to EEOC officials, although the antidkrimination provisions 

of uux were intended to be distinct from, and a complement to, the pro 

visions of title VII, there are some categories of discrimination charges 

over which EM)(: and 08~ appear to have overlapping jurisdiction. IRCA, 

Page 14 oAo/<wIDBBl4 lhploycr Smctlor 
however, prohibits charging parties from fii charges of discrimination arising from the same set of facts with both EEOC and osc. A charging party is thus forced to elect a forum. According to EMW: officials, if 

the charging party elects the less favorable forum, or the one in which 

no remedy is available, the charging party may not be able to make a 

second filing, with the appropriate agency, before the statute of limitations has run out. In order to avoid having such a situation prevent a 

charging party from exercising his/her rights, EEOC and osc are currently negotiating a memorandum of understanding to resolve statutes 

of limitations problems and to ensure that charges are processed by the 

appropriate agency. 

Employers found to have engaged in unfair immigration-related employment practices under the new immigration law will be ordered to stop 

the prohibited practice and will be subject to certain legal remedies. 

They may be ordered to (1) hire, with or without back pay, individuals 

directly iqjured by the disc rimination; (2) pay a fine of up to $1,000 for 

each individual discriminated against (up to 82,000 for each such individual in the case of employers previously fined); and (3) keep certain 

records regarding the hiring of applicants and employees. If the judge 

decides that the losing party’s claim had no reasonable basis in law or 

fact, the judge may require the losing party to pay the prevailing parties’ (other than the United States) reasonable attorney fees. 

INS Investigators The implementation of employer sanctions is primarily the responsibilPrimarily Responsible for ity of INS’ investigative work force. According to an INS official, as of 

Enforcement of Employer October 1,1987, INS had 768 investigators on duty in its headquarters, 

Sanctions four regional offices, and 33 districts. Investigators conduct various 

types of investigations, such as those involving entitlement fraud, and 

apprehend deportable criminal aliens. INS has requested an additional 

600 investigator positions for employer sanctions. These staff increases 

began in fiscal year 1987 and continue into 1988 as the new investigators are hired and receive the required training before being assigned to 

their new duty stations. 

In addition to carrying out its responsibility of apprehending persons 

illegally crossing our nation’s borders, the Border Patrol will also assist 

in implementing employer sanctions. INS has requested 136 additional 

Border Patrol positions for fiscal years 1987 and 1988 to inspect I-9 

forma and help to educate employers about the law’s requirements. 

Pye 15 GAO/GGD-8El4 Employer Sracthm 
INS’ requested budget for fiscal year 1988 for employer sanctions is 

about $60 million, or 6 percent of its proposed $1 billion budget. INS’ 

budget also requests 1,237 positions, or 8 percent of its workforce for 

employer sanctions (see app. I for INScomplete ’ employer sanctions 

budget). 

Two Labor Offices Will 

Inspect Employers’ 

Records 

The two offices within DOL that are responsible for conducting employer 

inspections are components of the Employment Standards Administration: (1) the Wage and Hour Division (LVHD) and (2) the Office of Federal 

Contract Compliance Programs (0Fccp). 

WHD administers and enforces a wide range of laws that establish standards for wages and working conditions. These laws cover virtually all 

private sector employment. Additionally, a 1986 Supreme Court decisior 

extended the Fair Labor Standards Act (FISA) coverage to most employees of state and local governments. 

~HD’S administrative and compliance enforcement officials are located 

in the national office in Washington, D.C., in 10 regional offices, 63 area 

offices, and 261 field stations throughout the United States. These area 

and regional offices and field stations have a nationwide staff of about 

900 compliance officers and supervisors responsible for enforcing the 

Fair Labor Standards Act, the Service Contract Act, and the Migrant ant 

Seasonal Agricultural Worker Protection Act. During LVHD investigations 

compliance officers have the responsibility, under IRCA, of carrying out I 

9 inspections. WHD plans to conduct 61,000 on-site visits during fiscal 

year 1988. 

The oFccp administers a number of statutes including Executive Order 

11246 that prohibits federal contractors from discriminating on the 

basis of race, color, religion, sex, or national origin. OFCCPadministra- ’S 

tive and enforcement officials are located in the national office in Washington, D.C., in 10 regional offices, 37 area offices, and 21 field offices 

throughout the United States. These offices have a nationwide staff of 

over 460 equal opportunity specialists. OITCP plans to inspect 1-9s when 

conducting about 6,400 on-site visits during fiscal year 1988. 

DOL officials stated that DOL did not request funds for inspecting employ 

ers’ I-9 forms in its fiscal year 1987 or fiscal year 1988 budget submissions. The 1987 budget did not contain funds because the budget was 

submitted to Congress before mcx was enacted. A DOL official said that 

$1.6 million in fiscal year 1987 funds was reprogrammed to pay for 

Pye 16 GAO/GGDBBII Employer !kncdor 
Clmpter 1 

lntroduct&n 

training DOL employees on its rRc+related responsibilities. DOL officials 

said that the 1988 budget did not include funds because of incomplete 

information on how to inspect employers’ I-9 forms when the budget 

was submitted. 

Subsequently, DOL requested an amendment to the fiscal year 1988 

budget. The amendment, if approved by Congress, would provide an 

additional $3.8 million and 68 additional positions to conduct compliance inspections: WHD with $3.19 million and 68 positions and OFCCP 

with $610,000 and 10 positions. 

P8ge17 
Objectives, Scope, and Methodology 

IRCA requires that we issue three annual reports on the employer sanctions provision each November 6. Specifically, the act requires us to 

describe the results of our review of the implementation of employer 

sanctions for the purpose of determining whether such provision has (1 j 

been carried out satisfactorily, (2) caused a widespread pattern of discrimination, and (3) created an unnecessary regulatory burden. The act 

also says that if we find that employer sanctions have caused a widespread pattern of discrimination, Congress can expedite the repeal of 

the employer sanctions provision if it concurs with our conclusions. iIn 

addition, if we determine and report that no significant discrimination 

has resulted from employer sanctions or that an unreasonable burden 

has been created for employers, Congress can repeal the anti-discrimination provisions using the same expedited procedures. 

IRCA’S legislative history does not provide guidance on the meaning of 

such terms as “satisfactorily, ” ‘widespread pattern of discrimination,” 

“unnecessary regulatory burden,” and “unreasonable burden.” Without 

such guidance, we analyzed the available data to help us draw conclusions that could address these questions. However, data limitations, 

partly related to the act’s newness, and methodological problems caused 

us to qualify our answers to the mandated questions. These problems 

may well persist into the subsequent two reports causing us to qualify 

those results too. Moreover, the act has not been fully implemented. As i 

result, little data regarding IRCA’S impact exists. For example, INS and DCJ

are just initiating their review of employer compliance with I-9s, and INS 

as of October 7,1987, had issued two notices of intent to fine employers 

hiring unauthorized workers. 

With respect to discriminatory hiring practices, not enough time has 

passed for us to obtain the results of many of the charges filed with osc 

EEOC or others (e.g., unions). Since INS and DOL are just starting to determine employers’ compliance with the I-9 requirements, information 

regarding the regulatory burden on employers associated with their pre 

paration and retention of the 1-9s is not yet known. Also, methodologica 

problems exist in determining if employer sanctions caused discrimination. The act requires us to determine whether a pattern of discrimination was actually caused by employer sanctions, but as yet no sufficient 

data exists (see chap. 4). 

khgress established procedures u) expedite the repeal of employer sanctions (sec. 101) and!or tht 

antiDon (SEC 102) pIwiskm8. Based on the comhmma ln our third report, these SectlOrl~ 

would be repealed if Cmgmss enacted within 30 days of our report a joint resolution stating in sub 

stance that it approves our fhdings. 

P&ge 18 GAO/GGDBB14 Employer Sanctio 
Our ability to answer the questions may be affected by several issues. 

