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By Philip S. Mortensen
Barton LLP
New York, New York

Any business that has employees knows that the U.S. Immigration and Nationality Law requires that employers verify both the identity and the employment eligibility of its workers.  The United States Citizenship and Immigration Services (“USCIS”), a federal agency under the Department of Homeland Security, administers the country’s immigration systems.  As part of these systems, employers are required to ensure the proper completion of form I-9 (“Employment Eligibility Verification”) for each individual they hire in the United States.  Both the employer and the employee must complete the form.  On the form, the employee attests to his eligibility to work in the U.S. and provide proof to the employer of same.  The employer must examine the employee’s proof and verify that it reasonably appears to be genuine.   The types of proof considered acceptable are found on the I-9 form itself.  The employee portion of the I-9 forms must be completed on or before the close of business on the first day of employment and the employer must complete its portion within three (3) business days of that first day of work.  With respect to foreign nationals legally permitted to work in the U.S. with a fixed period of employment authorization, their employment authorization must be re-verified prior to the original authorization expiring.  Thereafter, the I-9s must be maintained by the employer for a designated period of time and made available to USCIS agents for inspection.

The procedure involved with the I-9s is quite straight-forward and really not that complicated.  Nevertheless, it is surprising how many employers fail to properly follow the rules.  Presumably this is a result of an overwhelmed human resources function being burdened with yet more government forms.  But, regardless of the reason(s), errors on the I-9s can be very costly.  As if the original penalties were not enough, over the years the federal government has more than doubled them, the most recent increase becoming effective this past April.

For example, each “occurrence” (i.e., error) on an I-9 is subject to a civil penalty of $230.00.  Thus, if an employee’s date of birth is missing on the I-9, the employer could be fined $230.00.  If the employee’s signature is on the wrong line, the employer could be fined an additional $230.00.  If the date of hiring is missing on the I-9, the employer could be fined another $230.00.  If the employee’s ZIP Code is missing, the employer could be fined an additional $230.00.  Etc., etc., etc.  The good news?  The amount of civil penalties is capped at $2,292.00 per I-9.     Thus, if an employer has 200 employees, the liability for multiple errors on their I-9s could expose the employer to up to $458,400.00  And, since an employer is required to maintain the I-9s for terminated employees for up to one year, if the employer has another 100 I-9s for those former employees, there could be an additional exposure of up to $229,200.00.  And, these are the “minor” penalties.  If an employer knowingly employs an unauthorized alien, the employer could be fined up to $22,927.00 per employee.  Or, if an employer knowingly accepts forged documents as “proof” of employment eligibility, the civil penalty could be up to $9,472.00 per occurrence.  Those are examples of “civil” penalties.  An employer “engaging in a pattern or practice of knowingly hiring or employing unauthorized aliens” could face criminal penalties of up to $3,000.00 per unauthorized employee and/or up to 6 months of imprisonment.

The Immigration and Customs Enforcement, commonly called “ICE”, can issue a Notice Of Inspection at any time notifying an employer of the intent to audit the I-9s on file.  Upon receipt of such notice, an employer has three (3) business days to produce all I-9s, supporting documentation and current payroll.  How likely is this to happen, one might ask?  Under the previous administration, that  certainly was not as likely as under President Trump.  The federal government has embarked on a new strategy to focus on auditing and investigating employers and holding them accountable for hiring practices.

What can/should employers be doing now?  The prudent employer would be conducting an internal I-9 audit now before receiving a Notice Of Inspection.  Problems with any I-9s could be corrected (and dated at the time of the correction), thereby possibly negating some of the monetary exposure due to civil penalties.  And, the employer would be creating a possible good faith defense going forward.  Moreover, since a company acquiring the assets of another through a merger or acquisition will be liable for I-9 deficiencies, inspection of those I-9s should be part of the acquiring company’s due diligence.