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What Employment Lawyers Should Know About the Form I-9 Overhaul: Factors to Prevent and Mitigate Liability

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Employers’ requirements to verify a worker’s employment eligibility and identity are a minefield for potential mistakes and liability. The Form I-9 (employment eligibility verification) is a complex legal form. The employers and employees signing the form are doing so under penalty of perjury. Additionally, to comply with the law, employers must 1) verify the identity and employment authorization of each person they hire; 2) complete and retain a Form I-9 for each employee; and 3) refrain from discriminating against individuals on the basis of national origin or citizenship.

Under 8 C.F.R. §274a.2(b), employers must ensure that an employee completes §1 of the I-9 on the date of hire, and the employer must complete §2 of the I-9 within three days of hire. Employers are required to maintain I-9 records for inspection and must produce them for government inspection upon three days’ notice.[1]
As stated in Collins Foods International, Inc. v. INS, 948 F.2d 549, 554-55 (9th Cir. 1991), the employer sanctions provisions under §274A of the Immigration and Nationality Act (INA or the act), as amended by the Immigration Reform and Control Act of 1986 (IRCA), 8 U.S.C. §1324a, are “delicately balanced to serve the goal of preventing unauthorized alien employment while avoiding discrimination against citizens and authorized aliens,” and “[t]he doctrine of constructive knowledge has great potential to upset that balance, and it should not be expansively applied.”

Immigration and Customs Enforcement (ICE), a branch of the Department of Homeland Security (DHS), or an administrative law judge (ALJ) may impose penalties if an audit and investigation reveal that an employer knowingly hired or continued to employ an unauthorized worker, or failed to comply with the employment eligibility verification requirements with respect to employees hired after Nov. 6, 1986.[2]

Which Plans for the Current Form I-9 Expire October 31?

A new Form I-9 is in the works, and it is undergoing a significant redesign. Unfortunately, this will lead to additional confusion and errors as employers attempt to train Human Resources staff who are already overwhelmed by the many changes in the employment field.

The current Form I-9 is a two-page document with 15 pages of instruction included, as well as an additional manual with over 70 pages. One of the biggest mistakes employers make in the Form I-9 process is not providing adequate training, therefore, allowing untrained staff to administer I-9s. This is a bad idea for many reasons, not the least of which is that proactive training is a best practice and good faith mitigating defense.

DHS plans to streamline the Form I-9 and arguably make it less cumbersome and more user-friendly. At the time of this writing, the proposed changes include 1) consolidating §§1 and 2 into a one-page form; 2) updating the List C of acceptable documents; 3) allowing employers to leave unused fields blank instead of requiring “N/A”; 4) creating a Supplement A for the preparer/translator section; 5) creating a Supplement B for formerly §3 (for rehires and reverification); 6) reducing the instructions from 15 to seven pages; 7) facilitating the completion of the form from electronic devices

Employers must 1) train staff to collect and record I-9 information quickly in a newly designed I-9; 2) ensure reasonable accuracy of information; 3) track the expiration dates of work-authorizing documents; 4) complete re-verifications prior to their expiration; 5) do all of this while taking care not to ask for too many documents or too much information.

This myriad of requirements under time, knowledge, and liability pressure creates a lot of room for mistakes and business disruptions.

Within the “Quick Guide” (see chart, page 27) are some handy tools and key considerations to complete and audit the compilation of the current Form I-9.

Minimizing Business Disruptions and Mistakes

Proactive training and counsel-guided internal audits are key. Counsel your work with employers to develop, implement, or update an effective Form I-9 training program and regular internal audits. Proactive training and internal audits help establish good faith mitigation defense.

However, remember that audits can also create liability if they are conducted on the basis of an employee’s citizenship status or national origin, or in a retaliatory manner.[3] Counsel involvement in correcting I-9 mistakes provides attorney-client privilege and the ability to guide audits to avoid the perception of discrimination or retaliation. In planning internal audits, the timing, scope, and communication are important.

