I-9 Compliance Audits Catch Both Good and Bad Employers. Are You Ready?

by Staff Writer August 19, 2010

I-9 rhymes with fines, and perhaps for good reason, as an increasing number of employers nationwide face steep penalties associated with I-9 compliance audits conducted by Immigration and Customs Enforcement (ICE), an investigative agency of the Department of Homeland Security (DHS). While designed to identify and prosecute businesses knowingly hiring illegal immigrants, the audits also result in fines for good employers who have unknowingly filled out I-9 forms incorrectly, or who have failed to retain records, as the law requires.

Many of these employers believed that their I-9s and company systems for verification and storage of the associated documents were in compliance. Others were completely unaware of the changes made to I-9 compliance laws in recent years. Regardless of reason, failure to comply with I-9 laws has proven to be a costly gamble for all. If you are a company owner, human resource manager or manager in charge of hiring, now is the time to review your company’s I-9 compliance status, as further changes to the laws go into effect on August 23, 2010.

The Root of the Problem
In 2009, Janet Napolitano, DHS Secretary, stated that the DHS would place more focus on employers to tackle illegal immigration. An increase in audits of Employee Eligibility Verification forms (I-9s) was expected by many as the DHS and ICE cracked down on what many in government believe to be the root cause of illegal immigration: the willingness of some U.S. employers to hire illegal aliens.

“Within the United States, ICE will pursue an effective worksite enforcement program to reduce the incentive for aliens to come to, enter and remain unlawfully,” states the ICE Strategic Plan for 2010 through 2014. “To create a culture of compliance among employers, ICE will [pursue] aggressive criminal and civil enforcement against those employers who knowingly violate the law.”

This aggressive pursuit began with a vengeance in July 2009 as ICE announced 654 audits across the country. More than 85,000 I-9s were examined, with more than 14,000 suspect documents identified. As a result, more than 61 Notices of Intent to Fine (NIFs) were issued and 267 cases are under consideration for NIFs. More than $2 million in fines have been imposed on this batch of audits alone.

Then in November 2009, ICE Assistant Secretary John Morton announced ICE’s intention to conduct 1000 additional worksite audits. “ICE is focused on finding and penalizing employers who believe they can unfairly get ahead by cultivating illegal workplaces,” said Morton. “We are increasing criminal and civil enforcement of immigration-related employment laws and imposing smart, tough employer sanctions to even the playing field for employers who play by the rules.”

No one expects ICE to slow down on I-9 compliance audits any time soon. According to the ICE 2010 Fiscal Year Budget Fact Sheet, $6 million has been earmarked for worksite enforcement, including audits, in order to “allow ICE to provide a strong deterrent to employers who knowingly hire illegal workers; reduce economic incentive for illegal immigration; and restore the integrity of employment laws.”

A Few Bad Apples
As the old saying goes, “A few bad apples can rot the whole barrel.” That certainly seems to be the case when it comes to I-9 compliance. While most U.S. employers would never dream of violating employment laws by knowingly hiring illegal immigrants, there are still enough who do to keep ICE up to their necks in audits.

For example, in June, one bad apple pled guilty to employing 24 illegal aliens in two of his Maryland restaurants. An ICE I-9 compliance audit revealed that fraudulent identification documents had been presented by the applicants for employment and Employment Eligibility Verification forms were not filled out or filed. The restaurateur now faces up to ten years in prison, forfeiture of more than $370,000 from five bank accounts, an additional $256,696.67 that must be paid to ICE upon sentencing, and the loss of the owner’s 2009 Harley Davidson.

In July, five Arkansas residents were sentenced for conspiring to harbor, transport and employ illegal aliens after investigation by ICE. It was found that the individuals knowingly hired illegal immigrants to work on their chicken catching crews. As a result of the sentence they are forfeiting more than $1.2 million in U.S. currency along with property valued at $631,000.

Simple Clerical Errors Devastate Good Employers
The ICE I-9 compliance audits also result in penalties to good employers who have not hired illegal immigrants but have just processed the I-9s incorrectly. Simple clerical errors such as missing dates or signatures on I-9s can result in fines from $110 to $1100 per error. Failure to retain or store I-9s according to compliance rules can result in fines from $110 to $3000 per error.

One good employer facing stiff penalties is an egg company in Texas. In July, The Houston Chronicle reported that the government had fined the egg company $34,000 for not retaining I-9s for all of its employees. The general manager was quoted as saying, “It was all family members... most of us had been working for the company for a long, long time. But you’re supposed to have all your documents in place, and we didn’t have that.” Another company in San Antonio was fined $4,400 for the same violation.

