Excerpted from California Employment Law Letter, written by attorneys at the law firm Perkins Coie LLP

In a nationwide raid, federal immigration officials arrested nearly 200 janitors employed at various restaurant chains. The raid was aimed at a Florida-based company, Rosenbaum-Cunningham International, which supplies restaurants with janitors.
No action was taken against the restaurants, but Rosenbaum-Cunningham International and the illegal immigrants face serious consequences.

Midnight stakeout with huge results
Late in the evening on February 21 and in the early morning hours of February 22, U.S. Immigration and Customs Enforcement (ICE) officials conducted a sweep across 17 states. The sweep targeted employees of Rosenbaum-Cunningham International, a janitorial service used by such national restaurant chains as Hard Rock Cafe, Planet Hollywood, and ESPN Zone.

The investigation began 20 months ago based on tips from a cleaning crew at the Grand Traverse Resort and Spa in Michigan. Julie Myers, assistant secretary of the ICE, said the agency stands ready to work with honest companies like Grand Traverse Resort and Spa that want to change their business practices and do the right thing.

ICE officials arrested 195 illegal immigrants working for Rosenbaum-Cunningham International and filed a 23-count indictment against the firm's top three executives, Richard M. Rosenbaum, Edward Scott Cunningham, and Christina A. Flocken.

The executives allegedly failed to pay $18.6 million in social security, Medicare, and federal employment taxes on wages on $54 million in custodial and groundskeeping contracts between 2001 and 2005 at national restaurant chains. In addition to the high-profile venues mentioned above, those chains included the House of Blues, Dave and Busters, Yard House, and China Grill.

Commercial cleaning services are a $100 billion U.S. industry, employing nearly one million workers across the private sector.
According to prosecutors in this case, Rosenbaum-Cunningham International supervisors and about 155 on-site managers allegedly hired hundreds of workers since 1997 without job applications, W-4 tax withholding or I-9 employment eligibility forms, or W-2 wage and tax statements, leading to their illegal receipt of funds.

Immigration officials claimed that the firm's top three executives spent 63 percent of the illegally obtained funds on company operations. They allegedly used the remaining tax funds amongst themselves to buy racehorses, lavish homes, and luxury boats and to pay college tuition for their children.

The executives did that by way of shell companies with names such as Ricurt Inc., Monker, and Sunchaser Service Corp. as well as secret bank accounts. Myers said the criminal charges against the executives represented new, stricter tactics to fight illegal immigration and emphasized that they faced "the very real threat of jail time."

California hit hard
The federal agents raided 63 locations nationwide, including a number of places in California. All California raids were conducted while the businesses were closed. Southern California accounted for more of the 195 illegal immigrants arrested than any other region.

The illegal immigrant employees were recruited by word of mouth, advertisements in Spanish-language newspapers, and at job fairs and Latino cultural festivals. In one case, an employee allegedly bought 20 phony green cards.

No records were kept of the workers, and prosecutors allege they weren't required to show proof of citizenship. The illegal workers face administrative charges and deportation. Myers said that the only illegal immigrants not certain to face deportation were an unspecified number who were released "on humanitarian grounds" because they were the sole parent in a household.
Rosenbaum-Cunningham International officials didn't officially comment on the raids, but in a prepared statement made to the Washington Post by their attorneys, John Vandedelde and Jeffrey Rutherford, they asserted that the use of undocumented workers "pervades many industries throughout the United States" and that Rosenbaum-Cunningham International is cooperating fully and "expects to resolve the matter to everyone's satisfaction."

None of the restaurants that contracted with Rosenbaum-Cunningham International to employ the janitors were found to have done anything wrong.

Christine Baum, a manager with ESPN Zone, said Rosenbaum-Cunningham International provided crews to clean the restaurant at Downtown Disney in Anaheim after it closed each day. She said the contract was terminated the day after the raids in eight ESPN Zone locations.

Baum further stated the janitorial contract would be given to another company only after ESPN Zone carefully vetted its hiring practices using techniques yet to be determined.

Sign of the times
This raid was in line with the Bush administration's recent crackdown on employers harboring illegal immigrants. All this is with the backdrop of Congress' debate on an overhaul of the U.S. immigration laws.

Last year, the ICE arrested 716 individuals on criminal charges. It had arrested only a few dozen in the immediately preceding years. In the past year alone, many employers have been put under the microscope on the illegal immigration front:
• HV Connect and TN Job Service were charged with hiring illegal immigrants and providing them to companies in Ohio;
• three sushi restaurants in Baltimore agreed to forfeit $1 million and pleaded guilty to criminal charges stemming from an illegal employment scheme;
• seven current and former managers of IFCO Systems North America in Houston were charged with harboring illegal immigrants, and 1,187 suspected illegal immigrants were arrested;
• the owner of an Indiana stucco firm was charged with harboring illegal immigrants, transporting illegal immigrants, and making false statements tied to an illegal employment scheme;
• two subcontractors to Fischer Homes in Kentucky pleaded guilty to harboring illegal immigrants, transporting illegal immigrants, and making false statements tied to an illegal employment scheme;
• two Kentucky companies pleaded guilty to harboring illegal immigrants and money laundering by supplying illegal workers to Holiday Inn, Days Inn, and other hotels;
• two temporary labor companies, one of the companies' presidents, and two officers pleaded guilty to conspiring to provide hundreds of illegal immigrants to work for ABX Air, a national air cargo firm in Ohio; and
• 1,297 employees were arrested at Swift & Co. meat-processing plants in six states, 219 were charged with crimes, and the rest were charged with violating their immigration status.

Bottom line
While the federal government at times has been relaxed regarding employers' use of illegal immigrants, times have changed. If you hire illegal immigrants, you may be subject to government intervention and enforcement of laws and policies that are currently undergoing development and are likely to lead to more stringent regulation.

If you evade payment of social security, Medicare, and employment taxes, you may be subject to stiff criminal penalties. If egregious, you may even face jail time. This climate is certain to exist at least through the 2008 election.

Copyright 2007 M. Lee Smith Publishers LLC. This article is an excerpt from CALIFORNIA EMPLOYMENT LAW LETTER. The contents of CALIFORNIA EMPLOYMENT LAW LETTER are intended for general information and should not be construed as legal advice or opinion. Readers in need of legal advice should retain the services of competent counsel. The State Bar of California does not designate attorneys as board certified in labor law.