In its guidance for employers conducting internal employment eligibility verification Form I-9 audits, the government recommends that “an employer develop a transparent process for interacting with employees during any internal audit. This includes informing the employees in writing that the employer will conduct an internal audit of Forms I-9, explaining the scope and reason for the internal audit, and stating whether the internal audit is independent of or in response to a government directive. When a deficiency is discovered in an employee’s Form I-9, the employer should notify the affected employee, in private, of the specific deficiency. The employer should provide the employee with copies of his or her Form I-9, any accompanying Form I-9, any accompanying Form I-9 Office of Special Counsel for Immigration-Related Unfair Employment Practices documents, and any other documentation showing the alleged deficiency. If the employee is not proficient in English, the employer should communicate in the appropriate language where possible. An employer should also provide clear instructions for employees with questions or concerns related to the internal audit on how to seek additional information from the employer to resolve their questions or concerns.[4]
If corrections are needed but the information is unavailable, the employer should create an addendum to the I-9 record to explain why the correction cannot be made or that there has been a lack of employee cooperation to correct §1 of the I-9.[5] When making corrections, the original information must not be altered, backdated, recreated, or obliterated, and corrections should be made conspicuously.[6]

Advising employers on I-9 compliance and representing them in worksite enforcement actions is complex, particularly considering the evolving employment landscape and inconsistent federal, state, and local requirements.

For example, the following situations create unique scenarios for I-9 compliance: 1) remote workers; 2) contractors and subcontractors; 3) joint employment and professional employer organizations (PEO); 4) unionized workplace; 5) franchisor-franchisee relationship; 6) publicly traded employer.

Employers must make the necessary best efforts to perform regular audits and be in compliance with I-9 requirements. ICE audits and investigations are here to stay. Some audits are random, while others are lead-driven from other enforcement agencies, such as the U.S. Citizenship and Immigration Services (USCIS), the Department of Labor, and the E-Verify website; disgruntled former employees; competitors; audits of employers using temporary agencies; and others.

I-9 Audits and Minimizing the Employer’s Liability

An I-9 audit begins with ICE issuance of a notice of inspection (NOI). Upon the receipt of an NOI or before, employers should engage counsel to analyze the NOI, confirm the existence of the required I-9 records, make legally permitted I-9 corrections, prepare I-9 and other documents for production to the government, and open and maintain a positive line of communication with the auditor. All of this should occur prior to producing the I-9s.

At the conclusion of the audit, if the inspection reveals sanctionable violations under INA §274A, ICE will issue a notice of intent to fine (NIF). This notice will specify the violation and the proposed fines. The employer then elects whether to pay the fines, negotiate a settlement, or request a hearing. At this time, counsel should preserve the employer’s right to request a hearing before an ALJ. If DHS does not receive the hearing request within 30 days, this important right will be waived.[7] If the employer takes no action after receiving the NIF, ICE will issue a final order. If the employer chooses to litigate, the government files the complaint with the Office of the Chief Administrative Hearing Officer (OCAHO). OCAHO is a component of the Executive Office for Immigration Review (EOIR) whose ALJs hear and decide cases arising under the INA, including employer sanction cases under INA §274A for failure to comply with employment verification requirements.[8]
Counsel should work diligently with the employer to collect and prepare evidence and negotiate a reduction in the assessed fines and penalties. These negotiations are typically conducted with an ICE attorney. If a settlement cannot be reached, the employer might appeal the fine to OCAHO.[9]

How Are Fines for I-9 Violations Determined?

The NOI assigns monetary fines for each substantive violation (e.g., failure to complete an I-9 or sign the certification), uncorrected technical violations, and knowingly hiring or continuing to employ violations.[10] The applicable penalty range depends on the date of the violations and the date of assessment.[11] The penalty’s date of assessment is the date that ICE serves the NOI on the employer.[12]
The minimum penalties are outlined in 28 C.F.R. §85.5. For example, when a violation occurs after November 2, 2015, and ICE assesses the penalty after January 29, 2018, but before June 19, 2020, the minimum penalty is $224, and the maximum is $2,236.[13] For civil penalties assessed between June 19, 2020, and December 13, 2021, the minimum penalty for each violation is $234, and the maximum penalty is $2,332.[14] Currently, for I-9 paperwork violations, the penalties range from $252 to $2,507 for the first offense for substantive violations or uncorrected technical errors.[15]
To determine the base fine amount, ICE looks at the number of substantive violations/uncorrected technical or procedural failures and knowingly-hire/continue-to-employ violations.[16] Then, ICE divides these by the number of Forms I-9 that should have been presented for inspection.[17] The percentage from this calculation is the “violation percentage” that ICE uses to determine the minimum and maximum civil penalty base fine amount.[18] “This percentage may change depending on whether the offense being evaluated is the employer’s first offense, second offense, or a third or higher offense.”[19]
ICE’s penalty calculations and formulas are not binding in OCAHO proceedings.[20] The ALJ may — and typically does — examine the penalties de novo if appropriate.[21]

What Is the Burden of Proof?

