Michael R. Lied

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As a couple of recent cases make clear, I-9 Form errors can prove costly. Form I-9 is completed and retained by employers to assure new employees are legally authorized to work in the United States.

In the first case, the United States Department of Homeland Security, Immigration and Customs Enforcement (“ICE”) filed a complaint alleging that Anodizing Industries, Inc. violated 8 U.S.C. § 1324a(a)(1)(B) by hiring twenty-six employees for whom it failed to timely prepare and/or present I-9 forms.

ICE asserted that visual inspection of the company’s I-9s reflected that they were not timely completed. The government pointed out that the twenty-six employees named in the complaint had hire dates ranging from October 10, 1988 to July 26, 2010, and that the twenty-one I-9s that actually did have a completion date entered in section 2 reflected a date of August 12, 2010, thirteen days after service of the Notice of Inspection and one day before the forms were delivered to ICE.

The Chief Administrative Hearing Officer’s (“CAHO”) visual examination of Anodizing’s I-9 forms confirmed, with one exception, the accuracy of the government’s contention that the timeliness violations were apparent on the face of the forms. Each form was completed more than three days after the employee was hired.

Anodizing Industries implicitly acknowledged that it did not complete the forms promptly but sought to minimize the significance by insisting that preparing the I-9 paperwork was merely a technicality. The CAHO disagreed. Timely and proper completion of I-9 forms is precisely what the law and regulations require: the form must be completed for each new employee within three business days of the individual’s commencement of employment, and each failure to properly prepare, retain, or produce the form upon request constitutes a separate violation.

Failure to prepare an I-9 in a timely fashion is not only a substantive violation but also a serious one, because an employee could potentially be unauthorized for employment during the entire time his or her eligibility remains unverified. The longer an employer delays in preparing an I-9 form, the more serious is the violation.

The government has the burden of proof with respect to liability and the penalty, and must prove the existence of any aggravating factor by a preponderance of the evidence. The CAHO found most of the statutory factors were favorable to Anodizing Industries in that the company was a small business with no unauthorized workers or history of previous violations.

The CAHO observed that a general public policy of leniency to small entities is set out in the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (2006) as amended.

The potential penalties for the twenty-six violations shown in the case ranged from $2860 to $28,600. The government sought a total of $25,525.50. The CAHO adjusted the penalties downward as a matter of discretion to an amount closer to the upper mid-range, at the rate of $600 for each I-9 violation, for a total penalty of $15,600.

United States v. Anodizing Industries, Inc., 10 OCAHO No. 1184




In the second case, Ketchikan Drywall Services, Inc. (“KDS”) petitioned a U.S. Court of Appeals for review of a decision of an Administrative Law Judge (“ALJ”) in favor of U.S. Immigration and Customs Enforcement (“ICE”) on 225 out of 271 alleged Form I-9 and a resulting civil penalty of $173,250.00.

KDS is a drywall installation company, and employs four full-time employees and approximately twenty part-time employees. It hires additional employees as needed on a project-by-project basis. KDS does not hire workers “in the field,” but requires them to go to its main office first to fill out I-9 Forms.

In 2000, KDS received a Warning Notice from the Immigration and Naturalization Service (“INS”) following an audit of its I-9 Forms. In 2006, KDS hired a new Controller with I-9 training who initiated efforts to improve compliance.

In March 2008, ICE served a Notice of Inspection on KDS. After the inspection, ICE served a Notice of Intent to Fine (“NIF”), which ordered KDS to pay a civil penalty of $286,624.25.

KDS requested a hearing before an ALJ. The ALJ adopted ICE’s proposed base penalty, but adjusted it downwards to reflect the fact that fewer violations had been proven than alleged. The ALJ rejected both parties’ arguments regarding aggravating or mitigating factors, and ordered KDS to pay a civil penalty of $173,250.00.

In its petition for review, KDS contended that many of the violations that the ALJ found were not violations at all, on the ground that it had copied and retained documentation for these employees and that any omissions from the I-9 Forms themselves were either minor or could be filled in by reference to the copied documents.

The court disagreed. Requiring that the parties take the time to copy information onto the I-9 Form helps to ensure that they actually review the verification documents closely enough to ascertain that they are facially valid and authorize the individual to work in the United States.

KDS argued in the alternative that even if it had not complied with all of its verification and documentation obligations under § 1324a(b), its noncompliance should nevertheless be treated as good faith compliance because any deficiencies were merely “technical or procedural,” made in spite of a “good faith attempt to comply.”

This was not a winning position. KDS argued first that it was not responsible for errors or omissions made by employees in Section 1 of its I-9 Forms, but the statute clearly makes employers responsible for documenting employee work authorization.

KDS also argued that it sufficed for an employee to attest that he or she was authorized to work generally, and that there was no requirement for the employee to check a specific box in Section 1 of the I-9 Form. Again, the language of the statute compelled a contrary conclusion.

Next, KDS maintained that its retention of copies of certain of its employees’ documents excused deficiencies on the I-9 Forms, where the copied documents provided the necessary information.

Again, the court disagreed. Where the employee has not attested to the specific category of eligibility into which he or she fits, the statutory requirement is unfulfilled, regardless of whether other documentation might allow ICE to deduce the specific category to which the employee would have attested.

KDS argued that the ALJ erred in both the choice and application of the penalty calculation, but the court dismissed this argument.

Finally, KDS argued that the ALJ’s findings with regards to the seriousness of the violations were arbitrary and capricious. The ALJ had declined to mitigate the penalty, noting that KDS had provided no “reasonable basis” for finding that any of the violations were not serious.

According to the court, KDS misconstrued the nature of the violations for which penalties were imposed when it argued that for many cases “the only violation was the failure to attach the copies [of the relevant verification documents] to the I-9 form.” Instead, the penalties were imposed for substantive deficiencies on the I-9 Forms themselves. KDS’ petition for review was denied. Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enforcement, ____ F.3d ___, 2013 WL 3988679 (9th Cir. 2013).

The lesson from these cases is that the seemingly mundane task of verifying identity and work authorization on Form I-9 is serious business.

· Michael R. Lied
· Howard & Howard Attorneys PLLC
· One Technology Plaza, 211 Fulton Street, Suite 600, Peoria, IL 61602
· (309) 999-6311
· MLied@howardandhoward.com