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May 2013: I-9 Audits—Be Prepared
 

By Maxiel Gomez  5/27/2013
 
 

The Immigration Reform and Control Act of 1986 (IRCA) requires all employers to verify the employment eligibility of employees and imposes significant penalties for the employment of unauthorized workers. The challenge for employers is not to ask too many questions or too few. Failing to ask for enough information exposes employers to penalties under IRCA. Asking impermissible questions concerning an employee’s ethnic heritage or national origin exposes employers to damages under discrimination laws. With the number of government investigations steadily increasing, the purpose of this article is to highlight I-9 compliance to strike the proper balance.

Completing the I-9 Form

All employers in the United States are required to retain a completed Form I-9 upon hiring an employee. A completed I-9 form must be retained for all employees (citizens and noncitizens) hired after Nov. 6, 1986. An employee is anyone who performs labor or services in the United States in return for wages or other remuneration.

Employers are not required to complete I-9 forms for:

Individuals hired on or before Nov. 6, 1986.

Individuals employed for casual domestic work in a private home on a sporadic basis.

Independent contractors or individuals providing labor who are employed by a contractor providing contract services.

Compliance with IRCA begins and ends with the accurate completion and retention of I-9 forms. Even an employer not shown to have hired undocumented workers is subject to fines under IRCA for any errors or blank sections on the I-9 form. The I-9 verification process must begin after an applicant has accepted a job offer.

To properly complete Section One of Form I-9, the employee must first attest that he or she is a U.S. citizen, a lawful permanent resident, a noncitizen national or an alien authorized to work in the United States. The employee must also indicate whether the employment authorization expires and, if so, must provide the expiration date. Critically, an employer may not request documentation to verify the information provided by the employee in Section One.

If the employer seeks more information than it is permitted to seek or possess, it may be in violation of the Immigration and Nationality Act’s anti-discrimination provision, which prohibits employers from placing additional burdens on work-authorized employees during the hiring and employment eligibility verification process based on their citizenship status or national origin. For example, the Justice Department recently filed a lawsuit against an employer based on allegations that it required all newly hired non-U.S. citizens to present documents issued by the Department of Homeland Security to keep their jobs. The employer did not require U.S. citizens to show documentation. Therefore, applying the employment eligibility verification process to all employees equally is vital.

Typically, the employment verification process must be completed by the employer within three business days of the employee’s first day of work. The first step of the verification process requires an employee to present an original document or documents evidencing his or her identity and authorization to work in the United States. The employer or employer’s representative must review the documents presented in person to confirm that they belong to the presenting employee and to make certain that the documents are consistent with the information provided by the employee in Section One. The employee must be allowed to choose from the List of Acceptable Documents set forth on the I-9 form and cannot be required to provide a specific document.

In Section Two of Form I-9, the employer must attest that the required documents were inspected and that the documents appeared genuine on their face. For each document presented, the employer must record the type of document, its source and its expiration date. Failure to prepare an I-9 at all is among the most serious paperwork violations.

Employers are permitted, but not required, to retain copies of the documents presented and attach them to the completed I-9 form. There are pros and cons for retaining copies of the documents. On the one hand, retaining copies of the documents presented may be used to show that the employer reasonably believed the employee was authorized to work in the United States. On the other hand, the documentation could be used against the employer to show that the proper documents were not presented. Under either scenario, however, it is important that an employer apply the policy in a consistent manner to all employees, citizens and noncitizens alike.

Reverification

Some employment authorizations for noncitizens expire. Employers are required to reverify employment authorizations for all employees with time-limited employment authorizations. An employer will be deemed to have constructive knowledge that it is continuing to employ an unauthorized worker if it fails to conduct a reverification. As a matter of practice, employers should keep track of when an employee’s employment authorization expires so that reverification occurs no later than the date the employment authorization expires.

Retention

A completed Form I-9 must be kept on file for each current employee. Once the person’s employment has terminated, an employer must keep a copy of the completed Form I-9 for either three years from the date of hire or one year after the date of termination, whichever is later.

I-9 forms should be maintained in a separate file apart from an employee’s personnel documents. Separate I-9 files facilitate responding to government audits, performing reverifications and conducting internal audits. An employer may retain I-9 forms in paper format or electronically or may use a combination of a paper and an electronic system.

I-9 forms retained in paper format must be signed and stored with the original handwritten signatures. The completed paper forms may be kept onsite or at an offsite facility. However, the employer must be able to present the I-9 forms within three days of an inspection request.

