Auditing Your I-9s - A Good Idea?

We all remember it. Well, at least those of us who work or have worked for employers that follow the law. Amidst the mountains of paperwork that we complete upon the start of a new job lurks the I-9. New employees complete the form, provide documents from List A or B and List C and are off into the working world. Or, if you are the lucky individual supervising employee orientation, you oversee this process ad nauseam. No matter what our role is in the I-9 process, few of us stop to consider why the I-9 is such an important document for the employer.

So why is the I-9 so important and why has I-9 compliance emerged as a recent hot-button issue? In the ever-increasing debate over immigration reform and undocumented workers, the I-9 is becoming all the more significant as a means of establishing lawful employment status. As a result, many employers are conducting self-audits of their I-9 compliance or hiring law firms or consulting agencies to perform audits for them. Is an I-9 audit a good idea for your workplace? Here are a few points to consider if you are on the fence about apportioning funds from an already stretched budget to an I-9 review:

1. