No Reduction in Form I-9 Penalties for Georgia Restaurant
For the second consecutive month in 2014, OCAHO has issued a large penalty against a restaurant, U.S. v. Symmetric Solutions, Inc., d/b/a Minerva Indian Cuisine. It assessed a penalty of $77,000, but this did not reduce the penalty from what Immigration and Customs Enforcement (ICE) sought. This case has several interesting angles.
Why did ICE investigate and inspect the Restaurant’s I-9 Forms?
According to a government affidavit, ICE received information that the restaurant was hiring undocumented workers. ICE contacted the Georgia Department of Labor, which reported that only one employee was receiving wages even though ICE surveillance established 10 to 15 people were working there.
Two months later, in December 2008, ICE’s Alien Smuggling Unit served a Notice of Intent (NOI) on Minerva Indian Cuisine, at which time the part-time owner asked what an I-9 form was and said its corporate headquarters handles all legal documents. The restaurant consented to a search during which ICE found three “payroll ledgers” (they were “school composition notebooks” which listed the years, 2006, 2007, and 2008, the individual employees’ first names along with dates of payment and payment amount). ICE also interviewed 16 employees present at the restaurant . Furthermore, ICE developed evidence, through a lease agreement with an apartment complex and bank receipts for rent and utilities, that the restaurant was housing some of its non-documented workers – which could amount to a serious violation of the law – harboring. ICE did not pursue the harboring allegations.
Allegations in the Notice of Intent to Fine (NIF)
Although ICE originally alleged 103 violations in Counts I, II, and III in the NIF, it amended its allegations against the restaurant to 66 allegations in Count I – failure to prepare or present I-9 forms and four allegations in Count II – failure to complete Section 1 and/or ensure completion of Section 2 of five I-9 forms.
Procedural Arguments on the Sale of the Restaurant Determined to be Unfounded
The restaurant made a number of procedural arguments on why it was not responsible for the violations – mainly asserting Symmetric was no longer the owner of the restaurant at the time of the NOI because it had sold 60% of the restaurant to Vensai Foods. OCAHO found even if the restaurant had sold 60% of the business, it still would have owned 40% and be liable for the violations.
Formula for the Penalties
ICE sought $77,000 based upon a baseline penalty of $935 per violation (over 50% of the I-9 forms had substantive errors). ICE sought to aggravate the fine by 20% due to size of the business, seriousness of violations, the employer’s lack of good faith, and their use of unauthorized workers. These aggravating factors increased the amount to $1122, which is more than the statutory maximum of $1100 per I-9 form. Thus, the mathematical formula was 71 violations x $1100 per violation = $77,000.
OCAHO disagreed with ICE’s assertion that the restaurant was a large employer because as many as 70 employees worked for the restaurant in the three-year period. As OCAHO stated, the restaurant business is “notorious for high turnover” and at the time of the NOI about 10 to 15 employees worked there. Thus, OCAHO found the restaurant was a small employer. This is normally a 5% mitigating factor.
Concerning the use of unauthorized workers, the statute states that the penalty is to be enhanced against each unauthorized worker, not against all workers or what percentage of the workforce is unauthorized. Although there is no “smoking gun” that the employees were unauthorized or the restaurant lacked good faith, OCAHO found “paying unauthorized workers in cash under the table while failing to report their wages to taxing authorities are not the actions of an employer making an honest effort to ascertain what its legal obligations are and conform to them.” OCAHO also found this conduct to be strong evidence of the restaurant’s lack of good faith.
Despite the shortcomings in ICE’s formula (small employer instead of large employer and assessing a penalty on all violations for the use of unauthorized workers), OCAHO found the restaurant did not point to any “reason for reducing the penalties and the government reached an appropriate result by imposing penalties at or near the maximum.” Thus, OCAHO declined to reduce the penalty of $77,000.
One of the interesting aspects of this case is the coordination of investigation resources – ICE, Georgia Department of Labor, and the Alien Smuggling Unit. Additionally, the Alien Smuggling Unit interviewed employees and confiscated bank records and payroll ledgers. As regular readers of this blog have noticed, normally employers have been very successful in a reduction in the penalties. However, in this case, given the magnitude of the violations, the restaurant could not get a reduction from OCAHO.