Immigration Legislation Update: Everything You Need to Know About the Georgia Security and Immigration Compliance Act
By
Hon-Vinh Duong
In the continued absence of comprehensive immigration reform, lawmakers in states and localities around the
United States have proposed, considered and/or enacted laws and ordinances aimed at stricter enforcement of U.S. immigration laws. In 2006, the Georgia State Legislature enacted one of the toughest and most sweeping
immigration measures in the United States, known as SB 529, The Georgia Security and Immigration Compliance Act. This article provides in question and answer format a brief overview of pertinent sections of SB 529.
What is SB 529?
The Georgia Security and Immigration Compliance Act was signed into law on April 17, 2006. SB 529 covers a wide variety of topics, including employment verification, human trafficking, public benefits, identification, tax withholdings, state enforcement of federal immigration and ethics for immigration assistance services.
What are some of the key provisions of SB 529? Key
provisions of SB 529 include the following:
- Requires all public employers and all government contractors and subcontractors to register and participate in the federal employment eligibility verification program otherwise known as E-Verify (formerly known as the Basic Pilot Program).
- Authorizes trained state law enforcement officers to enforce federal immigration and custom laws while performing their authorized duties.
- Prohibits an employer from deducting compensation over $600 paid to an illegal immigrant as an allowable business expense.
- Requires employers to withhold a 6 percent tax on compensation paid to all non-resident workers who cannot provide a taxpayer ID number, who provide an incorrect taxpayer ID number or who provide a non-resident taxpayer ID number.
- Requires county, municipal, and regional jails to determine the legal status of prisoners who are charged with a felony or DUI and notify Immigration and Customs Enforcement if the individual is not legally in the United States.
- Requires verification of legal U.S. residence for public benefits where residency is a requirement and where the individual requesting the benefit is over 18 years old.
What is E-Verify?
E-Verify is an internet-based employment eligibility verification program, operated by the U.S. Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA), that allows employers to electronically verify through an online government database the work eligibility of newly hired employees. E-Verify is administered by U.S. Citizenship and Immigration Services (USCIS).
Is registration and participation in E-Verify mandatory for all employers in the State of Georgia?
No. Registration and participation in E-Verify is limited to employers who enter into a contract with a “public employer” in the State of Georgia for the physical performance of services within the state.
If your company enters into a contract with a private entity, your company is not required to register and participate in E-Verify. However, your company must still continue to verify the employment eligibility of newly hired employees by properly completing Form I-9.
If your company is contracting with a public employer for the physical performance of services within the State of Georgia, your company is required to register and participate in E-Verify. Subcontractors who subcontract with a public employer must also register and participate in E-Verify.
What is a “public employer?”
SB 529 defines a public employer as “every department, agency or instrumentality of the state or a political subdivision of the state.”
My construction company has a contract with a public employer in the State of Georgia. When does my construction company have to register and participate in E-Verify?
The date a public employer and its contractors and subcontractors must register and participate in E-Verify depends on the overall size of the public employer, contractor or subcontractor.
Registration and participation in E-Verify was effective July 1, 2007 for public employers, contractors and subcontractors with 500 or more employees; on July 1, 2008 for public employers, contractors and subcontractors with 100 or more employees (but less than 500); and on July 1, 2009 for all other public employers, contractors and subcontractors.
My construction company employs over 500 employees. We currently have a contract with a public employer that only employs 200 employees. What is the effective date for registering and participating in E-Verify?
This is a gray area that is not adequately addressed by SB 529. If ABC Company employs over 500 employees and the public employer, with which it has a contract, employs less than 500 employees, the public employer is not required to register and participate in E-Verify until July 1, 2008. HOWEVER, it is unclear whether ABC Company would be required to register and participate in E-Verify on July 1, 2007 (the effective date for companies with 500 or more employees) or July 1, 2008 (the effective date covering the public employer with which ABC Company has a contract). Similarly, it is unclear which date applies to XYZ Subcontractor with over 500 employees if the XYZ contracts to perform physical services for a contractor that is not yet subject to SB 529 because it employs less than 200 workers.
Until the Georgia Department of Labor issues additional guidance regarding this issue, it is recommended that your company register and participate in E-Verify on the effective date triggered by the overall size of your company.
Areall contracts with public employers subject to the employment verification requirements under the E-Verify program?
