Immigration Audits Can Snare Employers (Evan C. Bell Commentary)

If you are a business owner with at least one employee, you could be violating a very expensive law.

In 1986, Congress passed an act requiring employers to attest to the immigration status of their employees. To comply with this law, employers (and their employees) are required to complete a Form I-9 for each new hire. The I-9, although seemingly elementary, is a dormant financial risk for employers and has been called “the form from hell.” Failure to properly complete the Form I-9 has cost business owners thousands and, in some cases, millions of dollars.

Approaching 30, the federal law and its requirements are known to most employers, and most employers do their best to comply. But like the Internal Revenue Service, which audits for financial violations, Immigration & Customs Enforcement (ICE) conducts regular I-9 audits on businesses all across America. And these audits can be devastating to the ill-prepared business owner.

No company knows this better than Four Seasons Earthworks Inc., a small, family-owned construction outfit in Wilmington, N.C. At the time of its audit, Four Seasons employed 22 people, four of whom were members of the family that owned the business. Of the 43 current and former employee I-9s that were turned over to ICE, 21 had substantive violations. To calculate how much these violations would cost Four Seasons, the government’s forensic auditor took the number of I-9 forms with substantive violations (21), then divided it by the total number of forms (43). At 48.84 percent substantive violations, the base fine was set at $770 per violation, in accordance with the grid set out in ICE’s Guide to Administrative Form I-9 Inspections and Civil Monetary Penalties. The auditor then felt that all base penalties should be aggravated by 5 percent for seriousness of the violations. In the end, the judge modified the penalties and Four Seasons was fined $9,500.

The Four Seasons case demonstrates perfectly the most unfortunate risk of an I-9 audit: your employees do not have to be illegal for your company to be fined. According to the forensic auditor, Four Seasons had “no unauthorized aliens and the company had no history of previous violations.” It all came down to preventable deficient paperwork.

Audits like Four Seasons’ are happening all over the country. Since 2007, ICE has increased its audits from 250 per year to more than 3,000, with no intention of slowing down. Penalties resulting from I-9 audits can range from $110 to more than $10 million.

So how is a business to prepare for such an audit? Below are a few tips that will make your business more secure in this area:

  • Have an immigration attorney audit and assess employee I-9s for any errors that could result in monetary penalties from ICE.
  • Prepare a written plan of action that details your company's employment authorization process and what to do if your company receives an ICE Notice of Inspection.
  • Designate one employee (or a small team) to follow the authorization plan and maintain your company's I-9 records. These employees should be trained on Form I-9 compliance and should conduct a final review of each I-9 before it is filed.
  • File employee I-9s and any supporting documents in a separate, secure file, away from the employee personnel files.
  • For authorized alien employees, establish a tickler system to cause an alert when reverification is required.
  • Complete a yearly audit of your employee I-9s using an immigration attorney with experience in Form I-9 compliance.

This article barely scratches the surface of I-9 compliance. It’s up to you as an employer to take every possible measure to protect your business from — as we learned in the Four Seasons’ case — the completely preventable expense of an I-9 audit.

Evan C. Bell, who previously served as an immigration compliance audit manager for Wal-Mart Stores Inc. of Bentonville, is a lawyer with the firm of Wallace Martin Duke & Russell PLLC of Little Rock. He can be reached at ECB@WallaceLawFirm.com.

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