OCAHO on a Roll, Reduces More I-9 Penalty Amounts

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

The Office of the Chief Administrative Hearing Officer (OCAHO) has issued a number of decisions in the past few weeks that support a trend of reducing penalty amounts. The employers includeMarch Construction, Inc., Forsch Polymer Corp., BKR Restaurants (dba Burger King), andBarnett Taylor (dba Burger King).

Lessons Learned from March Construction

Although March Construction had been found liable for violations in a prior OCAHO ruling, it was found liable for an additional 28 violations in the most recent review of its case. The decision showed that ICE does not always back down from litigation and may ramp up its efforts in response. This recent decision analyzed the amount of the penalties for 103 violations. After the base fine of $770 was determined, ICE assessed these five factors:

  1. The size of the business of the employer,
  2. The good faith of the employer,
  3. The seriousness of the violation(s),
  4. Whether or not the individuals involved were unauthorized aliens, and
  5. Any history of previous violations by the employer.

Part of ICE’s aggressiveness is reflected in it aggravating the baseline by 15% because of March Construction’s (alleged) lack of good faith, seriousness of the violations, and employment of undocumented workers. ICE sought $885.50 per violation for a total of $86,933.

The good news for employers is that OCAHO may not always agree with ICE’s position.  In this case, OCAHO believed that “A poor rate of I-9 compliance is insufficient to show bad faith absent some culpable conduct going beyond the mere failure to comply.” Although OCAHO concurred with ICE on the seriousness of the violations, it also found that ICE failed to prove its allegations that the employer employed undocumented workers. Moreover, the company’s ability to pay the penalties remains an important factor in which to assess the fine amounts. The total penalty was ultimately reduced to $17,120, down from $86,933.

Important Issues in Forsch Polymer

The Forsch Polymer case illustrates that no case is too small for ICE to prosecute. ICE served a Notice of Inspection in June 2010 on the company, located in Englewood, Colorado, requesting the I-9s of all employees employed in the last year. Only 12 Forms I-9 were produced. ICE subsequently charged Forsch Polymer with 11 violations of Immigration Reform and Control Act (IRCA) including failing to complete a Form I-9 and failing to properly complete the sections of the Form I-9. ICE sought a fine of $11,827.75.

In a bit of irony, OCAHO held ICE accountable for procedural errors! In reviewing the charges, OCAHO found three of the ten employees involved the failure to complete an I-9 within three days of hire. It ruled that these errors constituted technical violations that required ICE to provide notice and an opportunity for Forsch Polymer to correct. Since ICE failed to do so, OCAHO dismissed those allegations. However, ICE prevailed on the other allegations, including charges that the employer had backdated several of the Forms I-9.

Concerning the fine, ICE determined the base penalty was $935 per violation. Based upon the statutory factors, ICE aggravated the penalties by 5-15% each for the seriousness of the violations, lack of good faith, and employment of four unauthorized aliens. Ultimately, OCAHO reduced the fines to $4,600, down from $11,827.75.

Burger King’s Arguments Rejected

Both BKR Restaurants (Peoria, AZ) and Barnett Taylor (Phoenix, AZ) are doing business as Burger King Restaurants. The two restaurant cases arose out of two NOIs issued on the same day. BKR Restaurants was charged with 87 violations of IRCA for not preparing Forms I-9 for 22 employees and failing to properly complete Forms I-9 for 65 employees. ICE proposed a fine of $54,945. Barnett Taylor was charged with not to preparing Forms I-9 for 74 employees and failing to properly completing Forms I-9 for nine employees.

In their defense, the restaurants asserted that omissions in Section 1 of the Form I-9, such as immigration status, could be cured by entries in Section 2. This assertion is contrary to case law and was flatly rejected by the court. As OCAHO stated, “If an employee failed to provide information sufficient to disclose his or her immigration status on the face of the I-9 form, the employee’s signature actually attests to nothing at all, and the statutory attestation requirement is not satisfied.”

Prior case law can bolster or prove fatal to employer defenses.

In addition, Barnett Taylor gave varying reasons for its failure to retain and present Forms I-9 for 74 employees. It claimed it was the result of a “clerical error” of the General Manager, the General Manager’s actions were “outside the scope of his employment”, and that he acted as a “rogue” employee. ICE referred to Barnett Taylor’s explanations as “vague, shifting, and inconsistent.” OCAHO found, regardless of what version is correct on how the I-9s were discarded or misplaced; none of them establish a defense of impossibility. (Impossibility could be established if the Forms I-9 had been completed but were subsequently lost or destroyed in the course of a burglary or a fire.)

In both of these cases, no final penalties were assessed. Rather, the parties were provided 30 days to make additional filings related to penalties. The case reveals that while OCAHO may be willing to reduce fines, employers must still present compelling evidence to support their claims.

Stay tuned for future coverage on OCAHO trends of 2012.

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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).