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Coping with change

Atlanta Business Chronicle - September 8, 2007

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Leaders from hospitality, legal, political and minority organizations advise business owners on best practices for handling immigration reforms in Georgia.

On Aug. 8, 2007, five Atlanta leaders came together to discuss the state's new immigration laws and how they will impact owners of small to midsized businesses.

Those leaders were: Paul Breslin, managing partner of Panther Hospitality Holdings LLC; Andy Lorenzen, manager of human resources at Chick-fil-A Inc.; Maritza Pichon, executive director of the Latin American Association; David C. Whitlock, partner with the law firm of Fisher & Phillips LLP who heads the business immigration practice; and outgoing state Sen. Sam Zamarripa, a partner at Heritage Capital Advisors, an Atlanta-based private equity firm.

Ken Bernhardt, the Regents professor of marketing and assistant dean for corporate relations at the J. Mack Robinson College of Business at Georgia State University, moderated the round table.

The transcript of this discussion has been edited for length and clarity.

A weighty issue

BERNHARDT: What are the major issues that impact Atlanta and Georgia businesses, and is illegal immigration a big issue for businesses in Atlanta?

BRESLIN: For the hospitality industry, immigration is a huge issue. I believe -- this is strictly from a business perspective -- there is a huge opportunity for us to capitalize on the desire to be here and to match with the needs of the businesses.

WHITLOCK: There are several issues that affect business in particular.

First is the question of enforcement now and how that's changed. Second is the question of reform to legal immigration. Third is the problem of legislation that we face now and the fact that none of it is going to work. And all of that is going to add costs to taxpayers and businesses.

PICHON: I think that the immigration issue for this state and the business side is immense, and from the community's perspective, there is going to be an impact. We're already seeing the impact, but I think the state's attempt to deal with immigration issues on a state level is a challenge, and I think dealing with it at the federal level needs to be a priority.

LORENZEN: There is no question that it is a substantial issue for business owners. We've seen the issue grow in importance, particularly over the last three to four years -- especially in Georgia. The immigration issue as it relates to the restaurant industry, it's the bedrock of our industry. It is a heritage issue. So many restaurants got their beginnings from immigrants that came to the United States, and we want to be supportive of that.

ZAMARRIPA: The business community missed an important window to lead the issue of immigration reform. We allowed the issue to be defined by extremist organizations and individuals whose real interests were not around business. They were really ethnic cultural issues. So the business community now is at the mercy of a debate that we didn't define, and so this is a problem that requires business leaders to take some risks and to take some responsibility for two things. One is that for the foreseeable future, we will be net importers of labor in the United States. We will not be net exporters of labor. No. 2, this labor force is as equal to a security threat if we don't have it, because it threatens our economy.

Industry impact

BERNHARDT: What are the industries that are most impacted by immigration issues?

WHITLOCK: Construction, agriculture, textiles, food processing, and hospitality. And now, infrastructure; critical infrastructure is going to be as hard to enforce as we go forward because the government -- the federal government -- incorrectly links border security to terrorism.

That list comes from the government itself, in terms of their analysis of the five highest industries of employment of immigrants and, therefore, they are targets for enforcement.

BRESLIN: I think all industries [are targets]. If you're a developer, for example, even if you're a Fortune 500 company, they'll go through a matrix of 'Where is the labor pool, what's the unemployment, where are the sources of people? Is there a process and a flow?' I think Sam is right on, that it's a net labor issue. We're capitalists. We should see it as an opportunity and capitalize on it.

ZAMARRIPA: You know, in macro-economic terms, most of our children and our peers have migrated away from hand labor. They've migrated to knowledge work or to management and service industries. That has left a vast demand for anyone that will work with their hands, and it doesn't matter what industry it is. It is really labor, hand labor. Everything from washing toilets to making sure that the textile machine is oiled and running 24 hours a day.

Economic effects

ZAMARRIPA: The economic impact is incalculable. You can't calculate it because this work force is inextricable from our economy. It is a major part of our economy. So you can add up all of the industry figures you want, but the question in my judgment going forward is 'Do we want to continue to grow our economic structures?' I do. I want to grow them by becoming an aggressive global economy. I want to grow them by educating the work force to be competitive in the knowledge sector. I want to grow them by being competitive with technology that makes your industry, chicken, the food-processing industry, more effective and efficient. And I want to grow it by keeping people working in legacy industries that need manual labor, and so I reject the definition of the problem. I think business -- and I said this earlier -- has allowed this debate to be defined by people who want to criminalize the process of work itself. I reject that. I want to define this as an economic issue, and I'm prepared to put legal structures around it to make it work.