If you don’t think this can happen to you or your business, think again. One restaurant franchisee who owns three stores in Colorado paid $32,000 in fines due to an ICE inspection. He never hired any illegal workers. He simply didn’t fill out the forms correctly and made simple mistakes like the ones already mentioned. One restaurant owner in Arizona, who was audited by ICE, ended up with $67,000 in fines. If you have hired undocumented workers, you could end up in jail.

Every Employer Faces Compliance Challenges
Increasing the compliance challenge for every employer, small and large alike, is the complexity of the deceptively simple I-9 and frequent changes to compliance rules.

The Immigration Reform and Control Act (IRCA) of 1986 introduced the I-9 when hiring an illegal immigrant became a criminal offense. All employers are required to use the I-9 to verify the identity and work eligibility of all employees hired after November 1986. The form must be properly completed for any employee hired to perform labor or services in return for wages.

The I-9 must be completed within three business days of the employee’s hire date. It must be kept on file by the employer along with photocopies of the identification documents submitted by the employee for completion of the form. I-9s must be retained for all current employees as well as for past employees for at least three years after their start date or one year from termination date, whichever is later.

In the case of an ICE I-9 compliance audit, the employer must be able to present all I-9s and associated documentation for current and past employees within three business days. Failure to present all I-9s, incomplete documentation or the hiring of illegal immigrants revealed by an ICE audit will result in fines. Fines range from $110 to $16,000 per violation up to forfeiture of a company’s assets and possible imprisonment. The fines and negative publicity generated by the legal process can bankrupt a business.

A new I-9 was introduced in April 2009. It requires that all documentation presented for identification purposes be unexpired, a change from the former I-9 requirements. Some documents were added or removed in order to improve the security of the Employment Eligibility Verification process. Fewer eligible documents are expected to make it easier for employers to verify valid and acceptable forms and identify false documents.

Additional I-9 compliance changes will take effect on August 23, 2010. These changes include giving the employer three business days to complete Section 2 of the I-9 as well as allowing employers to use paper, electronic or combination I-9 verification systems. An audit trail will also be required to enable ICE to determine if any tampering of data has occurred on electronically generated I-9s. Many of the changes are quite complex, but an employer’s failure to understand them does not make noncompliance any less serious in the eyes of ICE.

Verification is Priceless
So what’s an honest employer to do? If a business wants to ensure their I-9 compliance and avoid costly fines, legal fees and negative publicity in the event of an ICE audit, verification of all documents presented is essential. Options for verification include direct usage of the government-run E-Verify program or utilization of a third party provider such as I-9Compliance.com – an I-9/E-Verify program compliance service offered by Pre-Employ.com.

One of a handful of companies offering I-9 compliance verification, I-9Compliance.com provides this service to their clients totally free. Only individuals and institutions certified by the U.S. government can use the E-Verify program. If an employer wishes to utilize it for verification of employee I-9 documents, they must become certified – a time-consuming and often laborious process. Many employers find it more effective, efficient and convenient to outsource their I-9 compliance and verification to a third party such as I-9Compliance.com. The cost of such outsourcing is minimal in comparison to the thousands of dollars in fines employers may be subject to in the event of an ICE I-9 compliance audit, not to mention legal fees and negative publicity.

An increasing number of states are requiring usage of the E-Verify program by employers. There has even been discussion in Congress regarding required usage of the E-Verify program nationwide. On August 9, The Legal Intelligencer reported, “Virtually every proposal or outline for immigration reform from Congress that has been circulated in recent months includes a requirement for all employers to use E-Verify. Indeed, even apart from any comprehensive immigration reform, many in Congress have pushed for E-Verify to become mandatory for all employers.” If this occurs, providers such as I-9Compliance.com will be the logical choice for employers who want a simple solution to ensure their I-9 compliance is verified.

Past administrations have mainly focused on capturing and deporting illegal immigrants, imposing little punishment on the businesses that employed them. The current administration, as evidenced by the aggressive increase in ICE audits, is targeting the businesses themselves. If you’re a small or large business owner, human resource manager or anyone who participates in the hiring of employees, now is not the time to play ostrich with your head in the sand. Instead, it’s time to take action and ensure that when – not if – ICE does audit you, your I-9s are beyond reproach. Usage of a I9 compliance and verification provider such as I-9Compliance.com is perhaps the simplest way to do so.

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