In United States v. Metro. Enters., Inc., 12 OCAHO no. 1297, 7 (2017), OCAHO stated, “the government has the burden of proving by a preponderance of the evidence that the respondent is liable for committing a violation of the employment eligibility verification requirements.”

Once the government has introduced evidence related to a given factor, the burden of production shifts to the respondent to introduce evidence of its own to rebut the government’s evidence.[22] If the respondent does not introduce rebuttal evidence, the government’s unrebutted evidence may be sufficient to satisfy its burden of proof on that element.[23]
Ultimately, as shown by OCAHO in United States v. Applied Comput. Tech., 2 OCAHO no. 367, 1 (1991), all of the evidence must preponderate in the complainant’s favor in order for it to prevail upon its claims.

Statutory Factors in Negotiating a Reduced Fine

In assessing an appropriate penalty and mitigation, ICE, the ALJ, and the employer must consider the following statutory factors: 1) the size of the employer’s business; 2) the employer’s good faith; 3) the seriousness of the violations; 4) whether the violation involved unauthorized workers; and 5) the employer’s history of previous violations.[24]
The weight placed on each factor (including enhancement or mitigation) depends on the facts of the case. The court must give each statutory factor “due consideration.”[25]

Applying Statutory Penalty Factors to Mitigate the Employer’s Liability

The Size of the Employer’s Business — The case of United States v. Eriksmoen Cottages, Ltd., 14 OCAHO no. 1355a, 5 (2020), shows that when the respondent is a small, family-owned business, the government will consider this a mitigating factor. OCAHO caselaw has defined companies with fewer than 100 employees as small businesses.[26] In addition to the number of employees, OCAHO considers other sub-factors, such as 1) revenue and income, 2) payroll, 3) length of time in business, 4) turnover, 5) nature of ownership, and 6) nature and scope of facility.[27] Furthermore, in United States v. Psychosomatic Fitness LLC, 14 OCAHO no. 1387a, 12 n.4 (2021), it states, Congress requires OCAHO and ICE to consider general public policy of leniency toward small entities within the statutory factors.[28]
The Employer’s Good Faith — The most important factor in assessing an employer’s good faith is the steps the employer took before the investigation to follow the law.[29] “Respondent’s willingness to seek legal advice regarding its Forms I-9 from an immigration attorney several years prior to ICE’s investigation nevertheless suggests a good-faith effort at compliance which, concomitantly, warrants some mitigation of its penalty on the particular facts of its case.”[30]

“[A] low compliance rate, alone, does not warrant a finding of bad faith.”[31] The employer would have to engage in “bad faith” to aggravate this factor.[32] For example, “[i]n some instances, [backdating] is a compounding of an untimely prepared I-9 coupled with a lack of candor, and in other instances it is a complete fabrication (i.e., were the employment documents ever presented and verified at all?).”[33]

Backdating may be indicative of bad faith; however, generally, backdating alone does not warrant a finding of bad faith.[34] Importantly, “the absence of bad faith does not show good faith.”[35]

Seriousness of the Violation — Seriousness is evaluated on a continuum.[36] A greater penalty is warranted to deter future violations of the same character.[37] “[I]gnorance of the law is not an affirmative defense.”[38] Furthermore, the failure to prepare and/or present a Form I-9 for inspection “is among the most serious of paperwork violations” because the failure to complete the Form I-9 fundamentally undermines the effectiveness of the employer sanctions statute and must be treated as a serious violation.[39]
Unauthorized Aliens — The complainant’s submission of a government auditor’s declaration describing the searches he or she conducted in government databases, and the search results showing that the workers’ names did not match with the noncitizen number or work authorization card issued by USCIS, or results showed individuals to have restricted or expired visas is sufficient evidentiary proof of unauthorized workers.[40]

