Acquiring a business involves risks with respect to immigration laws that are often overlooked. The acquirer may either complete new Forms I-9 for all workers or retain the target company's previously completed Forms I-9. If the acquirer determines to retain the target company's previously completed Forms I-9, it inherits all liabilities arising out of the target company's pre-closing immigration laws violations.
When U.S. Immigration and Customs Enforcement initiates a Form I-9 audit, the employer has three business days to produce all Forms I-9 and a subsequent 10 days to correct any technical errors. Each substantive error and uncorrected technical error subjects the employer to a fine that ranges from $110 to $16,000 per violation. Furthermore, company personnel and owners who know about or conspire to employ unauthorized workers are subject to serving time in prison.
In 2011, ICE undertook 2,500 Form I-9 audits, initiated 3,300 enforcement cases and imposed fines totaling $10.4 million. In 2013 through the month of March, there have been over 300 arrests. Although all employers are at risk, ICE has targeted healthcare, energy, critical food, agricultural, water treatment, high-profile restaurants and nuclear reactor employees, among others.
Upon completion of an acquisition, the acquirer is given no grace period to comply with the immigration laws. Therefore, it is critical that the acquirer's counsel complete a Form I-9 audit prior to consummating any acquisition. The audit process, coupled with correcting the acquired company's historical mistakes, constitutes an inexpensive alternative to potentially incurring very expensive fines.