The Inspections Division, Office of the Inspector General, Department of Justice, has completed an inspection of the Immigration and Naturalization Service's (INS) efforts to combat harboring and employing illegal aliens in sweatshops.
This inspection reviewed the relationship of illegal immigration to the problem of sweatshops, the obstacles to effective enforcement of immigration law in sweatshops, and the opportunities for improvement of sweatshop enforcement efforts.
SCOPE AND METHODOLOGY
We began our inspection with an extensive literature review of sweatshops and the underground economy, labor standards enforcement, and immigration law enforcement. This literature included U.S. General Accounting Office (GAO) reports, INS documents, U.S. Department of Labor (DOL) documents, the U.S. Commission on Immigration Reform 1994 Report to Congress, as well as numerous newspaper articles and other published materials. Since 1989 GAO has issued four reports addressing sweatshops in the U.S. However, GAO focused primarily on the labor and tax implications of sweatshops, rather than immigration-related issues. For the purposes of our inspection, we adopted the GAO definition of a sweatshop as a business that regularly violates wage or child labor laws and safety or health laws.1
During our field work we interviewed officials at the headquarters level at INS, DOL, and the Federal Bureau of Investigation (FBI). We traveled to and interviewed officials from INS, DOL, United States Attorneys' Offices, and state labor agencies in New York City, Los Angeles, and San Francisco. We traveled to Newark, New Jersey, to attend a session of the Interagency Apparel Industry Joint Training Program on sweatshop enforcement, and Sacramento, California, to meet with the staff of the California State Senate Committee for Industrial Relations to gain their perspectives on sweatshop enforcement efforts in California. We visited the National Drug Intelligence Center (NDIC) in Johnstown, Pennsylvania, to speak with officials concerning a project studying the connection between alien smuggling and drug trafficking. While our review was in progress, the Office of the Deputy Attorney General formed the Interagency Working Group on Sweatshop Strategy Coordination. We participated in the two meetings that the group held during the period of our review.
Sweatshops present a law enforcement problem that cuts across agency jurisdictional lines. Sweatshop industries are particularly prone to violations of immigration laws because they offer low-skilled, low-wage jobs that are often viewed as undesirable by U.S. citizens and aliens authorized to work in the U.S. INS is responsible for enforcing the nation's immigration laws, and its mission includes enforcing sanctions against those who act or conspire to subvert the requirements for legal entry, and sanctions against employers who knowingly hire aliens not authorized to work in the U.S. Enforcement programs at INS fall within the responsibility of the Associate Commissioner for Enforcement, who oversees the activities of the Investigations Division, Intelligence Division, Detention and Deportation Division, Asset Forfeiture Division, and Border Patrol. Employer sanctions, alien smuggling, and fraud are included among the program responsibilities of the Investigations Division. INS has no authority for the enforcement of wage and hour or other labor standards, which, at the federal level, is a DOL responsibility.
The employer sanctions provisions of the Immigration Reform and Control Act (IRCA), passed in 1986, make it unlawful for employers to knowingly hire aliens who are not authorized to work in the U.S.2 The intent of the employer sanctions provisions is to reduce the magnet of jobs that draws illegal immigrants to this country and to preserve those jobs for U.S. citizens and aliens authorized to work in the U.S. As a result of the 1986 law, all employees must present evidence to the employer of their identity and employment eligibility at the time of hire. Employers are required to record the information presented by the employees on I-9 forms and make this information available upon request to officers of INS and DOL Wage and Hour Division, who share employer sanctions inspection authority. However, DOL has no actual employer sanctions enforcement authority and only INS officers have the authority to determine the immigration status of employees.
