What Will E-Verify Rules Mean for Hiring Small Businesses?

Growing numbers of government regulations have been problematic for businesses in the past and now a new one is drawing particularly significant criticism among owners, who believe it will soon become far more difficult to afford to even look for new employees.

The federal government recently advanced new rules related to the ways in which companies might have verify that job applicants are eligible to work in the United States, according to a report from the Wall Street Journal. The E-Verify system may have been launched in 1997, but now with immigration such a massive and divisive issue nationwide, there have been more significant efforts made to get a large number of businesses nationwide enrolled. As of earlier this month, only 467,328 companies nationwide are participating, but many small business owners now believe that the requirements would be too expensive to undertake all the steps necessary to verify every single applicant for any given position.

"It has significantly increased our recruiting costs," Daniel VanLoh, of Atlanta-based Rocket Farm Restaurants, told the newspaper. "We spend time and money recruiting and doing background checks on good candidates, and if the E-Verify comes back with a rejection, we have to start the process all over again."

Many note that simply using the system might require them to hire another worker whose job would include simply operate the E-Verify software, and many may also have to upgrade their computer systems to even have the ability to run these background checks, the report said. In all, at least 16 states now require at least some of the companies operating within their borders to run these checks on all job applicants they plan to hire, though these do not apply to current employees.

This may be a particularly large problem for companies that need to hire low-wage workers the most, such as restaurants, the report said. Many who may apply for these jobs might not have the legal ability to work in the U.S., and therefore the requirements not only hurt these would-be workers, but also the companies that need to run multiple background checks before they are finally able to find someone with the ability to be employed in this country.

More trouble looming for companies under these rules?
While most businesses nationwide are not currently required to run these background checks, the latest immigration bill passed by the U.S. Senate, back in June, would require all employers to run these E-Verify checks on new employees, the report said. If these employees are not authorized to work here, those businesses could face fines of as much as $7,500 per worker. That charge would double for repeat offenders.

Those fines are significantly higher than the ones currently in place for states without E-Verify mandates, where companies are only required to fill out standard I-9 forms and submit them to the federal government along with proof of authorization to work in the U.S., the report said. Hiring unauthorized workers through this process can result in penalties ranging from just $250 to $2,000.

A survey conducted late last year by the National Restaurant Association showed that about 23 percent of these businesses use E-Verify, and of those about one in four was enrolled as a consequence of state requirements, the report said. More than three in five of those who were not participating said that they did not have the resources to handle the extra verification work.

Added costs will always be a concern for independent owners, but one area in which they might have a little more control is when it comes to their small business insurance. Finding more affordable liability insurance or other policies can go a long way toward increasing flexibility.