An Administrative Law Judge with the Office of the Chief Administrative Hearing Officer (OCAHO) has rejected a request by U.S. Immigration and Customs Enforcement (ICE) to fine a California restaurant more than $22,400 for not completing I-9 forms on 24 employees. Although the restaurant, La Hacienda Mexican Café, admitted it did not complete the I-9 forms, and therefore violated federal law, Administrative Law Judge Ellen Thomas concluded the circumstances did not warrant fining La Hacienda $935 for each missing I-9.
Under federal law, new hires must complete Section 1 of the I-9 no later than the first day of employment and their employers must complete Section 2, based on original documentation of the employees’ identity and work authorization, within three business days thereafter. Failure to accurately complete the I-9 may result in a penalty of $110 to $1,100 per individual, depending on the percentage of non-compliant or missing I-9 forms. ICE may also consider additional factors to either increase or decrease the penalty, including the size of the employer, the employer’s good faith, the seriousness of the violations, whether the individuals involved were work authorized, and prior violations, if any.
Although La Hacienda did not dispute that it failed to complete I-9 forms on 24 employees, the restaurant’s owner avowed she was unaware of the federal requirement. Nevertheless, she still requested driver’s licenses, government-issued identification, and resident alien cards from the employees, confirming they had proper documentation. La Hacienda also explained that it was a small employer, whose workforce had dropped from 24 to seven employees, with no history of I-9 violations.
ICE did not dispute this evidence and agreed the 24 employees with missing I-9 forms were authorized. However, ICE claimed that lack of good faith and the seriousness of the violations – premised entirely on the number of missing forms – offset these mitigating factors and, therefore, the baseline $935 fine, calculated solely on the percentage of missing forms, was appropriate.
Rejecting ICE’s reasoning, Judge Thomas concluded that “[t]he penalties requested here are so near the maximum permissible as to appear disproportionate to the size and character of this small cafe restaurant.” She also emphasized that “the percentage of violations has in any event already been given determinative weight in setting the baseline fine; it should not be used to enhance it yet again.” As a result, Judge Thomas found La Hacienda liable but reduced the penalty per individual from $935 to $400, bringing the total to $9,600.
The La Hacienda matter is particularly noteworthy because it provides insight on ICE’s reluctance to reduce penalties below its baseline calculation even when the employer satisfies virtually all of the mitigating factors. Given this approach, which ICE will likely continue in the future, employers are advised to ensure they have complete I-9 forms for all employees, retaining the forms for three years from the date of hire or one year from the date of termination, whichever is later. Doing so will minimize the risk of such “paperwork” violations and accompanying penalties.