Collection of Civil Fines
Employer sanctions enforcement has relied heavily on civil fines. From October 1992 through July 1995, INS worked 4,337 employer sanctions cases resulting in civil fines. The fines for these cases totalled $15,215,399.51 Fifty-three percent of fine cases have been "substantive" violations for knowingly hiring or continuing to employ, with the remainder being verification-only or "paperwork" violations.52
Civil enforcement may be a less effective deterrent for sweatshop employers than for the typical mainstream employer. Sweatshops often operate in the underground economy, with a brief and clandestine existence. Sweatshop operators may prevent the collection of civil fines by quickly moving their operations, dissolving or simply discarding shell corporations, and opening up in a new location under a new name. Consequently, there may be little deterrence to the threat or imposition of an employer sanctions fine for the sweatshop operator. The INS districts we visited all had experienced difficulties in collecting employer sanctions fines from sweatshop operators. Because the actual dollar amounts of the civil fines and collections are not broken down by type of employer, INS does not know the exact amount of fines assessed or collected from sweatshop owners. Therefore, only the overall collection picture can be addressed.
INS needs to aggressively collect its employer sanctions fines if the program is to have a deterrent effect. LYNX, the INS employer sanctions data base, shows over $38 million in final orders for employer sanctions fines since inception of the employer sanctions program.53 INS Finance reports that approximately $34 million of these fines have been collected.54 Therefore, there is apparently $4 million outstanding in uncollected final orders for employer sanctions civil fines. The information in the LYNX system is only as complete and accurate as the information entered into it by agents in the field. We believe that the actual uncollected amount of civil fines may be greater than $4 million because INS officials told us that some civil fine final orders may not have been entered into LYNX. While LYNX shows total amounts of fines assessed, it does not track amounts collected or identify delinquent debtors. At present, INS has no national system for billing, tracking, and collecting employer sanctions fines. Consequently, the chance that fines will not be billed, tracked, and collected is increased substantially. INS' Director of Debt Collection and Cash Management informed us that INS intends to centralize the collections process.55
The employer sanctions collections effort is currently coordinated at the district level. The New York and San Francisco Districts have established and maintained an effective system for tracking collections. These two districts are also working with the U.S. Attorneys' Offices to pursue default judgments against delinquent debtors. However, we found that the Los Angeles District had no system to track fine collections or to pursue delinquent debtors, and did not know which of its over $2.5 million in employer sanctions fines had not been paid.56 The problem was further exacerbated by the fact that many of the fined employers had agreed to settlements requiring installment payments. When debtors failed to make payments, no action was taken, or could be taken given the lack of a tracking system. While we were in Los Angeles, we informed District officials of the nature and extent of the problem and they immediately began implementing a collections tracking and delinquent collections system. We also met with officials of the U.S. Attorney's Office in Los Angeles who agreed to assist the District in collection matters and to train District personnel in collections.
The Federal Claims Collection Standards, 4 CFR 102.13, require that agencies charge delinquent debtors interest at the published U.S. Department of Treasury tax and loan account rate, a penalty not to exceed 6 percent a year, and charges to cover the actual administrative costs incurred as a result of the delinquent debt. We found that INS is not charging interest, penalties, or costs on delinquent employer sanctions fines. We believe these charges would encourage prompt payment, especially since most employer sanctions fines are settled by negotiation and many are paid in installments.57 INS' Director of Debt Collection and Cash Management informed us that when a national system is implemented these charges will be assessed.
INS' collections practices affect its entire employer sanctions enforcement effort. However, we believe that prompt and aggressive collections are particularly important in sweatshop-related cases. INS needs to collect from fined sweatshop operators before they simply disappear, or go out of business, and to encourage their prompt payment by assessing interest, penalties, and costs. This effort is important for its deterrent effect and should involve early coordination with United States Attorneys to use judicial remedies to preserve INS' ability to collect its fines.