INS can impose civil fines on an employer for three types of activity prohibited in the employer sanctions provisions of IRCA: 1) knowingly hiring unauthorized aliens; 2) knowingly continuing to employ unauthorized aliens; and 3) hiring any individual without verifying identity and authorization to work.3 Verification violations occur when an employer's records are filled out incorrectly, do not exist, or are not produced for inspection. Civil fines for knowingly hiring and knowingly continuing to employ range from $250 to $10,000 per alien. Civil fines for verification violations range from $100 to $1,000 per employee. The only criminal violation of the employer sanctions provisions is for a pattern or practice of knowingly hiring or knowingly continuing to employ. This misdemeanor is punishable by a criminal fine of $3,000 per alien and imprisonment of up to 6 months for the entire pattern or practice.4
RESULTS OF THE INSPECTION
ILLEGAL ALIENS WORKING IN SWEATSHOPS
Illegal aliens comprise a substantial portion of the sweatshop work force. These undocumented workers are easily exploited by unscrupulous employers and frequently labor for long hours at less than the minimum wage under unsafe and unhealthy conditions. In some cases, illegal aliens are held in sweatshops under conditions of involuntary servitude. Sweatshops exact both social and economic costs including lost wages and taxes and the fostering of organized criminal enterprises including alien smuggling, drug trafficking, money laundering, labor racketeering, and extortion.
While the existence of sweatshops would appear to be an anomaly in contemporary American society, they are not only surviving but also apparently thriving.5 Because sweatshops operate in the underground economy, reliable national data on their nature and extent is difficult to obtain. GAO has found a high incidence of sweatshops in the garment manufacturing, restaurant, and meat-processing industries. The $45 billion garment industry, with its nearly one million employees, has been a fertile field for sweatshops.6 DOL believes that one-half to two-thirds of the approximately 22,000 contract cutting and sewing shops in the U.S. may be sweatshops.7 These shops, most of which are concentrated in the New York City and Los Angeles metropolitan areas, generally employ from 5 to 50 workers and operate with a predominately female immigrant work force.8 In a 1989 GAO report, officials estimated that 4,500 of the 7,000 garment sewing shops in New York City were sweatshops.9 In another GAO report, officials estimated in 1995 that up to 4,500 of the 5,000 garment sewing shops in Los Angeles were sweatshops.10
Several conditions foster the extensive presence of sweatshops in certain sectors of the U.S. economy. In the garment industry, for example, the nature of the relationship among the retailers, manufacturers, contractors and subcontractors encourages the proliferation of sweatshops. The retailers negotiate prices and purchase finished garments from the manufacturers, and then sell the goods to the public. In this extremely competitive industry, the retailers exert strong pressure on America's 1,000 or so manufacturers to keep costs low.11 The manufacturers place that same pressure on the 22,000 contractors and subcontractors who actually produce the goods, often through the exploitation of immigrant labor. The manufacturers and retailers are legally and logistically isolated from most labor standards and immigration violations. At the same time, the contractors and subcontractors easily enter and exit the industry, or simply reorganize to avoid liability for violations of laws. The average life of a garment sewing shop is 13 months.12 These characteristics make the industry particularly prone to violations while producing significant obstacles to enforcement efforts.
Another significant condition is the presence of a large, exploitable immigrant work force, many of whom are working in the U.S. illegally. Estimates of the number of illegal immigrants in the U.S. vary dramatically. INS estimates the total to be over 4 million.13 Accurate current estimates of the number of undocumented aliens actually working in the U.S. are difficult to obtain. The estimate most often quoted in the literature is 2 million.14 This estimate was derived by social scientists in 1986 from U.S. Census Bureau figures and surveys of aliens. An intriguing indirect estimate of a portion of undocumented alien employment was offered by the Commissioner of the Social Security Administration during Congressional testimony in 1995. The Commissioner testified that the Social Security Administration had issued 6 million social security cards to aliens that were authorized only for identification and not work purposes. However, the social security accounts for 2 million of these cards had earnings reported on them, suggesting that these workers may be employed without authorization.15
Sweatshop jobs are often the first step for newly-arrived illegal aliens in attaining gainful employment. These aliens will often work in sweatshops until they obtain the contacts or fraudulent documentation needed to secure more lucrative employment. The illegal status of many sweatshop employees inhibits most of these workers from challenging their poor working conditions and sub-minimum wages through an appeal to government labor agencies. DOL believes that up to 50 percent of the workers in California sweatshops may be undocumented aliens.16 In 1993 one local union officer estimated that most of the 100,000 garment workers in the Los Angeles area were undocumented aliens.17
Sweatshop workers labor for long hours in unsafe and unhealthy conditions for less than minimum wage. In the most egregious cases, such as the recent case in El Monte, California, illegal immigrants may be held in involuntary servitude in sweatshops. At El Monte, 72 illegal Thai immigrants were held against their will for up to 7 years while they worked 16-hour days and were paid about $1.60 an hour.18 The original indictment in the El Monte case included conspiracy, transporting illegal aliens, harboring illegal aliens, inducing illegal aliens to enter the U.S., knowing employment of illegal aliens, and aiding and abetting.19 Later charges included the civil rights offense of involuntary servitude. However, involuntary servitude prosecutions have been relatively rare. The Department of Justice has prosecuted only nine involuntary servitude and slavery cases since 1990.20 Most of these cases involved migrant workers in agriculture, not sweatshops.