First, changes in alien employment and flow may be caused by factors 

other than employer sanctions, which we may not be able to account for 

in our analysis. Second, data that are necessary to address the three 

questions may not exist. For example, we may not be able to identify 

when persons who are discriminated against because of employer sanctions decide for various reasons not to file a charge with a federal or 

state agency. EM)(: officials believe many acts of discrimination may not 

be reported because of the victim’s reluctance to come forward and file 

an official charge. Therefore, our estimate of mc+related discrimination 

may be less than has actually occurred. Third, the 3 years provided in 

m for us to measure the law’s effect may not be sufficient. For example, employer sanction laws in two countries showed that the laws were 

in effect for 3 years or more before these countries believed they had 

become a deterrent to illegal employment of aliens.* Our evaluation will 

cover the 3 years from November 1986 to November 1989 and will consist of three major tasks: 

. Gather and analyze data from the various federal agencies--m& DOL, 

osc, EEOC, the Small Business Administration (SBA)-and nonfederal 

state, and local agencies. We did our work at these agencies mainly in 

Chicago, Houston, Los Angeles, Miami, and New York City, where we 

believe the law could have a disproportionate effect because of the large 

number of resident aliens. In addition, we did work at the headquarters 

of various agencies in Washington, D.C. 

. Develop indicators of the illegal flow of aliens into the country and the 

employment levels of unauthorized aliens. To identify and refine our list 

of indicators, we (1) reviewed prior GAO, INS, Bureau of the Census, and 

EEOC reports; (2) obtained comments from officials with INS, osc, as well 

as advocacy groups; (3) met with public interest groups; (4) participated 

in an immigration seminar with employers; and (6) asked experts with 

experience in immigration issues to critique our indicators. 

. Develop a questionnaire on the act’s implementation to send to a stratified random sample of U.S. employers in late 1987 and early 1989. The 

results could provide data to address the three questions. 

IRCA also requires the President to issue reports related to employer 

sanctions, some of which relate to the three questions we will address. 

P8ge 19 GAO/GGDsBlI Employer !hnctIona 
We plan to review and analyze these reports and use the data in doing 

our work over the next 2 years. 

For this report, we concentrated our audit work on (1) validating and 

field testing the methodology to be used in the next two reports, (2) 

establishing working relationships with federal agencies and private 

organizations that will be affected by the act, (3) monitoring INS’ and 

DOL’S implementation and enforcement of the act, and (4) identifying 

potential data sources we could use to address each question. 

To validate our overall audit approach, we developed our methodology 

with help from experts in immigration and discrimination; from various 

organizations within government (e.g., Bureau of the Census, Bureau of 

Labor Statistics); and outside government (e.g., the Chamber of Commerce and selected unions). In addition, we discussed our methods at 

m-related employer conferences. 

To determine if the implementation of employer sanctions are being carried out satisfactorily, we 

. interviewed officials from INS, DOL, the Social Security Administration 

(SSA), the Bureau of the Census, industries at which INS had previously 

apprehended unauthorized workers, public interest groups, and immigration experts; 

9 analyzed INS’ and other agencies’ budget justifications and requests; 

9 reviewed INS efforts to complete all ma-mandated administrative 

actions including the requirement to educate employers about their 

responsibilities under the act; 

9 reviewed INS regulations on how employers and state employment services should verify if persons are authorized to work; 

. reviewed INS’ and DOL’S strategy for implementing employer sanctions; 

and 

. accompanied INS officials on visits to employers to explain the law. 

To determine if implementing the law is resulting in a pattern of employment discrimination, we (1) interviewed officials at INS, the Department 

of Justice, EEOC, state employment service offices, public interest groups 

and (2) obtained and analyzed data on discrimination related to national 

origin and citizenship. We plan to also use available discrimination data 

to determine if the anti-discrimination provisions created an unreasonable burden from persons fw lawsuits to harass employers. 

Pye30 GA0/GGDBB14Emp1oyerSu1cUo~ 
Finally, to review whether implementing the law is creating an unnecessary regulatory burden, we (1) interviewed officials at INS, SBA, 

employer organizations, the Office of Management and Budget (OMB) and 

(2) obtained and reviewed SBA’S and INS’ analysis of estimated 

paperwork costs for employers. 

Data sources, such as state employment agencies, categorize job applicants into racial or ethnic groups-Blacks, Whites, etc. To determine if 

employers are not hiring job applicants or firing employees who may 

appear “foreign-looking” to avoid sanctions, we selected two groups for 

analysis that we believe have a greater likelihood of being discriminated 

against-Hispanics and Asians. 

While both the public and private sectors are required to comply with 

the employer sanctions of IRCA, we did not review IF&X’s effects on federal, state, or local government employment practices. Rather, we 

decided to focus on the private sector where we believe, on the basis of 

reviewing immigration literature, that most unauthorized aliens are 

employed. Due to time constraints, we did not verify the data provided 

by others given the numerous data sources reviewed. Except as noted 

above, our work was conducted between November 1986 and October 

1987 in accordance with generally accepted government auditing 

standards. 

P8ge S 1 GAO/GGDBBl4 Employer !3uwtlo~ 
Chapter 3 

Iinplementing Eknployer Sanctions 

Congress’ objective in prohibiting employers from hiring unauthorized 

aliens was to eliminate an incentive that it believed was attracting alie] 

to this country-jobs. Achieving this objective will depend, to a large 

extent, on two factors: employers’ willingness to comply with the law 

and INS' and DOL'S employer education and enforcement activities. This 

objective may not be realized until employer sanctions have been fully 

implemented and, even if employers comply, unauthorized aliens may 

continue to find jobs through use of fraudulent documents.’ In this cha 

ter, we describe INS' and DOL'S actions to implement the law. These 

actions seem reasonable. 

INS efforts to implement employer sanctions have focused on educating 

the public and particularly employers about the law’s requirements. 

Handbooks explaining the law were mailed to over 7 million employers 

Further, INS has begun a national media campaign to educate the public 

As of September 23,1987, INS had contacted over 242,000 employers tc, 

explain the law’s requirements. According to available r~s data for 

22,670 contacts made during September 1987,66 percent of the employ 

ers were aware of the law’s requirements and 99 percent expressed the 

intent to comply. 

During fiscal year 1988, INS plans to focus more effort on enforcement. 

INS expects to allocate about 60 percent of its employer sanctions 

resources to investigations of suspected violators and the remaining 

efforts to a random selection of employers. As of October 7, 1987, INS 

issued 12 warning notices for employing unauthorized workers and twr 

notices of intent to fine (sanction) to employers of unauthorized workers. Also, 76 warning notices to employers were issued during this 

period for not complying with the Form I-9 requirements. An additional 

26 warning notices were issued for both employing unauthorized workers and I-9 violations. 

Since November 1986, DOL has trained about 1,600 of its employees in 

the inspection of I-9 forms. DOL began inspecting I-9 forms in September 

1987 and expects to complete about 60,000 inspections during fiscal 

year 1988. DOL plans to notify INS of the results of all inspections, includ 

ing employers whose I-9 forms are not in compliance or who are suspected of employing unauthorized aliens. According to a DOL official, as 

of September 14,1987, the results of the DOL inspections were not 

available. 

~h.migrationRefonn: ANew Role ForThe!3ocidSecurityCard(GAO/HRDB&4). 

P8ge 22 GAO/GGD8814 Employer SmcUon 
clupta8 

Implementing Employer S8nctlonm 

INS Actions to Following the law’s enactment, INS took a series of actions to educate 

Implement Employer employers of the law’s requirements. When the l-year citation period 

began on June 1,1987, INS continued its educational efforts and began 

Sanctions phasing in a 3-part enforcement strategy designed to encourage employers’ voluntary compliance: (1) an initial contact wiII be made with 

employers to provide continuing education about the law; (2) during a 

second visit, employers who are not in compliance with the act may 

receive a warning notice; and (3) during a third ws visit, employers who 

are not in compliance may be fined. On subsequent visits, the employer 

is subject to the graduated schedule of civil and criminal penalties as 

provided in the law. INS may make an exception to the above procedures 

if in its opinion the employer wiIIfuIly and knowingly shows wanton disregard for the law. 

