Facing $15,000 Fine : Firm Copes With Alien Worker Law

When the new immigration law was passed in 1986, Henry Gamboa knew he was going to have to make some changes. For years, his family-run Lemon Grove manufacturing firm, the Rainbow Steel Company, had relied on undocumented workers to fill a third or more of a work force that now numbers about 20.

“I knew it was going to impact us,” said Gamboa, a chunky, energetic 29-year-old who could be a prototype for a certain kind of hustling, fast-talking small businessman--his office cluttered with blueprints and invoices, his mind ever alert to minute operational details and possibilities for new clients and expansion.

Gamboa maintains that he quickly brought his ornamental steel manufacturing firm into compliance with the new law, which makes it a crime for employers to hire illegal aliens knowingly.

But U.S. immigration authorities say he didn’t act fast enough.

Facing $15,000 Fine

In November, Rainbow Steel became one of the first firms in the nation--and the second in San Diego County--to be notified that the U.S. Immigration and Naturalization Service intended to fine it for violating the new law by hiring illegal aliens and failing to fill out the newly required paper work. Gamboa, who faces a $1,500 fine, acknowledges a paper work violation but denies the central charge and has requested a hearing.

Similar to about two dozen cases pending nationwide, the case of Rainbow Steel is broadly illustrative of the impact that the immigration law is having on thousands of U.S. employers, both large and small, who have long relied on undocumented workers in an era when so many U.S. industries have moved overseas in search of cheap labor.

Like Rainbow Steel, other firms--from clothing manufacturers to restaurants, from farmers to hotels--have been or will be forced to make significant changes. If they don’t act quickly enough, owners could find themselves subject to fines, like Gamboa, or even jail terms.

Law’s Effects Studied

“This (Rainbow Steel) would not be an atypical firm,” noted Anna Garcia, a research associate at the UC-San Diego Center for U.S.-Mexican Studies who has investigated the effects of the new law on dozens of employers in Southern California. “Hiring the undocumented is one of the ways many firms have remained competitive while continuing to manufacture in the United States.”

While many assume that most undocumented laborers are unskilled, the fact is that many firms such as Rainbow Steel have developed a dependency on skilled and semi-skilled illegal aliens, particularly from Mexico, who have knowledge in fields such as welding and are willing to work hard for low and moderate wages. Garcia spoke of one firm, a Los Angeles manufacturer of high-quality shoes, that has traditionally brought in skilled workers from the Mexican shoe-producing city of Leon.

“With the new law, they’re now in kind of a bind,” Garcia noted.

Because of that bind, Gamboa, the president of Rainbow Steel, says he has reassessed his operations and made significant adjustments in his business. He says he has insisted that four long-time workers--all illegal--apply for amnesty, thus averting any legal threat to the firm because of their presence. And, with an eye towards future expansion, Gamboa says he plans to start a training program designed to avert a future labor shortfall.

Four Laid Off

“There’s a shortage of skilled workers, no doubt about it,” Gamboa said during an interview in his busy second-floor Lemon Grove office, situated above the covered work area where laborers weld, grind and shape steel bars into ornamental fences and grates. “We can’t rely on skilled people walking in here from Mexico anymore. That’s why we’ve got to start training.”

But the law also prompted Gamboa to make a more drastic move: He laid off four workers who did not qualify for amnesty. As it turns out, Gamboa says all four workers were on his payroll before the new immigration bill was signed into law--meaning Rainbow Steel would not have faced legal sanctions for maintaining them as employees.

Gamboa, however, says he was unaware of this exception, and he blames the confusion on the INS--a criticism frequently leveled at the agency by employers and others since passage of the complicated new law.

“Every time I talked to them (INS officials), they told me a different story,” Gamboa recalled, recounting several conversations with immigration authorities. “Finally, I almost threw my hands up in the air and told my workers, ‘If you’re not legal, and you don’t qualify for amnesty, you have to go.’ ”

The confusing signals emanating from INS offices is likely to be an issue raised in the upcoming administrative law hearings of Rainbow Steel and other firms accused of violating the new immigration law.

