The need for businesses to be proactive in their review of employee immigration status recently was highlighted by the serious penalties levied upon the owners of a California restaurant. Marino Sandoval and his wife Nicole Sandoval, owners of El Balazo Restaurant, in Oakland, California, were sentenced on April 24, 2012, after pleading guilty to various immigration, Social Security and tax violations. 

Mr. Sandoval admitted to employing more than 100 illegal aliens between August, 2007, and August, 2008.  He was sentenced to 41 months in prison.

Ms. Sandoval admitted she underreported employees' wages to the payroll company that prepared the restaurants' tax returns. Marino and Nicole Sandoval admitted that, because of their actions, the amount of employment taxes paid to the IRS was understated. 

She also pled guilty to misusing El Balazo employees' Social Security numbers that were provided to the Social Security Administration and the IRS. Between 2002 and 2007, she submitted, on behalf of El Balazo, the employer's quarterly contribution and wage reports to the Social Security Administration. The reports included the names of undocumented alien employees receiving wages from their employment. In court, Nicole Sandoval admitted she was aware the Social Security numbers submitted were not the numbers assigned to the employees.

She was sentenced to five years' probation and 12 months of community confinement.

In addition, the two were ordered to pay $2.2 million in restitution to the Internal Revenue Service (IRS).

In May 2008, HSI special agents conducted searches at several El Balazo locations and encountered approximately 63 illegal alien workers. After being informed by HSI in writing of the identities of the unauthorized employees, Marino Sandoval rehired more than 10 of them.

Businesses can avoid facing these types of penalties by taking proactive steps to ensure their workforce is authorized to work in the US and by making a good faith effort to verify employment eligibility.  This can include audits of Forms I-9 and the documentation provided by employees and training those employees who are responsible for completing them.  With the stakes as high as they are, Dykema can provide guidance on these and other immigration-related issues.