INS Actions to Educate the The first element of INS’ strategy is to educate the public and particuPublic larly employers about the law’s requirements to gain their cooperation. 

INS has taken the following four steps to achieve this objective: 

1. Employer Handbook 

A handbook explaining the law’s requirements and containing a copy of 

the I-9 form was mailed to over 7 million employers during June, July, 

and August 1987 according to INS officials. The handbook explains: 

. why employers must verify employment eligibility, 

. when and how to complete the I-9 form, 

. the civiI and criminal penalties for violations of the law’s requirements, 

and 

. the new unlawful employment discrimination practices. 

The handbook also contains photographs of some of the various documents that employers can rely on to complete the I-9 form (e.g., passport, social security card) and a list of INS offices to contact for more 

information. 

INS officials told us that the I-9, along with the handbook, was not 

mailed by June 1,1987, because INS decided more time was needed to 

revise the I-9 form to incorporate the public’s comments. INS also experienced a delay in arrang@ the mailing with the Internal Revenue Service. As a result of concerns that employers were not fu.Uy aware of 

IRCA’S requirements, congressional conferees agreed to include language 

Page 29 GAO/GGDBBI4 Employer Suwtionm 
in the report that accompanied INS’ fiscal year 1987 supplemental appr 

priations act that delayed for 3 months (June 1 to September 1, 1987) 

the INS regulation requiring employers to complete 1-9s. 

2. National Media Campaign 

On April 6, 1987;ms awarded a $6 million contract to The Justice 

Group, a consortium of three organizations, for a nationwide advertisin 

and public relations campaign on rRc+related activities, including 

employer sanctions. According to an INS official, as of October 26, 1987. 

$1.8 million was spent on the employer sanctions program. Specifically, 

$213,933 was spent on television advertising, $498,100 on radio, and 

$1,072,461 on print media. 

Together with the Justice Group, INS launched an employer sanctions 

advertising campaign in June 1987 with half-page newspaper advertise 

ments in eight major newspapers throughout the country. The advertise 

ment featured a full-sized Form I-9 and an explanation of the law’s 

requirements. The newspapers were the New-York Times, USA Today, 

the Wall Street Journal, the Washington Post, the Miami Herald, the 

Houston Chronicle, the San Francisco Examiner, and the Los Angeles 

Times. An INS official said that these newspapers were selected because 

bftheir large circulation, diverse readership, and nationwide 

availability. 

3. Half of Available Staff to be Devoted to Employer Information 

Contacts 

According to the Commissioner’s June 8,1987, memorandum to INS 

regional offices, about half of the available investigative time as of June 

1, 1987, wilI be allocated to employer information contacts for the 

1 -year period ending June 1, 1988. The purpose of these information 

contacts is to promote voluntary compliance by explaining the law’s 

requirements and providing copies of the I-9 forms and handbooks to 

employers. This responsibility is in addition to other investigative 

duties, such as the apprehension of criminal aliens and detection of 

fraudulent schemes to obtain immigration or federal entitlement benefits. An INS official said that it was within the discretion of the district 

directors to use noninvestigative resources to satisfy the 60 percent allocation and that resources added after June 1, 1987, do not count 

towards the 60 percent allocation. 

Page 24 GAO/GGD&b14 Employer !hnctiona 
w-3 

Implementing Eimploya !3anctiona 

Each INS district under the direction of the regional commissioners 

decides how to select employers to be contacted. INS officials said that 

some districts selected past employers of unauthorized aliens and other 

districts sent investigators door-to-door in commercial areas. For example, according to a Los Angeles District official, they are concentrating 

on employers with fewer than 60 employees. New York District officials 

said they are focusing on employers with 20 or more employees. 

INS’ goal is to contact 1 mihion employers by telephone or in person no 

later than June 1, 1988. As of September 23,1987, INS had contacted 

242,118 employers. INS had data on the results of 22,570 in-person contact,s2 These contacts showed that: 

. 36 percent of the employers responding had received the handbook containing copies of the I-9 form, 

. 66 percent of the employers responding were aware of [RCA’S requirements, and 

. 99 percent of the employers responding expressed their intent to comply 

with the law. 

We also obtained some data from the Western Region for the week ending September 4,1987. Of the 321 employers contacted in person during 

that week, 128 or 40 percent were not aware of [RCA’S requirements. 

INS’ planned allocation of investigative time to employer information 

contacts may affect INS’ ability to carry out its other investigative 

duties. For example, an INS Miami office official said that as a result of 

spending its staff time on educating employers, other investigative areas 

were not staffed. The INS Los Angeles District Office has implemented 

employer sanctions in part using investigators previously assigned to 

other units, such as criminal alien investigation. According to a district 

official, these other units’ activities have been reduced. According to an 

INS official, data on the specific effects of the planned allocation of 

investigative time to educational contacts were not available when our 

work was completed. An [NS official said that any adverse impact on its 

other investigative duties is temporary because additional staff are 

being hired. 

‘AccordingtoanINSofRdal,thedatafortheaecontansarefromthoseofficesintheEastemand 

Southem regions for which data was provided toIM headquarters for September 19S7. The Western 

and Northern regions had not reported their analyses to INS headquarters as of October 9.1987. 

P8ge 25 GAO/GGD-SEl4 Employer Sanctions 
4. Employer and Labor Relations Division Established 

An Assistant comlnissloner ’ for the Employer and Labor Relations Division (ELR) was appointed in January 1987, by the Commissioner of INS. 

This new office is responsible for educating employers about their ~RCA 

responsibilities and providing employers with information about hiring 

legal workers. According to an INS official, as of October 1,1987,71 ELR 

positions were authorized, and 67 personnel were assigned This LNS offi. 

cial stated these personnel will be located in each of INS’ 33 district 

offices as well as in Washington, D.C. Training sessions for new ELR stafl 

were conducted in July and September 1987. 

Educational efforts will be directed at, among others, new businesses 

created after IRCA was passed and at those employers identified as not 

fully understanding the law’s requirements. In addition, ELR staff is 

developing and will administer the Legally Authorized Worker program. 

which according to an INS official is designed to help employers find U.S. 

citizens and legal aliens to fill job openings formerly held by unauthorized aliens. ELR staff will encourage employers to fti job openings by 

contacting organizations, such as the local State Employment Service 

office, to identify qualified legal job applicants. Employer participation 

in this program is voluntary. As of September 14,1987, there were no 

data available because according to an INS official, the program is in the 

planning stages. 

Additional INS Actions to Since [RCA was enacted in November 1986, [NS has taken the following 

Educate the Public additional educational actions: 

. An “800” telephone number information system with recorded messages 

explaining various provisions of IRCA, including the employer sanctions 

program, has been introduced. As of August 31,1987, INS had received 

626,263 calls, of which 77,167 callers requested messages related to the 

employer sanctions provisions3 

l Over 890 copies of video tapes on requirements of employer sanctions 

have been distributed to INS offices and mJor employer and labor 

groups. 

. INS representatives have appeared on radio and television talk shows 

and at over 1,000 public meetings and press conferences to explain IRCA

including employer sanctions. 

3Accmdhg to an INS official, data were only available for calls requesting JCngbsh language message 

andnotforthoeeinSpanish. 

Page 26 GAO/GGD&314 Employer Sumlons 
ch8pter 3 

tmplementing Employer f4uuAo~ 

Compliance Inspections of The review of I-9 forms and assessment of employer compliance with 

I-9 Forms the law is the second element of INS’ enforcement strategy. The compliance inspections program is designed to enable INS to (1) monitor 

employer compliance among various segments of the economy, (2) 

encourage employers to complete the forms, and (3) plan an enforce 

ment strategy for the future. 

