Thousands of small businesses in North Carolina must now use an Internet-based system to verify that new hires are eligible to work in the United States.
Under the state law, which went into effect Monday, every business with more than 25 full-time employees has to run new employees’ information through a federal system known as E-Verify.
An employer enters an employee’s name, Social Security number, address and date of birth into a system that matches it with other federal data.
“I thought if E-Verify were in place and employers were required to use E-Verify in their hiring practice, it would stymie some of the ease with which illegally present people could be hired,” said N.C. Rep. Harry Warren, a Salisbury Republican who helped spearhead the legislation.
Employees whose information goes through without a discrepancy are cleared to work. Employees whose names are flagged have eight days to start an appeal.
The N.C. Department of Labor will investigate complaints against businesses accused of not using E-Verify, and it will issue fines of $10,000 to businesses that violate the law.
The law comes at a time when the state’s unemployment rate – 8.8 percent in May – is among the nation’s highest and immigration overhaul measures are being considered by Congress.
Warren argues that the E-Verify legislation could help reduce the state’s high unemployment by making it harder for undocumented workers to take jobs that North Carolinians could fill.
Some critics argue it’s just more paperwork. Others fear it will dry up jobs in sectors, such as construction, that are critical to the economic recovery.
Others, such as John Goodman, director of governmental affairs at the N.C. Chamber of Commerce, said North Carolina’s law is just anticipating legislation that’s likely to come from the federal government anyway.
“We’re trying to get ahead of that,” Goodman said.
The state law, which passed in June 2011 after three years of debate and modifications, has been rolled out in phases. Starting in October 2012, businesses in North Carolina with 500 or more employees had to use E-Verify for all new hires. In January, it was extended to businesses with 100 or more employees.
The latest, final phase applies to the more than 20,000 small businesses with 25 to 99 employees.
“This is the big grab,” Warren said. “This will kick a lot more people into the system, and this should help boost the effectiveness of it.”
It’s also boosting confusion, as this third and final group is the biggest yet – and perhaps the least prepared, because many larger companies had already been using E-Verify when the North Carolina law took effect.
Kenny Colbert, president of The Employers Association human resources consulting firm in Charlotte, said he’s been getting a stream of calls from small-business owners across all sectors.
“Most of our calls have been about, ‘I have read (and) heard that I have to start doing it, but how does the process really work?’ ‘How do I sign up?’ ” Colbert said.
According to the U.S. Citizen and Immigration Services, nearly 99 percent of all E-Verify searches have resulted in an employee being automatically authorized to work, either instantly or within 24 hours.
About 1 percent were correctly deemed ineligible and a fraction of 1 percent were mistakenly identified that way.
Some sectors skirt rules
Though every company with 25 or more employees has to comply, sectors, such as construction, landscaping and agriculture, that rely heavily on immigrant labor stand to lose the most.
Julian Arcila, executive director of the Hispanic Construction Association, is among the law’s critics.
The organization, which represents 254 Hispanic-owned construction businesses in North Carolina, has been holding seminars to explain the new law to its members.
“We always encourage our members in the construction industry to follow the rules,” Arcila said.
But these rules are frustrating, he said. Even with high unemployment, North Carolina faces a shortage of workers qualified to work in the construction industry, he said.
“We’re very concerned that once this rule comes into effect, we will see even (fewer) workers able to work,” he said.
The law does make an exception for “seasonal employees” – a response to lobbying from the state’s agriculture industry, said Goodman of the N.C. Chamber. Under the law, if employees work 90 or fewer days in one calendar year, the employer doesn’t have to run E-Verify background checks on them.
Seasonal status might help some construction workers, Arcila said, if they’re working on a short, residential project. But it will disqualify them from longer, commercial projects.
Leading the way
Goodman said says that, popular or not, this law is probably just a precursor to immigration legislation from the federal government, which could require E-Verify checks of all employers, no matter the size.
He said that last week a representative from the Department of Homeland Security called “to ask about our E-Verify program, what we’re doing here, how we got it right, (how) we’re working with the Department of Labor.”
And if that federal legislation does come?
“We’re ready,” Goodman said.
McMillan: 704-358-6045;Twitter: @cbmcmillan