However, where the complainant’s sole evidence in support of this factor is a vague, generalized, and conclusory declaration, the declaration, standing alone, is insufficient to meet the government’s burden.[41] The affiant must be competent to testify to the matters stated in the affidavit and the affidavits must be factual and based on facts and personal knowledge of the affiant. [42]
Further, there are significant concerns relating to mismatches found in searches of Social Security Administration (SSA) databases. As noted by the Ninth Circuit Court of Appeals in Aramark Facility Servs. v. SEIU, Local 1877, 530 F.3d 817, 825 (9th Cir. 2008):

SSN mismatches could generate a no-match letter for many reasons, including typographical errors, name changes, compound last names…and inaccurate or incomplete employer records. By SSA’s own estimates, approximately 17.8 million of the 430 million entries in its database…contain errors, including about 3.3 million entries that mis-classify foreign-born U.S. citizens as aliens.

History of Previous Violations — In order for the circumstances to be deemed a prior violation, a formal judgment or admission should have previously taken place. A prior warning notice should not be seen as a prior violation for purposes of aggravation. However, “compliance with the law is the expectation. Indeed, ‘never having violated the law before does not necessarily warrant additional leniency, and it is still appropriate to treat [the history of violations factor] as a neutral one.’”[43] The general viewpoint in OCAHO caselaw is that not violating the law in the past does not, on its own, necessarily provide adequate grounds for mitigation.[44]

Other Mitigating Factors

In addition to the statutory factors as outlined in United States v. Integrity Concrete, Inc., 13 OCAHO no. 1307, 18 (2017), the law allows for the consideration of other “non-statutory” factors. “[T]here is no reason that additional considerations cannot be weighed separately.”[45]
“The party seeking consideration of non-statutory factors ‘bears the burden of showing that the factor should be considered as a matter of equity and that the facts support a favorable exercise of discretion.’”[46] OCAHO and ICE take into consideration nonstatutory factors, such as inability to pay and legal fees paid by the employer.[47]

Inability to Pay — “To establish inability to pay, the employer should provide ‘detailed financial statements so that [the Court or government] can consider the “complete picture of [the business’] financial health.’”[48]

• Expenditure of Legal Fees — The “[r]espondent should not have to expend funds to gain access to a statutorily provided right to a hearing. As a matter of equity, the expenditure of legal fees merits mitigation of the penalty.”[49]

Conclusion

OCAHO precedent shows that the principal focus in assessing good faith is looking at what steps the employer took before the investigation to train its staff and follow the law. Because of this, it is crucial that attorneys work with employers to train the responsible staff to take the necessary action to prevent liability and remain in compliance with the I-9 requirements.

Periodic counsel-guided sample audits can identify problems to be addressed before a government audit — and the assessment of costly fines and additional work and requirements post-audit.

[1] 8 C.F.R. §274a.2(b).

[2] 10.8 Penalties for Prohibited Practice, The United States Citizenship and Immigration Services Handbook for Employers M-274 (2020).

[3] Office of Special Counsel for Immigration-Related Unfair Employment Practices United States Immigration and Customs Enforcement, Guidance for Employers Conducting Internal Employment Eligibility Verification Form I-9 Audits.

[4] U.S. Immigration and Customs Enforcement, Office of Special Counsel for Immigration-Related Unfair Employment Practices, Guidance for Employers Conducting Internal Employment Eligibility Verification Form I-9 Audits.

[5] Id.

[6] Id.

[7] 10.8 Penalties for Prohibited Practice, The United States Citizenship and Immigration Services Handbook for Employers M-274 (2020).

[8] EOIR’s Office of the Chief Administrative Hearing Officer, U.S. Department of Justice Executive Office for Immigration Review (2017).

[9] Id.

[10] U.S. Immigration and Customs Enforcement, Form I-9 Inspection Factsheet (2022).

[11] See 8 C.F.R. §274a.10(b)(2); 28 C.F.R. §85.5.

[12] U.S. Immigration and Customs Enforcement, Form I-9 Inspection Factsheet, (2022).

[13] 28 C.F.R. §85.5.