INS' fiscal year 1988 budget provides for 500 authorized investigator 

positions for employer sanctions that INS officials believe should be filled by the end of the fiscal year. INS officials expect to allocate about 40 

percent of the staff years available for employer sanctions enforcement 

in fiscal year 1988 to compliance inspections. About half of these 

resources will be directed at inspecting randomly selected employers 

within industries which, in the past, have employed significant numbers 

of unauthorized aliens. INS refers to this as the Special Emphasis Inspections Programs. The remaining half of the compliance inspections 

resources will be allocated to inspecting a representative sample of 

employers who are selected from a list of the nation’s employers.’ INS 

refers to this as the General Inspections Program. According to an INS 

official, INS headquarters will provide field offices with lists of employers to be inspected. INS plans to begin the compliance inspection program 

in December 1987. 

According to its fiscal year 1988 budget request, INS expects to conduct 

about 20,000 I-9 inspections in fiscal year 1988 using staff from Investigations and Border Patrol. This would be an inspection rate of about 

one-third of 1 percent of the over 7 mihion employers who were sent 

handbooks. An INS official said that the number of inspections may differ based on investigative results since the estimated 20,000 I-9 inspections represent the total inspections likely to be conducted pursuant to 

both the compliance inspection program and the investigation activities 

discussed below. 

With respect to completing 1-9s some state employment agencies have 

elected to provide job applicants with a certification of employment eligibility. For example, Florida began providing certifications in June 

1987. It estimated that 766,000 certificates wilI be prepared annuaIly. 

According to an Employment Development Department official, California is offering optional certification to employers who use the state job 

service. As of July 1987, it had completed about 92,000 certification 

‘INS has subscribed to a commercial firm’s data base on the nalwn’s employers co select employers 

randomly for mspection. 

Page 27 GAO/GGDBBl4 Employer Suwtio~ 
forms. In contrast, according to an Illinois Department of Employment 

Security official, Illinois will not provide an optional employment certification because of budget constraints. 

INS Investigations The investigation of employers who are suspected of hiring unauthorized aliens is the third element of INS’ strategy. An investigation can be 

initiated on the basis of a previous INS inspection, information provided 

by the public, or DOL employees who, as discussed in chapter 1, also 

inspect I-9 forms. INS officials expect to allocate about 60 percent of the 

available employer sanctions enforcement resources to investigations of 

suspected violators. 

According to MS officials, the fit employer sanctions warning notice 

was issued on August 21,1987, when a manufacturer of swimming pool 

chemicals was cited for knowingly employing unauthorized aliens. In 

accordance with its overah enforcement policy, INS had visited this 

employer previously to explain the law and provide the I-9 form. Subsequently, INS found the employer had not complied with the law and 

issued the warning notice. In addition, LNS has served two employers 

with notices of intent to fine for hiring unauthorized workers, as of 

October 7,1987. 

DOL Actions to 

Implement Employer 

Sanctions 

. 

. 

. 

. 

Since November 1986, according to DOL officials, they have taken the 

following actions to carry out their employer sanctions responsibilities 

under IRCA: 

About 1,600 employees have been trained. While visiting employers to 

enforce various other labor laws, they wilI educate employers about the 

law and inspect I-9 forms for compliance. 

A memorandum of understanding with INS concerning information 

exchange, to include notifying INS of the results of all employer visits, 

has been drafted. For example, DOL will notify INS of employers who 

(1) do not complete I-9 forms properly, (2) may be employing unauthorized aliens, and/or (3) may be engaging in a practice of disparate treatment (i.e., discrimination). 

On September 1,1987, DOL began inspecting I-9 forms for compliance. 

DOL expects to complete about 60,000 inspections during fiscal year 1988 

(or about 1 percent of the estimated 7 million employers). 

According to a DOL official, DOL has been providing rRc+related publications and information to employers and employer groups since March 

1987. 

Page28 GAO/GGLME14 Employer Sanctions 
clmpter 3 

lmplexnentlng Employer !3ancd0M 

Training About 1,500 DDL employees in WHD and OFCCP who carry out the Department’s employer sanctions responsibilities were trained in July and 

August 1987. 

DDL'S instructions to its employees include the following: 

. They will conduct inspections of I-9 forms during their standard on-site 

field visits to employer establishments. DOL enforcement staff will (1) 

inspect all 1-9s when there are less than 26 new hires and sample the 

1-9s when there are 26 or more new hires (e.g., for establishments with 

more than 260 new hires, every 10th form will be inspected); (2) compare the information on the I-9 with any documents attached to the 

form; and (3) inspect the 1-9s for their existence, proper completion, and 

retention. 

l DDL'S authority and responsibility with regard to 1-9s consists only of 

conducting a visual inspection of the 1-9s and reporting to INS on the 

results of that visual inspection. According to DDL, its authority and 

responsibility does not extend to in-depth investigation to determine the 

accuracy of the information and attestations on the 1-9s. 

l DOL will provide employers with a copy of the INS employer handbook 

containing the I-9 form. DOL will also answer employers’ general questions, but the employer will be advised to contact INS for answers to 

detailed questions, and 

l DOL will notify the employer and INS of the results of the I-9 inspection. 

DOL and INS Referral INS and DOL officials have drafted a memorandum of understanding that 

Process establishes procedures to ensure that 

. both agencies make the most efficient use of resources; and 

l the agencies’ enforcement efforts do not duplicate nor overlook those of 

the other agency. 

The draft memorandum states that it is the policy of DDL and INS to 

exchange information on suspected violations disclosed during the 

course of their respective IRCA enforcement and compliance activities. 

In addition, DDL procedures provide for quarterly summary reports to 

INS headquarters, as well as individual reports on the results of each I-9 

inspection to the appropriate [NS district director. INS officials will be 

responsible for taking the appropriate actions to follow up on DDL 

reports of suspected violations. The report will contain information 

P8ge29 GAO/GGINNiLll Employer Sanctlo~ 
clupler 3 

ImplementingEimployerSandona 

reports of suspected violations. The report will contain information 

about the employer including: (1) name, address, and industry; (2) 

whether the INS handbook was provided; (3) number of employees; and 

(4) whether the employer appears to be complying with the law. 

The DOL report to INS will also indicate two additional factors. DOL will 

report on any indication suggesting that unauthorized aliens are working for the employer. DOL will also report on indications that employers 

practiced discrimination (disparate treatment) in completing the l-9 

forms (e.g., all new hires were not required to complete the I-9). 

According to New York DOL and INS officials, INS and DOL had a reciprocal 

referral process in place before IRCA. DOL officials said INS altered its 

forms to capture information useful to VVHD. For example, INS added 

questions about the alien’s employer, salary, and number of hours 

worked. Also, when aliens in INS custody claimed their employers via 

lated the Fair Labor Standards Act, INS would contact ~HD, which used 

INS information as leads for investigations, particularly in the restaurant 

industry. The current informal mutual referral process between INS district offices and DOL area offices wiIl not change, according to WI-ID and 

om representatives. 

Conclusions INS’ overall strategy of educating the public, especially employers, about 

the law’s requirements is reasonable. In addition, the development of an 

agreement to share information between JNS and DOL should help to 

implement employer sanctions. Furthermore, ms’ planned enforcement 

strategy, including random inspections of employers combined with 

investigations of suspected violators, is reasonable. As a result, we 

believe that the progress made during the first year to implement the 

law is satisfactory. More time is needed, however, to determine if 

employers wiU voluntarily comply with the law. As discussed in chapter 

1, the Western European experience with employer sanctions has shown 

the importance of adequate enforcement to deter the employment of 

unauthorized aliens. 

Page30 
Chapter 4 

Discrimination and Employers’ Fear 

of sanctions 

Congress was concerned that employers may not hire U.S. citizens or 

legal aliens who “look or sound foreign” for fear of being sanctioned for 

hiring unauthorized aliens. As a result, IRCA prohibits employers with 

four or more employees from discriminating on the basis of a person’s 

national origin or citizenship status. Before IRC4, only employers with 16 

or more employees were generally subject to federal law prohibiting 

national origin discrimination under title VII of the Civil Rights Act of 

1964. 

