ICE Worksite Enforcement Takes a Big Gulp from 7-Eleven Franchisees

As employers, it’s all too easy to forget why we have this obligation to complete an I-9 form for all newly hired employees. The I-9 has been around now for more than two decades, and sometimes it seems like it’s just another onboarding form to collect along with the W-4, direct deposit, and insurance forms. But every once in a while, we’re reminded of why the I-9 form is required in the first place and the larger employer obligation to ensure a legal workforce. And in most instances, this reminder is delivered courtesy of the U.S. government…

The Case of the Bad Franchisees

On Tuesday, September 23, 2014, the Immigration and Customs Enforcement (ICE) announced that five franchisees and operators of 7-Eleven stores in New York and Virginia had pleaded guilty to concealing and harboring undocumented immigrants. The indictments, arrests, and seizures were conducted by ICE in cooperation with the Department of Justice, in what is now being called the largest worksite enforcement forfeiture case in history (more on that below).

According to court documents, the owners of the 7-Eleven franchise stores hired more than 50 undocumented immigrants, equipped them with stolen identities from United States citizens, housed them at residences owned by the defendants, and forced them to work 100 hours a week for a fraction of their wages.  The victims of the identity theft apparently range in age from 8 to 78 years old, and include a child, three deceased individuals, and even a Coast Guard cadet!  In addition, the defendants, together with others, apparently caused the 7-Eleven payroll service to transmit this false information, including the stolen identity information, to United States regulatory agencies, such as the Internal Revenue Service and the Social Security Administration. This is what we call a very slippery slope.

The High Cost of Non-Compliance

According to ICE, the 7-eleven case constitutes the largest criminal immigration forfeiture action in its history (they estimated over $30 million). As part of their plea, the defendants agreed to forfeit the franchise rights to ten 7-Eleven stores in New York and four 7-Eleven stores in Virginia, as well as five houses in New York worth over $1.3 million. In addition, the defendants agreed to pay roughly $2.6 million in restitution for back wages. The sentencing proceedings have not yet been scheduled, but the defendants could face anywhere from 10 to 20 years in prison.

What does this have to do with I-9s?

Clearly, this case represents the other end of the I-9 spectrum, which is reserved for those employers who knowingly hire unauthorized workers or engage in crimes that facilitate such actions (human trafficking, alien smuggling, document fraud, abuse/exploitation, etc.) But, it’s important to remember that I-9 compliance and verification failures are an extremely slippery slope (as mentioned above), and often indicative of a much larger problem that could easily spin out of control. This risk is especially severe for those organizations who fall into one of the government’s high-risk (and thus high-priority) profiles. These include the following:

  • Employers involved in matters of national security, including critical infrastructure such as airports and military installations
  • Employers with a high percentage of undocumented workers (who are more likely, according to the government, to ignore I-9 and E-Verify requirements and in some cases actively recruit unauthorized employees)
  • Employers with a history of Department of Labor wage and hour violations and/or OSHA violations (in other words, those who are seen as potentially taking advantage of employees generally)
  • Large organizations (especially those who maintain franchisor/franchisee relationships), who often have a very well known brand (and represent a very attractive target for the government!)

Lessons Learned

As we have described in the past, the best defense against a possible ICE investigation (whether it relates to I-9 violations or something more severe) is to proactively develop a comprehensive immigration worksite compliance program, which addresses any potential weaknesses. Although there is no “one size fits all” policy, the following steps are generally considered best practices in the industry:

1. Contact experienced immigration counsel to guide you through a detailed examination of your I-9 and E-Verify compliance practices. For a list of some of the best ‘in the know’ immigration counsel specializing in I-9 compliance, please see our list of guest attorney bloggers here.

2. Provide continual I-9 training for all those employees who are charged with ensuring the proper completion of the form.

3. Draft and implement consistent and uniform Form I-9 processes and procedures to ensure compliance throughout your organization and defend against potential discrimination claims for employees who feel that they have been treated differently.

4. Adopt a comprehensive and trusted electronic I-9 and E-Verify solution, which has been designed with compliance in mind from the ground up. Ensure the system has been vetted by immigration counsel and meets the most conservative interpretation of the regulations, especially in light of ICE’s guidance on evaluating electronic systems. And finally, be careful of those vendors making overly broad claims that your electronic I-9 system will magically cleanse or eradicate all mistakes. As this case illustrates, there is always a human element in complying with immigration laws. Or put more simply, if it’s too good to be true…[you know the rest.]