Sweatshop conditions raise more than humanitarian concerns. The employment of illegal aliens in sweatshops allows the unscrupulous employer to pit illegal workers against legitimate laborers. This results in lower wages and poorer working conditions for all workers. Sweatshops leach billions out of the legitimate U.S. economy. Many sweatshop employees are paid in cash, thereby evading any tax liabilities. A third of all sewing contractors nationwide are believed to operate without licenses or permits and to pay in cash.21 In California alone, officials estimate that hundreds of thousands of primarily immigrant workers have been cheated out of billions in wages by sweatshop operators, and the state has lost over $3 billion in uncollected taxes.22 The California Employment Development Department estimated that Los Angeles County lost $120 million in tax revenues in 1992 to these illegal sweatshop practices.23 State Labor Department officials in New York estimate that illegal sweatshops in the New York City area represent a loss of $20 million annually in social security and unemployment taxes.24
Sweatshops are particularly important to immigration law enforcement because they are often the illegal immigrants' first employers and, in many cases, are closely connected to alien smugglers. Additionally, the groups responsible for smuggling illegal aliens to work in sweatshops are often the same groups smuggling drugs into the United States. Organized crime syndicates have found alien smuggling to be a profitable adjunct to drug smuggling. NDIC has recognized this, and at the request of INS is currently engaged in an intelligence project to identify the key organizations and individuals involved in Chinese illegal alien smuggling and narcotics trafficking. Thai and Chinese nationals frequently pay $20,000 to $50,000 in fees to be smuggled into the U.S.25 DOL has received information that as many as 3,000 Thais in the Los Angeles area have paid a $30,000 fee to the smugglers and are working these fees off in sweatshops.26 In just one Los Angeles case involving the arrest of 130 mainland Chinese smuggled to the U.S. on an ocean-going fishing trawler, the criminal organizers stood to make nearly $4 million.27 The United Nations estimates annual gross proceeds of $5 billion to $7 billion from alien smuggling worldwide.28 Smugglers and associated gangs bringing Chinese to the U.S. account for $3.5 billion of this total.29 Estimates on the number of Chinese illegally entering the U.S. annually vary widely up to a high of 100,000.30 Some officials accept a more conservative estimate of 50,000 annually.31
Sweatshops are reaping huge profits for organized crime. Federal officials have identified links between organized crime groups and sweatshops in the New York City garment district. DOL's Office of Labor Racketeering (OLR) has found alliances among La Cosa Nostra, Asian organized crime, and alien smugglers. These alliances include sweatshop operators who use the smuggled aliens as an indentured work force. Evidence shows the alliances are also involved in drug trafficking and other criminal activities that produce substantial illicit proceeds. OLR views organized crime-controlled labor leasing/broker operations as a vehicle to enhance alien smuggling activity and defraud union benefits funds of contributions due. OLR believes that these schemes and the abuse of illegal aliens in sweatshops could not exist in the garment industry and other heavily unionized industries without the corrupt participation of union officials who are bribed or are otherwise under the control of organized crime.32
OBSTACLES TO INS SWEATSHOP-RELATED ENFORCEMENT
INS faces significant obstacles to effective enforcement of immigration law in sweatshops. Limited intelligence on sweatshop operations and their links to smuggling rings creates difficulties in focusing enforcement. INS employer sanctions units have sufficient resources to investigate only a small percentage of the leads they receive concerning employment of illegal aliens. DOL employer sanctions inspections have generated few useful investigative leads for INS. INS relations with DOL and state labor agencies in the field have sometimes been marred by the latter agencies' reluctance to cooperate in operations and intelligence sharing. INS employer sanctions enforcement has relied heavily on civil fines. The deterrent effect of civil fines on sweatshop operators may be vitiated by collection difficulties and INS' failure to track delinquent collections cases. The inability of INS to remove most aliens found working illegally in the U.S. provides an easily exploitable work force for sweatshops and the underground economy. The proliferation of cheap fraudulent documents also makes it possible for the unscrupulous employer to avoid being held accountable for hiring illegal aliens.
