IRCA made it illegal for employers knowingly to hire or continue to employ or recruit or refer for a fee unauthorized aliens. IRCA required employers to comply with an employment verification process intended to provide employers with a means to avoid hiring unauthorized aliens. Generally, IRCA requires employers to verify the identity and eligibility of all new employees hired after November 6, 1986. Under IRCA, employers must request newly hired employees to present a document or documents that establish their identity and eligibility to work. As of February 1999, INS rules allowed employees to present 27 different documents—8 that establish both identity and eligibility to work (e.g., a U.S. passport or INS permanent resident card, which is also called a “green card”); 12 that establish identity (e.g., a driver’s license); and 7 that establish eligibility to work (e.g., a Social Security card, other than one containing the following legend: “Not Valid for Employment”). The employment verification process that INS established pursuant to IRCA requires employers to complete the Employment Eligibility Verification Form, INS Form I-9, certifying that they have reviewed the documents and that the documents appear genuine and relate to the individual. In making their certifications, employers are expected to judge whether the documents presented are obviously counterfeit or fraudulent. Unless INS has evidence that the employer knew the employee was unauthorized to work, employers are deemed in compliance with the law if they have followed the verification procedures, even though an unauthorized alien may have presented fraudulent documents that appeared genuine. IRCA provides penalties or sanctions against employers who violate the law. Employers who fail to properly complete, retain, or present for inspection a Form I-9 may face civil fines ranging from $100 to $1,000 for each employee for whom the form was not completed, retained, or presented. Employers who knowingly hire or continue to employ unauthorized aliens may be fined from $250 to $10,000, depending upon whether the violation is a first or subsequent offense. Employers who engage in a pattern or practice of knowingly hiring or continuing to employ unauthorized aliens are subject to criminal penalties consisting of fines up to $3,000 per employee and/or up to 6-months imprisonment. During the legislative debate on IRCA, concerns were expressed that employers fearing sanctions would not hire “foreign-looking or foreign- sounding” citizens and aliens authorized to work. As a result, IRCA prohibits employers with four or more employees from discriminating against any authorized worker on the basis of citizenship or national origin. IRCA established Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) to investigate certain charges of discrimination. INS has a worksite enforcement program that is responsible for checking employer compliance with IRCA’s verification requirements and enforcing IRCA’s employer sanctions provisions. Labor has agreed to assist INS by checking employer compliance with verification requirements in the course of some of its own employer investigations. In March 1990, we issued our third and final report required by IRCA. In that report, we concluded that, on the basis of our analysis of INS apprehension data and research by other organizations, employer sanctions had slowed illegal immigration. However, we also concluded that the prevalence of counterfeit and fraudulent documents was threatening the security of IRCA’s employment verification process for prohibiting unauthorized alien employment. As a result, unauthorized aliens’ use of fraudulent documents was undermining IRCA’s employment verification process and improvements were needed. On the basis of responses from about 4,400 employers who responded to our survey, we also concluded that, while about 65 percent of employers were complying with the Form I-9 verification requirements, most employers wanted a simpler or better verification system. A majority of the employers we surveyed indicated that the federal government should consider such things as reducing the number of work authorization documents INS issued and establishing systems for employers to contact INS and SSA to verify INS documents and Social Security numbers (SSN). We also concluded that there was widespread discrimination against eligible workers as a result of IRCA. We stated that many employers appeared confused over the variety of documents that could be used to verify employment and uncertain about how to comply with IRCA’s verification system. For example, some employers did not accept valid work authorization documents, and some employers said they only asked alien employees, rather than all employees, to show documents. Noting that this uncertainty and confusion as well as the prevalence of fraudulent documents may have caused the widespread pattern of discrimination, we concluded that a simpler system that relied on the use of fewer documents could reduce discrimination. No one knows exactly how many unauthorized aliens are illegally employed in the United States or what percentage of the total workforce they represent. According to the Bureau of Labor Statistics, about 132 million people were employed in the civilian labor force as of October 1998. Even if all of the estimated 5 million illegal aliens residing in the United States as of October 1996 held jobs in October 