WHITLOCK: Take 12 million people. First of all, we don't have 12 million citizens who are legal workers, if you will, standing by ready to fill these jobs. So basic goods and services won't be produced, or we're going to have to pay a fortune for them. As taxpayers, we're going to lose the benefit of 8 million people who are on the books for whom every reader of this paper is now withholding taxes and submitting it to the government.

I agree with Sam. Thank God for the immigrant population. The earning suspense fund of Social Security today is $510 billion, that's half a trillion dollars donated to our economy by illegal immigration. Thank you. That's what's keeping that system afloat today.

We lose the benefit of 12 million consumers in our consumer-focused economy if we take these people out of the economy. We're going to have to pay a fortune for enforcement. We're going to, in theory, tell the employer we're going to find you. We'll put you in jail if you continue to employ these people. They're not going to leave. We're only going to exacerbate an existing problem of exploitation that is going to be a horrendous tragedy for these people and for our economy. Wasting $2.2 billion on a fence only puts a barrier in their way if we're assuming they're going to walk home anyway, but that is a ridiculous waste of our tax money. So those are the economic consequences we're all going to feel as taxpayers, let alone small- and medium-sized business owners.

Not breaking the law

BERNHARDT: What kinds of things do either your companies, companies you're involved with or familiar with, do to prevent violating immigration laws?

LORENZEN: Chain-wide, all of our operators, when they hire somebody to work in their restaurants, their employment is verified. We'll soon be a participant in the Department of Homeland Security's Basic Pilot. Right now, we simply cross-check identity numbers that are provided by applicants with the Social Security Administration. If those numbers are not valid numbers, a list is sent back to the operator and they address it with the employee. I think our focus, more than on checking identity, has been on making sure that the work environment they have there is fair and equitable and a good work environment. So we spend a lot of time focusing on that in our restaurants, and I think that's probably similar to a lot of other businesses as well.

BRESLIN: The Georgia Hotel Lodging Association has had more seminars on this in the last year and a half than we've ever had in probably the 15 years prior educating the employers firsthand. Not just from a point of what to check, but also, to not overdo it because of the discrimination, the possibility. You know, hiring a [good lawyer] is critical. Have a good law firm that will tell you what to do. Be a member of the hotel association or the restaurant association because most of the Web sites will give you kind of ABCs for the entrepreneur. The big companies will have it covered a lot of times, but the mom-and-pop [operations] and the small-business owner needs to know what to do and how to do it.

BERNHARDT: What's the best way for a small business that doesn't have a big human resources, or maybe any human resources, department to verify that its employees are legal and it is adhering to the law?

WHITLOCK: Use the online Social Security verification. It's free. It is instantaneous. You can submit 10 numbers and get an instantaneous report. That's the safest way to avoid hiring an illegal alien in the future. It takes a week or two to get enrolled in it, but you can sign up online and they confirm it and away you go. Once you're enrolled, they don't even know you're using it. So it's anonymous, instant, free, and it lets you ensure that the person you're hiring has a valid Social Security number. For a larger employer, that means your Social Security mismatch list is going to be reduced, which takes you off of the enforcement radar of Homeland Security. For a smaller employer, it reduces the risk almost entirely of having an enforcement issue or an enforcement problem.

BERNHARDT: How does a small business sign up for that?

WHITLOCK: Go online. The Web site is www.ssa.gov/employer/ssnv.htm. That takes you right to the enrollment page and there is the Social Security Administration Web site, and you can enter your information and start the process instantly.

BRESLIN: Does it cross-check valid numbers with a name, so you know?

WHITLOCK: No. I think it just ensures that the number itself is valid. Now, that won't necessarily tell you that person presenting it is allowed to use it. But it also means that the tax return for that person won't cause a mismatch. Since Homeland Security is focused so intensely upon the mismatches as an enforcement tool, that is the best offense you can take right now as a small- or medium-sized business.

BRESLIN: It does help, and it is a great recommendation, but it is not the answer end-all because it doesn't cross-reference. We get, in the industry, calls all of the time from people who will say we just got a letter saying 'This name doesn't match this Social Security [number] -- will you please have the person report in?' It puts the employer in a precarious position because the untrained employer will panic and then fire the employee. They'll think, 'I don't want any problem,' or they won't know how to deal with it. In reality, it usually means that a lot of these false IDs that they get are legitimate numbers, they are just not the right person. They're children or whatever. So it's a deeper process.

