Court rejects electronic I-9 signature argument

If you’re currently using (or considering) software to electronically complete your I-9s, you’ll inevitably face an important logistical question with legal implications: can you electronically sign your I-9s and still be in compliance with the law? At first glance, the answer may seem simple. The I-9 regulations specifically permit employers to electronically generate, sign, and store the Form I-9 as long as certain record-keeping and safeguarding requirements are met. That doesn’t sound so bad, right?

But there’s a catch. The electronic signature rules were drafted in relatively broad terms, and Immigration and Customs Enforcement (ICE), the agency which administers Form I-9 inspections and the resulting fines, has not published any guidance on what may (or may not) be considered a valid electronic I-9 signature. This uncertainty puts employers in an interesting position, where their efforts to increase I-9 accuracy and efficiency (through software) may wind up getting them into even more trouble.

This brings us to today’s I-9 case involving a commercial and office building contractor headquartered in Billings, Montana. While the case’s primary focus concerns a dispute over some missing I-9s, it’s one of the first decisions which discusses (albeit briefly) the requirements for electronic I-9 signatures in section 2. It also highlights the importance of the I-9 signature requirement, since a missing (or invalid) signature is treated as a very serious error, which will undoubtedly lead to a stiff penalty.

The Audit

We’ll begin with the case at hand. At the onset though, it’s important to note that all of the information presented in this blog is based upon the published OCAHO decision, US v. Agri-Systems D/B/A ASI Industrial, 12 OCAHO no. 1301 (Apr. 2017). The company involved in the audit may not entirely agree with the facts presented (or arguments made) in this decision, and so I wouldn’t necessarily draw any conclusions about the company or the alleged violations.

Keeping that in mind, here’s what we know: in July 2011, an ICE agent personally served the company with a Notice of Inspection (NOI) and accompanying subpoena demanding I-9s (and other supporting documents) for all current and terminated employees for a recent 6-month period. Shortly thereafter, ICE granted the company a one-month extension to deliver the documents (a courtesy not always extended by the agency). Right before the deadline lapsed, ICE received a FedEx package containing 159 I-9 forms along with an employee list and wage report, business owner information, and the company’s tax ID.

Fast-forward two years later (July 2013), and the company receives three additional notices from ICE (each one bearing bad news). First, there was a Notice of Suspect Documents (NSD) which advised the company that 46 of its employees appeared to be unauthorized to work (at least at the time of hire). Second, there was a Notice of Discrepancies which informed the company that the agency was unable to verify the identity and employment authorization of 28 employees (which may occur for a variety of reasons).

Last but not least, ICE served the company with a Notice of Technical Violations which indicated that there were several technical or procedural violations as well as other substantive violations found on the I-9 forms. ICE also warned the company that it can be fined for any substantive or uncorrected technical violations.

And sure enough, ICE did just that – issuing a Notice of Intent to Fine (NIF) in the amount of $104,907 for 111 alleged violations. Specifically, ICE charged that the company had failed to prepare and/or present I-9s for 29 employees, and failed to ensure that 82 I-9s were properly completed. ICE later amended its complaint to remove one employee from the first count, and the assessed fine was adjusted slightly downward to $103,644.75.

The Missing I-9s

As mentioned earlier, the primary issue discussed in the decision concerns roughly 29 I-9s that the company claims it sent to ICE in response to the audit request. ICE contends that it never received the I-9s in the original batch, and accordingly fined the employer for each missing record. In response, the company “re-sent” a portion of the missing I-9s and submitted affidavits swearing that the I-9s were in fact included in their original response.

So which version of the truth is correct? As it turns out, we still don’t know for sure. The court ultimately decided that there was a “genuine issue of material fact” with regards to the missing I-9s and refused to summarily decide against the company. According to the record, the judge will hold a conference call to discuss the next steps, which may include a potential evidentiary hearing on the missing I-9s.

