IMMIGRATION

What you need to know about Missouri's new HB 1549

On July 7, Governor Matt Blunt signed into law House Bill (HB) 1549, which addresses illegal immigration in Missouri. The new law cracks down on employers that knowingly hire unauthorized aliens and enacts penalties for hiring illegal immigrants. In addition, it requires the verification of legal employment status for every public employee and allows state contracts to be canceled if contractors hire illegal immigrants.

Prohibition on employing unauthorized aliens

HB 1549 provides that "no business entity or employer will knowingly employ, recruit, hire for employment, or continue to employ an unauthorized alien to perform work within the state of Missouri." In addition, the law imposes specificrequirements and restrictions on public employers, certain business entities, and contractors.

For instance, all public employers in Missouri must enroll and actively participate in a federal work authorization program (FWAP). A public employer is defined as any department, agency, instrumentality, or political subdivision of the state. A political subdivision is any agency or unit of the state that's authorized to levy taxes or cause taxes to be levied. An FWAP includes any of the electronic programs used to verify work authorization operated by the U.S. Department of Homeland Security (DHS) ― such as E-Verify.

In most cases, a private employer has the discretion to enroll in an FWAP. Indeed, under the new law, private employers may enroll and participate in an FWAP. If you elect to participate in such a program, you must verify the employment eligibility of every employee who begins working for your company after you enroll in the FWAP. The good news is that any business that participates in an FWAP will have an affirmative defense to a claim that it knowingly hired or continued to employ an unauthorized alien. In that sense, an FWAP can serve as a safe harbor of sorts.

In some cases, however, private employers may have to enroll and participate in an FWAP. For example, as a condition for awarding any state contract or grant that exceeds $5,000 or for receiving a state-administered or subsidized tax credit, tax abatement, or loan, a business must, by sworn affidavit and documentation, affirm its enrollment and participation in an FWAP for the employees working "in connection with" the project. In addition to enrolling in an FWAP, the business must sign an affidavit affirming that it won't knowingly employ any unauthorized aliens to work on the project.

General contractors and subcontractors may also need to participate in an FWAP. The law provides that a general contractor or subcontractor of any tier won't be liable for employing an unauthorized alien if its direct subcontractor employs one as long as the contract binding the companies affirmatively states that the direct subcontractor isn't knowingly in violation of the new law and will not violate it in the future. The contractor or subcontractor must also receive a sworn affidavit under the penalty of perjury attesting to the fact that the direct subcontractor's employees are lawfully present in the United States. The required contract language and sworn affidavit from all lower-tier contractors appears to apply in all construction settings, not just on a state project.

Enforcement by attorney general

The Missouri attorney general is charged with enforcing the law's prohibitions on employing unauthorized aliens. The attorney general will initiate an enforcement action after receiving a signed written complaint under penalty of perjury from a state official, business, or resident. The Attorney General's Office has 15 business days to ask the company for identity information on any employees alleged to be unauthorized aliens. If the business doesn't respond to that request in 15 business days, the attorney general will direct the applicable municipal or county governing body to suspend its applicable licenses, permits, or exemptions.

After receiving the information, the attorney general will verify the employee's identity data and immigration status with the federal government and provide the business with written notice of the results of the verification request. The employer isn't required to take any further action if the verification confirms the employee is authorized to work in the United States.

If the federal government notifies the attorney general that the employee is not authorized to work in the United States and the employer participates in an FWAP, there will be a rebuttable presumption that the company has met the requirements for an affirmative defense. The employer will still need to take corrective action, however.

If the federal government determines the employee isn't authorized to work in the United States and the attorney general reasonably believes the business knowingly violated the provision prohibiting the employment of unauthorized aliens, the attorney general will file a civil action against the employer. If the court finds that the business didn't knowingly violate the prohibition on employing unauthorized aliens, the employer will have 15 business days to take corrective action. If it fails to take corrective action within that time period, the court will direct the applicable municipal or county governing body to suspend the company's permits and any applicable licenses or exemptions until it takes corrective action.

If the court finds that the business did knowingly employunauthorized aliens, it will direct the applicable municipal or county governing body to suspend the company's permits and any applicable licenses or exemptions for 14 days. The court will reinstate any suspended permits, licenses, and exemptions if the business takes corrective action during the 14-day period.

Correcting a violation

A business seeking to correct a violation must undertake certain actions. It can terminate the unauthorized alien's employment orafter acquiring additional information from the employee, it can ask the federal government to perform a secondary or additional verification of his authorization under the procedures of an FWAP.

In addition, a legal representative of the business will submit to the attorney general:

1. a sworn affidavit stating that the violation has ended, including a description of the specific measures and actions the company took to end the violation and the name, address, and other adequate identifying information for any unauthorized aliens related to the complaint; and
2. documentation confirming that it has enrolled in and is participating in an FWAP.

