Why Small Businesses Should Be Worried About ICE

As an immigration compliance attorney who represents a number of small employers, the question inevitably arises as to whether it is financially worth it to a small company to invest the time and effort to revamp the company’s I-9 process and remediate past mistakes. Or should the company take the risk they will escape scrutiny from the Immigration and Customs Enforcement (ICE) and avoid the costly and painful process that is associated with receiving a Notice of Inspection (NOI)?

Small, especially family-owned, businesses are less likely to be as worried about a NOI as a large company. Why? Because it is not going to get as much media attention as Mexican Chipotle or American Apparel when they received NOIs. Second, as a family-owned business, it will likely not face any derivative shareholder lawsuits.

But the most recent statistics for FY 2012 show over 3000 employers were served with NOIs. It is unknown exactly how many of these were small employers, but a majority of cases litigated involve small employers.

Of the over 3000 NOIs, many of them ended with an assessment of a penalty/fine. Unfortunately, companies who do not address I-9 compliance mistakes until served with a NOI, are usually going to be cited for a substantial number of violations. Since the percentage of alleged violations is often 40% or 50% or more, the penalty is going to be $770 or $935 per violation plus or minus any aggravating/mitigating factors. If a small business has 50 employees and 50% of the I-9 forms have substantive violations, the company will owe
$935 x 25 or $23,375.

Make no mistake about it – addressing and resolving I-9 compliance mistakes can be very tricky business. Although ICE ultimately holds all employers accountable for compliance with the law, they have never published formal guidance on how to correct and remediate I-9 errors. Moreover, I-9 problems will also frequently uncover other serious issues, including unauthorized employment and/or discriminatory conduct in the hiring process.

Fortunately, small employers are not completely without recourse. As ICE audits have increased over the past few years, many small companies have been turning to immigration counsel that specialize in counseling employers on navigating the troubled waters of I-9 compliance. In particular, specialized immigration counsel can determine, through inspection of I-9 forms and/or supporting documentation, whether the company has committed substantive errors on the I-9 forms or employs any undocumented workers. If the company employs any undocumented workers, it could face a fine of between $375 and $16,000 per unauthorized worker if the company was aware of the issue, through actual or constructive knowledge. If, however, the company discharges them after an audit is conducted by an immigration compliance attorney, the chances of any liability are significantly reduced. In addition, many of the substantive violations on the I-9 forms can also be corrected in order to mitigate or entirely eliminate fines and penalties.
You may ask – “why wouldn’t a company just conduct its own I-9 audit and save the cost of attorney’s fees?” Although this may sound logical, this strategy is fraught with problems. One, the person conducting the I-9 self-audit may not have the training on how to properly correct and annotate the I-9 according to ICE’s standards. Two, without this training, the employer representative may actually make matters worse – by destroying old I-9 forms after creating new I-9 forms or backdating the I-9 forms to make them appear to be timely completed.

Additionally, if this representative is the one who completed Section 2 for the employer, it is just human nature not to locate your own errors.

Another reason to retain legal counsel is to seek guidance and advice regarding a comprehensive Immigration Compliance Policy. An immigration compliance attorney can draft such a policy and help the company answer a number of questions. The first seems so simple – “Who is in charge of the company’s Immigration Compliance Policy?” Hopefully, the answer is clear, but occasionally it is not. And as one can imagine, most employers without a specific person in charge of a policy, tend to have inconsistent problematic policies in place.

An Immigration Compliance Policy can also clearly establish whether a company retains supporting documents with the I-9 forms. It is not required under federal law but may be very helpful when the attorney conducts an audit, and in the event ICE serves the company with a NOI. Furthermore, the government has repeatedly emphasized the importance of having a consistent policy on retention of supporting documentation.

An effective policy should also state whether the company utilizes E-Verify. A small company may not have considered E-Verify and, through legal counsel, can make an informed decision on its use. In many cases, an attorney will discover that a small company is located in a state, city or county which mandates E-Verify for all employers or contractors with government agencies.

Is the small company a contractor with contracts of at least $150,000 or subcontracts of at least $3,000 on federal projects? If so, the Federal Acquisition Rule (FAR) on E-Verify may apply, making E-Verify mandatory for all current employees on the project and all new hires as well. A FAR E-Verify employer may also opt to E-Verify all of its existing workforce too.

An Immigration Compliance Policy should also cover the law on retention of I-9 forms for former employees, which is three years from the date of hire or one year from termination, whichever is longer. The policy can also cover other immigration-related issues of which the company may not have been aware.

As earlier discussed, a company needs to decide whether it is going to utilize E-Verify. From my experience, E-Verify is a great tool in immigration compliance for small employers, especially where there may not be one employee dedicated to human resources. By using E Verify, the employer is provided some assurance that it is employing a legal workforce. The one downside in the use of E-Verify is that it may give the small employer a false sense of immunity from I-9 form violations. Although E-Verify decides who is and is not authorized to work, it does not review a company’s I-9 forms and find substantive violations. Thus, a small business using E-Verify can still face sizable liability for substantive I-9 violations discovered by ICE in a NOI.

Another benefit of an Immigration Compliance Policy is if a small business receives a NOI from ICE, it should be able to demonstrate good-faith efforts to comply with immigration law. Since ICE has discretion in determining whether to fine a company and how much to fine, it is important to show good faith.

Obviously, retaining an immigration compliance attorney to be proactive, not reactive (to an ICE NOI) is going to cost the company attorney fees. But, these fees will be much smaller than if a NOI has to be responded to by legal counsel after the fact. Plus, it is most likely any penalties will be much smaller with legal counsel conducting an I-9 audit and drafting an Immigration Compliance Policy well in advance of the NOI.

About the Author
Bruce E. Buchanan is an Attorney at the Nashville and Atlanta Offices of Siskind Susser, P.C. Mr. Buchanan 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) and the Associated General Contractors – Middle Tennessee Branch.