Removing Illegal Aliens
Currently, INS' detention and removal efforts in the interior are concentrated primarily on criminal aliens. Non-criminal aliens arrested in employer sanctions investigations are a low priority for detention and usually are processed and immediately released. Our February 1996 report titled, Deportation of Aliens After Final Orders Have Been Issued, found that only about 11 percent of non-detained aliens are deported. INS does not have adequate resources to house and deport most of the illegal aliens it encounters in the worksite. The New York District, for example, has only 255 beds at its detention facilities. The New York District Employer Sanctions Unit estimated that only 10 percent of the aliens arrested at worksites would be removed from the U.S.58 In Los Angeles, the Employer Sanctions Unit offered a similar estimate.
INS national worksite arrest statistics and removal targets reinforce what we were told in the field. INS has reported approximately 10,000 to 12,000 worksite arrests of illegal aliens annually from FY 1991 to FY 1995. INS has targeted 12,400 worksite arrests for FY 1996 and 17,200 for FY 1997. Prior to FY 1996, INS did not track removals associated with worksite enforcement. However, INS intends to modify systems to track these removals this fiscal year. INS has targeted 1,680 worksite enforcement removals for each of FY 1996 and FY 1997. If INS meets these targets, its removal rates for aliens arrested in the worksite will be 13.5 percent for FY 1996 and 9.8 percent for FY 1997.59
Even if the illegal alien work force in the U.S. were to remain static at 2 million and INS were to meet its removal targets, INS worksite removals would equal less then 0.1 percent of the illegal alien work force and could be expected to have a statistically insignificant effect on the remaining work force. Consequently, we believe that a large illegal immigrant work force is likely to continue to be available to sweatshop operators for the foreseeable future.
INS CAN PLAY A
LEADERSHIP ROLE IN A GLOBAL
APPROACH TO SWEATSHOP ENFORCEMENT
INS participation in the Deputy Attorney General's Interagency Working Group on Sweatshop Strategy Coordination could be a major component of a more effective battle against sweatshops. A coordinated interagency enforcement strategy would draw on the investigative resources and sanctions available to several agencies, including the FBI, DOL, INS, and the Internal Revenue Service (IRS). Some INS field units have made important strides in using interagency task forces and innovative enforcement approaches to enforce immigration law in sweatshops and the underground economy. However, an increased INS emphasis on criminal investigations targeted against sweatshops would significantly aid interagency enforcement efforts. While the only employer sanctions criminal offense is a misdemeanor, alien smuggling offenses are felonies. The ability to implicate sweatshop operators in alien smuggling could result in significant criminal penalties and help put sweatshops out of business.
As a result of the well-publicized raid on the sweatshop in El Monte, California, the Attorney General requested the creation of an interagency group to develop a coordinated strategy and mechanism for sweatshop enforcement. On October 10, 1995, the Office of the Deputy Attorney General hosted the first meeting of the Interagency Working Group on Sweatshop Strategy Coordination. The group brought many agencies together that have an interest in sweatshop enforcement including INS; DOL Wage and Hour Division; DOL Solicitor of Labor; FBI; Department of Justice, Civil Rights Division; the Executive Office for United States Attorneys; and the White House Domestic Policy Council. The initial agenda of the group included enhancing information sharing among agencies, targeting the cities already selected by INS and DOL for increased joint enforcement efforts, developing indicators for locating sweatshop trouble spots, and examining the connections between sweatshop operators and alien smuggling rings. We believe the Deputy Attorney General's group has taken positive first steps in developing and coordinating sweatshop strategy among the concerned agencies.
INS has made significant strides in its relationship with DOL. Coordination with DOL's Wage and Hour Division has steadily improved, and in some locations the cooperation between the two agencies is excellent despite some philosophical differences. The two agencies are currently meeting to revise their Memorandum of Understanding (MOU), improve the referral process, and organize joint enforcement operations in selected cities.
Further coordination between DOL's Office of Labor Racketeering (OLR) and INS could prove beneficial for both agencies. In January 1995, the OLR wrote to INS' Associate Commissioner for Enforcement requesting INS' assistance in developing a combined enforcement strategy, including the exchange of intelligence, to address labor racketeering problems involving nontraditional organized crime groups and illegal aliens.60 Subsequently, OLR participated with INS in SouthPAW, INS' employer sanctions operation in the southeast U.S. While not primarily oriented towards sweatshops, this operation resulted in the arrest of 4,044 aliens. Approximately $55.8 million in annual salaries was redirected to legal workers and more than 20 criminal investigations were initiated.61 Despite these mutual successes, OLR officials told us the two agencies have not yet established a system of intelligence exchange, which could be extremely valuable for both agencies. At our suggestion, OLR contacted and has become a member of the Interagency Working Group on Sweatshop Strategy Coordination. We expect its intelligence sharing with all the represented agencies, including INS, will increase.