If the attorney general orders the suspension of a business' license or licenses, the suspension will end one business day after a legal representative of the company submits the above-mentioned affidavit and other required documentation (such as confirmation of the business' enrollment and participation in an FWAP) to the attorney general. An entity that violates the provision prohibiting the employment of unauthorized aliens for a second time will lose its business permit and any applicable licenses or exemptions for one year. For subsequent violations, the company will permanently lose its business permit and any applicable licenses or exemptions.

In addition having its permits or licenses suspended, a business with a state project that violates HB 1549 will be deemed in breach of the contract, and the state may terminate the contract and suspend or debar the company from doing business with the state for three years. Upon termination of the contract, the state may also withhold up to 25 percent of the total amount it owes the business. If a second violation occurs, the business will be deemed in breach of the contact, and the state may terminate the contract and permanently suspend or debar the business from doing business with the state. The state may also withhold up to 25 percent of the total amount it owes the business.

Also, any compensation ― whether in money, in kind, or in services ― knowingly provided to any unauthorized alien may not be allowed as a business expense deduction from any income or business taxes of the state. Likewise, any business that terminates an employee according to the provisions of HB 1549 will not be liable for any claims under Section 213 of the Revised Missouri Statutes (Human Rights). Although the statute contains immunity from state employment lawsuits, it doesn't prevent employers from being sued in federal court under Title VII of the Civil Rights Act of 1964.

Finally, knowingly transporting an illegal alien in Missouri for the purpose of employment is a felony punishable by a fine of at least $1,000 and imprisonment for at least one year or both.

Misclassifying employees as independent contractors

Employers with five or more employees will be required to file federal 1099- miscellaneous forms with the Missouri Department of Revenue within the same deadline for filing of Missouri Form 99s (currently on or before February 28 of each year for the previous calendar year). Previously, federal 1099-miscellaneous forms didn't have to be filed with the Missouri director of revenue. An employer that intentionally fails to submit the forms five or more times will be fined up to $200 for each time it neglects to file forms on or after the fifth occurrence.

Employers are prohibited from knowingly misclassifying a worker as an independent contractor by failing to claim him as an employee when they know that he's an employee. The attorney general has the authority to investigate any alleged violations. Anyone violating this provision will be subject to a fine of $50 per day per misclassified worker up to $50,000.

OSHA training requirements

In addition to its immigration provisions, HB 1549 imposes new occupational safety training requirements for both immigrant and nonimmigrant employees. Any person, contractor, or subcontractor signing a contract to work on public works construction projects for any public body must provide on-site employees with a 10- hour construction safety and health course. The course must be approved by the Occupational Safety and Health Administration (OSHA) or be as stringent as an OSHA- approved course. Employers may not know or understand whether the course their employees attend meets that "as stringent" standard, however.

Public works are defined as all fixed work constructed for public use or paid for out of public funds. Public works projects include any work done directly by any public utility company ― but not public utilities under the jurisdiction of the Public Service Commission ― or other public authority. All employees are required to complete the OSHA-approved course within 60 days of beginning work on the public works project.

Any employee required to but found not to have completed the safety course will have 20 days to produce documentation of his completion of the course or be removed from the project. The penalty for contractors that don't follow this provision is $2,500 plus $100 per day for every employee who hasn't completed the course. The public body awarding the contract can withhold the penalties from the contractor's payment, and the contractor may withhold or recover payments from the subcontractor to cover any penalty the subcontractor is responsible for. If the contractor or subcontractor fails to pay the penalty within 45 days, the Missouri Department of Labor and Industrial Relations will file an enforcement action to recover the penalty and the cost of enforcement.

Concerns about HB 1549

A number of concerns have been raised about the new law's immigration-related provisions. Most notably, the legislation may be susceptible to a constitutional challenge. Immigration enforcement is regulated by the DHS. It could be argued that the Missouri law addresses an issue that should be handled by the federal government.

Another concern is that employers will need to make great efforts to identify every contract with the state or a county or local government and verify the status of all workers employed "in connection with" the public project. Some observers have asked whether the law covers things like Medicaid payments by the state.

Bottom line

The provisions of the law regulating employee misclassification as independent contractors, filing federal 1099-miscellaneous forms with the state, and knowingly transporting illegal aliens for purposes of employment take effect August 28, 2008. The provisions that prohibit hiring illegal aliens take effect January 1, 2009, and the OSHA training mandate takes effect August 28, 2009.

As a result of the enactment of HB 1549, many of you will have to meet stricter compliance requirements, and you may be subject to harsh penalties for failing to follow the law's immigration provisions. Furthermore, you'll be faced with the challenge of complying with Missouri's new immigration law in addition to federal regulations, along with responding to enforcement actions filed by the Missouri attorney general or the federal government.