1998, they would have represented less than 4 percent of the nation’s workforce. The results from INS’ inspection of a random sample of the nation’s 6.5 million employers in fiscal year 1997 indicated that about 195,000 employers (or about 3 percent) had employed unauthorized aliens. Illegal alien employment has been shown to be more significant in certain industries and locations. For example, Labor’s National Agricultural Workers Survey estimated that 37 percent of the agricultural workers in 1995 were illegal. There is also evidence that the meatpacking, construction, and garment industries have employed large numbers of unauthorized aliens. For example, in February 1998, we reported that in 1996 and 1997, INS found that about 23 percent of the workers at seven Nebraska and Iowa meatpacking plants had questionable documents. INS’ inspection of 89 construction businesses in Las Vegas, NV, starting in March 1995 found that 39 percent of the approximately 6,000 employees for whom a Form I-9 was completed appeared to be unauthorized to work. Similarly, inspections of 74 Los Angeles area garment contractors in March 1998 revealed that 41 percent of the 7,100 employees at these worksites were unauthorized to work. INS Investigations is responsible for enforcing IRCA’s employer sanctions provisions. Investigations receives information, referred to as leads, from a variety of sources, including the public and other federal or state agencies, regarding unauthorized alien employment. Worksite enforcement unit supervisors are to systematically analyze these leads and, as a first priority, open investigations on employers suspected of knowingly hiring unauthorized aliens and/or suspected of engaging in abusive employment practices. To track employer sanctions case activity, Investigations field personnel are to prepare Employer Case Activity Reports documenting such case activities as the opening of a case, a Form I-9 inspection, or the arrest of unauthorized aliens. Data from these reports are to be entered into INS’ Employer Case Activity database. For ease of presentation, we refer to this database as the Employer Sanctions database throughout this report. The database contains case-specific information submitted by local INS offices since August 1989. As of May 1998, the system contained data on over 69,000 employer sanctions cases. In May 1998, INS issued a directive regarding worksite enforcement operations. According to the Executive Associate Commissioner for Field Operations, the directive was intended to provide consistency among INS districts in conducting worksite operations. Under the directive, all investigations in which INS believes an employer is unknowingly hiring unauthorized aliens must start with a review of Form I-9 and other employment records. INS is then to hold a seminar for these employers to educate them on such things as how to properly prepare the Form I-9 and how to detect fraudulent documents. The employers are then to be given a list of aliens INS believes are unauthorized to work. The employer must either re-verify that the alien is authorized to work or dismiss the alien. INS could then inform the employer that it intended to arrest any unauthorized aliens. For investigations in which INS believes an employer is knowingly hiring unauthorized aliens, INS is to arrest the unauthorized aliens first, followed by a review of the Form I-9 and other employment records. In addition, before an enforcement action can be conducted at an employer’s place of business, INS worksite enforcement units must prepare an operational plan to be approved by either the INS Regional Director or the Executive Associate Commissioner for Field Operations. Before this directive, the decision of whether INS arrested unauthorized aliens before or after a Form I-9 inspection was left to the discretion of the INS district office. In addition, there was no requirement that INS hold seminars for employers or that operational plans be approved by the regional office or headquarters. As agreed with your offices, this report addresses the following: (1) the effectiveness of the current employment verification process in preventing employers from hiring unauthorized aliens, (2) INS’ efforts to improve the employment verification process, (3) the level of effort INS and Labor devoted to worksite enforcement activities and the results of these activities, and (4) changes being made to INS’ worksite enforcement program. To determine the effectiveness of the current employment verification process, we reviewed previous reports by us and others, such as the Commission on Immigration Reform and other immigration researchers. In addition, we held discussions with INS, Labor, and SSA officials and analyzed data from INS’ Employer Sanctions database to obtain INS statistics on the use of fraudulent documents by unauthorized aliens. To determine what actions INS had undertaken to improve the employment verification process, we held discussions with and obtained documents from INS, SSA, Labor, and OSC officials. Using a data collection instrument, we surveyed worksite enforcement unit supervisors representing 32 of INS’ 33 districts who attended a national worksite enforcement conference in San Diego in June 1998. We also contacted representatives of four national organizations representing business owners or employee unions to discuss their views on INS’ efforts to improve the employment verification process.