May 20, 2016

Unionized Employers, Take Note: E-Verify Is a Minefield

On May 13, 2016, a National Labor Relations Board (NLRB) judge ordered The Ruprecht Company, a meat processor and food manufacturer, to provide confidential immigration documents to the union and to rescind its participation in E-Verify upon request of the union.

The decision raises several issues of interest to unionized employers who are seeking to comply with federal regulations concerning the employment of work-authorized individuals. Unionized employers, often in industries with high rates of immigration audit and enforcement, should consider the implications of enrolling in E-Verify following this recent decision.

Case Summary

In January 2015, Immigration and Customs Enforcement (ICE) under the Department of Homeland Security (DHS) began an audit of 262 of The Ruprecht Company’s I-9 forms. Ruprecht complied, and during the audit, decided to enroll in E-Verify (for new hires only) in order to avoid a catastrophic loss to its workforce should another audit occur in the future. It did this without first notifying the union that represented some of its employees. Of 92 employees in the collective bargaining unit, 62 employees were terminated or resigned as a result of the audit. The union asked Ruprecht for copies of letters that ICE had sent to the company identifying the affected employees. Ruprecht first provided versions of the letters with employees’ names redacted, and after the union renewed its request, asked the union to enter into a confidentiality agreement before it provided the unredacted letters. The union never entered into the agreement, and Ruprecht did not provide the unredacted letters. An NLRB judge ruled that Ruprecht violated its duty to bargain in good faith with the union by not bargaining before implementing E-Verify and by not providing the unredacted letters from ICE to the union.

Background on E-Verify

E-Verify is a free, internet-based system run by DHS that allows businesses to determine employees’ authorization to work in the United States using information from the federally-mandated Form I-9. Although employers are not required by federal law to use E-Verify, some states require employers operating within the state to use E-Verify. Certain federal contractors are also required to use E-Verify. Enrolled employers are required to sign a Memorandum of Understanding (MOU) to participate in E-Verify that creates certain obligations (such as notifying potential applicants of the employer’s use of E-Verify and ensuring proper training and compliance procedures are in place).

E-Verify works in connection with databases at DHS and the Social Security Administration (SSA) and will notify employers whether an employee is “Employment Authorized” or whether there is an information mismatch with DHS or SSA that requires further action on the part of the employee (“Tentative Nonconfirmation” or TNC). If an employee receives a TNC, he or she must affirmatively decide to contest or not contest the result. Once the employee decides to contest, he or she has eight federal working days to contact DHS or SSA to resolve the TNC.

If an employee chooses to contest a TNC and fails to follow up with DHS or SSA, the E-Verify system produces a “DHS No-Show” result. A DHS No-Show is considered a “Final Nonconfirmation” (FNC). Similarly, if an employee chooses not to contest a TNC, the final result is an FNC. An FNC from E-Verify provides the basis for an employer to terminate employment based on lack of confirmed U.S. work authorization.

Mandatory Subject of Bargaining

The National Labor Relations Act (NLRA) requires unionized employers to give the union notice and the opportunity to bargain before changing terms and conditions of employment that are “mandatory subjects of bargaining.” In February 2012, the NLRB Division of Advice (Advice) issued an internal opinion in Pacific Steel Casting Co., a case then under investigation and submitted to it by NLRB Region 32 (Oakland). Pacific Steel Casting, without first negotiating with the union, had entered into an MOU with E-Verify/DHS on the same day that DHS agents retrieved documents from the employer’s facility as part of an audit. Advice held that the employer’s participation in E-Verify was a mandatory subject of bargaining, meaning that it was required to give the union notice and the opportunity to bargain about the company’s decision to participate in E-Verify. Advice reached this conclusion by finding that participation in E-Verify affects terms and conditions of employment because (1) it imposes a certain length of time for employees to establish that they possess genuine work documents, and (2) it vests employers with substantial discretion to terminate employees who do not contest a TNC or whose final E-Verify results are an FNC or DHS No-Show. Faced with certain litigation from the NLRB, the employer settled the case.

Last week, in the very similar case of The Ruprecht Company, an NLRB judge ruled against Ruprecht after it did not settle. The Ruprecht Company had agreed to participate in E-Verify and sign an MOU after ICE began an audit of its I-9 forms. Ruprecht did not first bargain about its decision to enroll in E-Verify with the union. The judge acknowledged that the NLRB recognizes an exception to mandatory bargaining where the employer can establish a “compelling business justification” or where “economic exigencies compelled prompt action,” but refused to apply those exceptions in this case. The judge found that the employer had violated the NLRA by agreeing to participate in E-Verify without first giving the union notice and the opportunity to bargain about that decision.

Requests for Confidential Information

The NLRA also requires unionized employers to provide relevant information upon the union’s request, although employers can sometimes — as long as the information requested is not “presumptively relevant” to the union — object to providing confidential information. The union asked Ruprecht for copies of letters that ICE had sent Ruprecht identifying the employees affected by the ICE audit. Ruprecht first provided versions of the letters with employees’ names redacted, and after the union renewed its request, asked the union to enter into a confidentiality agreement before it provided the letters. The union never entered into the agreement, but the NLRB judge nonetheless found that Ruprecht had violated the NLRA by not providing the letters, apparently because he considered them to be presumptively relevant to the union’s role in representing the affected employees.

Remedies and Appeals

The Ruprecht decision ordered that, “upon request of the Union,” Ruprecht rescind its participation in E-Verify and bargain in good faith with the union for future participation in the program.

Logistically, this remedy might prove more challenging than it sounds. E-Verify requires that employers provide 30 days’ notice following a request to terminate an E-Verify account. During that time, employers are required to continue to use E-Verify in accordance with the MOU. This means that, even if the union requests that Ruprecht rescind its participation in E-Verify, the company would be required under its MOU to continue to create E-Verify cases for new hires for up to 30 days, in violation of the union’s request.

The Ruprecht Company may be waiting for a more favorable decision from the Federal courts. In 2014, in Overstreet v. Farm Fresh Company, the NLRB sought an injunction from the United States District Court for the District of Arizona to require reinstatement of employees who it said who had been unlawfully discharged. The employer offered reinstatement subject to having employment verified through E-Verify, which the NLRB refused. The court noted that E-Verify was a manner of confirming legal status permitted by federal law and required by Arizona law, and refused to order reinstatement. The court additionally required the NLRB to pay Farm Fresh’s attorneys’ fees because the agency’s reinstatement demand was unjustified. In the Ruprecht case, the employer was not required by state law to use E-Verify, but the Farm Fresh decision may still reflect a deference of the federal courts toward lawful use of E-Verify that is greater than that of the NLRB.

Before it appeals to the federal courts, however, Ruprecht must first appeal the ALJ’s decision to the NLRB itself, which has never before ruled on the issue. We at Faegre Baker Daniels will be watching closely to see whether the NLRB endorses the views of the ALJ and the Division of Advice that implementation of E-Verify is a mandatory subject of bargaining.

The Faegre Drinker Biddle & Reath LLP website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Drinker Biddle & Reath LLP's cookies information for more details.