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Latest I-9 Penalty Case Leaves Cleaning Company Hung Out to Dry

There’s an old adage that says what you do today will affect tomorrow – an inspirational quote often intended to encourage good choices. But in the world of I-9 compliance, it’s what you’re NOT doing today which will most definitely impact tomorrow – especially when it comes to I-9 fines and penalties.

During the past year, employers across the US have personally witnessed the dawning of a new era of worksite enforcement – with Form I-9 audits spreading like wildfires amidst the Trump administration’s crackdown on all things immigration-related. And while each I-9 audit/investigation can be different, the end result for many employers is often the same – fines and penalties assessed for any substantive (i.e., serious) and uncorrected technical violations.

In today’s blog, we’re going to discuss a recently published I-9 penalty court case involving a small cleaning company with a big problem – 100% non-compliance with its Form I-9 responsibilities. But what’s really interesting about this case is that the court goes on record to note that I-9 violations committed years ago can be assessed at the current (adjusted) Form I-9 penalty amounts – which, as described below, are constantly increasing.

U.S. v. Executive Cleaning Services of Long Island Ltd.

At the onset, it’s important to note that all of the information presented in this blog is based upon the published OCAHO decision, U.S. v. Executive Cleaning Services of Long Island Ltd., 13 OCAHO no. 1314 (Dec. 2018). The respondent cleaning company may not entirely agree with the facts presented (or arguments made) in this decision, and so I wouldn’t necessarily draw any conclusions about the company or the alleged violations.

With that in mind, here’s what we know. On December 1, 2016, the Immigration and Customs Enforcement (ICE) served Executive Cleaning Services with a Notice of Inspection (NOI), demanding the company produce their I-9 forms as required under the law. After the I-9s were delivered, ICE returned (almost 8 months later) with a Notice of Intent to Fine, alleging the company failed to properly complete I-9s for twenty-five employees. The total assessed fine was $44,315 – a fairly significant amount when you consider the small number of I-9s involved.

The company appealed the decision, and in a ruling issued in October 2018, the court found the company liable for the 25 violations, which was not surprising since they apparently had failed to complete Section 2 for any of the 25 employees. The court also noted that the employer had failed to ensure that the employee attested to his or her status in 17 of the 25 I-9s.

But when it came time to rule on the penalties, the court decided that more information was required – giving both sides the opportunity to make their arguments.

I-9 Fines and Penalties

To a large degree, assessing I-9 fines and penalties is one big balancing act. On the one side, you have ICE arguing that penalties must be meaningful in order to promote future compliance. And on the other, you have employers stating that fines should not be unduly punitive. In order to weigh and measure these competing objectives, the court must examine five statutory factors and determine whether each one should enhance, mitigate, or have no effect at all on the ultimate penalty assessed against the employer. These include 1) the size of the employer’s business, 2) the employer’s good faith, 3) the seriousness of the violations, 4) whether or not the individual was an unauthorized alien, and 5) the employer’s history of previous violations.

In many of the court cases we analyze, there’s quite a bit of back and forth on each of these elements.  In the case at hand though, most were (in essence) non-issues. For example, both ICE and the court acknowledged that the employer was a small business (with fewer than 100 employees) and agreed that the fines should be mitigated based on this assessment. And while the Court went into some detail about the company’s poor rate of compliance and the seriousness of the violations, they ultimately determined that these factors should be treated as neutral because ICE did not seek to increase the fines based on these elements.

Moving to the last 2 statutory factors, both ICE and the court treated the history of violations as a neutral factor (because the record did not indicate that the company had any previous problems with their I-9s) and determined that an increase was appropriate for one violation where the company was found to be employing an undocumented worker.

Last but not least, the court briefly addressed a “non-statutory” factor that is frequently raised by small employers – the inability to pay an I-9 penalty because of financial hardship. And while the cleaning company tried to make this argument (noting that they were no longer in business), the court ultimately set it aside as the company apparently failed to provide any evidence supporting their claim.

Appropriate Range of Penalties

The most interesting aspect of this case, however, concerns the appropriate range of penalties that should be applied. For the last 16+ years, I-9 paperwork violations have been assessed at a range of $110 to $1,100 per form. However, in August 2016, the fine amounts for I-9 violations essentially doubled in size – courtesy of a new rule that increases monetary penalties across the board in order to account for inflation and to ensure that the fines continue to maintain their deterrent effect.

The most recent adjustment (announced on April 3, 2018) notes that employers will be fined between $224 and $2,236 for each individual with respect to whom such I-9 violation occurred after November 2, 2015. This means that the applicable penalty range for an employer will depend on the date of the violations. If the violation occurred on or before November 2, 2015, the minimum penalty amount is $110 and the maximum is $1100. For violations that occur after November 2, 2015, the new higher amount would apply.

In the case at hand, the cleaning company argued that the lower ($110 to $1,100) range should be used since the violations occurred before November 2, 2015 – when presumably the employees were hired and the I-9s were half-completed. ICE, on the other hand, argued that all of the violations actually occurred after November 2, 2015 because these types of paperwork errors are “continuing violations” until corrected by the employer.

And sure enough, the court agreed with ICE, noting that case law has long held that an I-9 paperwork error or omission is not a “one-time occurrence” but rather a violation which continues until corrected or until the employer is no longer required to retain the I-9 form. Following this logic, the 25 incomplete I-9s were all deemed to be continuing in nature since the cleaning company had failed to make any corrections at all. Accordingly, the court upheld ICE’s assessed fines of $1,768.90 per form for 24 of the violations and $1,862 for the violation involving the unauthorized worker.

What this means for HR managers

This most recent court decision provides yet another advantage to addressing I-9 problems now (rather than later) – enabling employers to lock-in the potential range of penalties (if any) by fully resolving those so-called “continuing” violations before fine amounts increase.

But even aside from the penalty range issue, there are numerous other benefits to self-auditing (and correcting) I-9 forms as soon as possible – especially when you consider how the I-9 can be a veritable minefield of potential errors and omissions. Correcting I-9s in advance of an audit not only shows good faith, but practically speaking, can turn a potential catastrophic penalty into a small fine (or even no fine at all).

While conducting an I-9 self-audit may sound daunting, there are a variety of strategies (and tools) available to ensure you follow the correct procedure. For example, LawLogix offers a full-service remediation solution which not only analyzes your historical paper (or electronic) I-9s, but also provides a compliant (and automated) workflow for correcting those mistakes under the advice of counsel. For more information on this service, please visit this page.

About John Fay

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 President at the LawLogix division of Hyland Software, Inc., where he oversees all aspects of the division’s operations and provides strategic leadership and direction in the development and support of Form I-9, E-Verify, and immigration case management software solutions.

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