President Barack Obama’s November 20, 2014, Executive Order sought to expand the number of individuals who qualify under the Deferred Action for Childhood Arrivals program (“DACA”) and to provide employment authorization to undocumented immigrants who are parents of U.S. citizens or of permanent legal residents under the “Deferred Action for Parents of Americans and [of] Lawful Permanent Residents” (“DAPA”).

DACA was created in the spring of 2012 as a measure of relief to “Dreamers” when the DREAM Act failed to pass in Congress — thousands of previously ineligible individuals have obtained employment authorization since.

While these programs are temporarily on hold due to a court injunction, it is anticipated that they will move forward, adding many new lawful workers to the labor pool.

The increased number of “Employment Authorization Documents” or “EADs” from the DACA and DAPA programs in the labor pool, particularly of workers not previously authorized to be employed, may prove a challenge for some employers. First, employers must diligently update their Form I-9 records to ensure that there are no gaps in employment authorization.

Second, despite employers’ best efforts, there likely will be gaps in employment authorization, which would raise issues regarding how to handle those gaps. Third, and likely the most difficult, employers must determine how to address workers who now disclose that they were not authorized to work when they were hired.

I-9 Reverification

The Immigration Reform and Control Act of 1986 (“IRCA”) requires all U.S. employers to verify the identity and employment authorization status of all employees hired after November 6, 1986. This means employers must require all new hires to complete Section 1 of Form I-9 no later than the first date of hire and to present documentation, which the employer must record in Section 2 of Form I-9, confirming their identity and authorization to work no later than three days after the date of hire.

Immigration and Nationality Act (“INA”) § 274A(a)(2) makes it unlawful for an employer, after hiring an alien for employment, to continue to employ the alien, knowing the alien is or has become unauthorized to work. Therefore, employers must reverify the employment authorization of an employee whose employment authorization document expires no later than the expiration of the authorization on file.

Gaps in Employment Authorization

Workers’ Employment Authorization Document applications frequently take up to 120 days for processing by U.S. Citizenship and Immigration Services. Therefore, failure to make a new application at least 120 days before the expiration of the current EAD likely will lead to gaps in a worker’s employment authorization. The Form I-9 receipt rules for EADs also can be confusing for employers, further complicating this issue.

For the vast majority of expiring EADs, a receipt for an extension is not acceptable evidence for purposes of Form I-9. The exceptions to this rule are Temporary Protected Status (“TPS”) and Science, Technology, Engineering and Mathematics (STEM) on Optional Practical Training (OPT) EADs.

Employers must consider how to handle employees with potential gaps in employment authorization caused by EAD renewals. Essentially, employers have two options: (1) granting a leave of absence and (2) terminating the employee and then rehiring the individual.

IRCA defines “employment” as providing services or labor for an employer for wages or other remuneration. This definition permits an unpaid leave of absence since the employee is not providing services or labor during a gap period in employment authorization. In fact, the U.S. Court of Appeals for the Ninth Circuit, in San Francisco, has held that a leave of absence should be granted for a reasonable period of time for such gaps in employment authorization. Incalza v. Fendi North America, Inc., 479 F.3d 1005 (9th Cir. 2007).

The Court held that a gap in employment authorization did not constitute good cause for termination under California law because a leave of absence was a viable alternative and is consistent with IRCA. While the Ninth Circuit decision is binding only in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, and Washington, the decision may inform courts in other jurisdictions. A weakness of this option is that the employer could have an employee on leave, waiting indefinitely for the employment authorization issue to be resolved. Another problem is that this option raises issues over medical insurance and COBRA, among other employee benefits.

The termination-and-rehire option, therefore, may be more appropriate as there is a clear separation at the time employment authorization ends. This makes for a cleaner record and puts the burden on the employee to request rehire once the issue is resolved.

Previously Unauthorized Workers

An increasing problem in the current DACA environment is how employers should respond to employees who disclose their unlawful status to the employer, for instance, when the employee provides a new identity or documents to the employer. If an employee admits to providing false identification for the Form I-9, should the employer terminate the employee or merely accept the new documentation? Where an employee has worked for an employer using false documents, as long as the individual is currently work-authorized, the I-9 rules do not require termination. Further, such an employee may be terminated only if doing so is in compliance with an existing written honesty policy implemented indiscriminately and consistently throughout the entire organization, as even perceived disparate treatment of employees can be viewed as national origin discrimination.

In the absence of an honesty policy, the employee should be given an opportunity to present other acceptable I-9 documentation. If the employee provides alternate documentation, the employer may accept it and have the employee complete a new Form I-9. The new Form I-9 should be attached to the old one. If the employee fails to present new documentation, the employer may terminate the employee.

While new regulations and guidelines from the Department of Homeland Security providing EADs to DACA recipients potentially may expand the labor pool, they present challenges for employers. Employers can better avoid the pitfalls and challenges by establishing and maintaining effective policies and procedures and administering them in a uniform manner.