The Quiet Before the Storm? A Review of 2017 OCAHO I-9 Penalty Decisions
[Editor’s Note: Today’s blog is courtesy of Bruce E. Buchanan, an attorney at the Nashville and Atlanta offices of Sebelist Buchanan Law PLLC. As he has done in years past, Bruce discusses some important I-9 penalty decisions published during the past year.]
The Office of Chief Administrative Hearing Officer (OCAHO) was incredibly quiet in calendar year 2017 issuing only 5 substantive decisions against employers in I-9 penalty cases. This was a sudden change from 2016 when there were 16 substantive decisions against employers in I-9 penalty cases. Why the drastic reduction? Did employers stop committing I-9 violations? Did employers stop appealing decisions by Immigration and Customs Enforcement (ICE)? As recent news clearly illustrates, the answer to both questions is a resounding no.
The real reason for the reduction in cases is actually much simpler and less provocative: turnover of Administrative Law Judges at OCAHO. In 2016, ALJ Ellen K. Thomas retired after many years of service and ALJ Stacy Paddack transferred to another agency after less than two years at OCAHO. In late 2016, James McHenry was named an OCAHO ALJ. However, his tenure was short-lived as less than six months later, he was named Acting Director of EOIR and in January 2018, he became the permanent Director of EOIR. So, after ALJ McHenry issued four OCAHO I-9-related decisions in the first five months of 2017, the rest of the year was extremely quiet – with only one remaining decision hitting the books. In the last nine months, ALJs have been “detailed” from other agencies.
That being said, it’s still worthwhile to review the substantive cases that were issued in 2017, in the hopes that employers can benefit in the future (when cases are once again likely to increase). Below is a chart showing the amount of the penalty sought by ICE and the amount assessed by the OCAHO in the 5 cases in 2017:
Employer’s Name Penalty Sought by ICE OCAHO’s Decision
Waterstone Grill $46,657 $33,725
Metropolitan Enterprises $195,649 $151,200
Alpine Staffing $367,000 $276,000
American Concrete $5,390 $5,500
Integrity Concrete $24,684 $11,325
One of the most interesting aspects of reviewing a year’s worth of cases is to determine the percent that OCAHO reduced ICE’s proposed penalties. However, with so few decisions in 2017, the results may be skewed. In 2017, OCAHO reduced ICE’s proposed penalties by 25.3%. In 2016 and 2015, the penalties were reduced by 31 % and 32.8%, respectively. OCAHO continues to reduce ICE’s proposed penalties but at a lower percentage. About five years ago, the reductions averaged over 40%.
Interesting OCAHO Issues
One of the most innovative arguments heard by OCAHO involved U.S. v. Agri-Systems (ASI). In this case, ICE sought $103,645 for 110 alleged violations, including failure to sign Section 2 of the I-9 form. ASI defended themselves by stating its “signature” was completed through use of “word processing.” The ALJ referred to such argument as merely the typed company name and address. In declining to find such a signature, the ALJ stated ASI’s argument was “spirited but contrary to both law and evidence.” The penalties were not decided in this decision. [Editor’s note: for a complete review of this case, see our blog posting here.]
In three decisions, OCAHO criticized ICE’s evidence and arguments. In U.S. v. Metropolitan Enterprises, OCAHO dismissed 20 of the 209 allegations. Why? Because ICE failed to provide hiring and termination dates for the two-year payroll period, which made it impossible to determine whether the company was required to retain the I-9 forms of terminated employees. In finding against ICE, the ALJ for OCAHO stated: “mind reading is not an accepted tool of judicial inquiry.”
In U.S. v. Waterstone Grill, ICE found the employer should receive a 25% mitigation for good faith. In so doing, it offered no explanation on why it increased the mitigation to 25% from the statutorily-required 5%. OCAHO found this mitigation was unwarranted and declined to reduce the penalty accordingly. In U.S. v. Integrity Concrete/American Concrete, ICE refused to find two employers with less than 100 employees to be small employers and entitled to 5% mitigation. ICE argued one should focus on gross sales and gross assets, not whether there were less than 100 employees. OCAHO found this argument was contrary to established caselaw.
Although there were few OCAHO decisions in 2017, I would expect more in 2018 when OCAHO receives a new ALJ. Plus, ICE is issuing many more Notices of Inspection, which inevitably will lead to more litigation. Thus, employers need to be conscious of any I-9 liabilities and proactively correct their errors, provide more training for HR on I-9 compliance, and consider going to a comprehensive electronic I-9 system.
If you want more information on immigration compliance, I recommend you read The I-9 and E-Verify Handbook, a book I co-authored with Greg Siskind, which is available at https://www.amazon.com/dp/0997083379.