The IRS has a significant stake in sweatshop enforcement. Many sweatshops violate tax laws as well as labor and immigration laws. A 1994 GAO report on the tax compliance of sweatshops showed that of the 94 garment and restaurant sweatshops studied, 84 (about 89 percent) were penalized for filing returns or paying their taxes late in one or more tax years between 1990 and 1993. As of mid-1994, 30 sweatshops in the sample owed liabilities of $492,000.62 The penalties for criminal tax violations can be especially severe and a sweatshop task force would gain greatly from the involvement of the IRS. IRS has detailed a criminal investigator to work with INS in Los Angeles. INS investigators told us that the IRS' disclosure rules are a hurdle to interagency coordination because they often prevent information sharing with other agencies. If this complex issue could be resolved satisfactorily, IRS could become a greater participant in sweatshop enforcement efforts.
Sweatshop enforcement efforts could also gain from a greater involvement of the FBI, which is responsible for investigating involuntary servitude cases. The FBI currently has an MOU in effect with INS dating from the 1980s. The MOU provides that INS will refer possible involuntary servitude cases to the FBI. FBI officials told us that fewer than five referrals were received in the last several years. FBI officials also told us that the biggest problem they had with involuntary servitude cases was finding out about them. The Bureau does not have the intelligence resources to devote to the problem. However, it is implementing a new initiative to reach out to concerned agencies and create a mechanism for identifying these cases. As part of this initiative, FBI Headquarters asked all FBI field offices to make contact with other federal agencies, such as INS, and local civic groups to establish communications links.63
The INS Los Angeles District has recognized the advantage of coordinating with other agencies in targeting sweatshop industries and the underground economy. The Los Angeles District Employer Sanctions Unit created and currently participates in the GOZER Task Force. We believe this may be an excellent model for working relationships among INS and state and local authorities. The GOZER Task Force targets the underground economy and conducts joint operations among the participating agencies (INS, IRS, DOL, the Environmental Protection Agency, the state consumer affairs office, as well as other state and local regulatory agencies).64 The District has also used the entrance authority of other task force agencies to avoid the difficulties imposed by the 3-day notice required for employer sanctions inspections that is mandated by INS' regulations. While this self-imposed requirement provides employers time to get their records in order for inspections, it has proven to be an impediment to enforcement in sweatshops and the underground economy. An internal draft review of INS' employer sanctions program has recommended discontinuing the mandatory 3-day notice, as have many of the agents we interviewed. We agree with INS' assessment to retain the notification as prudent, but voluntary. This will allow unannounced review of I-9 forms without notification when warranted.
The California Division of Labor Standards Enforcement (DLSE) has been closely coordinating with DOL in the Targeted Industries Partnership Program (TIPP) since 1992. The TIPP targets sweatshops and the underground economy and is expanding into New Jersey and New York.65 However, INS has been unable to become a part of this group due to its strained relationship with DLSE. INS' coordination with the TIPP could benefit both the overall goals of the pilot project and INS by bringing INS' investigative resources and enforcement tools into the pilot and helping INS locate sweatshops. Until the differences between INS and several of the state labor agencies are resolved, this valuable cooperation is unlikely to materialize.
INS has made some progress in its relationship with DLSE despite their differences. DLSE entered into an MOU with the IRS that requires DLSE to withhold licensing from farm labor contractors and garment contractors that have outstanding federal tax liabilities. INS negotiated a similar MOU with DLSE that would require DLSE to withhold licensing from employers who had unpaid employer sanctions fines. The MOU is currently awaiting final signature. This MOU could significantly help INS' fine collections in the garment industry. We suggest that INS explore a similar MOU with New York State, which has comparable licensing requirements for garment contractors.