Mester Manufacturing, an El Cajon water bed manufacturer that was the first California firm notified that it would be fined under the new law, maintains that it is wrongly accused and that the INS provided it with ambiguous and misleading instructions about the law, according to Peter Larrabee, the San Diego attorney representing the firm. A hearing on the El Cajon case--perhaps the first such session in the nation--is scheduled for Feb. 9 in San Diego.

The hearing is likely to set a precedent.

“Everybody’s inventing the wheel,” said Larrabee, who cited widespread uncertainty about how the new legal process will unfold. “We’re all kind of stumbling along.”

‘Law of the Land’

Like representatives of the El Cajon firm, Gamboa of Rainbow Steel says he can live with the new law.

“It’s the law of the land, and we tend to abide by it--and we are abiding by it,” said Gamboa, who, on a recent afternoon, was dressed in jeans, warm-up jacket and a baseball-style cap emblazoned with the company motto.

Working in an highly competitive industry that has long attracted undocumented workers, Gamboa boasts that his work staff is now 100% legal. “I’m willing to bet five bucks that we’re the only legal iron shop around.”

As Gamboa spoke, he received telephone calls every few minutes--and appeared to know all his callers, mostly clients, on a first-name basis. That familiarity reflects the family-run, small-business character of Rainbow Steel.

The firm was founded 26 years ago by Tony Gamboa, Henry’s father and a first-generation U.S. resident whose parents came from Mexico. In recent years, Henry Gamboa said, sales have increased on the tail of a San Diego building boom. The company mostly supplies building contractors; color photographs of its work--in condominium projects, swimming pools, private homes--adorn the office walls. In the most recent fiscal year, Gamboa said, sales totaled about $1.5 million.

Why did Rainbow Steel come to rely on undocumented labor? In Gamboa’s view, the answer involves Mexicans’ willingness to work harder than Americans, plus the widespread knowledge of welding in Mexico, where small iron shops are commonplace.

“In California, the ornamental iron-work field is 80 percent Mexican or Hispanic,” noted Gamboa, speaking in the rapid-fire fashion that is his custom, a trait that gives him more the feel of a New Yorker than a Southern Californian.

“This is not just welding; it’s a skill, like glass cutting . . . . Mexicans are very hard workers. They’re on time. They hardly ever give an excuse. They’re always willing to go that extra bit.”

No Feelings of Guilt

While U.S. immigration officials and others have long condemned the practice of hiring undocumented workers, Gamboa, a self-described Reagan Republican, says he never felt a moment’s guilt.

“We have never hired people just because they were illegal, because we could pay them less . . . . All of my competitors were hiring them, and I couldn’t find legal people to work and do as good a job. They just weren’t out there.”

Gamboa recites a series of bad experiences with his non-Hispanic U.S. employees--despite extensive efforts to recruit workers through classified advertisements, government programs and other means. “Maybe Southern Californians are just too laid back to do this kind of work,” Gamboa theorized, only partially in jest.

While few Americans may be willing to take minimum-wage jobs as field workers or in apparel factories, iron work can be relatively well-paying. Gamboa says his starting workers earn $5 to $6 an hour, but he adds that they can eventually earn as much as $16 hourly.

Even before the new immigration law, businesses such as Rainbow Steel faced certain risks in hiring undocumented workers. At any time, businessmen knew, immigration agents might descend on their factories, plants and job sites, costing them a part of their work force. Gamboa says he experienced several such raids a year.

“They’d come in here, take out four of five workers, and there’d be havoc,” Gamboa recalled. “Most of ‘em would be back the next day or so, though.”

Mixed Blessing

For the workers at Rainbow Steel, the new law has been a mixed blessing. For those such as Herminio Cardenas Suares cq , who appears to qualify for amnesty, there is the happy prospect of finally becoming a legal resident--a feeling that is tempered by sorrow for those, including his brother, Ruperto, who lost their jobs because of the law.

“The law has mixed everything up,” said Cardenas, 25, a slender, soft-spoken native of the Mexican interior state of Jalisco whose wife is expecting their first child. “I hope I can become legal and stay in this job. I like this work. You have to have discipline, and you have to work hard, but it’s good work. You can do something different every day.”