As discussed in chapters 1 and 2, IRCA states that we are to determine in 

each of our annual reports whether the implementation of the employer 

sanctions provision has created a pattern of national origin discrimination. If our third annual report finds that a widespread pattern of 

national origin discrimination has been caused solely by the employer 

sanctions provision, the law provides procedures for Congress to ex-pedite the repeal of both the employer sanctions and anti-discrimination 

provisions. On the other hand, if we find that employer sanctions have 

caused no significant discrimination, the law provides expedited procedures for Congress to repeal the anti-discrimination provision. 

In addition, Congress can use expedited procedures to repeal the antidiscrMna.tion provision if we find it has resulted in an unreasonable 

burden on employers. According to Chairman Rodino, House Judiciary 

Committee, the congressional conferees added this repeal provision 

because of concern that persons would abuse the new legal authority in 

IRCA and ftie lawsuits to harass employers. They were also concerned 

that the discrimination penalties in IIECA could create an unreasonable 

burden. 

We reviewed the one federal court decision relating to IRCA that found an 

employer’s dismissal policy had a discriminatory impact on four Hispanic women. We also reviewed the 16 discrimination charges filed with 

aec as of September 9,1987, the 62 charges filed with EEOC, and charges 

filed with state government agencies, and with other organizations. 

We do not believe that the one court decision and the 67 charges filed 

with cxx and EEOC during the law’s first year show a pattern of discrimination. In addition, we do not believe these cases reflect an unreasonable 

burden for employers. However, according to INS, it has just begun to 

enforce the law, with the first notice of intent to fine issued on October 

2,1987. Until full enforcement has been underway for some time, 

employers may have little reason to fear being sanctioned. 

P-81 GAO/GGDBBlQ Employer Srnctlona 
cw-4 

S 8nd Employera’ Feu 

of SulcdOM 

Moreover, after enforcement is increased, we still may not be able to 

determine if any discrimination that occurs was caused “solely” by 

employers’ fear of sanctions. The Chief Administrative Hearing Officer 

in DOJ as well as officials from EEX, osc, and DOL said that normally 

judges’ decisions on cases of discrimination do not specify what caused 

the discriminatory act. We may, therefore, not be able to use judges’ 

decisions in specific cases to determine whether an employer’s fear of 

sanctions was the cause of discrimination. 

Determining the extent of discrimination caused by employers’ fear of 

sanctions is also difficult (i.e., widespread pattern of discrimination versus no significant discrimination). There will be no data on the number 

of persons who applied for the estimated 67.6 million jobs filled in a 

given year who were not hired because of employers’ fear of sanctions. 

Without this information, it may not be possible for us to determine 

what is a “widespread pattern” of discrimination versus “no significant” discrimination. 

As discussed in chapter 1, IRU’S discrimination provisions will increase 

the number of employers subject to discrimination charges. Consequently, the act will increase from about 13 to 48 percent the portion of 

the nation’s employers subject to federal anti-discrimination laws.’ This 

increase in the number of employers covered by IRCA could, by itself, 

result in an increase in the number of discrimination cases. 

Given these difficulties, we have devised an indicator to test whether 

employers’ fear of sanctions may cause discrimination. As discussed in 

chapter 1, employers are required to complete the I-9 for new hires 

except when state employment agencies agree to certify the individuals’ 

employment eligibility. In such cases, if INS later determines the persons 

are unauthorized workers, the employer cannot be sanctioned for hiring 

them unless ~3 can prove the employer did not act in good faith. We 

plan to compare the placement rates of different ethnic groups between 

state employment agencies that provide certificates and those agencies 

that do not. Significant differences between the two may provide an 

indication of the effect that employers’ fear of sanctions had on the hiring among ethnic groups and therefore may indicate discrimination. 

We also identified an issue regarding IRCA’discrimination S provision. 

IRCA states that legal resident aliens must apply for naturalization 

within 6 months of becoming eligible to be protected under the law’s 

‘This is baaed on Dun’s Marketing Services which identified about 6 million employers m the nation. 

P8p 32 GAO/GGDBB14 Employer !hwtiona 
alienage discrimination provision. However, they may not be aware of 

the need to apply. 

One Employer Ordered Before the appointment of an acting special counsel and the creation of 

to Reinstate 

Employees 

OSC, the League of United Latin American Citizens filed a case against 

the Pasadena Independent School District in a U.S. District Court in 

Texas.2 The case involved four Hispanic women who had used false 

social security cards to obtain employment. When this was discovered, 

all of the plaintiffs were dismissed for violating the school district’s policy against providing false information on employment applications. The 

plaintiffs argued that a large proportion of the school district’s maintenance workers consisted of Hispanics and that many Hispanics use false 

social security numbers because of their undocumented status. Consequently, it was aileged that the school district’s policy would have a disparate impact on some Hispanics who were possibly eligible for 

legalization under [I#=A.~ The school district contended that the women 

were not fired because of their undocumented status, but because they 

violated the district’s policy against furnishing false information on 

employment applications. 

The Court, having reviewed the intent and the language of the statute, 

found that the plaintiffs had demonstrated a substantial likelihood of 

prevailing on the merits of their claim that the school board’s policy of 

terminating aliens who qualified for legalization under [RCA and had 

given a false social security number would run foul of ~RCAanti-dis- ’S 

crimination provisions. The Court also found that the school district’s 

policy had a discriminatory impact on aliens who, like the plaintiffs, 

quallfy for legalization and are authorized to be employed under the act. 

The Court exercised jurisdiction over this case because the administrative process authorized under the act to address allegations of discrimination was not yet in place. 

The Court entered a preliminary injunction in this case. The school district is under order to reinstate the plaintiffs and to refrain from dismissing any employee who is an undocumented alien qualified for 

legalization under IRCA because he or she has provided a false social 

3Uder IRCA. un8uthorized al&s who have beem in the country continuously since January 1982 

and meet other requirements mpy be gmnted temporary residence (legakation). 

P8ge ZM GAO/GGDBB14 Employer Sancdonr 
clupter 4 DlmThlMtion uhd Employed Pear of !38ncdona 

security number. The court ruled that its preliminary injunction should 

remain in effect until the plaintiffs have had an opportunity to exhaust 

their administrative remedies. 

0% Investigation 

Activities 

c&z has received 16 discrimination charges as of September 9,1987. As 

of that date, 2 of the 16 charges were dismissed for lack of jurisdiction 

and 1 charge was withdrawn because the charging party was rehired 

with back pay. For the remaining 12 charges, 0s~ either (1) required the 

charging party to provide more information because the charge was 

incomplete or (2) is conducting an investigation. Alleged charges of discrimination were filed with 08~ baaed on the following types of complaints: (1) employer specificalIy required the charging party(s) to 

provide a birth certificate (even though other documents are acceptable j

in conjunction with the I-O process and (2) charging party(s) was dismissed from work after requesting the employer’s assistance in applying 

for residency in the United States. Of the 12 charges, 4 are based solely 

on national origin discrimina tion and 2 are based solely on citizenship 

discrimination. In addition, three of the charges allege both national origin and citizenship discrimination and three charges do not specify the 

basis of the claim. 

Also, according to 08c, it has identified about 600 job advertisements in 

newspapers that contain possible discriminatory wording, such as limiting which work authorization documents are needed for the I-9 or limiting employment to U.S. citizens only. OBC is in the process of determining 

the appropriate action to take ln response to the advertisements. 

Charges Filed With As discWWd in chapter 1, EEtX handles national Origin discrimination 

charges filed under title VII of the Civil Rights Act. As of September 15, 

1987, EEOC had received 62 charges related to IRCL Two charges were 

also filed with 08c, which they determined were not covered by IRCA. 

EEOC has obtained closure on 20 of the 62 charges. Five charges were 

closed without benefits and three were dismissed because there was no 

cause to believe the charges were true. Twelve of the 20 charges were 

settled or withdrawn with benefits provided The remaining 32 alleged 

discrimination charges are in various stages of processing or investigation. The charging parties used the following reasons as a basis for discrimination: employers asked only Hispanics to verify their eligibility to 

work, employers required specific authorization documents, and 

employers hired only U.S. citizens. 