In many cases, aliens are smuggled into the U.S. specifically to work in sweatshops while they repay their cost of passage. A targeted and effective sweatshop enforcement effort would require identification of sweatshops and their operators, the individuals and organizations smuggling aliens, and the links between smugglers and sweatshops. Accurate and timely intelligence information in these areas would enable agents to target their inspections and investigative efforts at the most severe sweatshop cases. However, INS possesses little in the way of formal intelligence collection capabilities, either domestic or foreign. The Deputy Assistant Commissioner for Intelligence characterized the division as a head without a body. He further stated that the Division has a problem of limited resources, which is compounded by INS' diverse missions and the complexity of the immigration issues. The Intelligence Division has 94 employees, most of whom work at headquarters. The Forensic Document Lab employs 28 of the Division's personnel and the INS Command Center another 17. Seventeen staff members are also detailed to other organizations, such as NDIC, the El Paso Intelligence Center, and INTERPOL.33 This staffing pattern affords the Intelligence Division little opportunity to perform any direct intelligence collection.
The Intelligence Division is almost completely dependent on information forwarded to it by other law enforcement agencies or by field personnel in other INS organizations, such as criminal investigators in INS' district offices. INS intelligence officers believe this dependence presents severe problems because INS criminal investigators often fail to recognize information that would be valuable for INS' intelligence efforts.
INS recognizes the advantage of intelligence-driven investigative efforts and over the past several years has requested the resources to increase its intelligence capabilities. In spite of these continual budget requests, the additional intelligence positions have not been funded. This lack of funding, in light of the overall rapid increase of INS resources seems to imply that intelligence resources rank low in priority for Congress in comparison to the emphasis on the Southwest border. For Fiscal Year (FY) 1996, INS requested an increase of 49 permanent positions to create and staff field intelligence groups deployed within the U.S.34 Each group would be assigned a geographical area of responsibility and would be composed of criminal investigators, intelligence analysts, and support personnel. The groups would be responsible for maintaining liaison with all INS field operations personnel and with the intelligence divisions of local, state, and other Federal law enforcement agencies to facilitate the flow of immigration-related intelligence. The groups would also independently develop information through the use of confidential informants. The funding requested for the field intelligence groups was cut by Congress for FY 1996. INS has resubmitted its budget request for these groups for FY 1997.
INS has also been concerned about increasing its overseas-based intelligence capability. INS' Office of International Affairs (OIA) consists of three overseas districts: Rome, Bangkok, and Mexico. At the beginning of FY 1995, these three districts had a total of 77 full-time and 4 part-time personnel, who were responsible for all overseas INS functions.35 OIA and the Department of State's Office of International Criminal Justice are leading an interagency working group in developing a comprehensive plan for deterring alien smuggling. As part of this deterrence effort, INS developed Operation Global Reach in 1995. Operation Global Reach was designed to enhance overseas intelligence gathering, fraudulent document training, and investigative efforts. The operation's plan contemplated the overseas deployment of 47 additional INS officers.36 Fifteen of these overseas positions were funded in FY 1995. INS officials informed us that it appears funding will not be available for the remaining positions.
