ICE Audits ‘Skyrocket’ with Form I-9 Violations on the Rise

by Jen Clark

Plastics Business

As calls for federal immigration reform ramp up, so have the number of US Immigrations and Customs Enforcement (ICE) audits on businesses around the country. These audits look for lapses in recordkeeping and outright violation of the laws determining workplace eligibility for immigrants in companies large and small.

"ICE audits have skyrocketed since 2012, as ICE continues to hunt for those employers hiring illegal immigrants," said H. Alan Rothenbuecher, a partner at Ice Miller LLC, Cleveland, OH. "Fines have increased, as have (the number of) company managers arrested because of I-9 violations. And, the Obama administration has shown no signs of letting up on this initiative. The time is ripe for doing an internal audit."

What is Form I-9?

The I-9 form, sometimes called the Employment Eligibility Verification Form, is provided by the federal government to help employers verify a person’s identity and to establish that he or she is eligible for employment in the US, which became a requirement under the Immigration Reform and Control Act (IRCA) of 1986. The act also contains anti-discrimination provisions, meaning an eligible applicant cannot be rejected solely based on country of origin.

According to US Citizenship and Immigration Services (USCIS), all US employers must ensure proper completion of Form I-9 for each individual they hire, including citizens and noncitizens. Employers must retain Form I-9 for a designated period and make it available for inspection by authorized government officers, including some state agencies. Employers also must update or re-verify certain identification documents at or prior to their expiration date.

"Failure to collect Form I-9 from employees or maintain the forms for inspection can lead to fines and other penalties on the part of the employer," Rothenbuecher said. "The penalties for incorrect I-9s vary greatly, depending on the type of violation. If an employer knowingly hired or continued to employ an individual who is not authorized to work in the US, monetary penalties range from $375 to $16,000 per violation. Employers also may be criminally prosecuted."

I-9 forms are kept on file at the employer’s office, rather than submitted to USCIS or ICE, but they can be completed electronically. One form for "each person on payroll who is required to complete the form... must be retained and stored by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later," according to USCIS. The forms must be made available for inspection by authorized officials from the Department of Homeland Security, Department of Labor or Department of Justice.

Anatomy of an audit

Employers can expect that ICE audits will last several weeks, but that really depends on how many forms the auditor needs to go through. In a sense, Rothenbuecher said, I-9 audits can be a surprise for an employer. "The first an employer will hear about an audit will be via receipt of the Notice of Inspection (NOI). Generally, employers are given three business days from the date of the NOI to produce the forms. Some officers will work with the employer and allow a longer period of time to provide the forms; others will not. "

ICE then inspects each Form I-9 for compliance. If technical or procedural corrections are necessary, then the employer is given 10 days to correct those violations. "However, in certain situations where the corrections are numerous, the employer can work with the ICE auditor to get more time to complete the corrections," Rothenbuecher said, noting sometimes ICE simply will fine the employer for forms that were erroneously completed.

After all forms have been reviewed, ICE will issue the employer a notice of the audit outcome in one of three formats. A Compliance Letter indicates that the employer was found to be in compliance. A Warning Notice notifies the employer it was not in compliance, but the errors were not egregious enough to warrant monetary penalties. A Notice of Intent to Fine tells the employer that ICE will be issuing monetary penalties for the violations.

Fines vary and depend on violation types

According to the I-9 form, "Federal law provides for imprisonment and/or fines for false statements or use of false documents in connection with the completion of this form." In addition, companies can be barred from federal government contracts for a year. An employee using fraudulent documentation can face criminal prosecution under other immigration laws.

Violations concerning the form itself fall into two categories: technical and substantive. A technical violation includes smaller errors that can be corrected, such as forgetting to put a ZIP code on the address line. "Substantive violations are more serious and cannot be corrected on the original I-9," Rothenbuecher said. If an employer accepted a document that didn’t prove work authorization, such as an expired driver’s license, that is a substantive violation. "In some instances, another (new) I-9 can be completed to supplement the original I-9 in order to mitigate possible penalties," he explained.

Penalties for substantive violations or uncorrected technical violations range from $110 to $1,100 per violation. "In determining the amount of penalties, ICE considers the size of the business, the employer’s good faith effort to comply with ICE’s audit, the seriousness of the violation, whether the violation involved employees not authorized for employment in the US and the employer’s history of previous violations," Rothenbuecher said.

According to The National Law Review, "ICE has conducted over 7,500 audits and imposed over $80 million in fines since 2009. In 2011 alone, ICE conducted 2,740 audits and assessed over $7 million in fines. "

Rothenbuecher noted that while those numbers are staggering, "ICE auditors generally are willing to work with employers who show a genuine interest in compliance and working with the auditor to make sure violations are taken care of in the appropriate manner."

Taking a proactive approach

While there is no way to stop an ICE audit from taking place, companies can be ready for one. "ICE audits happen in order to ensure compliance with Form I-9 guidelines and to confirm that employers are using a workforce that is authorized for employment in this country," Rothenbuecher said. "Employers should strictly adhere to the Form I-9 guidelines set out in its instructions and the Handbook for Employers (form M-274)." Minimizing or eliminating the potential fines that come out of an ICE audit only can be achieved by conducting an internal audit well before an ICE audit occurs, he said. "An internal audit also will reveal if training of human resources staff (or others who complete I-9 forms) is required to eliminate re-occurring errors."

For MAPP-member companies, Ice Miller can help in two primary ways, Rothenbuecher said. "First, we provide I-9 trainings and audits of company I-9 forms. Experience has shown us that almost every employer has some deficiencies in its I-9 recordkeeping. A proactive internal audit – where we evaluate the I-9s for compliance with current guidelines and recommend corrections to the forms – can result in thousands of dollars in fines and penalties being avoided in a subsequent ICE inspection."

Once an internal audit has been completed, Ice Miller can create trainings specifically tailored to address the needs found in the audit. The training has the goal of preventing those errors from recurring, which can reduce the risk of fines being imposed for deficient I-9 forms.

Additionally, when ICE does come knocking, Ice Miller can represent MAPP members through the entire audit process. Rothenbuecher said that ranges from "assembling only those documents which need to be produced, to handling the communications with ICE, to advising on how to handle terminations for unauthorized workers discovered during the audit, through defending the member against any Notice of Intent to Fine. We do this for both small and large businesses and generally provide the internal audit and trainings on a fixed fee basis."

Plastics Business would like to thank H. Alan Rothenbuecher for his insights on employment eligibility and Form I-9. He handles complex business litigation, including immigration issues, through Ice Miller LLC. Based out of Cleveland, OH, he has appeared in US Immigration Court, defending employers against ICE audits, and has trained human resource professionals on best practices regarding I-9 compliance and E-Verify employment verification requirements. For more information, visit www.icemiller.com.