Temporary Staffing Agency Wins and Loses on I-9 Fines with OCAHO

[Editor’s Note: Today’s OCAHO discussion is authored by Bruce E. Buchanan, an Attorney at the Nashville Office of Siskind Susser, P.C.]

In late January 2012, the Office of the Chief Administrative Hearing Officer (OCAHO) issued a 40-page decision against a temporary staffing company, Occupational Resource Management (ORM). Although ORM was successful in substantially reducing the fine sought by Immigration & Customs Enforcement (ICE), it still faced $108,000 in fines. How did ORM ultimately lower its total fines?

Background and Procedural History

ORM, headquartered in Seattle, was served with an ICE Notice of Inspection in June 2008 requesting I-9 forms of all employees employed in the last three years. ORM produced about 1,700 I-9 forms and a payroll list of 1753 employees/former employees. (As a temporary staffing agency, ORM had lots of turnover.) Thereafter, ICE issued a Notice of Suspect Documents identifying 1,141 employees and former employees who appeared unauthorized for employment and a Notice of Intent to Fine.

Constructive Knowledge

This OCAHO decision states “constructive knowledge has not been fully developed.” That’s a kind way of stating constructive knowledge in immigration law is clear as mud. However, the basic principle is the “employer is not entitled to cultivate deliberate ignorance or avoid acquiring knowledge. The state of mind to be shown has also been characterized as ‘conscious disregard,’ ’deliberate ignorance,’ or by some other formulation implying a conscious avoidance of positive knowledge.” The Court used the following example to illustrate constructive knowledge.  ORM hired an employee who completed Section 1 of the I-9 form and signed the attestation indicating that he was a lawful permanent resident. Section 2 of the form indicated a driver’s license and a social security card as the documents examined, but instead of a signed attestation, the following notation, “Social Security Card did not appear valid on its face” was indicated and initialed. Despite this notation, ORM continued to employ this particular individual.  OCAHO found that once ORM was presented with a Social Security card that it recognized as not valid on its face, it should have refused to accept the document altogether, and not have allowed the employee to start work.  Thus, ORM had constructive knowledge that the employee was unauthorized to work. While ICE sought $275 each for these types of errors (based on Penalty Guide in effect in 2008) plus enhancement of 5% for lack of good faith, OCAHO subsequently increased the penalties based upon the seriousness of the violations, for a fine of $1,600.

Backdating I-9s

ICE also charged ORM with 60 substantive violations of preparing I-9 forms well after the employees were hired and then backdating the I-9 forms. Additionally, ORM could not locate the I-9s of 47 individuals. ORM argued the “misdated” I-9 forms were technical violations for which it should have received 10 days to correct. OCAHO rejected this argument, indicating, “Waiting for months or years after these employees’ hire dates to prepare their I-9s and then backdating them is not a technical or procedural violation nor does it reflect a good faith attempt to comply with the requirements.”

Failure to Insure and/or Complete Sections 1 and 2

Additionally, ICE charged ORM with 269 substantive violations for failure to ensure Section 1 of the I-9 forms was properly completed and failure to fully complete the Section 2. ORM did not challenge 201 violations. There were a number of alleged violations concerning how employees noted their status in Section 1. The first was the lawful permanent resident box checked but no A# was entered. OCAHO cited established law in denying this defense – “failure to ensure that an employee enters his or her Alien number on the form prevents the government from verifying the employee’s work authorization status, thus defeating the purpose of the I-9.” However, where no Section 1 box was checked, but A# was entered on the appropriate Line, OCAHO found this was substantial compliance with the requirements. Thus, OCAHO found no violations in these four allegations. Where employees checked multiple, incompatible Section 1 boxes, OCAHO found this rendered the attestation meaningless. Thus, these were substantive violations. Finally, where an employee checked U.S. Citizen in Section 1 and presented a permanent resident card in Section 2, OCAHO stated, “Permanent resident status is fundamentally inconsistent with simultaneous status as a citizen of the United States.”

Penalties

ICE determined the baseline fine for the substantive violations was $440 because ORM had between 20 to 29% substantive violations in their I-9s. It aggravated the penalties by 10% or 15% – 5% each for lack of good faith and seriousness of the violations and 5% for 225 violations involving unauthorized employees. Thus, ICE sought a fine of approximately $187,000 for these violations. ($484 each for 151 violations = $73,084 + $506 each x 225 violations = $113,850). OCAHO agreed with some of ORM’s arguments and dismissed approximately 44 alleged violations. Concerning the remaining, ORM characterized the penalties proposed by ICE “as grossly unjust and punitive, and not designed to encourage voluntary compliance.” The company also asserted it could not afford to pay ICE’s proposed penalty and it was a small company with only 50 current employees; thus, it should receive a 5% mitigating factor deduction. OCAHO agreed ORM was currently a small company; thus, it should receive the 5% small company discount. OCAHO concluded “Considering the record as a whole and the statutory factors in particular, the penalties for the 107 violations found in Count II will be assessed at $500 each, and for the 265 violations in Count III the penalties will be assessed at $200 each. The total for all counts is $108,100.

Meaning of Decision

This decision is another example of the benefit of contesting the Notice of Intent to Fine. It received a reduction of $80,000 or about 42.5%. In 2012, the average penalty was reduced by 45%. However, this decision also highlights a number of defenses that have been unsuccessfully argued in court, providing a little more insight on OCAHO’s evaluation of constructive knowledge.

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Bruce E. Buchanan is an Attorney at the Nashville Office of Siskind Susser, P.C. He represents individuals and employers in all aspects of immigration law, with an emphasis on employer immigration compliance, as well as employers in employment/labor law matters. He is Past-Chair of the Tennessee Bar Association’s Immigration Law Section from 2011 to 2012 and has been the editor of the TBA’s Immigration Law Section Newsletter and the TBA’s Labor and Employment Law Section Newsletter since 2009. Mr. Buchanan also serves on the Board of Directors for the Nashville International Center for Empowerment (NICE) and the United Cerebral Palsy of Middle Tennessee and Middle Tennessee Seminole Club. He is an associate member of the Mid-Tennessee Chapter of the Associated Builders & Contractors (ABC).