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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/06/2007 - FIRST READING OF ORDINANCE NO. 045, 2007, ESTABLI ITEM NUMBER: 28 AGENDA ITEM SUMMARY DATE: March 6, 2007 FORT COLLINS CITY COUNCIL STAFF: Diane Jones Jim O'Neill SUBJECT First Reading of Ordinance No. 045, 2007, Establishing Local Sanctions Upon Contractors and Subcontractors of the City Who Employ Unauthorized Aliens to Perform Work for the City. RECOMMENDATION None. FINANCIAL IMPACT Staff has estimated that it would require 30 to 40 hours to conduct each audit of one firm with 100 employees that has contracted for work with the City. If the audit is conducted by City staff, the cost is estimated at $1,600 and, if the audit is outsourced, it is estimated to cost approximately $3,200. A large construction contract with 20 subcontractors and over 1,000 employees,such as the Police Administration Building project, could cost between $12,000 (City staff) and $24,000 (outside source)to audit. Based on current workloads, staff could reasonably absorb audits of two to six companies per year. If more than six audits are necessary or desired,it is likely that additional resources will be required. The proposed Ordinance may require contractors and/or subcontractors additional time and administrative costs associated with multiple sets of similar tasks and responsibilities required by each tier of government. If the risk of doing business with Fort Collins(fines and/or debarment) is great enough, contractors will typically do one of two things - not bid work offered by the City or raise their prices to cover potential costs. Both of these can result in increased costs to the City. EXECUTIVE SUMMARY This Ordinance makes it unlawful for contractors and subcontractors who perform work on City projects to hire unauthorized aliens. It applies to major construction and service contracts. Contractors and subcontractors are required to verify the legal employment status of employees working on City contracts and must maintain copies of these records. If they fail to perform the appropriate screening and documentation,the City may terminate these contracts with the City and may prohibit future contracts with the City for a period of five years. If a contractor or subcontractor falsely identifies, or falsely certifies the legal employment status of, any person working on a City contract, a fine of$1,000 for each infraction may be imposed. March 6, 2007 -2- Item No. 28 BACKGROUND At the October 24, 2006 City Council work session, Council reviewed and discussed the implementation of new state immigration laws. One of the state laws enacted in 2006 requires that the City take certain steps to ensure that unauthorized aliens are not allowed to perform work on any of its contracts for services(HB 1343). A contract for services is defined as the furnishing of labor, time or effort by a contractor or subcontractor not involving the delivery of a specific end product other than reports that are merely incidental to the required performance. The City has adopted the interpretation that HB 1343 does not apply to construction contracts as they involve the delivery of a"specific end product." Compliance Requirements of HB 1343 Under HB 1343 contractors must certify that they do not knowingly employ or contract with an unauthorized alien and have participated or attempted to participate in the "Basic Pilot Program" in order to verify that the contractor is not employing any undocumented or unauthorized worker. The "Basic Pilot Program" is a web-based program, maintained by the Department of Homeland Security,and allows employers to confirm the employment eligibility of all newly hired employees. Penalties of Non-compliance of HB 1343 Violation by contractors of the mandatory provisions of HB 1343 can be grounds for termination of the contract,but termination is not required. If a contract is terminated by the City,the Secretary of State must be notified. City Council Direction Direction provided by City Council at the October work session was for staff to prepare and present a local ordinance that meets the following criteria: • Applies to both service and construction contracts between the City and persons, vendors, contractors, and any other type of business entity. • Enforcement will occur through"spot checks"and impromptu audits of compliance,as well as a complaint basis. • City contracts will go only to those persons, vendors, contractors and business entities that verify that they do not employ unauthorized aliens through the use of the most reliable indicia of legal status. March 6, 2007 -3- Item No. 28 Ordinance Establishing Local Sanctions on Contractors/Subcontrators of the City Who Employ Unauthorized Aliens on City Projects The purpose of preparing a local ordinance on this subject is to complement federal and state laws that apply to employment practices on City projects. More specifically, the purpose of the Ordinance is to emphasize to contractors and subcontractors who provide the City with services, including construction services,that employment of unauthorized aliens is contrary to the interests of the City and its citizens and that any contractor and/or subcontractor that does not comply with the prohibition can and will by penalized. The following are the pertinent elements of the proposed Ordinance: • Applies to City construction contracts over$500,000, service contracts over$100,000 and major warranty work, except for those services that are exempted from the procurement provisions of the City Code,i.e.,donations,legal and litigation services,musicals,dramatic and fine arts performances and intergovernmental agreements. • Prohibits contractors and