The Grand America Hotels and Resorts ("Grand America") which owns hotels and resorts in Utah, Wyoming, Arizona, California and Idaho must forfeit almost $2 million to the Department of Homeland Security ("DHS") after it was found to have hired undocumented workers, terminated them and then rehired them through temporary staffing agencies. The US Attorney's office in Utah and the US Immigration and Customs Enforcement ("ICE") settled the claims with Grand America which resulted from an investigation dating back to 2010. After Grand America was warned in a Form I-9 audit that it was hiring unauthorized workers, the company terminated the workers and then rehired about a third of them, in many instances using fraudulent names or Social Security numbers, through a series of temporary staffing agencies that Grand America itself established.

This case is a clear warning and example of how not to proceed if your company is audited by ICE or any other government agency. It is surprising that Grand America's management and decision-makers were not criminally charged. Grand America was first audited by ICE in 2010. This audit resulted in a finding of approximately 130 undocumented employees. Grand America terminated these employees in 2011 after it received a warning notice from ICE. A year later, ICE found that Grand America rehired many of these employees through staffing agencies that the company created. At that point, search warrants were issued and Grand America agreed to cooperate with the investigation in exchange for the US Attorney not filing criminal charges against the company and its management. As a result of the settlement, and in addition to the $2 million forfeiture, Grand America must complete extensive remedial measures concerning its employment practices and training of staff in charge of the Employment Eligibility Verification process and E-Verify process.

Government audits and investigations relating to the Employment Eligibility Verification process are on the rise. Every year there is a record number of audits and unfortunately company self-audits are not sufficient to root out training deficiencies or practices and policies that appear to be lawful, as in the Continental Airlines case, but are in fact fines and unwanted press waiting to materialize. It is notable that the airline was not in fact fined for hiring undocumented workers, but was fined for not complying with the laws relating to Employment Eligibility Verification. Employers should be aware that the vast majority of fines in this area are assessed for "paper" violations, e.g., failure to prepare the I-9 or properly complete it. Although a relatively simple form on its face, the I-9 is a minefield of liability. Employers should note that it may only be a matter of time before the Office of Special Counsel or ICE knocks on your door.