[14] Id.

[15] Id.

[16] U.S. Immigration and Customs Enforcement, Form I-9 Inspection Factsheet (2022).

[17] Id.

[18] Id.

[19] Id.

[20] United States v. Psychosomatic Fitness, LLC, 14 OCAHO no. 1387a (2021).

[21] Id.

[22] United States v. Metro. Enters., Inc., 12 OCAHO no. 1297, 7 (2017).

[23] Id.

[24] 8 U.S.C. §1324a(e)(5).

[25] Id.

[26] See United States v. Eriksmoen Cottages, Ltd., 14 OCAHO no. 1355a, 5 (2020).

[27] United States v. Ketchikan Drywall Servs., Inc (KDS), 10 OCAHO no. 1139, 24 (2011).

[28] United States v. Psychosomatic Fitness LLC, 14 OCAHO no. 1387a, 12 n.4 (2021).

[29] United States v. Snack Attack Deli, Inc., 10 OCAHO no. 1137, 10 (2010).

[30] United States v. International Packing, Inc., 12 OCAHO no. 1275a, 4 (2016).

[31] Eriksmoen Cottages, Ltd., 14 OCAHO no. 1355a at 5 (quoting Farias Enterprises LLC, 13 OCAHO no. 1314).

[32] United States v. R&SL INC., 13 OCAHO no. 1333b, 30 (2022).

[33] Id. at 26.

[34] See United States v. Imacuclean Cleaning Servs., LLC, 13 OCAHO no. 1327, 9 (2019); United States v. Visiontron Corp., 13 OCAHO no. 1348 at 7 (2020).

[35] Visiontron Corp., 13 OCAHO no. 1348 at 8.

[36] Snack Attack Deli, Inc., 10 OCAHO no. 1137 at 12.

[37] United States v. Jonel, Inc., 8 OCAHO no. 1008, 19 (1998).

[38] United States v. Keegan Variety, LLC, 11 OCAHO no. 1238, 5 (2014).

[39] United States v. Alpine Staffing, Inc., 12 OCAHO no. 1303, 18 (2017) (citing United States v. Super 8 Motel, 10 OCAHO no. 1191, 14 (2013)).

[40] United States v. Exec. Cleaning Servs. of Long Island Ltd., 13 OCAHO no. 1314, 4-5 (2018); Imacuclean Cleaning Servs., LLC, 13 OCAHO no. 1327 at 11-12; Visiontron Corp., 13 OCAHO no. 1348 at 9.

[41] United States v. Metro. Enters., Inc., 12 OCAHO no. 1297, 16 (2017).

[42] Fed. R. Civ. P. 56.

[43] Psychosomatic Fitness, LLC, 14 OCAHO no. 1387a, at 12 (quoting United States v. New China Buffet Rest., 10 OCAHO no. 1133, 6 (2010)).

[44] United States v. Alyn Indus., Inc., 10 OCAHO no. 1141, 8 (2011).

[45] United States v. Integrity Concrete, Inc., 13 OCAHO no. 1307, 18 (2017) (quoting United States v. M.T.S. Serv. Corp., 3 OCAHO no. 448, 527, 531 (1992)).

[46] Id. (quoting United States v. Buffalo Transp., Inc., 11 OCAHO no. 1263, 10 (2015)).

[47] Id; United States v. R&SL Inc., 13 OCAHO 1333B, 32 (2022).

[48] Psychosomatic Fitness LLC, 14 OCAHO no. 1387a, at 10 (quoting Eriksmoen Cottages, Ltd., 14 OCAHO no. 1355a, 7 (internal citations omitted); see also Imacuclean Cleaning Servs., LLC, 13 OCAHO no. 1327, at 4).

[49] R&SL Inc., 13 OCAHO 1333B, 32.

 

Giselle CarsonGiselle Carson is a corporate immigration and compliance attorney with Marks Gray, P.A., in Jacksonville. She is a past president of the Jacksonville Bar Association, two-time immigrant, marathoner, and Ironman triathlete. She is the author of Beyond the H-1B: A Guide to Work Visa Options, available on Amazon.

This column is submitted on behalf of the Labor and Employment Law Section, Robyn Sue Hankins, chair, and Alicia Koepke, editor.


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