Immigration Laws: January, 2004 - Number #02

On October 23, 2003, Immigration and Customs Enforcement agents arrested 250 illegal migrants who worked as janitors for outside contractors at 60 Wal-Mart stores in 21 states. The origins of the workers were various: 90 were Mexicans; 35, Czechs; 22, Mongolians; and, 20, Brazilians. Most reported earning $350 to $400 a week for 56-hour weeks, or $6.25 to $7 an hour; most did not receive overtime pay for hours worked after 40 in a week.

Wal-Mart has 3,470 US stores and 1.1 million US employees or "associates"; its global sales in 2002 were $245 billion, the same as the GDP of Belgium and more than the GDP of all but 30 countries. Many Wal-Mart employees in the US work 28-hour weeks, keeping their earnings below $15,000 a year.

Most Wal-Mart janitors are hired directly; Wal-Mart uses contractors to clean only 700 of its 3,470 US stores. In addition to violating immigration laws, many of these contractors violated labor laws, including failing to pay required social security taxes and full workers' compensation premiums. ICE discovered layers of contractors, with Wal-Mart paying $10 an hour to super contractors who then paid $9 an hour to contractors who in turn hired janitors to clean five to 15 stores.

Operation Rollback, the ICE name for the Wal-Mart raids, included wiretaps that ICE says demonstrate that Wal-Mart managers knew the contractors hired unauthorized workers. Wal-Mart said the reason for that was that it had been cooperating with ICE investigators. The arrests capped a four-year investigation aimed at ensuring "that U.S. companies do not employ individuals who are unauthorized to work in the United States."

ICE said that St. Louis resident Christopher Walters, who has 15 cleaning companies with layers of subcontractors between him and the mostly unauthorized janitors from Eastern Europe, received $37 million from Wal-Mart in 2001. Most of the Eastern Europeans arrived in the US on tourist visas and in debt for $1,000 to $2,000, and worked as janitors to pay off their debts. Some stole merchandise from Wal-Mart, alleging that they were promised $2,000 a month but received only $600 a month.

Wal-Mart said that it ended its relationship with Walters in 2002. Wal-Mart said it would review the legal status of all its US employees to ensure that they are legally authorized to work in the US. However, Wal-Mart noted that it paid a $60,000 fine for requesting additional documents from non-US citizens in 1996, and complained that employer sanctions and anti-discrimination laws force US employers to walk a fine line in hiring.

Some of the workers arrested filed suits seeking overtime pay from their contractor-employers and Wal-Mart. A class-action suit was filed against Wal-Mart and its contractors under RICO, the Racketeering Influenced Corrupt Organizations Act, which allows triple damages if the plaintiffs prevail.

Will the Wal-Mart raids mark a revival of sanctions enforcement? The Associated Press reported that the average number of completed employer investigations fell from 6,100 a year during the 1990s to 1,900 a year between 2000 and 2003, and the average number of employers fined for having undocumented workers fell from 1,025 to 110 a year, including 53 in FY02. An average of 200 unauthorized workers a week were arrested during the 1990s; since 2000, arrests averaged 12 a week. In FY01, there were 124 full-time agents enforcing employer sanctions laws--there is no separate line item in the immigration budget for workplace enforcement.

Mark Reed, a former INS regional commissioner, predicted that the Wal-Mart case will not presage a new era of workplace raids because "the numbers got away from them [ICE]," suggesting that ICE can no longer deter the employment of unauthorized workers with raids. Workplace raids are used mainly to build cases against employers, but the government suffered several high profile losses, including the acquittal of Tyson Foods and Nebraska Beef in 2003 of charges that they knowingly hired unauthorized workers.

Joe Greene, ICE's deputy assistant director for investigations, said that ICE aims to curb worker smuggling, sweatshop exploitation and instances in which undocumented workers displace US workers: prosecutions of "worst cases" are to signal employers that there is a line when employing illegal workers they should not cross.

Wal-Mart has no union contracts in the US. US unions have 16 million members, 13 percent of US employees, but only five percent of retail employees are in unions. Unions say that Wal-Mart aggressively opposes unions, while Wal-Mart says that it treats its "associates" with respect and they do not see the need for union representation.

Some 50 to 60 percent of Wal-Mart products are imported. Wal-Mart is the world's largest clothing buyer, spending $35 billion a year on clothes that are normally marked up more than 100 percent. Countries including Bangladesh treat Wal-Mart something like a foreign country, sending delegations to Wal-Mart's Arkansas headquarters to maintain ties. Wal-Mart took about 14 percent of the $2 billion in Bangladeshi clothing exports in 2002, but is increasingly sourcing garments and other manufactured items in southern China.

Wal-Mart became the largest private employer in Mexico in 2002, with 100,200 employees and $11 billion in sales, equivalent to two percent of Mexico's GDP. Wal-Mart accounts for about 30 percent of all supermarket food sales in Mexico, and about six percent of all retail sales- the same as its shares in the United States. As in the US, Wal-Marts in Mexico are non-union, with employees earning about $1.50 an hour. Wal-Mart is the largest retailer in Canada, and has outlets in Argentina, Brazil, Germany, South Korea, Puerto Rico and Britain. Analysts say that Wal-Mart has mastered the use of information technology to streamline its operations, enabling it to undercut competitors on price.

Construction. Construction is rapidly being transformed by labor brokers and subcontractors who supply workers and act as risk absorbers for general contractors. Some of the labor brokers, based in southern right-to-work states, hire unauthorized workers and do not have required workers' compensation insurance or pay required taxes, which some justify by saying that their workers are independent contractors, not employees. The labor brokers require workers to sign forms saying they are independent contractors, and send the workers 1099 statements rather than W-2 forms. The AFL-CIO estimated that brokers provide up to one million US construction workers, a sixth of the total.

For example, Texas-based Brother's Construction II supplied hundreds of unauthorized workers to drywall companies around the US, declared them to be independent contractors, and did not pay the workers overtime wages for their 56-hour weeks. Brother's had more than 20 corporate identities and moved workers among them from project to project. The spread of false independent contractors has encouraged some union agents to track day laborers to construction sites and notify ICE. In the Buffalo area, organizers for construction unions in summer 2003 notified ICE about unauthorized workers on non-union construction sites, which led to raids and arrests.

Legislation signed in December 2003 extended the basic pilot employee verification system through 2008, and allows all US employers to participate beginning in December 2004. The basic pilot, which checks the Social Security and alien identification numbers of newly hired non-US citizens against Social Security and immigration databases, had been limited to employers in California, Florida, Illinois, Nebraska and New York; 11,700 employers participated.

Registration. Between Fall 2002 and Spring 2003, some 85,519 men from 25 predominantly Muslim nations had to register with DHS: they were fingerprinted, photographed and interviewed, and 13,743 were detained for removal, usually for overstaying their visas. Only 11 had suspected links to terrorism.

DHS in December 2003 announced that this National Security Entry-Exit Registration System (NSEERS) was ending. The US Visitor and Immigrant Status Indicator Technology program (US-VISIT) began on January 5, 2004 and registers foreign visitors who require visas to enter the US by taking their photographs and fingerprints as they enter the US at 115 airports and 14 major seaports, and logging them out when they leave. Nationals of 27 countries do not need visas, and thus are exempt from US-VISIT unless they are remaining longer than 90 days or are coming to the US to study or work.

A suit filed in December 2003 accused the Departments of Justice and Homeland Security of adding routine immigration violations to the National Criminal Information Center database, which the FBI uses to notify law enforcement agencies about people wanted for crimes. By adding the names of foreigners who have overstayed visas, the FBI is in effect asking over 600,000 state and local police to help enforce immigration laws, since police routinely run the names of people they encounter through the database, which gets almost four million queries a day.

At least 300,000 foreigners with deportation orders are in the FBI database, and the government is planning to add foreign students who have not maintained their status in the US. Local police reported arresting about 500 foreigners a month in 2003 because their names are in the FBI database.

All US residents must file taxes, but only legal residents can obtain the Social Security Numbers used to file returns. The Internal Revenue Service, which issues Individual Taxpayer Identification Numbers beginning with the number nine to those without SSNs, noted that only about 75 percent of the seven million ITINs issued since 1996 were followed by tax returns. IRS is converting the ITIN card to a letter so that it is not used like a Social Security number for identification.

Ann Zimmerman, "Wal-Mart Fires Back at U.S.," Wall Street Journal, December 19, 2003. Justin Pritchard, "Despite Wal-Mart raids, crackdowns on illegal workers are rare," AP, November 30, 2003. Steven Greenhouse, "Wal-Mart Raids by U.S. Aimed at Illegal Aliens," New York Times, October 24, 2003. Fred O. Williams, "Construction Police," Buffalo News, June 13, 2003. Michael Riley, "Labor brokers. Fast-growing firms exploit immigrants to feed construction industry," Denver Post, February 16, 2003.