subcontractors performing such work from knowingly recruiting, hiring for employment,or continuing to employ any unauthorized aliens to work on covered City projects. • Requires contractors and subcontractors to certify to the City that they have verified the legal employment status of all employees working under the contract or subcontract by reviewing the I-9 documentation required by federal law. • Requires contractors and subcontractors to maintain, for a period of one year from completion of the contract work, all documents they relied upon in verifying the legal employment status of those who worked on the project. • Requires contractors to review the documents relied upon by their subcontractors before entering into the subcontracts. • Requires contractors and subcontractors, upon request by the City, to verify the identity of all persons working on the project and to produce for City inspection the documents relied upon in verifying the legal employment status of such persons. • Makes it a civil infraction for any contractor or subcontractor to falsely identify, or falsely certify the legal employment status of, any person working on a City project. • Requires all contractors and subcontractors to comply with Title 7 of the United States Code and not unlawfully discriminate against any employee or applicant for employment. • Authorizes enforcement of the Ordinance through audits of compliance,conducted pursuant to administrative regulations, or through the investigation of complaints as long as those complaints are in writing and include a recitation of the facts establishing the alleged violation. March 6, 2007 -4- Item No. 28 • States that complaints based primarily on the basis of race, color, national origin, ethnicity or other constitutionally or statutorily protected status will not be investigated. • Requires the City to give contractors and subcontractors notice and an opportunity to be heard if the City suspects aviolation of the Ordinance,unless the contractor or subcontractor has previously violated the Ordinance. • Authorizes, but does not require, the City to terminate a contract and prohibit the violator from entering into future contracts with the City for a period of five years. • States that the violator will be liable to the City for any actual, consequential damages the City may experience as a result of the termination of the contract. • States that if any portion of the Ordinance is invalidated by a court, the remaining portions will remain in effect. Comparison Between State Law and the Ordinance The state law that addresses this same subject is House Bill 06-1343, which has been enacted as C.R.S. §8-17.5-101. That law applies only to 'contracts for services." Thus, the scope of the proposed Ordinance is broader than the state law. (However, at least one state agency has interpreted the state law as applying to construction contracts as well as contracts for services.) The purpose of the state law is similar to the proposed Ordinance but the state law is directed towards the government entities rather than their contractors and subcontractors. The state law essentially prohibits state agencies and political subdivisions from entering into or renewing apublic contract for services with a contractor who knowingly employs or contracts with an unauthorized alien to perform work under the contract or who knowingly contracts with a subcontractor who does so. It also states that all covered contracts must contain provisions prohibiting the employment of unauthorized aliens;prohibiting subcontracts with subcontractors who have failed to certify that they will not knowingly employ unauthorized aliens; requiring the contractor to verify or attempt to verify, through participation in the basic PILOT program, that the contractor does not employ unauthorized aliens; and requiring contractors to terminate subcontracts with subcontractors who, after notice, continue employing any known unauthorized aliens. Like the Ordinance, the state law authorizes governments to terminate contracts with contractors who violate the law, and they may recover any actual and consequential damages that they may incur in doing so. Governments terminating contracts under the law are to notify the Secretary of State of any contracts terminated under the law, so that the violators will be placed on a statewide list. In comparing the state law with the proposed Ordinance,the significant differences and similarities are as follows: (a) The state law pertains only to service contracts, while the Ordinance refers to both service and construction contracts. (b) The state law pertains to all public contracts for services, regardless of the amount. The Ordinance pertains to only those contracts which meet a March 6, 2007 -5- Item No. 28 threshold amount and are subject to the procurement provisions of the City Code. (c) The state law requires that certain provisions be placed into a public contract for services as more fully discussed above. The Ordinance does not require particular contract language but instead makes it unlawful to hire unauthorized aliens to work on contracts, subcontracts or major warranty work of the City,requires a verification process,and requires contractors and subcontractors to maintain copies of their records. (d) The state law imposes no civil or criminal sanction for a violation of the statute. The Ordinance imposes a civil penalty of$1,000 per infraction if a contractor or subcontractor falsely identifies, or falsely certifies the legal employment status of,any person working for the contractor or subcontractor on a City contract, subcontract or major warranty work. (e) Both the state law and the Ordinance provide for the termination of