By Ashley Fletcher Frampton
aframpton@scbiznews.com
Published Aug. 18, 2009

State investigators visited 76 companies last month to ensure compliance with a provision of South Carolina’s 2008 immigration law that recently kicked in.

As of July 1, the law requires that businesses with 100 or more employees verify the work status of new employees either through the federal E-Verify system or by checking certain other identification documents. The same will apply to smaller businesses on July 1, 2010.

The 76 random audits turned up no violations, said Jim Knight, spokesman for the S.C. Department of Labor, Licensing and Regulation. But the manner in which the audits were conducted has elicited complaints from some in the business community.

The S.C. Chamber of Commerce, employment lawyers and others say that state auditors are overstepping their legal authority by seeking proof of verification for all employees — not just those hired after July 1.

“State law didn’t even go into effect until July 1,” said David Dubberly, an employment lawyer in Columbia with Nexsen Pruet. “The state doesn’t have the legal authority to be looking at people hired before July 1, in our opinion.”

Otis Rawl, president of the S.C. Chamber of Commerce, said business groups negotiated with the General Assembly last year to make July 1 the start date for the new verification requirements. The date was set with an emphasis on moving forward with new procedures, not looking back, he said.

Rawl said it appears that state officials are trying to find and make an example out of a company that has not properly verified employees in the past.

“Our concern is they’re on a witch hunt,” Rawl said.

Another complaint from businesses is that the agency’s auditors, though not required by state law, should give employers some advance notice of an audit instead of showing up unannounced and disrupting the workplace.

Business representatives also say auditors are sometimes interviewing random employees and asking to see federal I-9 forms, which they say the state law doesn’t allow. Also objectionable to some is the state agency’s method for selecting businesses to audit.

Though the issues now apply only to employers of 100 or more, Rawl said it’s important to resolve them now before they take effect for smaller businesses next year.

Conversations with the business community

Knight said agency officials have been in conversations recently with representatives of the business community about their concerns. He would not comment on several of the questions the groups have raised, saying he did not want to interfere with those conversations.

Dubberly and Rawl said the biggest sticking point in the ongoing conversation is the question of whether state auditors should inspect the work status verification documents of all employees or just of those hired since July 1.

The matter is one of legal interpretation — what the law says and what state lawmakers intended it to mean.

In a written response to questions from the Charleston Regional Business Journal, the state agency said the following about what businesses should expect from an audit: “A business should be prepared to demonstrate that it is in compliance with the verification requirements of the statute. We will check to see that the legal status of all employees hired since July 1, 2009, has been verified by the employer through E-Verify or the driver’s license procedures outlined in the law.”

In an interview, Knight said, “We’re not only looking at employees hired since July 1, 2009; we’re doing some random checks of employees hired before July 1, 2009.”

Knight said he could not comment further because “that’s one of the things we’re talking with them about.”

According to the agency’s Web site, no employees are grandfathered.

“There will be no sanctions for failure to check credentials using the statutory process, if the credentials were checked prior to July 1, 2009,” the site says. “However, one can still be sanctioned for knowingly employing workers who are not authorized.”

Lee Gibbs Depret-Bixio, an employment lawyer with Ogletree Deakins in Columbia, said the agency must have cause to inspect documentation for employees hired prior to July 1. The agency must have a reason to think the employer knowingly or intentionally hired unauthorized workers, her firm advised clients in a newsletter.

“If there’s an obvious violation when they look at the paperwork, that would be one thing,” Dubberly said. “But if they’re just doing it routinely, we feel like that is unlawful for various reasons.”

Business officials say they are waiting to hear back from the state agency on the issue. But they don’t plan to wait indefinitely.

“If we don’t have some movement on those issues, I don’t think we have any alternative than to look at some type of legal action,” Rawl said.

Dubberly said he wants to be sensitive to the fact that the agency is still discussing what its final position will be. “But at the same time, we’ve got clients that are getting inspected and they’re very concerned about the legality of this,” he said.

Other enforcement issues

Another apparently unresolved issue is how businesses are selected for audits.

Rawl said construction, agriculture and tourism businesses have been targeted because they are industries thought to have high proportions of immigrant workers. He said the tactic is like racial profiling and is illegal.

According to the new law, businesses can be audited based on a complaint or through a random selection process. Knight said the agency had not received any complaints as of early August.

To conduct audits, the state has hired 10 investigators with $750,000 the Legislature allocated this fiscal year, he said.

The Labor, Licensing and Regulation Web site lists 13 business sectors that are subject to random audits this year. The site says: “The department will use existing data sets (either state or federal as available) to identify industries or individual workplaces with immigrant employees and shall concentrate audits in these industries and workplaces.”

In a written response, the state agency said its audits are scheduled using a neutral scheduling process. “ ‘Neutral scheduling process’ means that we are not targeting any particular business but are trying to schedule so as to best use state resources,” agency officials wrote.

One matter of contention could be nearing a resolution, according to some involved in the talks. State officials said they will consider giving employers three days’ notice prior to an audit, as various types of federal inspectors do, according to Dubberly and Depret-Bixio.

Advance notice is a topic on which the Labor, License and Regulation Department did not comment. Dubberly said advance notice is a reasonable expectation and can make the process more efficient for everyone involved.

Rawl agreed. “Even the IRS tells you when they’re going to come in and do audits on you,” he said. “They’re not looking for illegal immigrants. They’re looking for the paperwork.”

Reach Ashley Fletcher Frampton at 843-849-3129.