$95 Million Penalty Reveals the Dangers of remaining “Willfully Blind” to I-9 Compliance Problems

If you’ve ever undertaken a review of your I-9 compliance policies and procedures, inevitably someone will ask the question that everyone is afraid to address: what’s the worst that can happen if we throw caution to the wind instead of confronting potential I-9 and immigration problems head-on?

Well, wonder no more, as the Immigration and Customs Enforcement (ICE) has once again provided a pretty good indication of the potential pitfalls associated with immigration and I-9 compliance failures. On September 28, 2017, ICE in collaboration with the Department of Justice (DOJ) U.S. Attorney’s Office announced that Pennsylvania-based Asplundh Tree Experts, Co. would pay $95 million to settle both criminal and civil immigration charges stemming from the company’s hiring and rehiring of undocumented workers over a six-year period. The $95 million price tag (which includes an $80 million criminal forfeiture money judgment and $15 million in civil payment), represents the largest payment levied in an immigration or Form I-9 investigation to date.

And while you may be tempted to dismiss this case as being extreme (or perhaps something that “could never happen here”), it’s important to note that Asplundh’s decentralized hiring process and apparent lack of compliance attention was not all that unique. Many employers across the US face similar problems in managing their I-9 and E-Verify obligations, and some (whether deliberate or not) choose to keep themselves in the dark for fear of what lurks within.

In today’s blog, we’ll carefully analyze the Asplundh case and provide some best practices for employers across all industries to avoid the terribly slippery slope of I-9 and immigration non-compliance.

The Asplundh Case  

Headquartered near Philadelphia, Pennsylvania, Asplundh is family-owned and operated utility contractor that performs tree trimming and brush clearance for power and gas lines throughout the U.S., Canada, New Zealand and Australia. With over 34,000 employees, Asplundh is considered one of the largest privately-held companies in the US – a factor that weighed heavily upon the investigation into its hiring practices.

According to court documents, ICE initiated an I-9 audit of the company on November 19, 2009, the results of which revealed that a number of employees were unauthorized to work in the US. Subsequently, the company dismissed a large number of the employees, while others voluntarily resigned.

The case, however, was far from over. ICE’s six-year investigation found that after the audit, the company utilized a carefully coordinated scheme to hire and rehire undocumented workers in many regions through the US by accepting identity and employment authorization documents (such as green cards, social security cards, and drivers’ licenses) that the company knew to be false and fraudulent.

But what’s really interesting about this case is how the government focused on the employer’s decentralized hiring process and senior management’s deliberate attempts to remain “willfully blind” to the problems underneath. Like many organizations, Asplundh utilized a traditional hierarchical approach with a small leadership team at the top (“Sponsors”), many employees at the base, and others at various supervisory levels in the middle (including Regional Managers Supervisors, General Foremen, and Foremen in order of responsibility and control).

The problem, however, is that the company also decentralized its hiring function along these same organizational lines, such that employees could be hired (and rehired) by “low level supervisors” rather than by a compliance officer at a regional office. According to the government, this decentralized hiring model not only facilitated but “tacitly perpetuated” the fraudulent hiring practices which ultimately led to this whopping $95M liability.

The “manner and means” of these practices included regional managers instructing supervisors to accept and receive I-9 supporting documents from employees (some of whom had previously resigned), knowing that these documents were fraudulently made and illegally obtained. Moreover, at least one supervisor (who separately plead guilty to felony counts) assured the higher-ups that the company would have “plausible deniability” as to fraudulent hiring practices since the undocumented individuals had stolen real (i.e., valid) social security numbers which would be positively identified by E-Verify.

Last but not least, the government also noted that the company’s hiring “by word of mouth” rather than through a systematic application process further enabled and facilitated the hiring of ineligible workers since the necessary paper trail (and associated checkpoints) were non-existent.

ICE Gets Tough

In announcing the Asplund Settlement Agreement, ICE’s Acting Director Thomas Homan noted that the “judgment sends a strong, clear message to employers” while also referencing the removal of the “magnet” of US jobs which are procured through the manipulation of hiring laws and procedures (including those associated with the Form I-9). Mr. Homan’s stern warning in the Asplundh case was recently intensified when he promised up to a five-fold increase in audits and inspections and increasing scrutiny overall at a recent event in Washington, DC.

Aside from the impending increase in worksite enforcement, the government also appears to be using an aggressive playbook whereby Form I-9 audits and fines are effectively enhanced with a brutal combination of criminal prosecutions and asset forfeiture in the case of egregious violations. To make this case, prosecutors can use the smuggling and harboring statute which carries a potential 10-20 year prison sentence, plus forfeiture of all company assets and revenues derived from or traceable to the proceeds obtained from the commission of the offense.

In the case at hand, the Philadelphia Inquirer reports that the $80M forfeiture was calculated by tallying up the profits earned by the company during a 4-year stretch of the investigation ($800 million) and then multiplying it by 10% (the portion of the company’s workforce that was hired using this fraudulent practice). The theory being that the government should seize 10% of the profits, which (presumably) was generated by the 10% of the company’s workforce that was hired in violation of the law. Regardless of the math, most employers would agree that the total $95M amount (which also includes $15M in civil fines) represents a fairly significant penalty as well as a tremendous incentive for ICE to prosecute these types of cases in the future.

Important Lessons for HR and Compliance Departments

There’s a dangerous tendency in the world of HR compliance to dismiss or perhaps simply ignore Form I-9 responsibilities based upon the mistaken belief that investigations only happen to employers who flagrantly hire or employ undocumented workers. As the Asplundh case illustrates, immigration compliance is a tremendously slippery slope, and the very nature (and structure) of your organization might inadvertently lead you down a dangerous path.

But wait, you say, we don’t hire any undocumented workers! Therefore, we don’t have anything to worry about, right? Sadly, as many employers have learned the hard way, ICE can still penalize you for simple “paperwork” violations (which can now be as high as $2,191 per form), just because you failed to follow the established process for ensuring you have a legal workforce. And as we’ve said many times in the past, it all begins (and ends) with the Form I-9.

The good news is that it’s never too late to turn it around, and there are simple strategies you can implement (right away!) to get you started back onto a path of compliance. Here are 3 which come to mind especially in light of the Asplundh case:

(1) Raise Form I-9 Awareness – above all else, employers must avoid the tempting trap of remaining “willfully blind” to I-9 and immigration violations (especially if you operate in a decentralized manner). If you haven’t examined your Form I-9 practices in a while (or at all), now’s the time to do so through an attorney led audit which identifies potential problems and outlines plans for a speedy remediation.

(2) Train Staff on both I-9 and E-Verify rules and procedures – the key to a successful compliance program is having knowledgeable and trained staff who can navigate the sometimes rocky waters of I-9 and E-Verify process and procedure (which can easily change at a moment’s notice). Make sure to include tutorials covering the Form I-9, E-Verify (if applicable), and the rules relating to non-discrimination.

(3) Systemize your I-9 and E-Verify process – as the Asplundh case illustrates, the lack of a well-defined hiring process can be a recipe for disaster, and leave you with little or no defense to compliance-related allegations (whether those originate from the government or even your own employees). Most experts agree that the best way to systemize your I-9 and E-Verify process is through a smart electronic I-9 system that not only interfaces with your other HR onboarding applications, but also (more importantly) makes sure that you adhere to your various compliance obligations under the law.

If you have any questions or comments on this blog (including self-audit planning or electronic I-9 systems), please feel free to contact us here. You can also subscribe directly to this blog (and receive instant email notifications) by entering your email address in the following form.

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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.