DLSE does not want the immigrant-worker community to perceive it as assisting in the arrest and deportation of aliens. The DLSE Acting Commissioner told us that while he is not willing to go on joint raids with INS, he would be willing to share intelligence on alien smugglers without divulging the identities of undocumented workers.66 He informed us that he was about to undertake an extensive series of meetings with employers and employees in the Thai community, and he agreed to confer with INS before the meetings to discuss INS' intelligence needs in this area. We related the Commissioner's offer to INS officials in the Los Angeles District and in the Intelligence Division.
We believe that state labor standards enforcement agencies could be among the best sources of intelligence on employer sanctions violations and links between sweatshops and alien smugglers. These agencies have sources of information in the immigrant community who would be unwilling to share information directly with INS investigators. If these sources know that the identity of undocumented aliens will not be compromised, they may be willing to share valuable intelligence with intermediary agencies. INS could benefit from an intelligence collection effort using such agencies. However, INS' responsibility to arrest illegal aliens found in the worksite will complicate the relationship, despite the fact that these aliens are only rarely removed from the U.S.
INS could play a leadership role in a multi-agency sweatshop enforcement effort by using anti-smuggling laws to the maximum extent against sweatshop operators. Smuggling-related offenses include: 1) knowingly bringing or attempting to bring an alien into the U.S. at a place other than a designated port of entry; 2) knowingly transporting or attempting to transport an illegal alien within the U.S.; 3) knowingly concealing, harboring, or shielding from detection, or attempting to conceal, harbor, or shield, an illegal alien; and 4) encouraging or inducing an illegal alien to come to, enter, or reside in the U.S.67 All of the above offenses are felonies punishable by fines and imprisonment. The first of the offenses listed above is punishable by imprisonment of up to10 years for each alien with respect to whom the violations occur and the remaining three offenses by 5 years for each alien.68
We believe that proving sweatshop operators' involvement in smuggling-related offenses is one of the best strategies for putting sweatshops out of business because smuggling offenses carry significantly stiffer criminal penalties than employer sanctions offenses. INS has made some use of felony alien smuggling charges against employers. The charges in the El Monte case included these violations. From FY 1992 to August 1995, INS reported 15 harboring and transporting prosecutions of employers and 7 convictions.69 INS should work to make more smuggling-related cases against sweatshop employers.
CONCLUSIONS AND RECOMMENDATIONS
Sweatshops require a multi-agency approach. INS cannot successfully attack the sweatshop problem on its own. INS has no responsibility or authority for labor standards enforcement. Sweatshops that do not violate immigration law are not its concern. However, the number of sweatshops employing undocumented aliens, and violating alien smuggling laws, is sufficiently large to require significant INS attention. We believe INS can have a substantial effect on sweatshop enforcement if it can make meaningful progress in: reducing the pool of undocumented immigrant workers available for sweatshop employment, creating the maximum deterrence to employment of undocumented workers in sweatshops by effectively using all of the civil and criminal sanctions at its disposal, and decreasing the availability of counterfeit and other fraudulent documents and their usefulness in securing employment.
We realize that INS is working hard to achieve the previously mentioned goals and its success will not just aid the fight against sweatshops, but will further the broader goals of general immigration law enforcement. We also recognize that these goals require a long-term approach and will not be attained overnight. However, there are some actions that INS can take immediately that will increase the effectiveness of its sweatshop enforcement efforts.
The Inspections Division recommends that the Commissioner, Immigration and Naturalization Service:
1. Develop a plan to increase INS' ability to collect and analyze intelligence on sweatshop operators and their connection to alien smugglers.
2. Develop a sweatshop enforcement strategy that will effectively use the full range of civil and criminal sanctions available to INS under the Immigration and Nationality Act and the U.S. Criminal Code.
3. Have the immediate Office of the Commissioner work with the Governors' Offices of New York and California to maximize these states' coordination and cooperation with INS.
4. Identify and implement actions to track all employer sanctions civil fine collections, identify delinquent debtors, and assess required penalties, interest, and administrative costs.
We believe the Deputy Attorney General's Interagency Working Group on Sweatshop Strategy Coordination can, with INS participation, provide the leadership, planning and new ideas necessary to significantly increase the effectiveness of sweatshop enforcement efforts. One such idea could be developing multi-agency sweatshop enforcement task forces in selected areas of the country including, at a minimum, Los Angeles and New York City. These task forces could be organized with United States Attorneys' Offices as nuclei, similar to the structure of the Organized Crime Drug Enforcement Task Forces. Each task force could have a representative from each participating agency and an Assistant United States Attorney assigned as lead coordinator. INS participation would be essential to the success of these task forces.