a contract if a contractor fails to abide by the law,and for the recovery of consequential damages. Enforcement City staff will be responsible for enforcing the Ordinance. Enforcement will be carried out through audits of compliance and written complaints. More specifically, enforcement activities would consist of: 1. making sure, when contracts are let, that contractors and subcontractors certify that they have reviewed the I-9 documents and verified the legal employment status of their employees; 2. conducting periodic "spot checks" or audits, reviewing the documentation that the contractors and subcontractors are required to maintain; 3. going onto a job site if there is a complaint and trying to determine the identity (though not the legal employment status) of all persons on the site and then checking the contractor's records to see if the contractor has checked the employment status of a particular employee and has documents on file verifying such status. City personnel generally do not have the training needed to determine the legal employment status of individual workers. Federal officials are usually in charge of investigating the status of individual immigrants. However, if staff can identify who the people are at a particular site,they may be able to determine whether the contractor has checked and verified their status as required by the Ordinance as well as federal and state law. The difficultly is that staff may not always be able to match a person's identity with the paperwork maintained by the contractor or subcontractor. Staff has estimated that it would require 30 to 40 hours to conduct an audit for a service contract. This includes preparation, review of files/documentation and preparation of the audit report. March 6, 2007 -6- Item No. 28 Calculating staff time, the estimated average cost for each service contract audit, whether by complaint or spot check, is $1,600. Based on current workloads staff could absorb two audits per year. If more than two audits are desired or required, it is likely that additional resources will be required. An audit on a large construction project,such as the Police Administration Building which involves one general contractor and 20 subcontractors for a total of 1,000 employees,would take an estimated 300 hours to complete. For staff to do the audit, it would cost approximately $12,000 (based on $40/per hour)and if the audit was outsourced,the estimated cost is$24,000(based on$80/per hour). Based on current workloads, staff could absorb two to six audits per year. If more than six audits are desired or required, it is likely additional resources will be required. Effect On City Contracts/Contractors Staff believes that most, if not all, of the City's contractors comply with the State of Colorado and Federal PILOT program. Though staff did not conduct an extensive outreach effort, a few contractors voiced their concern that the Ordinance may require additional time and administrative costs associated with multiple sets of similar tasks and responsibilities required by each tier of government. While confident about the ability to comply with federal, state and, if the Ordinance is approved, City requirements that prohibit hiring unauthorized aliens, contractors are concerned that they could be tripped up on a technicality and face,as a result, significant time and cost to work through the process and defend their documentation and/or employees.This concern is exacerbated by the fact that most subcontractors are small firms with limited resources,and these subcontractors are less certain about their capacity to meticulously and thoroughly completed the required documentation for and respond to an audit. As the risk of doing business with Fort Collins (fines and/or debarment) increases, contractors typically do one of two things — not bid work offered by the City or raise their prices to cover potential costs. Both can result in increased costs to the City. The City competes regionally for qualified firms. Some firms may elect not to bid on City contracts because of the added regulation. At the present time there is more than enough business for these firms with others who will not have these regulations. Staff does not have specific data that addresses the degree to which contractors and subcontractors—ones that are currently doing business with the City as well as those that are potential contractors—comply or don't comply with existing federal and state laws related to employing unauthorized aliens. Consequently, it is not possible to determine the extent to which the proposed Ordinance will help prevent the employment of unauthorized aliens on City projects in Fort Collins. On the other hand, adoption and enforcement of the Ordinance will send a strong message to businesses that positions of employment in the City should be reserved for persons who are legally authorized to work in this country. Ultimately,the question presented by the proposed Ordinance is whether the additional requirements and penalties presented by the Ordinance are needed to better ensure that no unauthorized aliens work on City contracts. ORDINANCE NO . 