U.S. Immigration and Customs Enforcement reported it conducted more than 3,000 worksite audits in fiscal year 2012. One way ICE identifies potential hiring violations is by auditing employers’ Form I-9s, the document businesses use to verify an employee’s eligibility to work. Under the Immigration Reform and Control Act of 1986 (“IRCA”), employers are required to complete and retain a Form I-9 for each individual they hire. ICE is authorized to fine employers even for technical violations of the employment authorization verification system. Each year, the agency issues fine notices totaling in the millions to businesses for I-9 violations. In light of ICE’s increased worksite enforcement activities, this article examines how employers can demonstrate compliance with Form I-9 employment authorization verification requirements.

Verification

Employers perform I-9 verification by requiring all new hires to complete Section 1 of the Form and present documentation confirming their identity and authorization to work. The employer must then record the documentation presented in Section 2 of the Form. U.S. Citizenship and Immigration Services released a new Form I-9, Employment Eligibility Verification, and M-274, Handbook for Employers, Instructions for Completing the Form I-9, on March 8, 2013. Employers must use the new form exclusively beginning May 7, 2013. Employers who fail to do so will be subject to penalties.

Penalties

Section 274A of the Immigration and Nationality Act (“INA”) provides for civil monetary and criminal penalties:

  • for record keeping or paperwork violations: $110-$1,100 per occurrence;
  • for knowingly employing an unauthorized worker: $375-$3,200 per occurrence for first violation, $3,200-$6,500 per occurrence for second, and $4,300-$16,000 per occurrence for third and more; and
  • for a demonstrated “pattern or practice” of knowingly employing unauthorized workers: a criminal fine of up to $3,000 and imprisonment of up to six months.

USCIS regulations define “pattern or practice” as “regular, repeated and intentional activities, but…not…isolated, sporadic, or accidental acts.” Criminal prosecutions may be brought against the employer as well as individual company officials for pattern or practice violations. In addition, it is a criminal offense, punishable by up to five years’ imprisonment, for “any person who during a 12 month period knowingly hired for employment at least 10 individuals with actual knowledge” that they are not authorized to be employed in the United States and were brought into the country illegally. An employer who has violated the I-9 requirements may be debarred from federal contracts for a year. This period may be extended in one-year increments.

The Other Side of I-9 Compliance

The focus of I-9 enforcement is on the means of I-9 completion and civil and criminal penalties for noncompliance. However, even as employers seek to comply, they also must ensure they do not treat individuals disparately or discriminatorily. The I-9 requirements represent a compromise between eliminating the employment of unauthorized individuals and preventing discrimination on the basis of citizenship and national origin. Employers may be penalized for engaging in activities that could have a disparate impact upon one of the protected classes of job applicants. Thus, an employer who engages in document abuse by demanding more documentation than the law requires or rejects documents that “on their face appear to be genuine,” may be subject to civil penalties ($110-$1,100 per individual discriminated against). Employers found to have engaged in unfair immigrationrelated practices (“UIREP”) may be subject to penalties of:

  • $375-$3,200 per occurrence for a first violation,
  • $3,200-$6,500 per occurrence for a second, and
  • $4,300-$16,000 per occurrence for a third and more.

UIREPs include refusing to hire or discharging a protected individual because of his or her national origin or citizenship, and requesting specific documents or rejecting apparently valid documents during employment eligibility verification for the purpose or with the intent of discriminating on the basis of citizenship or national origin.

The Department of Justice’s Office of Special Counsel for Immigration Related Unfair Employment Practices (“OSC”) enforces INA’s anti-discrimination provisions. The INA prohibits employers from discriminating on the basis of citizenship or immigration status unless required by law, regulation or government contract. Following random checks/audits of online postings (particularly of recruiters, job banks, and staffing companies), OSC has commenced proceedings against employers for alleged unlawful discrimination. It announced on February 8, 2013, a settlement agreement with a Casselberry, Florida, healthcare staffing company, resolving allegations that the company had engaged in a pattern or practice of citizenship status discrimination by posting discriminatory job advertisements on the Internet. OSC’s investigation had found the company’s Internet-based job postings contained discriminatory language, impermissibly preferring foreign-trained individuals seeking permanent residence or H-1B visa sponsorship over U.S. workers. Under the terms of the settlement, the employer agreed to pay $27,750 in civil penalties, to change its internal policies and written procedures to incorporate INA’s anti-discrimination protections, and to submit to reporting and compliance monitoring requirements for three years. Link: http://www.justice.gov/opa/pr/2013/February/ 13-crt-173.html

The INA’s anti-discrimination provisions also limit the type of questions employers can ask job applicants. In policy statements, OSC has approved two questions:

  1. Are you legally authorized to work in the United States? (Yes or No); and
  2. Will you now or in the future require sponsorship for an employment visa status?

Employers cannot ask whether a job applicant is a U.S. citizen before making an offer of employment, unless required by law or government contract. Since U.S. citizens, permanent residents, refugees and asylees are protected from citizenship status discrimination, asking the question pre-offer could expose the employer to charges of discrimination. By the same token, employers are generally cautioned against asking additional questions about a job applicant’s current visa status prior to making an offer of employment.

