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  • Article: How Should Employers with Multiple Legal Entities Enroll in E-Verify? By John Fay

    How Should Employers with Multiple Legal Entities Enroll in E-Verify?

    by


    For years now, the USCIS has touted E-Verify as a “fast, free, and easy” option for employers seeking to electronically confirm the work authorization of their new hires. In order to enroll, employers need to complete a series of steps where they enter some basic details, provide hiring site information, learn about the many “do’s and don’ts”, and ultimately sign a binding non-negotiable Memorandum of Understanding (MOU) with the government.

    While the enrollment process itself is now fairly streamlined (almost wizard-like), questions surrounding the setup will inevitably arise for which there are no good answers. Today, we are going to discuss one issue in particular that has proven challenging to large employers with multiple legal entities: how exactly are we supposed to enroll in E-Verify anyway?

    Before I get started though, I’d like to note that enrolling in the E-Verify program should not be taken lightly. At a bare minimum, you will need to decide which hiring sites will participate; how E-Verify will be managed; how responsibilities will be distributed among the HR teams; and the specific procedures that will be followed. But for purposes of this article, let’s assume that you’ve already settled on those details and you now just need to figure out the logistics behind enrolling a large employer.

    The Multi-Entity Employer

    Imagine you work for a large company (let’s just call it “Acme Corporation”) where various parts of the enterprise are run by different subsidiaries, each of which has been established as its own legal entity. For example, Acme Finance Inc. is responsible for consumer investment products; Acme Online, Inc. handles online merchandise; and Acme Food Corp delivers hot fresh meals through conveniently located food kiosks in malls and airports. And then there is Acme Holding Inc., and nobody knows what they do…other than exist on paper.

    It’s your first day on the job in human resources, and you’ve been selected to “figure out this whole E-Verify thing” and make sure that we’re “compliant with the law.” After receiving the proverbial pat on the back and sincere wishes for good fortune, you decide to speak with an experienced immigration attorney who is familiar with the finer points of I-9 and E-Verify (and the resulting liabilities for failures related thereto).

    The first question the attorney is likely to ask is whether any of those legal entities are currently using E-Verify, and if so, how they are enrolled. This sounds like an easy question…and it really should be easy to answer, but quite often, that is not the case. For you see, E-Verify began as a “pilot program” and many employers treated it that way. “Electronically verify new hires? And it’s free too? Sounds great, sign me up!”

    However, in their haste to jump on the E-Verify bandwagon, many employers enrolled haphazardly, registering multiple accounts under the same name and tax id, creating different accounts for each location, and failing to consider the actual legal entity that serves as the employer. Fast-forward to today, and E-Verify is no longer just an afterthought to the I-9 process. It’s now a big deal – it receives millions of dollars in DHS funding on a yearly basis; has its own compliance and monitoring branch; and is the weapon du jour of many states looking to crack down on undocumented workers.

    In light of the above, this enrollment issue takes on a whole new level of importance.

    How should an employer with multiple entities enroll in E-Verify?

    After your enlightening discussion with the immigration attorney, you rush to the E-Verify website to find an answer to a fairly simple question: how should a company with multiple Federal Employer Identification Numbers (EINs) enroll in E-Verify? And you’re in luck: because that very same question is located on the E-Verify FAQ page:

    Source: http://www.uscis.gov/faq-page/e-veri...l#t16967n47117

    Your initial excitement quickly turns to confusion as you realize this is yet another I-9 and E-Verify question with an unresolved answer. Yet, hope springs eternal – for ambiguity in law often enables a certain degree of flexibility in your practice and procedure. That’s great, you think, but I still need to figure out how to enroll all of these various legal entities. Are there any best practices we can follow?

    An Analytical Approach

    When faced with uncertainty in E-Verify rules and procedures, it’s always a good idea to perform a two-step analysis: first, determine whether there is any corollary in I-9 guidance which may extend to E-Verify; and second, examine the potential business and legal risks of choosing the wrong course of action.