If I-9 forms are retained in an electronic storage system, they must adhere to specific guidelines for the type of computer program used for storing the forms and a requirement that the employer maintain procedures that ensure the security of those forms.

The electronic system is required to include:

Controls to ensure the integrity and reliability of the electronic storage system.

Controls to detect and prevent unauthorized alteration or deletion of stored I-9 forms.

An inspection and quality assurance program that regularly evaluates the electronic storage system.

An indexing system that permits the identification and retrieval of the document for reviewing or reproducing.

The ability to print paper copies of the stored forms.

Employers that retain I-9 forms electronically must be able to demonstrate upon request the business processes for the retention of the forms and must establish the integrity of the forms. Employers are allowed to fill out a paper Form I-9, then scan and upload the original signed form to retain it electronically. Once the I-9 form has been securely stored in an electronic format, the employer may destroy the original paper form.

In maintaining the forms electronically, employers are required to implement a records security program that:

Ensures that only authorized personnel have access to the electronic records.

Provides for backup of records to protect against information loss.

Ensures that employees are trained to minimize the risk of unauthorized or accidental alteration or deletion.

Ensures that when an individual accesses an electronic record, the system creates a permanent record that establishes the date of access, the identity of the individual who accessed the record and the action taken.

Given the high standards required of electronic retention systems, including regular auditing and independent indexing systems, employers should carefully review the specific security guidelines for electronic retention and completion of I-9 forms.

E-Verify

E-Verify is an Internet-based program that provides employers with access to government databases to check the employment eligibility of new hires. The United States Supreme Court recently upheld the Legal Arizona Works Act requiring all employers in the state to use E-Verify for the employment verification of all new hires. Currently, employers nationally are not required to participate in the E-Verify program. However, given that several states, including Arizona, Mississippi, South Carolina and Utah, require all employers to participate in E-Verify and given that proposals of mandatory use of E-Verify have been floated in national immigration reform proposals, mandatory nationalization of E-Verify is potentially on the horizon.

I-9 Inspections

Typically, inspections are conducted by the United States Immigration and Customs Enforcement (ICE). Unless the ICE agent presents a warrant, ICE must provide an employer a minimum of three days’ prior notice of an inspection. The inspection process typically starts when ICE issues an employer a Notice of Inspection, which requests that the employer produce certain documentation that may include I-9 forms, payroll records or a list of all current employees.

After the inspection, ICE may issue a Notice of Compliance, which notifies the employer that it was found to be in compliance. The employer also may be issued a Notice of Suspect Documents or Notice of Discrepancies. Under either a Notice of Suspect Documents or Notice of Discrepancies, the employer is given an opportunity to remedy the problem by presenting additional documentation to establish employment eligibility. However, if ICE determines that the employer knowingly hired or continued to employ undocumented workers, the employer may be fined or subject to criminal prosecution.

Penalties

If technical violations are found, such as forms that are incorrectly filled out, an employer is given 10 business days to make corrections. If left uncorrected, the technical violations will become substantive violations.

If an investigation reveals that an employer knowingly hired or continued to employ an unauthorized alien or failed to comply with the employment eligibility verification requirements, the employer will be ordered to cease the unlawful activity, may face civil penalties and may be prosecuted criminally. In criminal investigations, a finding that the employer engaged in a “pattern or practice” of hiring unauthorized workers is a misdemeanor punishable by up to six months of imprisonment and a fine of up to $3,000 for each unauthorized worker. Knowingly hiring 10 or more unauthorized workers for a period of a year or more is considered a felony and punishable by up to five years of imprisonment and/or a fine.

Employers also may face civil penalties that include up to $3,200 for the first offense and not less than $4,300 and not more than $16,000 for each unauthorized alien for subsequent offenses. The following are factors used to determine the amount of the penalty issued:

The size of the business.

Whether there was a good-faith effort to comply.

The seriousness of the violation.

Whether the violation involved undocumented workers.

The history of previous violations also is considered.

Best Practices

The good news is that if the foregoing procedures are followed very carefully, an employer that does not know an employee is not legally permitted to work is immune from liability. To ensure that employers have the benefit of that defense, it is recommended that they conduct, at a minimum, yearly internal audits and training for those employees responsible for I-9 compliance. In addition, employers should establish a clear I-9 compliance policy that serves as guidance for all hiring personnel and should maintain a notification procedure for when employment eligibility is due to expire.


Maxiel Gomez is a labor and employment law litigator at Pashman Stein in Hackensack, N.J., and can be reached at mgomez@pashmanstein.com.

 

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