Collecting intelligence on sweatshops and alien smuggling in Asian communities presents special problems. Evidence indicates that links between sweatshops and smugglers of Asian immigrants may be closer and more frequent than links between sweatshops and smugglers of Mexican and other Spanish-speaking immigrants.37 The high smuggling fees from Asian points of origin may foster more indentured relationships in sweatshops than the much lower smuggling fees paid by most illegal Mexican immigrants. INS investigators told us that they needed more officers with Asian ethnic backgrounds and language skills to more effectively gather intelligence and perform investigations in close-knit Asian communities.38
Employer Sanctions Enforcement
INS classifies employer sanctions cases into two main categories, lead-driven cases and General Administrative Plan (GAP) cases. Lead-driven cases are based on leads received from calls and letters, or on referrals from other agencies such as DOL, and state and local officials. INS' lead-driven cases have generated most of its employer sanctions fines. GAP cases are randomly selected by INS Headquarters Investigations Division from a national data base of U.S. employers and are used to measure the effectiveness of INS' employer sanctions enforcement and employers' overall compliance rate. A previous Office of the Inspector General (OIG) audit report states that lead-driven cases are the primary focus of the employer sanctions program, and constitute the bulk of fines issued and arrests made39. In FY 1995, 86 percent of the total 4,760 INS employer sanctions cases investigated were lead-driven.40 INS intends to increase the percentage of lead-driven cases worked in FY 1996. INS receives significantly more leads than its resources allow it to work. Employer Sanctions Unit personnel in the INS field offices we visited stated that they were only able to work about 10 to 15 percent of the leads they received.41 The previously mentioned OIG audit report found that INS has a significant backlog of investigative leads, which the Service estimates at 23,000, many of which will not be pursued because the backlog is purged on an annual basis. INS Investigations has proposed a reduction in GAP cases to 500 in FY 1996, down from a high of 5,570 in FY 1990, and 2,326 in FY 1994.42 This represents an important step for INS because it will allow the agency to use more of its scarce investigative resources in lead- and intelligence-driven cases in targeted industries.
Based on its GAP cases, INS estimates an 89 percent compliance rate among all U.S. employers.43 It is important to note that this favorable compliance rate should not imply a low rate of employment of illegal aliens. The compliance rate only indicates that an estimated 89 percent of employers have complied with the requirements of the employer sanctions provisions. Employers who have properly completed I-9 forms in good faith and unwittingly have accepted fraudulent documentation from illegal aliens have not committed violations.
INS recognizes that there is a prolific trade in fraudulent documents. Counterfeit employment authorization documents are easily and cheaply obtained. A counterfeit "green card" or a social security card can be purchased in the Los Angeles area for as little as $20.44 The abundance of fraudulent documents makes it difficult for employers to ensure that they employ only citizens and authorized aliens. A sweatshop employer who wishes to circumvent the law probably has an excellent chance of succeeding if he properly completes his I-9 forms and ensures that any unauthorized alien employees have obtained fraudulent documents.
DOL's Wage and Hour Division inspectors conduct inspections of employers for compliance with wage and hour laws. During these inspections, they also review employers' I-9 forms. DOL records the results of its employer sanctions inspections on ESA-91 forms and forwards all of these forms to INS. Since 1988, DOL has forwarded 266,000 ESA-91 forms to INS.45 INS selected 5,024 of these ESA-91 forms for investigation. Only 321, or 6 percent resulted in findings of violations and issuance of Notices of Intent to Fine.46 While DOL's employer sanctions inspections may educate employers and foster voluntary compliance, they have done little to aid INS' investigative efforts.47
INS' relations with DOL and state labor agency personnel have sometimes been problematic. DOL wage and hour investigators and state labor investigators have sometimes expressed the opinion that the labor agencies' mission and INS' mission are in conflict. In February 1995, the Secretary of Labor was quoted in the Washington Post as saying that "We can't be in the business of identifying, apprehending and deporting workers; our ability to do our job depends on the cooperation of workers who tell us about violations of wage and hour laws."48 Labor investigators often perceive that cooperation with INS will have a chilling effect on the willingness of undocumented workers to come forth with complaints and leads. New York and California state labor agencies refuse to conduct joint operations with INS. The situation is particularly acute in New York where the head of the labor enforcement agency has gone so far as to refuse to attend meetings if INS representatives were present.49 In New Jersey, however, we found that the chief of the state labor enforcement agency and his staff were enthusiastic cooperators with INS. The New Jersey officials expressed the belief that the problem of 400,000 illegal aliens in New Jersey was a crisis that required the utmost in cooperation between the two agencies.50