If your company employs 500 or more employees, you are only required to register and participate in E-Verify to verify the employment eligibility of all new employees for new contracts executed on or after July 1, 2007. Existing contracts are not subject to the employment verification requirements of SB 529. However, employers will likely be required to register and participate in E-Verify for contract renewals and/or amendments.
The employment eligibility of employees hired prior to July 1, 2007 does not have to be verified through E-Verify. In other words, employees hired prior to July 1, 2007 and who are assigned or transferred to a public employer jobsite will not be subject to the electronic employment verification requirement.
Does a public employer or contractor have any oversight responsibilities to ensure compliance with the SB 529’s employment verification requirements?
The final rules, as promulgated by the Georgia Department of Labor, require a public employer to incorporate language in its contracts with contractors regarding compliance with E-Verify and to secure affidavits of compliance from its contractors. This language also requires the contractor to include similar language in its subcontracts and to obtain affidavits of compliance from its subcontractors.
How does my construction company participate in E-Verify?
In order to participate in E-Verify, your company must register online and execute a Memorandum of Understanding with the Social Security Administration and U.S. Department of Homeland Security. Employers may utilize a third party or designated agent to conduct verification on its behalf.
The online verification is submitted after the employee has been hired and completed a Form I-9 (the paper form that all employees complete to demonstrate their identity and eligibility to work in the U. S.).
My construction company is headquartered in Virginia, but will be entering into a contract with a public employer in the State of Georgia for the physical performance of services in Georgia on July 1, 2007. Does registering and participating in E-Verify with regard to the Georgia contract subject my entire construction company to the E-Verify program?Two important considerations about E-Verify are that registration in E-Verify is on a state-by-state basis and that registration is worksite specific. Consequently, employers that are required to participate in E-Verify in Georgia will not be required to participate in other states merely because of their participation in Georgia.
Further, E-Verify’s worksite specificity allows an employer to “opt out” of particular work sites that are not subject to SB 529’s requirements. For example, if ABC Company has two worksites in Georgia: one contract with a “public employer” and another with a private employer, ABC Company must register and participate in E-Verify for those new employees engaged in the public employer contract, but may opt out of participating in E-Verify for the private employer contract.
Besides the employment eligibility verification requirement, are there other provisions of SB 529 that potentially affect my company?
Section 8 of SB 529 requires employers to withhold a 6 percent tax for all non-resident 1099 workers who cannot provide a taxpayer ID number, who provide an incorrect taxpayer ID number or who provide a non-resident taxpayer ID number.
In May 2007, the Georgia State Legislature enacted SB 189 containing certain amendments to the Georgia income tax code (consistent with the revenue measures in SB 529) to provide that employers in Georgia must withhold 6% as state income tax from payments to individuals for labor services when such payments are reported on a Form 1099 if the individual has failed to provide a taxpayer identification number, failed to provide a correct taxpayer identification number, or a taxpayer identification number issued for a nonresident alien. This requirement applies to all employers in Georgia, not just public employers and their contractors, effective July 1, 2007.
This provision of SB 529 applies only to state withholdings and is not applicable to an employer’s federal withholdings. Further, the state withholding is not required if the 1099 individual is authorized to work in the United States. SB 529 appears to apply only to individual independent contractors who provide a Social Security Number or an Individual Taxpayer Identification Number on the IRS Form W-9 when they are hired.
As yet, there is no system currently available for an employer to confirm the accuracy or genuineness of a taxpayer identification number and no guidance regarding the process for collecting and reporting the withheld taxes. Presumably, any deficiency will only become known to an employer after its state income tax returns are filed and subsequently audited by the Georgia Department of Revenue.
Employers who are exempt from federal withholding pursuant to a properly file IRS Form 8233 are exempt from this 6% state withholding requirement.
Because the effective date of this provision was July 1, 2007, employers need to determine whether they have been employing any 1099 individuals since July 1, 2007. If so, employers must establish and implement a policy regarding whether to withhold and what documentation to request from individual 1099 contractors.
Summary
The impact of the Georgia Security and Immigration Compliance Act will not be fully felt until the General Assembly appropriates the necessary funds to enforce this new law. Nevertheless, employers are now on notice that the State of Georgia has an aggressive, get tough law on illegal immigration and is prepared to crack down on businesses that hire undocumented workers.