http://www.ocregister.com/ocregister/mo ... 224846.php

Friday, July 28, 2006

New laws could be tough to stomach
Orange County restaurateurs say immigration regulations may disrupt operations, pose crushing fines and cause more enforcement work for businesses.

By NANCY LUNA
The Orange County Register

Restaurant operators believe they might face steep fines and labor shortages that could cripple at worst – and disrupt at best– their livelihoods under immigration regulations proposed in House and Senate bills.

No action is expected until September, after a series of hearings is held this summer. Watching closely are restaurateurs who say reform is necessary but not if it means staff reductions and border enforcement duties for immigrant-reliant businesses.

Restaurants already face a labor shortage. Over the next decade, the National Restaurant Association forecasts that the industry will grow 15 percent, or by 1.9 million jobs. However, the Labor Department estimates that the available work force in the country will only increase 10 percent over the same period.

"If we're not getting enough workers with permits to fulfill demand, then we have a problem," said Ivan Calderon, co-founder of Orange County's popular Taco Mesa and Taco Rosa eateries.

That's why the restaurant association supports the Senate bill, which would provide a new guest worker program and give an estimated 12 million immigrants a shot at citizenship. By contrast, the House legislation focuses on border enforcement and calls for increased financial penalties – up to $40,000 – for employers who repeatedly hire undocumented workers.

Uncertainty over the fate of the legislation is forcing some restaurateurs to come up with backup plans for potential staff shortages, while others, such as Wendy's International, Jack in the Box and the parent company of Mimi's Café in Tustin, have added "immigration" and "citizenship" regulations to a bevy of risk factors they disclose to investors.

"Everybody is very fearful that they (unknowingly) have someone employed that is probably illegal, and they will get caught," said Jim Walker, owner of The Bungalow, a Corona del Mar steakhouse.

THE REACTION
Restaurant operators interviewed for this article said they do not employ undocumented workers.
However, of the 12.5 million restaurant employees in the nation, 635,000 could be undocumented immigrants, with roughly 5,500 of those in Orange County, based on some federal estimates.

The Pew Hispanic Center also estimates that one-fourth of all dishwashers in the U.S. are unauthorized migrants.

Jordan Traverso, a spokeswoman for California Restaurant Association, said its members don't "knowingly hire" illegal immigrants. However, she added: "Nobody is blind to the fact there are undocumented workers in this industry. We just don't think it's us."

The CRA, which represents more than 21,000 of the state's 81,000 restaurants, supports reform but not if it means costly fines and expanded enforcement duties for business owners, Traverso said.

"It's hard enough serving ham and eggs. For us to be unofficial border patrol, that's wrong," said Jeff King, co-founder of King's Seafood Co. in Costa Mesa.

Under the proposed legislation in the House and Senate, fines for employers who repeatedly hire unauthorized workers range from $20,000 to $40,000. Fines for paperwork violations can run about $6,000.

"That degree of fining is absurd," said King, whose seafood eateries include King's Fish House in Laguna Hills and Orange. "That's enough to debilitate a small restaurant."

Though they say they follow the law when it comes to hiring workers, restaurateurs concede that some undocumented workers may slip through the system because they have provided false documents that go undetected for months. In 2005, the Social Security Administration sent out 128,000 letters to employers with more than 10 workers on their payroll whose Social Security numbers didn't match the name listed in the agency's database.

Form I-9 Compliance in Newport Beach, founded in January 2005, is authorized by the Department of Homeland Security and Social Security Administration to verify newly hired employees' legal right to work in the country. Chief executive John M. Hermann said roughly 15 percent of employees it screens don't have names that match the identity numbers they've submitted.

Hermann declined to reveal his fees, only saying that "for an extraordinarily reasonable cost," Form I-9 can verify the authenticity of someone's documents within 5 seconds.

"All employers desperately need help in this area," said Hermann. "Employers simply can't tell the difference between a fraudulent card and a non-fraudulent card."

The Social Security Administration said employers could stem the use of unverified Social Security numbers by taking advantage of their free services. The agency has offered for several years a toll-free service for employers to cross-check up to five names against Social Security numbers and recently launched an online program for businesses to check as many as 10 names, said agency spokesman Mark Lassiter. Both services provide "immediate results," Lassiter said. "These are very easy ways for employers to verify."

The Bungalow's Walker said he's heard of the service but has never taken advantage of it. He now might.

So far this year, 17.4 million employers have used the online service. Of those requests, about 2.3 million Social Security numbers came up as "not matched," said Lassiter.

The NRA said it is seeking clarity on what obligations employers have under each bill when it comes to background checks. Both the House and Senate bills would create electronic verification systems for screening worker eligibility against a federal database. Still, it's unclear how that will work, said John Gay, the trade association's chief lobbyist.

Regardless, employers should have "safe harbor if they do everything right," said Gay, who also serves as co-chairman of the Essential Worker Immigration Coalition, a group of immigrant-reliant service industries.

FUTURE WORK FORCE
The restaurant industry's need for 1.9 million jobs in the next decade – coupled with the possibility of additional shortages from proposed immigration regulations – has state and national restaurant industry officials concerned.
The fear of losing workers is also forcing some chains to scramble.

Randy Hiatt, a Costa Mesa restaurant consultant, said he's hearing of chains that are now "looking at how they might fill holes" in the event of temporary disruptions. The president of Fessel International said restaurants are also asking part-time workers if they're willing to take on more hours.

He declined to name any specific company. However, he said the Plan B strategies are being played out "heavily in the Southwest," a region dependent on an immigrant work force, especially for fast-food chains.

Del Taco in Lake Forest and El Pollo Loco in Irvine declined to comment for this article. Taco Bell in Irvine, the largest Mexican fast-food chain in the U.S., sent this statement in an e-mail: "We abide by all local, state, and federal labor rules and don't get involved in politics. If the laws ever change, we'll comply with them."

Jack in the Box spokeswoman Kathleen Finn confirmed last week that the San Diego chain's regulatory filings now warn investors that changes in law related to "immigration" may be a risk factor. She said it was just a precaution, and would not comment further.

Traverso said she doesn't blame chains for being cautious. "Do you want a microscope shining on (you)? No way," she said. "That's like calling the INS, saying, 'Check me out.' "