Word Processing is NOT an electronic signature

The remaining 82 I-9s under inspection had a variety of issues, ranging from a failure of the employee to check a box in section 1 to missing or incomplete documents in section 2. However, one violation was particularly prevalent in the I-9s under inspection – the absence of the employer’s signature in section 2 of the form. As many employers are keenly aware, a missing section 2 signature is generally considered to be a very serious violation because it fundamentally defeats one of the purposes of completing section 2 in the first place – to attest (under penalty of perjury) that the hiring entity (or its representative) reviewed appropriate documents to verify the new hire’s identity and employment authorization.

The company at hand, however, came up with a rather novel (if not entirely successful) explanation. In a nutshell, the company argued that it actually had signed many of the I-9 forms electronically by using “word processing” to provide its name in the attestation in Section 2. The company went on to state that the printed name on each form “efficiently demonstrates that the attestation was read as it comes immediately below the attestation itself.”

While the court seemed to appreciate the “spirited” nature of this argument, the judge ultimately rejected the premise outright as being contrary to both law and the evidence. First, the court noted that the I-9 forms in question were generally completed by hand (though many did contain a pre-printed address), and there was no indication that the company either generated or stored any of the forms electronically (as contemplated by the regulations). Second, even assuming that the pre-printed names can constitute an electronic signature, there was no evidence that the company complied with the electronic I-9 regulations (which stipulate a host of requirements relating to security and traceability). Lastly, the court noted that some of the I-9s did have a handwritten signature in section 2, and the company had not offered any convincing reason for why they would complete some I-9s “electronically” while others received wet signatures.

Lastly, and perhaps most significantly, the court noted that there was no actual signature, electronic or otherwise, in section 2 of the I-9s at issue since they merely contained a pre-printed (or typed) company name. The fact that the pre-printed notations appear immediately below the attestation was deemed irrelevant as it still would not meet the requirement for validly signing the I-9. And as the court noted (in somewhat dire terms), “[w]ithout the employer’s signature, the mandated attestation is patently not complete.”

Lessons Learned for Employers

Although the case at hand involved a somewhat dubious example of an electronic I-9 signature, it still serves as a stark reminder that employers will ultimately be held accountable for their electronic I-9 processes and procedures. As more employers continue to adopt and implement electronic I-9 systems (many of which are often integrated into their onboarding workflow), HR and compliance managers should carefully consider the following:

  1. While many HR software applications claim to “handle I-9s”, the vast majority of systems (particularly the so-called “all-in-one” HR providers that combine onboarding, applicant tracking, and payroll) have not been designed to meet the very stringent and unforgiving regulations. In particular, employers should be on the lookout for systems which contain a very simple “click to accept” mechanism for electronically signing the I-9, which arguably fails to demonstrate that the system verified the identity of the person producing the signature.
  2. Scanning historical paper I-9s and calling them “electronic” will not satisfy the very specific recordkeeping and safeguarding requirements outlined in the regulations. In order to avoid claims that your I-9 is just “word processing,” you’ll want to make sure that your system includes I-9 data indexing, secure access and logs, and audit controls to securely record whenever an individual creates, completes, updates, modifies, alters, or corrects the electronically stored (i.e., scanned) record.
  3. A fundamental flaw in your electronic I-9 system can have a wide and potentially devastating impact – particularly since ICE can (under the regulations) essentially invalidate all of the I-9s generated in the system and charge you with failure to prepare/present a valid I-9. In order to mitigate this risk, employers are well-advised to contact specialized immigration counsel who can assist in vetting the electronic I-9 software to ensure it complies with all of the various rules.

Do you have questions or comments relating to electronic signatures or the use of electronic I-9 software in general? Please feel free to contact us here or send me an email to the address provided in my bio link below.

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John Fay is an immigration attorney and technologist with a deep applied knowledge of I-9 compliance and E-Verify rules and procedures. During his career, John has advised human resource managers and executives on a wide variety of corporate immigration compliance issues, including the implementation of electronic I-9 systems. In his current role, John serves as Vice President and General Counsel at the LawLogix division of Hyland Software, Inc., where he is responsible for overseeing product design and functionality while ensuring compliance with ever-changing government rules.