Enforcement of Form I-9 Employer Sanctions

The Departments of Labor and Homeland Security audit employers to ensure compliance with the I-9 requirements. The DOL compliance force is made up of Wage and Hour Compliance Program compliance officers and Office of Federal Contract Compliance Programs equal opportunities specialists. Members of DHS’s ICE carry out enforcement. To avoid liability that may result from an ICE inspection, employers need to establish a sound I-9 verification and compliance system. Employers also should ensure that their contractors comply with I-9 obligations with respect to contractor employees performing services at the employer’s facilities.

Under the Obama Administration, I-9 enforcement strategies have shifted away from civil enforcement of employer sanctions towards combined civil and criminal prosecutions of egregious violators. Unlike the Bush Administration, which focused on unauthorized-worker arrests at employer worksites, the current administration has pursued employers alleged to have knowingly or recklessly hired unauthorized workers. ICE’s worksite enforcement strategy, which it released on April 30, 2009, prioritizes criminal prosecutions against employers that rely on unauthorized workers as a business model, mistreat their workers, engage in human smuggling or trafficking, engage in identity and benefit fraud, launder money, or participate in other criminal conduct. ICE concentrates on employers involved in national security and public safety, or associated with critical infrastructure and key resources sectors. Consequently, industries traditionally associated with the employment of illegal aliens — including the construction, food processing, and agricultural production industries — have been frequent targets for enforcement.

Form I-9 Audit Process

ICE usually initiates the I-9 administrative inspection process by serving an employer with a Notice of Inspection (NOI). The NOI compels production of Forms I-9 within three business days. An extension may be granted at the discretion of the investigating officer. The NOI will indicate whether ICE requires any supporting documentation, such as a copy of the payroll, list of current employees, Articles of Incorporation, and business licenses.

ICE agents or auditors then inspect the employer’s Forms I-9. When technical or procedural violations (pursuant to INA § 274A(b)(6)(B)) are found, the employer is given 10 business days to make corrections. ICE may impose a fine for all substantive and uncorrected technical violations. Employers determined to have knowingly hired or continued to employ unauthorized workers will be required to cease the unlawful activity. They, in most cases, will be fined, and in certain situations, prosecuted criminally. Such employers may be debarred from participating in federal contracts and from receiving other government benefits.

ICE must consider all criminal statutes pertaining to violations discovered during a worksite investigation for possible criminal prosecution of an employer or principal manager. These statutes cover alien smuggling, encouraging or inducing an illegal alien to enter the U.S., knowingly hiring/continuing to employ illegal aliens, fraud or misuse of visas, false statements, structuring transactions to evade reporting requirements, money laundering, and conspiracy, among others.

Employer Response

Employers can reduce the likelihood of being fined by taking a number of measures, such as establishing and maintaining effective I-9 compliance policies and procedures, administering them in a uniform manner, and conducting self-audits. Here are some tips to consider:

  • In-House Procedures: Adopt written procedures providing clear guidance to human resources managers. Procedures should address who is responsible for conducting I-9 verification and who is subject to I-9 verification, when and how I-9s should be completed, how I-9s should be stored and retained, and how to develop a sound I-9 compliance system that is integrated with the company’s overall personnel/hiring policy, and employee orientation and registration materials and applications.
  • Appoint an I-9 Manager: A human resources manager should be tasked to manage the I-9 process. This manager is responsible for:

Training employees responsible for completing I-9s and ensuring they understand the process.

Overseeing compliance and helping to ensure that it becomes part of corporate culture. With the assistance of counsel, employers should conduct periodic reviews of the company’s I-9 files, looking for patterns of common mistakes and areas that require attention. Regular I-9 audits will enable the company to respond more effectively to a government NOI in a timely manner and demonstrate a good faith attempt to comply with I-9 requirements.

Keeping abreast of ICE requirements and ensuring that those conducting I-9 verifications are informed of changes.

  • Conduct Manager Training: Managers responsible for hiring and for negotiating service contracts should be trained on I-9 requirements and procedures, potential penalties for I-9 violations and behavioral risks (such as joking about illegal aliens in the workplace) that could be used to show the company knew, or should have known, of I-9 violations.
  • Review Contracts with Service Providers: Contracts with service providers should contain express provisions making the completion of I-9s for contractor employees the contractor’s responsibility. Where the host company has sufficient leverage, it may be desirable to include a provision requiring the contractor to indemnify the company for any costs, damages or penalties arising from the contractor’s failure to comply with IRCA and other legal requirements, such as workman’s compensation.
  • Consider Auditing Contractor Performance: Conduct periodic audits of contractor I-9 procedures to ensure the contractor is complying with IRCA’s requirements. If such audits include reviewing the contractor I-9 forms, however, they may be used to bolster an argument that the company is a co-employer of the contractor’s employees and extend the company’s potential liabilities.
  • Evaluate Overall Relationship with Contractors: Employers must be honest with themselves. In one case, the government argued that a retailer’s cleaning contracts were so favorable to the company that it must have known its contractors could not comply with the wage and hour and workman’s compensation laws and, therefore, would have to resort to employing unauthorized employees in violation of IRCA. Employers should consider an evaluation to determine whether similar risks exist. Finally, a previous IRCA violation increases the risk of additional government investigations.