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Employer Verification System proposed by HR 4437

The House Judiciary Commitee voted to consider the BORDER PROTECTION, ANTITERRORISM, AND ILLEGAL IMMIGRATION CONTROL ACT OF 2005, authored by Chairman Sennsenbrenner.

The following is the portion of the report concerning the proposed Employer Verification System:

Employment Eligibility Verification System. H.R. 4437 would direct DHS, within two years of the bill's enactment, to extend and expand a system to verify the eligibility of persons for employment in the United States. CBO estimates that this would cost about $405 million over the 2006-2010 period, including $185 million for DHS, $200 million for SSA, and $20 million for other Federal agencies.

Requirements of H.R. 4437. DHS and SSA currently operate an employment eligibility verification system known as the basic pilot. This system is available to employers nationwide, but its use is voluntary and is restricted to checking the status of new hires. All inquiries to that system are handled through the Internet, and the pilot program expires in late 2008. H.R. 4437 would require DHS to set up a toll-free telephone line or other toll-free electronic media to respond within three working days to inquiries from employers seeking verification of employment eligibility and would require the department to maintain records of all inquiries and responses.

The bill would require all employers to use the new system for newly hired employees upon its establishment. Within three years of the bill's enactment (in 2009), Federal, State, and local governments, as well as certain other private employers, would have to use the system to check the eligibility of all of their employees (i.e., both new hires and the existing workforce). Within six years of enactment (in 2012), all other employers would have to do so for all of their workforces.

Number of Inquiries Expected. According to the Bureau of Labor Statistics (BLS), new hires at nonfarm establishments average about 4.6 million each month, or about 50 million to 55 million at an annual rate. (That does not mean that 50 million people change jobs every year because some people change jobs several times in a year. Nevertheless, each new hire would--after mid-2008--go through the employment verification system proposed in H.R. 4437.) The annual volume of new hires will equal about 55 million to 60 million in 2008 through 2015, CBO assumes. Employees of Federal, State, and local governments and certain other sectors--chiefly, nongovernment employees who work at Government installations, airports, nuclear power facilities, and `critical infrastructure' facilities--would become subject to verification in 2009; CBO estimates that would be about 25 million people. Finally, all other employees would become subject to verification under the bill in 2012, six years after enactment. CBO estimates that about 120 million employees would need to have their eligibility to work in the U.S. verified by 2012, although many of those people would have been newly hired after 2008 and would thus represent repeat cases. Those figures represent lower-bound estimates of the total volume of verifications because the BLS data on which they are based omit agricultural employment.

Costs to DHS. Under the bill, DHS would have primary responsibility for establishing and maintaining the system. Based on information from DHS, CBO estimates that it would cost the department about $100 million over the 2006-2008 period for upgrades to the basic pilot system to handle the huge increase in inquiries that would result from H.R. 4437. This one-time cost would include enhancements of software, hardware, databases, and other technological components of the new employment eligibility system.

In addition, DHS would have to hire personnel to respond to inquiries within three working days (as required by the bill), staff the toll-free telephone line, and maintain records of the inquiries and responses. Based on information from DHS, CBO expects that staff would be hired during 2008 and costs would reach $35 million annually, beginning in fiscal year 2009. Under the bill, the agency's cost to process employment verification inquiries would increase substantially after 2010 when all private employers would be required to check the eligibility of their entire workforce by 2012.

Costs to SSA. The SSA's responsibilities under the bill would include providing DHS with continued, secure access to its database of Social Security numbers and handling phone inquiries, personal visits, and requests for replacement cards from people seeking to clear a `nonverified' response to their current or prospective employer. Based on information from the agency, CBO estimates SSA's costs at $9 million in 2006, about $200 million over the 2006-2010 period, and about $640 million over the 2006-2015 period. Under the bill, the agency's cost to process employment verification inquiries would increase substantially after 2010 when all private employers would be required to check the eligibility of their entire workforce by 2012.

Costs to Other Federal Agencies. Finally, Federal agencies themselves would be among the employers required to verify the legal status of their workforce in 2009, three years after the bill's enactment. There are slightly over 4 million Federal Government employees, including military personnel on active duty. CBO assumes that it would cost agencies an average of $4 per employee to comply with the verification requirement. (The requirement would apply even if agencies had previously performed a security clearance or other exhaustive check.) That cost, incurred by agencies' personnel offices, consists of assembling the data for initial submission and following up the relatively few, but labor-intensive, cases that the automated system would initially fail to match. CBO estimates that Federal agencies would spend approximately $18 million in 2009 to submit their employees' basic data to the DHS system and to reconcile the new cases that would be returned as `nonverifiable.' The Federal Government would also spend an estimated $1 million annually to verify its new hires through the automated system.

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