045 , 2007 OF THE COUNCIL OF THE CITY OF FORT COLLINS ESTABLISHING LOCAL SANCTIONS UPON CONTRACTORS AND SUBCONTRACTORS OF THE CITY WHO EMPLOY UNAUTHORIZED ALIENS TO PERFORM WORK FOR THE CITY WHEREAS , federal law requires that persons who are not citizens or nationals of the United States must comply with certain criteria before they may legally enter the United States, be granted lawful permanent residency or be eligible for employment in the United States ; and WHEREAS , in 2006 , during regular and special sessions, the Colorado General Assembly passed legislation addressing unauthorized aliens and the use of public resources, and the Governor signed that legislation into law; and WHEREAS , the City of Fort Collins contracts with service providers and vendors to perform a variety of services including construction; and WHEREAS , the employment of unauthorized aliens on City projects is contrary to the interests of the City in that it deprives persons legally present and/or authorized to work in the City of such employment opportunities and contributes to the increased demand for City services presented by unauthorized aliens; and WHEREAS , the City Council wishes to adopt a local ordinance establishing additional, more stringent policies and procedures than have been established by the State in order to deter and prevent the employment of unauthorized aliens on City projects. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows : Section 1 . That Article IV of Chapter 8 of the Code of the City of Fort Collins is hereby amended to add a new Division 6, to read as follows : DIVISION 6 . UNAUTHORIZED ALIENS Sec. 8-215. Definitions. The following words, terms, and phrases , when used in this Division, shall have the meanings ascribed to them in this Division: Alien shall mean any person who is not a citizen or national of the United States . Construction shall mean the process of building, improving, altering, or demolishing improvements . Construction does not include the operation or maintenance of improvements . Contract shall mean an agreement between the City and a contractor to perform any service to or for the City for One Hundred Thousand Dollars ($ 100,000) or more, or to perform construction work for the City for Five Hundred Thousand Dollars ($ 500,000) or more, or to perform major warranty work. Contract shall not include donations or an agreement for the procurement o£ goods ; legal or litigation services ; musical, dramatic and other fine arts performances ; or services or activities that are the subject of contracts between the City and other governmental entities . Contractor shall mean any person, employer or entity, other than a governmental entity, that enters into a contract. Legal employment status shall mean status as a citizen or national of the United States or status as a person who is otherwise legally eligible under federal law for employment in the United States . Major warranty work shall mean work that results from a completed contract pursuant to the warranty provisions of such contract and amounts to not less than ten ( 10) percent of the value of the original contract. Subcontract shall mean an agreement, whether written or oral, between a subcontractor and a contractor pursuant to which the subcontractor agrees to perform work under a contract or to perform major warranty work. Subcontractor shall mean a person, employer or entity, other than a governmental entity, that enters into an agreement with a contractor to perform any service or work on a contract or to perform major warranty work. Unauthorized alien shall mean, with respect to the employment of an alien at a particular time, a person who is not at that time an alien lawfully admitted for permanent residence or a person authorized to be so employed under federal law. Sec. 8-216. Hiring of illegal aliens to perform work on contracts prohibited. No contractor or subcontractor shall knowingly recruit, hire for employment, or continue to employ, for the purpose ofperforming work on a contract or subcontract, any person who is an unauthorized alien. -2- Sec. 8-217. Verification of legal employment status of all employees and subcontractors. (a) Each contractor entering into a contract and each subcontractor entering into a subcontract shall verify by obtaining and reviewing copies of such records as are required by Form I-9, issued by the Department of Homeland Security, the legal employment status of all employees, subcontractors and other persons who will perform work under the contract or subcontract . (b) Each contractor shall, upon execution of a contract, certify to the City's Purchasing Agent, on a form approved by the City Manager, its compliance with the provisions of subsection (a) above. (c) Each contractor or subcontractor shall, prior to undertaking any major warranty work, certify to the City's Purchasing Agent, on a form approved by the City Manager, its compliance with the provisions of subsection (a) above. (d) Each contractor shall, prior to entering into any subcontract, certify to the City's Purchasing Agent, on a form approved by the City Manager, that it has reviewed the subcontractor's compliance with the provisions of subsection (a) above, as well as the records required to be maintained by the subcontractor under subsection (e) below, and has verified, through such review, the legal employment status of all persons who will perform work under the subcontract. (e) Each contractor or subcontractor shall maintain copies of all records it has accepted as evidence of legal employment status under this Section for a period of one year from the date of completion of the contract, subcontract or major warranty work, whichever is applicable . At any time that work is being performed under a contract or subcontract, or that major warranty work is being performed, the contractor or subcontractor responsible for such work shall, upon request by the City, verify the identify of any and all persons performing such work and produce for City inspection copies of the documents relied upon in verifying the legal employment status of such persons . (f) It shall be unlawful for any such contractor or subcontractor to falsely identify, or falsely certify the legal employment status of, any person under the provisions of this section. (g) All