P8ge 94 GAO/GGm14 Employer Smctlona 
chapter 4 

-on and Ehployed Pear 

of sulcttono 

State and Local 

Agencies’ Activities 

Some state and local governments also have laws that prohibit discrimination. During our field work, government agencies that are responsible 

for enforcing these laws in those states where our field work was conducted have identified r%+related discrimination complaints, as shown 

in table 4.1. 

lablo 4.1: Chrrgor Filed With Soloctod 

Agoncioa 

Awnchr 

Number of 

Charaer 

Chicago (Illinois) CornmIssIon on Human Relations 30 

Fort Worth (Texas) Human Relations CornmIssIon 1’ 

Illinois Dewrtment of Human Riahts 1 

New York City Commlssion on Human Rights 2 

‘Tentatively ldentltied as WA-related 

Chicago’s Commission on Human Relations is acting as a clearing house 

for discrimination complaints and is referring some mc+related charges 

of discrimination to appropriate agencies. As of September 1,1987, the 

city of Chicago had received 30 ma-related discrimination charges 

involving such issues as “grandfathered” employees who were dismissed or threatened with dismissal, employees eligible for legalization 

who were dismissed, and permanent resident alien employees who were 

dismissed or demoted. 

Of the above cases, 22 employees returned to work after the city negotiated with the employers, one case was dropped by the employee, three 

cases were referred to other agencies, three cases are still under investigation, and 1 employee would not return to work. 

The New York State In recognition of the potential effect of IRCA in New York State, the GovInteragency Task Force on emor established the New York State Interagency Task Force on ImmiImmigration gration Affairs to help make necessary transitions under the law. Task 

Force responsibilities include (1) helping state agencies in planning 

responses to changes in the law; (2) developing appropriate safeguards 

to discourage discrimination; (3) providing employers with information 

on the new law; and (4) encouraging eligible aliens to pursue legal 

status. 

The March 1,1987, Task Force Report shows that the Task Force documented more than 64 cases of ma-related discrimination and reported 

the most widespread problem to be the firing of unauthorized workers 

Page 35 GAo/GGDJ3&14 Employer Sanctions 
wt4=4 

~acr&dn~tlon and Employem’ Fear 

of SuIedona 

hired before November 6,1986. The report pointed out that (1) 26 unauthorized workers hired before November 6,1986, were fired over the 

subsequent 2 months; (2) according to an immigration lawyer, 12 authorized workers were informed by their employers that they would lose 

their jobs under IRCA; (3) 26 employers warned their aiien workers that 

they must be discharged; and (4) an employer demanded a $600 cash 

bond from an unauthorized alien and required longer hours of work at 

less pay. In addition, employers allegedly made an unspecified number 

of threats to fire U.S. citizens and permanent resident aliens. 

Involved With 

Discrimination 

Charges 

such as alleged discriminatory practices. During our review, we met 

with union officials whose members work in industries that traditionally employ large numbers of aliens (e.g., garment, agriculture, restaurant, hotel, and construction). 

Officials from 8 of 17 union offices across the country believe that IRCA 

will not result in discrimination against their union members. Neverthe 

less, several unions intend to resolve discrimination charges that may 

occur through collective bargaining agreements or refer instances of discrimination to an organization that is concerned with immigration 

rights. As of September 1987, one union had received some complaints. 

The Mexican American Legal Defense and Education Fund is a nongovernmental organization that provides legal assistance to Mexican-Americans and other Hispanics involved in employment discrimination suits or 

complaints. Its Los Angeles office operated a telephone hotline from 

January 20, 1987, to July 31, 1987, to disseminate information about 

IRCX and to monitor its implementation. According to its analysis, about 

2 percent or 160 hotline calIs were employment-related allegations. Its 

analysis did not indicate the legal status of the charging parties. Of the , 

160 calls, 78 contained enough information for analysis. In 67 of the 78 

tails analyzed, people alleged they were not hired, were threatened with 

firing, or were fired due to employers’ concerns over the new inunigration law. For the 11 remaining cases the known issues included charges 

related to wages, language requirements, or training. According to its 

analysis of the complaint data, employee charges seemed to arise from 

employers’ lack of knowledge or misinformation about IRMA. 

The status of the 78 cases as of August 1987 was as follows: in 16 cases 

the people were hired, rehired, or received back pay; in 7 cases the 

charges were referred to another organization (e.g., DOL); in 11 cases the 

P8ge 96 GAO/GGD8814 Employer .!hmtiona 
Chapter4 

m and Employed Fear 

of sJancrioM 

callers did not pursue their complaint; in 7 cases the callers’ charges 

were considered not valid; in 3 cases the callers’ charges were being pursued legally; in 16 cases the complaint is pending; in 2 cases the 

employer changed his policy; and in 17 cases the status was unknown. 

Because the charges are confidential, we were not able to verify any of 

the information. 

Anti-Discrimination W A’S anti-discrimination provisions provide protections to employees 

Burden on Employers against possible national origin or citizenship discrimination that may 

occur with respect to hiring, referral, or discharge. However, according 

to Chairman Rodino, the congressional conferees were apprehensive 

that the provisions might be used as a tool to harass employers. There 

fore, Congress included a provision for awarding attorneys’ fees if the 

losing party’s argument “is without reasonable foundation in law or 

fact.” This particular language was intended to discourage law suits to 

harass employers. Cur subsequent reports wilI identify where judges 

determined that cases were not based in law or fact. 

Since very few cases have been filed and only one case has been adjudicated, it is too soon for us to determine the potential legal burdens 

caused by m. Consequently, this issue will be addressed in our subsequent reports. 

Service Placement As of July 1987,20 states reported that their state employment agencies 

Rates and IRCAhave elected or plan to provide job applicants whom they refer to 

employers with a certification of employment eligibility. Employers who 

Related Discrimination hire such people cannot be sanctioned if INS later determines them to be 

unauthorized aliens unless INS can prove the employer did not act in 

good faith. To determine if the fear of sanctions is causing employers 

not to hire U.S. citizens who appear foreign, we plan to compare the 

placement rates of job applicants of different ethnic groups in those 

states providing the certificates with placement rates in states not providing certificates. If employers are not hiring “foreign-looking or 

sounding” U.S. citizens or legal aliens for fear of being sanctioned, the 

placement rate may be lower in states not offering the certificate. 

In addition, we will compare the placement rates of Puerto Ricans before 

and after M A. The Commonwealth of Puerto Rico’s Department of 

Labor and Human Resources refers Puerto Ricanjob applicants to 

employers in New York City and has offices in Chicago, Cleveland, and 

Philadelphia. Table 4.2 shows job referral statistics for Puerto Ricans in 

P&ge 87 GAO/GGD-S&14 Employer SUICUOM 
New York City provided by a Commonwealth official. Partial data for 

1987-the first year after IRCA’enactment-do S not show a decrease in 

the placement rate. 

Tabh 4.1: Puorta Rican Job Referral Data 

in Now York City Numbw ol Puerto Ricans 

Flacal Ybar Emdoyed 

(July to Juw) Rderfod Numbor Pwcont 

1984 2,159 1,219 5646 

1985 2,166 1,262 5773 

1986 2,462 1,344 54 15 

1967 2.622 1,696 60.10 

TOWS 9,949 5,521 57.22 

Alienage We also identified an issue regarding IRCA’S discrimination provisions. 

Discrimination Issue According to an INS official, an estimated 6.8 million legal resident aliens 

were eligible to apply for naturalization when mcx was enacted in 

November 1986 To be protected by IRCA’S alienage discrimination provision, the law states that these aliens had to file for naturahzation no 

later than May 6,1987. IRCA does not require INS to notify these individuals of this requirement. We found that over 97 percent of those eligible 

did not apply. The law also states that as additional aliens become eligible for naturalization they have 6 months to apply to be protected by 

ma’s alienage discrimination provision. 

sion. Thus, until now, employers have had little reason to discriminate 

again& “foreign-looking” U.S. citizens or legal aliens to avoid being 

sanctioned. In our subsequent reports, we will continue to analyze the 

available data to determine whether or not a pattern of discrimination 

has resulted from the law. However, methodological problems may preelude us from determining whether employers’ fear of sanctions is causing discrimination. 

