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The case for immigration reform

Aslam Khan got started in the restaurant business the way many immigrants do: washing dishes. In 1987, soon after arriving from Pakistan, he got hired by a Church’s Chicken in Los Angeles. After 13 years of working up to cashier, shift manager and ultimately chief operating officer, he bought a franchise himself.

“My mission was to come out of Pakistan and change my life,” recalls Khan, now the brand’s largest franchisee, with 153 units headquartered in Westlake, Texas. The restaurant business, he says, “gave me an opportunity to come over here, create thousands of jobs and contribute back to society.”

For Khan, part of giving back means offering a hand up to new immigrants. So he felt stung on a personal level, not just a business one, when he signed on with the federal government’s E-Verify system, which checks legal eligibility to work in the U.S. Close to 100 of Khan’s employees were flagged for suspect Social Security numbers or other documents. He gave them a chance to correct any errors, but most couldn’t, including several store managers. He had to let them all go. It cost $1 million in recruiting, retraining and sales, he estimates, not counting emotional costs.

“It was people’s livelihoods,” Khan says. “Many of these people had been in our system awhile. They were doing a really good job. It was difficult, but I had no choice. I had to comply with the law.”

At the Gulf Shores Plantation, a resort in Gulf Shores, Ala., a fifth of Pedro Mandoki’s off-season staffers left on their own—even ones who had passed E-Verify—after the state enacted one of the strictest immigration laws in the country. “They just left,” Mandoki says. “They felt they were being harassed. There was so much press about what was going on, they had a feeling of, ‘You’re not welcome.’”

Long a simmering issue for operators, immigration is reaching a boil this year. A divided Congress is wrestling with reform, and restaurant owners are lobbying hard to make it food service-friendly.

Above all, the industry craves certainty, says Rob Green, executive director of the National Council of Chain Restaurants. As states such as Alabama, Arizona and Georgia pass conflicting rules, he says, “a federal approach is much preferable to the patchwork of state laws. It’s important to have certainty in terms of enforcement and expectations.”

In the bigger picture, restaurants want to be certain of two things: finding enough workers and hiring them without fear of workplace crackdowns.

Food service is among the top employers of foreign-born labor, reported the Pew Research Center in January. Immigrants account for 22 percent of the industry’s workers. Without them, say many, restaurants simply couldn’t run.

A critical link

Karen Bremer, executive director of the Georgia Restaurant Association and a former German citizen, points to a sharp drop in U.S. birthrates after 1964. “Nowhere ever, in the history of the world, has an economy expanded with a declining population,” she says. “And we have jobs in our country that Americans choose not to do.”

Don Fox agrees. The CEO of Firehouse Subs points to a new unit in the oil field boomtown of Midland, Texas. The franchisee is paying up to $15 an hour, and still has trouble filling jobs such as prep cooks and dishwashers. “Very often, new people in the workforce, like immigrants, are eager to fill those jobs that natural-born Americans are not always eager to fill,” says Fox, whose 670 units are headquartered in Jacksonville, Fla.

In resorts, where most revenue is crammed into a few months, restaurants depend even more on foreign workers. One is Morey’s Piers, a boardwalk amusement park in Wildwood, N.J. which includes five restaurants. It hires 600 guest workers each summer on short-term J-1 visas that allow them to work three months and travel one.

“It has provided seasonal staffing that we are not able to fill domestically, especially in our shoulder seasons,” says Director of Waterpark Operations and Human Resources Denise Beckson. “Due to the seasonal nature and geographic remoteness of our business location, we are not able to attract a sufficient number of American applicants to successfully operate our business.”

Nonseasonal restaurants have no such options, notes Jay Perron, vice president of government relations for the International Franchise Association. Both high-tech firms and farmers can sponsor foreigners as guest workers. “But because of the way the laws are currently written, there’s no way for low-skilled, low-income workers, who are essential to our industry, to get here,” Perron says.

Of course, 11.7 million illegal immigrants already are here, Pew estimates—and 1.1 million of them work in food service. Undocumented employees make up 12 percent of its workforce, surpassed only by farming, building maintenance and construction. They tend to work disproportionately in the back of the house, where speaking English is less important. Pew calculates that 19 percent of cooks are undocumented, and 28 percent of dishwashers.

Cracking down

Until recently, few restaurant owners worried about immigration status, says Tamar Jacoby, president of the business federation ImmigrationWorks USA. “The law basically wasn’t enforced,” he says. Businesses did what they could to look at documents, hoping for the best. But when enforcement started to get tougher, that approach wasn’t going to work any more.”

The hammer fell in 2009. That year, U.S. Immigration and Customs Enforcement changed tactics. In place of raiding workplaces, it stepped up audits of I-9 forms, which record the documents that new hires show to work legally. Audits are a more efficient use of resources, says ICE spokesman Brandon Montgomery, “This strategy reduced the need for large-scale immigration enforcement actions.”

In 2008, ICE performed 503 such audits. By 2012, the number was 3,004. That year, ICE assessed $12.4 million in fines, with the record restaurant fine hitting $90,508.

From a public relations standpoint, the agency avoids hauling off cooks in handcuffs, says Tampa immigration lawyer Jennifer Roeper. “Now, there are more of these silent raids. The effect is the same, but they’re not swooping in with guns and badges. Employees tend to fire themselves,” she says.

That’s what happened at Sushi Zushi in San Antonio in July 2012. According to local press reports, auditors descended while owner Alfonso Tomita was overseas. By the time he got back, rumors of the audit had spread throughout the workforce. So many employees left at once, that the chain was forced to close all eight locations. It took a month to restaff and reopen. (Tomita did not respond to interview requests for this story.)