WHITLOCK: There are other steps you can take if you want to go beyond the SSN checking. I mean, you can hire a background check company to run the Social Security number and a criminal record and find out if, in fact, this person is using this number properly. So there are other steps you can take. The online verification from Social Security is free, though. There's no reason not to do it. Now, I discourage clients from using the Basic Pilot program, because it's riddled with errors. The U.S. Chamber of Commerce estimates that the error rate in the database for DHS is 20 percent to 30 percent, which means one out of five people is getting a false negative, which means you can't employ them even though they're authorized to work. I generally tell people to stay away from that. Two weeks ago, the government announced this new image program, which will require you to go through an I-9 audit in order to become image-certified. So I'm discouraging clients from going through that as well. It's all risk and no reward.

Workplace discrimination

BERNHARDT: Several of you have mentioned the ambiguity associated with some of the laws of enforcement and the threat that many small-business owners perceive related to this. Has all of this led to an increase in discrimination against Hispanics in hiring?

PICHON: We have people coming in that have been employed for 14 years, five years at the same employer, and now are unemployed. We've had some that have come in wanting clarity on this new legislation sent by their employers because the employers, especially small-business owners, are saying, 'I know I'm going to have to deal with this issue, I just don't know how, so I'm going to send some people to go see if they can find out.'

The other thing is that as some of this work force may be pushed out, they're going to be at the day-laborer centers because traditionally they have been a transient population. But now, you're going to have the parents of children, of U.S.-born children, that are hanging around waiting for a day's pay, and so there are all kinds of social issues. There is also the impact that you're seeing that is the result of this population having started to arrive mainly or mostly in the early '90s, pre-Olympics. Those children are in the school systems. You have, in certain counties, if you look at the kindergarten class, for example, in Gwinnett County, it is about 26 percent of the population.

What does that tell you about our future work force? My point is this is all entrenched already. It is trying to undo something that has already been done and trying to move forward in a disciplined and a lawful way because people want to obey the law. The other thing is the perception of people don't pay taxes. I have yet to speak to a worker that comes to our office who is not paying taxes because our government has found a way to make sure that people can pay taxes while we wait until this whole issue of immigration reform is dealt with.

WHITLOCK: There's likely to be more discrimination this fall as employers react to the Department of Homeland Security's proposed rule that we require verification of mismatched lists. Larger employers are going to start to prepare for that by weeding out the people who have been on their mismatch list already. That means that they're going to do online verification. They're going to force people to go to Social Security. If they can't come back with a new or different number or confirmation that their number's valid, they're going to let them go. So what you're going to see is some employers are going to start to react to this rule by cleaning up their mismatch list, which means you are going to have more people who are illegal out on the street looking for work.

Getting informed and involved

BERNHARDT: What are some of the biggest mistakes companies make with respect to immigration issues and illegal workers?

ZAMARRIPA: The No. 1 mistake is not being involved in defining how to resolve this issue. This is a business issue, and the business community hid during this debate, and they hid because we allowed extremist groups to somehow associate this with terrorism and other issues that were too volatile for the business community to stand up to. So very few businesses have inserted themselves into this debate in a rational way. What they've done is they've hired lobbyists to compromise bills, like [S.B.] 529 [the Georgia Security and Immigration Compliance Act].

The business community was very present in 529. You just didn't hear from them. They were at every private meeting watering down this bill, but they would not stand up and say this bill is wrong, and the reason they couldn't, or they believed they couldn't, stand up is because they were afraid of the public. The public has been stirred up by the likes of D. A. King and including people like Lou Dobbs. We have allowed entertainers and convicted felons to define this debate. So you can speak about the intricacies of what business should do related to the law, but frankly, because the law is dysfunctional, unclear [and] unenforceable, it won't make much difference. Business is going to fail as they interface with this law because the law is impossible to conform to it because the system is broken. So what business needs to do, more than anything, is to start talking about the fact that we need people to work. And that they, business leaders, are not criminals for needing those laborers.

BRESLIN: I think the biggest mistake business makes is not getting involved. It's the 80/20 rule. Twenty percent are involved and 80 percent are not, and we keep thinking the source of employment is always going to be there, and I think what's critical is we understand these issues and how they affect us and what we need to do about it. We have blown it out of proportion, and it shouldn't be. It should be something that we deal with and try to remove a lot of politics from it and solve it and put business response to economic impact, both good and bad. And if we understood the economic impact of it, we would be a lot more focused on it.