Page 98 GAo/GGD-8&14 Employer sulctiona 
hployer Sanctions’ Burden on Employers 

Congress was concerned about the reguIatory burden the law placed on 

the nation’s estimated 7 million employers to complete I-9 forms for all 

new employees. INS has estimated this requirement will cost employers 

about $182.26 million annually. The law states we are to report on our 

review of the implementation of the employer sanction provision for the 

purpose of determining among other things, whether the regulatory burden created by this provision is “unnecessary.” 

A concern is whether there is a less burdensome alternative to the I-9. In 

our analysis of the I-9 requirements, we plan to determine INS’ and DOL'S 

use of the form. For example, can INS and DOL identify possible unauthc~ 

rized workers through their review of the I-9? Also, we wi.lI gather data 

on fraudulent documents used in completing the 1-9. 

Based on public comments on its draft regulations, INS revised its final 

regulations to minimize the regulatory burden on employers. For example, agencies who recruit or refer job applicants to employers for a fee 

were allowed to complete I-9 forms just for persons hired rather than 

for all persons referred. INS is continuing to examine its regulations to 

identify additional ways to reduce employer burden. For example, 

according to an DE3 official, the regulations may change to allow employers to microfiche the I-9 forms to reduce the paperwork burden. 

In principle, the burden from employer sanctions (e.g., preparation of an 

I-9) may not be necessary if one could prove conclusively that the law 

has not decreased the employment of unauthorized aliens and/or their 

flow into the United States.1 Although it is unlikely that we will find 

conclusive evidence, we plan to monitor the employment and flow of 

unauthorized aliens using three indicators: 

INS’ alien apprehension rate, 

employers’ reliance on authorized workers, and 

the size of the unauthorized alien population. 

We plan to analyxe changes in these indicators before and after IRCA. 

In addition, we have identified one related regulatory issue that may 

affect state agencies that provide entitlement benefits. The law states 

that it is an unlawful practice to employ any person without verifying 

Pye89 
the individual is authorized to work. Thus, to be able and available for 

work in the United States, all persons must now have the necessary 

work authorization documents to show prospective employers. Various 

federal entitlement programs require participants to search for work. As 

a result, we believe the state agencies that provide entitlement benefits, 

which have some work requirements associated with receiving benefits, 

may have to verify employment eligibility of all applicants, including 

U.S. citizens. 

Cost -iaM With Employers will incur costs associated with obtaining, completing, and 

I-9 storing the I-9. INS estimated these costs at $182.26 million annually. SBA 

estimated just the cost to complete the verification form at $676 million 

in 1986. The difference between these amounts is due to differing 

assumptions about the hourly cost to complete a verification form. 

Based on requirements in Executive Order 12291, the Regulatory Flexibility Act, and federal regulations, INS prepared a regulatory impact and 

flexibility analysis of IRW’S impact. As part of the analysis, INS developed a cost estimate of the annual burden on employers. INS developed 

its costs using an e&mate of 67.6 miIlion new hires from a study conducted for DOL.? According to IN& the following figures in table 6.1 repro 

sent the annual cost for employers. 

Tabk 5.1: INS Coat Esthuta 

Amount 

(in milllona) 

I-9 mtm coat@ 

67.5 million x S .lO $6 75 

PC Drsofmdco8ta 

67.5 million x l/4 hour x $10 per hourly wage 

m67.5 million x S .lO 

.s16875 

$6.75 

$192.25 

INS says all employers should have some form of employment-related 

recordkeeping system, and therefore no cost would be incurred for the 

creation of an additional system solely to comply with the law. It also 

says while there may be some additional costs to employers associated 

Page 40 
with inspecting documents to ensure compliance with IRCA, the average 

annual costs per employer would be insignificant. 

SFSAOffice ’S of Chief Counsel for Advocacy developed a cost estimate for 

the recordkeeping requirements of a similar immigration bill in 1986. 

SBA developed its estimate using the same DOL study to establish an estimate of new hires in 1986. However, SBA estimates differentiated 

between employer and employee hourly costs and used a range of time 

to complete the form in order to compute an average per hiring cost as 

shown in table 6.2. 

Tabla 5.2: SM Coat Eatimato 

Employer 

Tim. coat 

(minutor) (pw hour) Rang0 

10-20 x $40.00 $6.67 -%I333 

Employee 

Total Rmna 

5-10 x $3.50 $30.ml 

$6.97 - $13.93 

SBA averaged the $6.97 and the $13.93 to establish a $10.00 cost for 

each new hire, which it multiplied times the 67.6 million new hires for a 

total co& to employers of $676 million. 

We have no basis to question SBA’S or INS’ cost estimates. However, as we 

gain more experience about the related costs for preparing the I-9, we 

should be able to evaluate and analyze these estimates. As discussed in 

chapter 2, we plan to send a questionnaire to a sample of employers. The 

results should provide us with data on employers’ time to complete the 

I-99. 

Employer Sanctions’ to which employer sanctions appear to be achieving Congress’ objective 

as part of our analysis of regulatory burden. Accordingly, we selected 

Effectiveness three indicators of the law’s effectiveness in reducing the number of 

unauthorized aliens: . 

. the rate of INS unauthorized aliens apprehended per work hour, 

l e&Mates of employers’ reliance on legal labor sources rather than unauthorized alien labor, and 

. estimates of the size of the unauthorized alien population in the United 

States. 

Pye 41 GAO/GGD-8?314 Employer !3u1ctio~ 
Several potential ways to measure changes to these three indicators of 

employer sanctions’ effectiveness are discussed below. However, caution should be exercised in using these indicators because measuring 

them is difficult and these measures may be influenced by many factors 

other than employer sanctions. As a result, it may not be possible to 

attribute changes solely to IRCX. For example, economic or political conditions in other countries could affect the flow of aliens into the United 

States. Further, estimating the size of the unauthorized alien population 

is very difficult. Accordingly, changes in the indicators can only be used 

as a rough gauge of employer sanctions’ effectiveness. 

INS Apprehensions We selected two ways to measure changes related to INS apprehensions. 

1. Alien Apprehensions at the Border: If employer sanctions are effective in reducing job opportunities for unauthorized aliens, fewer aliens 

will attempt to enter the country illegally to search for work. Figure 6.1 

shows INS Border Patrol apprehensions per work hour for fiscal years 

1983 to 1986. 

Figun 5.1: Appnhonalom Par work 

Hour (Border Patrol) FY 1-86 -40 ApmhmhmhrworLt4oul 

1BM 1oW 

Pye 43 GAO/GGtU3Sl4 Employer Sanctlonw 
2. Arrests of Employed Aliens: If employer sanctions are effective in 

reducing the number of aliens employed illegally, then the number of 

aliens [NS arrests who are working illegally should decrease. The INS data 

per work hour for November 1986 through July 1987 are shown in figure 6.2. 

Figun S.2: lllogally Employed Alkn 

Armeta Pw IMork Hour 

0.12 AlTatmParwallHaul 

0.14 

0.12 

0.10 

0.00 

0.00 

0.04 

0.M 

0 

Reliance on Authorized We have selected four ways to measure changes in employers’ reliance 

Workers on authorized workers. 

1. If employer sanctions are effective in reducing the number of aliens 

employed illegally, then the number of nonimm@ants (visitors) who 

receive visas to enter the country each year but subsequently become 

employed illegally might decrease. For example, if employers properly 

complete the IQ forms for alI new employees, fewer visitors should find 

illegal employment and overstay (violate) their visas. The estimated 

number of nonimm@ants who violated their visas from those countries 

Pye ld GAO/GGD&%l4 Employer sUrcU0~ 
Chapter 5 

employer Sancdom’ Sauden on Employers 

with some of the highest estimated violations during fiscal years 1984 to 

1986 are shown in figure 6.3. 