contractors and subcontractors shall comply with Title 7 of the United States Code and shall not discriminate against any employee or applicant for employment with respect to the hiring, recruitment or referral for a fee of such employee or applicant for employment, nor shall any such contractor or subcontractor discriminate against any employee with respect to the hiring, recruitment, referral for a fee or discharge of such employee on the basis of race, creed, color, national origin, sex, age, gender, disability, military status or marital -3 - status, or, in the case of a protected individual as defined in Title 8 U. S . C . Section 1324 b(a)(3 ), on the basis of such individual ' s citizenship status . Sec. 8-218. Enforcement. Enforcement of this Division may occur either through audits of compliance or through investigation of a written complaint filed with the City Manager by a resident of the City, a City officer or employee, or a City-licensed business . (a) All audits of compliance must be conducted in accordance with regulations and procedures adopted by the City Manager. (b) No complaint will be investigated by the City unless it is in writing, signed by the complainant, and submitted to the City Manager' s Office no later than ninety (90) days after completion of the contract, subcontract or major warranty work, whichever is applicable . All such complaints must include the name(s) ofthe alleged violator(s) as well as the actions constituting, and facts supporting, the alleged violation and the date and location where such actions occurred. A complaint that alleges a violation solely or primarily on the basis of race, color, national origin, ethnicity, or other constitutionally or statutorily protected status will be deemed invalid and will not be investigated. Sec. 8-219. Penalties. (a) If the City believes that a contractor or subcontractor has violated the provisions of this Division, the City shall give written notice of such alleged violation to the contractor or subcontractor. Within five (5) business days of the City ' s notice, the contractor or subcontractor may make a written request for a hearing before the City Manager or his designee to determine the merits of the allegation. (b) If the City determines as a result of such hearing that the contractor or subcontractor has committed the violation alleged in the notice, and if the contractor or subcontractor has not previously violated the provisions of this Division, the contractor or subcontractor shall have three (3 ) business days from the date of such determination to remedy the violation and avoid possible termination of the contract or subcontract. If the violation is not remedied within said period of time, or if the contractor or subcontractor previously has been found by the City to have violated the provisions of this Division, the City may summarily terminate the contract. In addition, the contractor or subcontractor committing the violation may be prohibited from entering into future contracts with the City for a period of five years from the date of the finding by the City of a violation. (c) If the City elects to terminate a contract due to a violation of this division, any contractor or subcontractor that has committed the violation or knowingly permitted the same to occur shall be liable to the City for any actual and -4- consequential damages incurred by the City as a result of the termination of the contract. The City may pursue collection of such consequential damages by any legal means available to the City, including, but not limited to , a suit for damages in a court of competent jurisdiction. (d) If a contractor or subcontractor violates the provisions of § 8-217(f), the contractor or subcontractor commits a civil infraction. Such civil infraction shall be punishable by a civil fine of not more than one thousand dollars ($ 1 ,000 . ) plus costs, damages and expenses as follows : ( 1 ) A person found responsible by the Municipal Judge or referee for any violation of this Code charged as a civil infraction shall pay the fine imposed by the Municipal Judge or referee, together with all costs, direct or indirect, that the City has incurred in prosecuting the civil infraction. (2) If a defendant fails to answer a citation for a civil infraction or notice to appear in court or before a referee for such infraction, a default judgment shall enter in the amount of the civil penalty plus all costs, expenses and damages . In the event a defendant fails to pay such civil fine, costs , and expenses within thirty (30) days after the payment is due, the City may pursue any legal means for collection. (3 ) Each act of violation shall constitute a separate offense . Sec. 8-220. Severability. If any clause, sentence, paragraph, subdivision, section or part of this Division or the application thereof to any person, individual, corporation, firm, partnership, entity, or circumstance shall be adjudged by any court of competent jurisdiction to be invalid or unconstitutional, such order or judgment shall not affect, impair, or invalidate the remainder thereof, but shall be confined in its operation to the clause, sentence, paragraph, subdivision, section, or part of this Division, or in its application to the person, individual, corporation, firm, partnership, entity or circumstance directly involved in the controversy in which such order or judgment is rendered. Introduced, considered favorably on first reading, and ordered published this 6th day of March, A.D . 2007 , and to be presented for final passage on the 20th day of March, A.D . 2007 . Mayor ATTEST : City Clerk -5 - Passed and adopted on final reading on the 20th day of March, A.D . 2007 . Mayor ATTEST : City Clerk -6-