IFCO Fined Record $21 Million for Illegal Workers

Jan. 1, 2009
IFCO Systems North America will pay a $21 million settlement to avoid criminal prosecution for hiring illegal workers.

IFCO, a pallet supplier, had more than 1,100 illegal workers on its payroll in April 2006. John P. Torres, an Immigration and Customs Enforcement (ICE) official, says the settlement between ICE and IFCO will send a "powerful message that ICE will investigate and bring to justice companies which hire illegal workers.”

The Houston Chronicle reports that the IFCO settlement is larger than Wal-Mart’s 2005 illegal-hiring case, when it paid $11 million to avoid prosecution for knowingly hiring illegal workers. The IFCO settlement includes $2.6 million dollars in back pay and penalties from the company’s overtime violations impacting about 1,700 workers.

A tip to ICE in February 2005 launched a government investigation at an IFCO plant in Albany, where illegal immigrants were seen tearing up their W-2 forms. ICE agents arrested 1,187 illegal immigrants at some 40 IFCO locations across the country on April 19, 2006.

Seven IFCO managers pleaded guilty to knowingly hiring illegal aliens and transporting and harboring illegal aliens. They are awaiting sentencing. Five other IFCO managers were indicted in February for similar crimes and are awaiting trial.

According to federal prosecutors, the government’s analysis of IFCO payroll information submitted to the Internal Revenue Service and the Social Security Administration show that, from 2003 through April 2006, as many as 6,000 illegal immigrants worked at IFCO plants.

The settlement agreement concerns only the liability of the corporation and does not address any pending or possible future criminal charges against individual employees.

In a statement, IFCO says it cooperated with the government's probe. "Over the last 32 months, we at IFCO have significantly upgraded our compliance procedures to go well beyond what the law requires," says IFCO President Dave Russell.

During the past few years, ICE has gone after companies that hire illegal workers. In the past two years, the agency has collected more than $60 million in employment-related fines and forfeitures, including IFCO’s fine, the Houston Chronicle reports. The Congressional Research Service, a nonpartisan group, says in 2003, ICE collected $37,000 in employment fines and seizures.

In fiscal 2007, the Houston Chronicle reports, ICE secured fines and forfeitures of more than $30 million in worksite enforcement cases. ICE also arrested 863 people in criminal cases and made more than 4,000 administrative arrests during that time.

According to immigration officials, the number of employers registering for E-Verify, the federal government's electronic employment verification system, is growing by more than 1,000 per week. Currently, more than 87,000 companies are signed up for E-Verify.

Mark Krikorian, executive director of the Center for Immigration Studies, in Washington, says, "The enforcement that's been going on over the past year or two has already had a significant effect on employer behavior. A lot of companies are trying to make sure they don't end up in the same hot water."