Figure 5.3: Nonimmignnt Viu Violationa 

(By Country FY 1984-85) 

EWns~ed Number ef Mmlmmlgmm Vbs Vb~~tbns (Ooo) 

ba 

00 

50 

50 n 

42 

40 

22 

20 

25 

20 

16 

10 

1 d r-,-m 

Sines data are avaifabfe only for the first half of each year, visa violation tigures are multiplied by two. 

2. !SA issues special social security cards (called “nonwork” cards) to 

legal alien no nimmigrants who are not authorized to work but who need 

the number for other reasons (e.g., to open a bank account). Figure 5.4 

shows that about half of the nonwork social security cards issued from 

1983 through 1987 had wages reported according to an SA official. If 

employer sanctions are effective, we believe the number with reported 

wages relative to the number of cards in circulation might decrease. 

P8ge 44 GAO/GGD8814 Employer Sancdom 
Employer Smctlo~’ Burden on Employera 

Figun 5.4: Non-Work Social Security 

Cards With Wages Roportad the 

Previous Year for 1983-87 2.00 Yllllom 

1.7S go-- 

.- 

..-• 

.- 

1.50 

go-- 

.-- 

.-- .-- 

..-- .-- 

1.2!i .-- -..--- 

----- 

.-• ..-- 

*c-- 

1.00 

0.75 

0.50 

0.22 

0 

lM3 lW4 1SM 19.0 1W 

cahlldar Yrr 

- Number of Card8 R@orPng Wager 

---- Number of Cards in Cirwlation 

3. If employer sanctions are effective, the wages paid to low skilled 

workers in cities with large concentrations of unauthorized aliens might 

increase more than wages paid to similar workers in cities with low concentrations of unauthorized aliens. The large supply of unauthorized 

alien labor may depress wages. If this downward pressure is relieved by 

employer sanctions, wages for these jobs should increase as employers 

attempt to recruit legal workers to fill the vacated jobs, assuming that 

this effect is not offset by wage declines of grandfathered aliens. 

4. If employer sanctions are effective in reducing the number of aliens 

employed illegally, employers’ use of public employment agencies to fill 

job openings with legal workers might increase. If past employers of 

unauthorized aliens comply with the law and begin employing legal 

workers, employers may increasingly turn to public state employment 

agencies to fill jobs. 

Page 46 GAO/GGDJ3t%14 Employer Sanctiona 
Size of the Unauthorized 

Alien Population 

If the law is effective, the rate of growth in the size of the unauthorized 

alien population in the United States should decrease. Such a decrease 

should occur if the number of illegal alien residents who die, emigrate, 

return to their country of origin, or obtain legal immigration status is 

more than the flow of new resident unauthorized aliens into the country. 

One method to determine whether the employer sanctions provision of 

IRCA has achieved the congressional intent of reducing the unauthorized 

alien population is to compare the size of the unauthorized alien population from the census data after IRCA with prior census data. For example, INS and Bureau of the Census officials estimate there were about 4 

million unauthorized alien residents in the United States in 1986 when 

Congress enacted IRCA. If the number of unauthorized aliens Census 

counts after [RcA is significantly lower than the projected increases in 

the absence of JRCA (after subtracting all legalized aliens), it would be an 

indication that sanctions may have been effective. An INS official said 

that the flow of unauthorized aliens could also be influenced by deteriorating economic or political conditions in other countries. 

Census Estimate of the Part of the data Census used to develop the 1980 estimate of the unauIJnauthorkd Alien Population in thorized alien population came from INS’ Alien Registration (I-63) Pro 

1990 More Difficult gram. This program required all legal aliens in the United States to 

report address changes to DQI. However, according to INS officials the 

program has not been funded since 1981 because INS was not using the 

data. 

INS officials said they are considering reinstating the I-63 program. It 

would provide current and accurate data with several potential uses on 

the identity and location of legal aliens such as: 

l Knowing the location of legal aliens could help INS decide where to allocate its enforcement resources since unauthorized aliens tend to live 

near legal aliens. 

l Knowing the current name, address, social security number, and other 

identifying information about legal aliens could help INS detect fraudulent alien applications for entitlement benefits as a part of its Systematic 

Alien Verification for Entitlements Program. 

. Having current addresses for legal aliens would help [NS notify them 

more easily if a new law or regulation required aliens to take some 

action. For example, under IRU, many legal aliens had to apply for naturalization before May 6,1987, to be protected under WA’S alienage discrimination provision. 

Pye 46 GAO/GGDSEI4 Employer Smction~ 
In a report presented to the Population Association of Americaa, an [NS 

and a Census official stated: 

“plans for the 1990 census should include the possibility of enumerating large numbers of undocumented aliens. The demise of the I-63 system after 1981 will make 

more difficult the production of estimates of undocumented aliens in 1990. Unless, 

alien registration is reinstated, . . . other methods will have to be developed for estimating the legally resident foreign-born population . . .” 

As of September 1987, INS officials had not decided if the program 

should be reinstated. 

Regulatory Issue for 

states 

There is one related issue that could increase the burden on agencies 

that administer entitlement programs, such as Unemployment Insurance, Aid To Families With Dependent Children, and Food Stamps. 

These programs require applicants to either be available for work or, in 

some cases, search for work by registering with the state employment 

agencies. Currently, the officials who administer these programs require 

all applicants to present some documents to prove their eligibility for 

benefits.+ In some cases, these documents are the same as those used in 

completing the I-9. 

RCA does not require the states that administer programs, which have as 

a condition of receiving benefits that the person be available or register 

to work, to verify that all persons receiving benefits have the necessary 

I-9 documents. Therefore, some states may not know if the persons 

receiving the benefits can complete an I-9 for prospective employers. If 

states decide to modify their eligibility verification procedures to 

require documents that also meet the I-9 requirements, their burden 

could increase. 

Conclusions Since data on employers’ costs for the I-9 are not available because of 

the act’s newness, we do not know whether INS’ or SBA’S cost estimates 

of the law’s regulatory burden on employers are reasonable. However, 

the data from our planned questionnaire, which will be available in subsequent reports, should help us analyze the costs. Also, it is too soon to 

Page 47 GAo/GGDas14 Empbycr !ikncdoIu 
know if the I-9 will be useful to INS or DOL in carrying out their responsibilities or the extent that fraudulent documents are used in preparing 

the I-9. We plan to obtain data on these issues in our subsequent reports. 

GAO believes that the ultimate test of whether the burden imposed on 

employers is worth the costs involved is the extent to which these activities are accompanied by and contribute to desired reductions in unauthorized alien employment and illegal immigration. Unfortunately, it 

will be extremely difficult, if not impossible, to conclusively establish 

such a cause/effect relationship. Further, even if no progress is realized, 

the employer requirements may still be a necessary part of a revised 

strategy. 

Pye48 GAO/GGDssI4 Employer Sanction 
GAO/GGD-&M4 Employer Sanctlo~ 
Appendix I 

Fiscal Year 1987 and 1988 mS Budgets for 

Employer Sanctions 

Amount In Thousands 

Poriuona 1907 1980 

INS ONko Authorlr8d RE* Amount FTE. Amor 

Border Patrol 135 14 $3.049 81 s446( 

Investigations 500 50 15.325 450 20.1. 

AnkSmuggling 

Detention and Dewrtatlon 

38 

242 

4 773 34 1 at 

24 4.977 218 12.2 

Training 8 1 330 7 3, 

Data and Communcatlons 2 0 4,236 2 6.0 

InformatIon and Records 98 13 1.939 06 2 5 

Intelligence 8 2 119 7 21 

Constructton and Engineering 0 0 196 0 3.5 

Laaal Proceedings 170 17 1.985 153 72 

Executive Direction 7 3 240 6 3 

Admirwtrative Services 31 4 500 28 9 

Total 1237 132 $33.669 1.072 559.7 

Yull-me eqlJlvalent poalons. 

Page so GAO/GGD8814 Employer srnetio 
Ttltpbnt 202-275-6241 

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