    We’ll start with the I-9 – is there anything in the regulations or policy guidance that would lead us to believe that separate legal entities are separate employers? The regulations at 8 CFR 274a.1(g) define an employer as “a person or entity…who engages the services or labor of an employee to be performed in the United States for wages or other remuneration.” Elsewhere at 8 CFR 274.a.1(b), an entity is defined as a “corporation, partnership, joint venture, or similar organization.” Taking these two together, many employers have decided that each legal entity will be considered a separate employer for I-9 purposes, with all of the resulting obligations and liabilities attached.

    But wait, there’s more! Your attorney dusts off an old INS policy memo from 1993 which specifically discussed the Form I-9 responsibilities of employees that are transferred from one entity to another (imagine Billy moves from Acme Electronics to Acme Finance). In the memo, the government notes (for all practical purposes) that the employer is whichever entity actually controls the employee’s day-to-day work and takes responsibility for hiring, firing, recruiting, etc. So if we apply that analysis to E-Verify, all we need to do is figure out each legal entity’s responsibility for hiring and firing and then create accounts accordingly. Easier said than done.

    A Conservative Approach

    When faced with this E-Verify entity conundrum (and impracticality of figuring out who is an employer), many organizations decide to enroll under separate E-Verify accounts because it provides the best and most definitive documentation of E-Verify enrollment at the “entity-level” while also potentially limiting exposure to I-9 and E-Verify liabilities. Here are three important reasons to consider this practice:

    1. Since the E-Verify Monitoring and Compliance Branch closely tracks E-Verify case activity at the individual account level, we can lessen the chances of a widespread investigation into our entire enterprise if one particular location has a lot of errors (intentional or otherwise). Eliminating this scrutiny will help us avoid related investigations from the Office of Special Counsel for Immigration-Related Unfair Employment Practices (“OSC”).

    2. In the event of an OSC or similar investigation for alleged discrimination, we may be able to narrow the scope of potential fines and monitoring obligations to just one entity (rather than the whole company).

    3. If one distinct entity receives a federal contract with the FAR clause, we’ll be able to effectively isolate the E-Verify obligation to just one account and thereby avoid the considerable expense and hassle of having to enroll the entire enterprise as a federal contractor (which may entail verifying substantially all employees through the E-Verify system).

    Managing Multiple E-Verify Accounts

    So let’s say you've decided (under the advice of counsel) to enroll each legal entity under a separate E-Verify account. How in the world can you manage the cases and make sure that each employee is being submitted under the correct account/EIN?

    Employers using the web E-Verify interface can enroll using the “corporate administrator access method,” which is designed for managing multiple related employer accounts. Corporate administrators can enroll new company locations, view reports, and modify general user and program administrator accounts for any company location that is linked to your central corporate administrator account. It’s important to note that corporate administrators cannot create and manage E-Verify cases though, and so the employer will need to maintain multiple E-Verify user profiles and develop processes/procedures to ensure the right account is used for the right employee.

    Fortunately, employers can now also used an electronic I-9 system which is integrated with E-Verify in order to manage multiple related accounts. A well-designed system will enable you to:

    • Create your various employer E-Verify accounts through one centralized user profile
    • Seamlessly manage the accounts through a centralized control panel which tracks the specific EIN, E-Verify status, and the associated federal contracts
    • Assign employees to the correct E-Verify account based on criteria that you define
    • Ensure that employees are submitted under the correct EIN

    And with that, I leave you to ponder whether enrolling multiple legal entities is a good practice for your organization. As always, it’s important to remember that facts matter – so I highly recommend that you contact an experienced immigration attorney to discuss your specific company setup before making any E-Verify decisions.

    Until next time!

    This post originally appeared on LawLogix. Reprinted with permission.


    About The Author

    John Fay

    John Fay is an immigration attorney and technologist with a deep applied knowledge of I-9 compliance and E-Verify rules and procedures. During his career, John has advised human resource managers and executives on a wide variety of corporate immigration compliance issues, including the implementation of electronic I-9 systems. In his current role, John serves as Executive Vice President and General Counsel at LawLogix, where he is responsible for overseeing product design and functionality while ensuring compliance with ever-changing government rules.


    The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.

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