04/26/2013 06:26 pm ET Updated Jun 26, 2013

Will E-Verify Have Discriminatory Results?

Immigration reform is fundamentally about acceptance of new people into American society. But tucked inside the Senate immigration bill is a proposal which, if enacted, will make that process of acceptance much more difficult. It's called electronic employment verification, or E-Verify, and there is every reason to believe it will have major discriminatory impacts once implemented.

The Senate bill mandates businesses use the system to check their employees' work authorization. If employees' information fails to match the information held by the government, they have two weeks to correct the record. If they fail to contest in time, their employers must fire them or risk major fines and jail time.

We know this system will lead to discrimination for at least four reasons. First, penalties for hiring unauthorized workers automatically make any group of employees more likely to be unauthorized -- Hispanics and perhaps Asians in the future -- a riskier hire.

When Congress created sanctions on employers in 1986, it knew discrimination could result. So it created a process whereby if the General Accounting Office (GAO) determined the penalties indeed led to discrimination, Congress could vote in an expedited manner to remove them. In 1990, GAO found a "widespread pattern of discrimination," but Congress never voted to repeal.

The Senate legislation will increase penalties for illegal hiring, paperwork mistakes or technical errors in the process, which further incentivizes discrimination. Moreover, a second reason for avoiding foreign-born or "foreign-looking" individuals is that if unauthorized workers beat E-Verify by assuming others' identities, employers could lose much of their workforce overnight if ICE finds out.

In fact, more than half of unauthorized immigrants beat the system through identity theft, according to the last independent audit of E-Verify in 2009. In Arizona, where E-Verify was mandated in 2008, this has caused major problems for employers. In 2011, for example, Pei Wei, a Chinese restaurant chain, had to close eight Arizona stores after immigration raids discovered unauthorized employees. Despite having no knowledge of their status, the closings cost the businesses $1.8 million in revenue.

Third is E-Verify itself. Errors that require employees to correct their records at government offices will disproportionately impact unauthorized immigrants, naturalized citizens and Hispanics, who often have multiple surnames. The 2009 E-Verify audit found foreign-born workers were 26 times more likely to receive errors, meaning they received more than 80 percent of all the errors.

According to the GAO, this "can lead to the appearance of discrimination," but it can lead to more than just the "appearance." Many businesses reject workers to avoid dealing with the appeals process -- which can take months -- or to avoid hiring, training and paying workers they ultimately will have to fire. This could cost employers $4 billion each year under a national mandate, according to a recent study.

Juan Carlos Ochoa, who lives in Arizona, discovered how E-Verify can have discriminatory effects after he was not confirmed for a job in 2008. He could not quickly resolve the error because he lost his naturalization certificate, and his employer fired him out of fear of penalties. Juan was unable to get a new certificate for months, leaving him without work and behind on his rent.

Many other workers have received similar treatment under E-Verify. According to E-Verify's 2009 audit, as many as 57 percent of E-Verify users prescreen employees to avoid those who are not immediately confirmed. A full two thirds take adverse actions against those who receive errors -- by firing them or restricting their hours or responsibilities.

E-Verify proponents argue the bill prohibits discrimination. But this doesn't affect the disproportionate impact of errors, nor has similar prohibitions stopped employers in the past. Arizona has been able to get only two-thirds of employers to even submit E-Verify checks -- let alone investigate every instance of discrimination. Moreover, far more effort always goes into stopping illegal hiring than preventing their discriminatory impacts.

In 1990, after the GAO study uncovered discriminatory effects of employer sanctions, The Wall Street Journal editorialized sanctions are the first law "since Jim Crow where the government is so closely aligned with a process that produces discrimination." The only reasonable conclusion based on these facts is that E-Verify will be remembered as the second.