1. "Sweatshops" In The U.S.: Opinions on Their Extent and Possible Enforcement Options, United States General Accounting Office, Report GAO/HRD-88-130BR, August 1988, p. 1.
2. On February 13, 1996, the President signed an executive order titled, Economy and Efficiency in Government Procurement Through Compliance with Certain Immigration and Naturalization Act Provisions. This executive order adds debarment from Federal contracting to the sanctions available for knowingly employing aliens who are not authorized to work in the U.S.
3. Federal Immigration Laws and Regulations, 1995 ed., West Publishing Co., St. Paul, MN, 1995, pp. 1180-1196.
5. Garment Industry: Efforts to Address the Prevalence and Conditions of Sweatshops, United States General Accounting Office, Report GAO/HEHS-95-29, November 1994, p. 4.
6. "Apparel Industry Initiative" Document, Region VI, United States Department of Labor, Wage and Hour Division, Dallas, TX.
7. Interview on October 12, 1995, Headquarters, United States Department of Labor, Wage and Hour Division, Washington, DC.
8. Garment Industry, GAO/HEHS-95-29, p. 8.
9. "Sweatshops" In New York City: A Local Example of a Nationwide Problem, United States General Accounting Office, Report GAO/HRD-89-101BR, June 1989, p. 2.
10. Garment Industry, GAO/HEHS-95-29, p. 5.
11. "Apparel Industry Initiative" Document, Region VI, United States Department of Labor, Wage and Hour Division, Dallas, TX.
12. Lora Jo Foo, "The Vulnerable and Exploitable Immigrant Workforce and the Need for Strengthening Worker Protective Legislation", The Yale Law Journal, Vol. 103, No. 7, May 1994, p. 2187.
13. Congressional Task Force on Immigration Reform, "Report to the Speaker, the Honorable Newt Gingrich", June 29, 1995, p. 2.
14. Keith Crane et al., The Effect of Employer Sanctions on the Flow of Undocumented Immigrants to the United States, The RAND Corporation and The Urban Institute Press, April 1990, p. 47.
15. Shirley S. Chater testimony, "Worksite Enforcement of Employer Sanctions", Hearing before the Subcommittee on Immigration and Claims of the Committee on the Judiciary, House of Representatives, 104 Congress, Session 1, Serial No. 8, March 3, 1995, p. 56.
16. Interview on November 2, 1995, District Office, United States Department of Labor, Wage and Hour Division, Glendale, CA.
17. John J. Sweeney statement, "Employer Sanctions", Hearing before the Subcommittee on International Law, Immigration, and Refugees of the Committee on the Judiciary, House of Representatives, 103 Congress, Session 1, Serial No. 12, June 16, 1993, p. 435.
18. "Thai Immigrants Are Freed After a Furor on Bondage", New York Times, 12 August 1995.
19. Background on El Monte Documents, INS Central Office, Field Operations, Washington, DC.
20. Involuntary Servitude and Slavery Case Listing, Criminal Section, Civil Rights Division, U.S. Department of Justice.
21. Susan Headden, "Made in the U.S.A.", U.S. News and World Report, November 22, 1993, p. 50.
22. Lora Jo Foo, p. 2179.
23. Susan Headden, p. 51.
24. Ann LoLordo, "Sweat and tears: Immigrants drawn to low-paying illegal sewing shops", The Dallas Morning News, November 5, 1995.
25. Michael T. Lempres testimony, "Asian Organized Crime", Hearing before the Permanent Subcommittee on Investigations of the Committee on Governmental Affairs, United States Senate, 102 Congress, Session 1, November 6, 1991, p. 328.
26. Interview on November 8, 1995, San Francisco Regional Office, United States Department of Labor, Wage and Hour Division, San Francisco, CA.
27. Michael T. Lempres, p. 328.
28. Operation Global Reach Documents, INS Central Office, Office of International Affairs, Washington, DC.
29. "Presidential Initiative to Deter Alien Smuggling Report of the Interagency Working Group", INS and the Department of State Interagency Working Group Report, p. 6.
