Franchising has long been a business sector that welcomes immigrants, both as successful franchise owners and as franchise employees. But more recently, the industry has repeatedly hit the headlines for employing undocumented immigrants.
For example, in January 2018, Immigration and Customs Enforcement (ICE) agents arrested 21 people after raiding nearly 100 7-Eleven convenience stores. The search for unauthorized employees made it clear that franchise chains are being scrutinized by ICE for possible employment violations.
It’s not only federal authorities that franchise owners have to worry about, either. Franchisors have also been taking action. In 2018, Dunkin’ sued to close nearly 30 Dunkin’ Donut franchises in its system, where it claimed owners had hired undocumented workers.
Let’s face it: Many franchise owners rely on the work of undocumented immigrants. Unemployment is low, and it’s hard for many franchises to stay fully staffed. One New York Times article reported on the hiring struggles of restaurants today. According to the piece, “The specter of increased immigration enforcement is putting many of those restaurants in a more fraught situation: let go of trusted employees or risk criminal prosecution.”
Despite challenges in today’s hiring climate, it’s important that you take steps to comply with our current employment laws. How? My company specializes in training people to become franchise consultants. Through this experience, I’ve developed a quick guide (not legal advice, but a few general tips) for franchise owners:
The U.S. Department of Homeland Security’s voluntary E-Verify service allows employers to quickly confirm if prospective employees are eligible to work in the U.S. According to the department’s website, E-Verify electronically matches the information provided by workers on their I-9 form, which verifies employee eligibility, against information in the social security and homeland security databases.
Using E-Verify doesn’t magically absolve you of liability if it turns out later that you’ve hired someone who is undocumented. However, using E-Verify can show a good-faith effort to comply with employment law.
Keep good records.
It’s never been more important for franchise owners to keep employee paperwork well-organized and readily accessible. You’ll want to quickly respond to any records requests if any of your hiring decisions are challenged. You’re expected to keep records for at least three years.
Federal officials are not only rooting out the employment of undocumented immigrants; they’re also looking for employment discrimination.
It’s not OK to ask some applicants for one set of paperwork, but demand more documentation from others. In October 2019, the U.S. Department of Justice announced a settlement with MUY Consulting and MUY Brands, a Texas-based franchisee with more than 70 Taco Bell restaurants. MUY required more documents of lawful permanent residents than U.S. citizens, which caused some immigrants to lose work opportunities. MUY paid a $175,000 penalty and created a $50,000 back-pay fund to affected workers.
Respond to IRS ‘no-match’ notices.
The Social Security Administration searches for employer-submitted social security numbers that don’t match its database. If you receive an EDCOR (educational correspondence) letter, also known as a no-match notice, take it seriously, but don’t panic.
It’s possible that there was a clerical error or other confusion, so correct it on the SSA’s Business Services Online portal or ask your worker for clarification in writing. Promptly respond to correct any records that are wrong, and provide requested information. Be sure to respond to SSA within the time allotted.
Know your franchisor’s stance.
Learn all you can about your rights and responsibilities as a franchisee who hires workers. If you own a franchise or are considering buying one, here are two key questions to ask your parent company:
• What resources do you provide on employment compliance to help me stay out of trouble?
• Is there in-house legal help at franchise headquarters that might assist me if there’s a problem, or will I need to hire a lawyer?
Find out what help you can access now before a problem crops up.
Franchise owners who have large staffs but don’t recruit constantly can find themselves coming up short. Understand that in a robust economy, you’ll need to do constant outreach to keep your business fully staffed and running.
Finally, immigration law is always evolving, so be sure you stay up to date on your legal obligations around hiring workers.