WHITLOCK: I think it is also involvement though at every level. I do training in seminars all of the time. Human resources directors come to my seminar, and they go back to their office, and they don't pass the training on to the people who do the I-9 form. You have to want to be involved in this and you have to stay on top. I see that as a problem in every industry.

BERNHARDT: What kinds of things get businesses in trouble that [lawyers] have to get involved in defending?

WHITLOCK: The lack of involvement, the lack of attention, the lack of focus on this process. That's what's going to trigger the worst kind of enforcement, which is criminal enforcement by Homeland Security.

Typically, enforcement is going to start with an I-9 audit, unless they've obtained a mismatch letter and think you have a huge proportion of illegal workers on your work force. But Homeland Security is taking the approach that if you have a sufficient number of people on your payroll, even if your I-9 forms are OK, if there are a sufficient number of people on your payroll who are illegal under their records, they're going to assume that you knew, and start a criminal matter. And that's a radical change in enforcement. That's scary. There are no guidelines for enforcement. It is all over the board depending upon where you are. And frankly, we're seeing that in Georgia, too.

We try to counsel our clients to take prudent proactive steps to reduce the risks.

BERNHARDT: Any other mistakes that businesses make?

BRESLIN: People are hiring -- knowingly hiring -- illegal immigrants, aliens, and that's wrong. The other thing I think is we don't do enough to get our government to make the process more efficient [and] easier for people. I think there is an inordinate amount of people who just go around the system because they just don't know how to go about it the right way from the country that they're leaving.

WHITLOCK: It's a broken system, too. For example, the Immigration and Naturalization Service handbook for employers on how to do I-9 compliance was last published on Nov. 21, 1991, and you can't tell me that in 15 years we haven't had changes in immigration documents. But the government won't reprint that manual to help employers figure out how to do that. If you go to the government Web site for information, half of it is wrong. If you try to call them on the phone, there is a better than 50 percent chance you'll get an incorrect answer there. There is just no resource for employers to rely upon safely, which is a travesty. I mean, how can you expect employers to comply if you're not going to give them any resources or tell them what to do? Yet, that is the situation we face.

BERNHARDT: In the past 10 years, we've averaged granting citizenship to 500,000 people per year. With an estimated number of 18 million illegal immigrants in this country, are the criteria too restrictive?

WHITLOCK: This is a very complex problem with many facets and dimensions to it. But part of the reason we have such a population of falsely documented or illegal workers in this country is because it takes far too long to get here legally. It's not so much the processing time. The processing time is two to four years on its own, but then you have a visa quota system that you have to wrestle with. And on the employment side now today for your basic skilled worker or professional, the visa wait time is five years.

It is just ridiculous how long these quotas are. If we want to reduce the volume of illegal immigration, we have to increase the volume of legal immigration.

We have to do this in many respects, not just with permanent residents and citizenship, but also with our basic guest-worker program. We have to take quotas off of H1B, and quotas off of H2B programs so that hospitality industry employers can get access to the seasonal workers they need. We need to improve the legal immigration system as a means of decreasing the number of people who come here and cheat and bend the rules. That just makes sense.

PICHON: We are currently dealing with a backlog case of 8,000 files that were opened years ago, some of them 10 years old, where Immigration and Customs Enforcement (ICE) is now calling up all of these cases because they are trying to clear out their backlog. They brought 70 new agents down to process these cases. Ten years have gone by. Each one of those files now requires that you [document] what activity they've had since then because if they've left the country and come back in, it can jeopardize the situation. These are all people who have a legal path to some form of staying in this country. They applied because they were legally eligible, but they've been waiting for years and years. The other thing is there's a lot of lost files. When people sometimes use two last names, it creates a nightmare.

But they are trying to clear out the backlog, and you know, our hope is it's an anticipation of having some kind of reform in the future, because it wreaks total havoc on the people that are here.

Working through the web

• Online Social Security verification is one way to check the employment status of potential workers. The service is free.

• To enroll, visit the Social Security Administration's Web site at www.ssa.gov/employer/ssnv.htm.

• While the Web site does not cross-check valid numbers to ensure that the person presenting the number is the person authorized to use that number, it does ensure that the person's tax return won't trigger a mismatch and raise questions with the Department of Homeland Security.

Source: David Whitlock, Fisher & Phillips LLP

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