The highest-profile headache is still afflicting 1,500-unit Chipotle Mexican Grill. A 2010 audit of 50 restaurants in Minnesota led to the departure of 450 employees. ICE pursued further audits in Washington, D.C., Virginia, Atlanta and Los Angeles, while other federal bodies launched civil and criminal investigations. Chipotle reports that it has yet to be fined by any agency, though it’s spent more than $1 million on legal fees.

“It was an eye-opening experience for us,” says spokesman Chris Arnold. “Our immigration compliance programs and policies exceeded what was required by law, and we were still found to have a number of employees who had provided bogus documents.” The company, he adds, has since created a team of I-9 specialists and trains managers on its policies.

Turning a corner

It’s to avoid such nightmares that the industry is reluctantly embracing E-Verify. For much of its 16-year history, error rates have been high. But critics say both accuracy and user-friendliness have improved, so that checking documents against Social Security and Department of Homeland Security databases can be as quick as running a credit card. It’s also free to operators. An April survey by ImmigrationWorks USA and the National Restaurant Association found that 49 percent of corporate-owned restaurants are using it, and 80 percent of users would recommend it to others.

“Originally, I thought we would never be able to hire anyone again,” says user Seth Goldstein, a Dunkin’ Donuts franchisee in Bayshore, N.Y. “But very few have been flagged. We find we’re actually saving money, because that person we hire is more likely to stay.”

A wide-ranging reform bill, passed by the U.S. Senate in June, would make E-Verify mandatory nationwide. That’s fine with the NRA and other industry groups, but they want something more: legal protection for employers if a worker’s ID turns out to be fraudulent.

“We’re willing to do what the government wants us to do,” says Angelo Amador, the NRA’s vice president for labor and workforce policy. “But once we do it, we should be safe from liability.”

Restaurant groups hope to see two other key pieces in any reform law:

  • A process to let many of the 11 million already here work legally—though not necessarily a path to citizenship.
  • A guest worker system robust enough for restaurants to meet future needs.

“Without dealing with future flow, you end up with continued pressure on the border, as people keep looking for ways to gain employment, and there’s no mechanism for them to realize that,” says Richie Jackson, CEO of the Texas Restaurant Association.

The Senate bill goes partway toward that goal. It would create a 3-year W-visa for low-skilled workers, eligible for jobs that employers had advertised and failed to fill with citizens. But only 20,000 visas would be issued in the first year, a fraction of the industry’s needs. Lobbyists hope the House will raise that cap.

Guest worker programs have some critics, like Saru Jayaraman, co-director of the New York City labor group Restaurant Opportunity Center. “They don’t allow workers to speak up for issues on the job, because they’re beholden to whoever sponsored them,” she says. “The alternative is real legalization programs that allow people to stay, with the same working conditions and wages as everybody else.”

Many restaurant lobbyists would like some form of legalization, but in today’s gridlocked Congress, they’ll take what they can get. Their dilemma is that Republicans and Democrats appear more motivated for an immigration deal than ever before. But issues such as military strikes and budget showdowns keep pushing it off the floor.

As of press time, House leaders have declined to act on the Senate bill. But several House committees are readying their own bills, targeting more limited issues such as border security, guest workers and immigrant children. Lobbyists are hoping the House finally will vote on those bills in the first quarter of next year, then try to reconcile them with the Senate bill. After touring the country during the August congressional recess, Amador believes it still can happen.

“The whole mood of the country has changed,” he says. “Whether it’s Ohio or Arizona, people are either pro doing something or neutral.”

Restaurant owners, he says, have helped to win over some in Congress. “Something I hear over and over is, ‘So-and-so represents my district. I know him when he comes to my restaurant, and I’m taking him aside and talking.’ That’s one of the reasons we’re getting as much support as we’re getting.” 

I-9s: What to do before the knock on your door

Sitting innocuously in your personnel office is a time bomb. As Seattle immigration attorney Gregg Rodgers describes it, “An I-9 is a liability to the government that you hold in your filing cabinet.”

Until recently, few businesses took the forms seriously. Which means their files often are full of omissions and mistakes. Today, paperwork errors can cost a restaurant five-figure fines, even if all employees are legally here. How can you defuse the bomb? Here are some tips from the experts:

  • Audit yourself. Once Immigration and Customs Enforcement comes knocking, you have only three days to turn over your files. Get them in order now, so that you can correct mistakes. Don’t begrudge $500 to have an attorney do the audit because you can be fined for correcting mistakes improperly—from $110 to $1,100 per infraction.
  • Put someone in charge. “Choose an I-9 captain,” says Tampa, Fla. immigration lawyer Jennifer Roeper. “Get somebody well-trained on the I-9 issue, and make sure every I-9 is run through that person to approve.” If you have multiple stores, train each manager, but send every form to the captain for final approval.
  • Document dos and don’ts. Don’t try to save time by asking for specific documents, like a driver’s license and Social Security card. That can get you sued for discrimination. The I-9 form lists 26 acceptable documents. “Technically, the choice from the list of acceptable documents is the employee’s choice, not the employer’s choice,” says Rodgers.
  • Do be sure the person who views the documents is the same person who writes them on the I-9—and make sure they’re original documents, not copies. Don’t write down more than two, because you also can be fined for over-documentation.
  • When all else fails, appeal. “If you challenge fines, you usually get them knocked down,” says Kelly Eisenlohr-Moul, an Atlanta immigration attorney. That’s partly because appeals are heard in a separate agency, the Department of Justice. A Subway owner with seven employees—all legal—got his fine reduced from $46,282 to $9,600. But appeals are a last resort, notes Eisenlohr-Moul. It’s cheaper for your lawyer to show mitigating evidence before auditors set the fines. 

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