New Legislative Requirements for Keeping Track of the
Legal Status of Your Employees

By: Scott J. Hedlund

The Louisiana Legislature concluded its 2011 regular session on June 23, 2011.  Several new statutes may impact the construction industry, but none more so than Acts No. 376 and 402 related to the E-Verify program.  E-Verify, established by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996, is an electronic system operated by the U.S. Department of Homeland Security used to verify an individual's immigration status and authorization to work in the U.S.  Acts 376 and 402, discussed below, now require the implementation of E-Verify when a party contracts with the State and an  alternative verification in any employment situation, respectively, and provide for various penalties if not followed.

ACT 376

Act 376 adds an additional section to the Louisiana Public Works Act, specifically Revised Statute 38:2212.10, entitled "Verification of employees involved in public contract work."  The statute requires that any "private employer" who submits a bid or otherwise contracts with a public entity for "the physical performance of services within the state of Louisiana" must verify in a sworn affidavit that: (1) the employer is registered and participates in a status verification system to verify that all employees in the state of Louisiana are legal citizens of the United States or are legal aliens; and (2) that the employer will continue to utilize that system throughout the duration of the contract.  The employer must also require all subcontractors to submit to him a similar affidavit about their employees, although no penalties attach for the action of a subcontractor unless the party they are working for has actual knowledge of the subcontractor's failure to comply.

Failure to provide and obtain the sworn affidavits that the employer contracted with the state entity may result in the cancellation of any public contract (the statute does not limit this penalty to the contract at issue) and make the employer ineligible for any public contract for a period of not more than three years from when the violation is discovered.  Earlier versions of the bill had this penalty as a mandatory "shall," but the enacted version provides some discretion to the awarding authority with whom the employer contracted, presumably to take into account the particular circumstances of any violation.  As an additional penalty, any employer whose contract is cancelled under these provisions is liable for any additional costs incurred by a public entity, which obviously could be substantial depending on the project and when the violation is discovered.

If information obtained from the status verification system incorrectly indicates that an individual's federal legal status allows them to be hired, there is no penalty to the employer as long as the system was used.  Similarly, anyone refusing to hire or retain an individual based on information obtained in accordance with the status verification system that indicated they were an unauthorized alien, as defined in 8 USC 1324a(h)(3), shall not be civilly or criminally liable.

The provisions of R.S. 38.2212.10 apply to all contracts entered into or bids offered on or after January 1, 2012, and expire if the status verification system expires and extensions are not approved by the federal government.

 
ACT 402

This Act, which takes effect August 15, 2011, is similar to Act 376 in that it addresses the legal status of employees, but does so by amending Revised Statute 23:995.  The amendment requires all employers in the state, whether in connection with private or public employment, to verify the legal status of their employees either through 1) E-Verify or 2) a picture ID and U.S. birth certificate, naturalization certificate, certificate of citizenship, alien registration card or I-94 form. 

Penalties for failing to comply may be assessed by the Louisiana Workforce Commission in an amount of $500 for the first violation for each alien employed, hired, recruited, or referred; $1,000 for the second violation; and mandatory suspension of the violator's permit or license to do business in the state for not less than thirty days nor more than six months and a fine of $2,500 for third or subsequent violations. 

It is unclear as to which of these two statues will govern over the other, as both have different penalties.  There is a belief by some that Act 402, since it was signed last, is the "latest expression" of legislative intent, and will therefore control.  It's also possible, however, that Act 376 will be viewed as more specific, while 402 is more general, and therefore both should have effect.  Until such time as the Courts make a determination, or the Legislature revises one or both next session, this issue will remain unresolved.  It is also unclear if Act 402, which adds a section to the Public Works Act, will also apply to professional services such as those offered by architects and engineers, since such services are typically governed by other statutes.  The new statutory language refers to “public contract work” and “the physical performance of services within the state of Louisiana,” but fails to define either of those terms.  Does drawing a line on a piece of paper or using a calculator rise to the level of “physical performance of services” requiring E-Verify for those private employers who contract with a public entity?  Either way, contractors, architects and engineers need to be mindful of these additional requirements, and implement them as part of the regular employment hiring routine to avoid potential penalties.

Written for The Legal Blueprint, Issue 8.