30. Interview on September 29, 1995, INS Central Office, Intelligence Division, Washington, DC.
31. INS and Department of State Interagency Working Group Report, p. 6.
32. Interview on December 11, 1995, Headquarters United States Department of Labor, Office of Labor Racketeering, Washington, DC.
33. Interview on September 29, 1995, INS Central Office, Intelligence Division, Washington, DC.
34. Department of Justice 1996 Congressional Budget Submission, p. 31.
35. Operation Global Reach Documents, INS Central Office, Office of International Affairs, Washington, DC.
36. Interview on December 11, 1995, INS Central Office, Office of International Affairs, Washington, DC.
37. Interview on October 26, 1995, INS New York District, Investigations Division, Employer Sanctions Unit, New York, NY.
38. Ibid., and Interview on October 31, 1995, INS Los Angeles District, Investigations Division, Employer Sanctions Unit, Los Angeles, CA.
39. Immigration and Naturalization Service Select Enforcement Activities, United States Department of Justice, Office of the Inspector General, Audit Report 95-30, September 1995,
40. "Employer Sanctions Activity: FY 1988 - July, 1995" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
41. Interview on November 6, 1995, INS San Francisco District, Investigations Division, Employer Sanctions Unit, San Francisco, CA.
42. Draft "Employer Sanctions Today" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
44. Interview on October 31, 1995, INS Los Angeles District, Investigations Division, Employer Sanctions, Los Angeles, CA.
45. Draft "Employer Sanctions Today" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
49. Interview on October 4, 1995, United States Department of Labor, New York, NY.
50. Notes, Interagency Apparel Industry Joint Training Program, Newark, NJ,
October 25, 1995.
51. "Employer Sanctions Activity: FY 1988 - July, 1995" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
52. Draft "Employer Sanctions Today" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
53. "Employer Sanctions Activity: FY 1988 - July, 1995" Document, INS Central Office, Investigations Division, Employer Sanctions Unit, Washington, DC.
54. "Immigration and Naturalization Service, Employer Sanctions Fine Collections" Document, INS Central Office, Debt Collection and Cash Management Division,
55. Our March 1995 audit report titled, Cash Collections at Districts and Ports in the Immigration and Naturalization Service, disclosed that INS had not developed standardized collection procedures for employer sanctions fine receipts. INS concurred with our report's
recommendation to streamline the processing of employer sanctions fines and develop collection procedures to ensure prompt deposit of fines.
56. Employer Sanctions Cases File, INS Los Angeles District, Investigations Division, Employer Sanctions Unit, Los Angeles, CA.
57. Our September 1995 audit report titled, Immigration and Naturalization Service Select Enforcement Activities, found that many employer sanctions fines resulted in negotiated settlements, but that these settlements were not fully explained in INS' case files. INS subsequently agreed to include memoranda in case files explaining settlements.
58. Interview on October 23, 1995, INS New York District, Investigations Division, Employer Sanctions Unit, New York, NY.
59. Department of Justice 1997 Budget Submission to Office of Management and Budget, pp. 66-67.
60. Interview on December 11, 1995, Headquarters United States Department of Labor, Office of Labor Racketeering, Washington, DC.
61. "Heat being turned up on illegal immigrants", USA Today, September 29, 1995.
62. Tax Administration: Data on the Tax Compliance of Sweatshops, United States General Accounting Office, Report GAO/GGD-94-210FS, September 1994, p. 2.
63. Interview on November 6, 1994, Headquarters FBI, Criminal Investigative Division, Washington, DC.
64. Gozer Task Force Documents, INS Los Angeles District, Investigations Division,
Los Angeles, CA.
65. "First Annual TIPP Report, 92-93" and "Second Annual TIPP Report, 94" Documents, California Division of Labor Standards Enforcement, San Francisco, CA.
66. Interview on November 9, 1995, California Division of Labor Standards Enforcement, San Francisco, CA.
67. Federal Immigration Laws and Regulations, 1995 edition, West Publishing Company, St. Paul, MN, 1995, pp. 244-245.
69. "Employer Sanctions/Fraud Servicewide Level Summary" Document, INS Central Office, Office of Statistics, Washington, DC.