2012 was a record year for Immigration and Customs Enforcement-Homeland Security Investigations (HSI), the agency charged with I-9 enforcement. In 2012, HSI commenced 3,004 I-9 investigations and completed 495, charging $12,475,575 in administrative fines. HSI also arrested 520 persons in conjunction with these investigations, including 240 business owners, managers, supervisors and human resources employees, all charged with harboring and knowingly hiring undocumented workers. The remainder were foreign national employees, charged with social security fraud and aggravated identity theft.

The Department of Justice (DOJ), Office of Special Counsel for Immigration Related Discrimination has also been extremely active in suing employers for national origin discrimination and document abuse. In a June 2013 action, a large national retailer was required to pay $175,000 in fines and set aside $100,000 in a back-pay fund for employees who were unlawfully terminated from employment due to the retailer's faulty I-9 processes.

HSI and DOJ enforcement is expected to continue unabated for the foreseeable future due to the positive reinforcement of increasing fines, Congressional approval of large agency investigation budgets and the certainty of worksite enforcement as a key component of any comprehensive immigration reform measure.

Background

Prior to 2009, there was very little investigation of Form I-9 or discriminatory immigration-related hiring practices, despite the fact that the laws have been in effect since 1986. Prior to the passage of the Immigration Reform and Control Act (IRCA) on Nov. 6, 1986, Section 274A(b) of the Immigration and Nationality Act (INA), codified in 8 U.S.C. § 1324a, there was no prohibition on hiring employees without legal work authorization. This law created, for the first time, the requirement that employers verify immigration status at the time of hire, or face criminal and civil sanctions for the employment of undocumented workers.

To counteract an anticipated employer backlash against foreign looking and foreign sounding workers, IRCA also created several forms of prohibited immigration-related employment discrimination in the hiring and I-9 process, including citizenship status, national origin, document abuse and retaliation. National origin and citizenship status discrimination occur when an employer treats a person differently based upon their citizenship or national origin during the hiring, termination, or I-9 process. Document abuse occurs when an employer asks an employee for more or different documents than what is minimally required during the I-9 process. Retaliation occurs when an employer terminates, refuses to rehire or otherwise penalizes an employee who complains to the government about violations.

Documentation

8 C.F.R. § 274a.2 designates the Employment Eligibility Verification Form I-9 (Form I-9) as the means of documenting this verification. Employers are required to have employees complete Section One of Form I-9 on or before the first day of employment. Employers are then required to inspect the employee's original identity and immigration documents in order to complete Section Two of the form on or before the fourth day of employment. Once completed, employers must maintain Forms I-9 for all current employees for government inspection. In the case of former employees, retention of Forms I-9 are required for a period of at least three years from the date of hire, or for one year after the employee is no longer employed, whichever is longer.

Since their original enactment, the regulations have been amended several times to allow for electronic storage and creation of Form I-9 as well as to recognize the ever-changing, ever-shortening list of acceptable documents that employees may present to prove their identity and immigration status. The form itself has been through five versions since its inception in 1986, with the latest dated March 8, 2013.

Using an outdated version of the form is a violation of I-9 regulations and is a finable offense. Other finable I-9 offenses include failure to complete the form, and late, improper or incomplete preparation of the form. Fines for paper work violations range from $110-$1100 per form. Employers who are found to have knowingly hired or continued to employ unauthorized workers under INA § 274A(a)(1)(a) or (a)(2) (8 U.S.C. § 1324a(a)(1)(a) or(a)(2)) will be required to cease the unlawful activity, may be fined from $375 to $16,000 per violation, and in certain situations may be criminally prosecuted. Employers found to have knowingly hired or continued to employ unauthorized workers may be subject to debarment from federal contracting and from receiving other government benefits. Employers found to have violated the anti-discrimination provisions of IRCA may be subject to civil fines, back-pay awards, and monitoring by the DOJ.

What Employers Can Do

In spite of the bleak outlook, there are several specific measures employers may implement to reduce liability and improve the overall effectiveness of immigration compliance: 1) Appoint a single Responsible Officer for I-9 Compliance; 2) Mandate semi-annual training for all employees responsible for completing Section Two of Form I-9; 3) Review and revise all Form I-9 reverification procedures; 4) Conduct and complete in-house audits on an annual basis; and 5) If fined by the government, utilize the administrative appeal procedure to challenge the amount of the fine.

Appoint an I-9 Responsible Officer

One of the most problematic issues for consistent I-9 compliance is the number of employees involved in the process. The larger the number, the larger the I-9 error rate. One way to combat this problem is to create a funnel-like system, so that all I-9s are eventually the ultimate responsibility of only one person. This person should be the last person to view the I-9 before it is properly recorded in any tickler systems and filed. The responsible officer should have the authority to go back to the human resources employee who completed Section Two of the form and have that person correct any mistakes or provide any missing information or documentation. In addition, the Responsible Officer will be tasked with maintaining the systems that indicate when an I-9 can be purged and when an I-9 needs to be re-verified due to work authorization expiration. The Responsible Officer should be provided with advanced training and should be given direct access to immigration

Mandate Semi-Annual Training

At first glance by a lay person, Form I-9 does not appear to be that complicated; however, experience has shown that there are dozens of mistakes that can be and are made during the I-9 process. Error rates often run as high as 90%, even in companies that make compliance a priority. One misguided piece of information can quickly become company policy, thus tainting an entire system. Regular and repeated training for all individuals tasked with completing Section Two of the form is recommended to fully align an employer's real-world practices with its own I-9 policy, legal requirements, and changing government guidance.

Review and Revise all I-9 Reverification Procedures

Reverification of an employee's immigration status documents is required in specific instances, most notably when the document provides specific work authorization and contains an expiration date, such as for H-1B workers or those with Employment Authorization Documents. Failing to complete timely reverification in these instances may lead to inadvertent employment of a person who is no longer authorized to work in the United States. However, reverifying when it is not required or legally permitted is even more problematic. This most often occurs in the case of legal permanent residents who have provided their I-551 Card (green card) as evidence of work authorization and identity for I-9 completion.

All green cards issued in the last 20 years contain an expiration date. Some are valid for 10 years and others for only two years. Many employers mistakenly think that this document requires reverification at the expiration date. It does not. In fact, requiring legal permanent residents to provide updated documents during a reverification process is discriminatory. The rule is that once a permanent resident, always a permanent resident regardless of the expiration date. This mistake is regularly investigated by the DOJ and often leads to significant fines and back-pay awards.

Conduct Annual Voluntary I-9 Audits

Voluntary and regular I-9 audits conducted under the direction of an immigration attorney have immense benefits for employers concerned about areas of I-9 compliance vulnerability. The audit will identify all forms that need corrections, and provide a forum for all corrections to be made. The audit will provide statistics on form error rates, instances of particular errors, and incidences of errors for staff members responsible for completing the form. This kind of information allows a company to estimate civil fine liability, tailor training to particular staff, issues or locations and make meaningful changes to its I-9 process based upon the audit results. The audit may even uncover undocumented workers and missing I-9s, and will identify I-9 forms that can be legally purged.

If a voluntary I-9 audit is started, it must be completed. Many companies start audits with the best of intentions, identifying corrections that need to be made and missing I-9s that need to be replaced, but fail to remedy the errors. This is worse than not starting the audit at all, as the company may now be charged for knowing and continuing violations. Additionally, there is a 5 year statute of limitations on all corrections, which eliminates liability completely for substantive I-9 violations five years after the employer remedied the violation, so it is in an employer's best interest to have corrections made as early as possible.

When done properly, a voluntary audit will also provide the employer with a "good faith defense" to violations uncovered in a real I-9 audit conducted by HSI. Because I-9 violations are a strict liability offense, even employers with the best of intentions are liable for civil fines when mistakes or omissions are made on the I-9 form. So the "good faith defense" does not exonerate an employer, but can be used in negotiations to reduce or eliminate fines imposed by HSI.

Challenge I-9 Inspection Fines

An I-9 investigation is initiated by the service of a Notice of Inspection (NOI) upon an employer compelling the production of Forms I-9. HSI allows three business days to present the Forms. Often, ICE will request the employer provide supporting documentation, which may include a copy of payroll, list of current employees, Articles of Incorporation, and business licenses.

HSI auditors then conduct an inspection of the Forms I-9 for compliance. When technical or procedural violations are found, pursuant to INA § 274A(b)(6)(B) (8 U.S.C. § 1324a(b)(6)(B)), an employer is given 10 business days to make corrections. An employer may receive a monetary fine for all substantive and uncorrected technical violations. In determining penalty amounts, ICE considers five factors: the size of the business, good faith effort to comply, seriousness of violation, whether the violation involved unauthorized workers, and history of previous violations.

The Government's initial assessment is delivered in a document called a Notice of Intent to Fine. Companies may attempt to negotiate reduced fines or request review of HSI's fine calculations by an administrative law judge at the Office of the Chief Administrative Hearing Officer (OCAHO). Both of these strategies are often successful in reducing the amount a business must pay. However, most settlement agreements include additional concessions such as regular HSI site visits for I-9 review, agreements to participate in E-Verify, ICE supervised in-house I-9 audits of other company locations, and HSI-led I-9 training of company personnel.

In recent months, taking an appeal to OCAHO has been a very successful strategy for employers to reduce I-9 fines. Small businesses have been especially successful in reducing fines, often by more than 70% of the original assessment. The HSI tendency when preparing a Notice of Intent to Fine is to use the highest multipliers possible regardless of the size of the business, often levying fines that will bankrupt or severely affect business operations. OCAHO provides a thoughtful and thorough review of the actual violations and requires the government to prove I-9 violations as well as justify fine amounts based upon HSI internal policy guidance.

The effect of OCAHO's recent trend in reducing fines has generally encouraged HSI to levy even higher fines, knowing that they will likely be reduced when the employer challenges them. This "OCAHO effect" makes it even more likely that employers will now need to take an appeal to have fine levels reduced to a reasonable amount.

Conclusion

I-9 enforcement actions have become a lucrative and successful form of agency action and therefore are not likely to subside. Employers should take this hidden area of liability and turn it into a strength through concerted attention and the skillful implementation of measures like those described in this article.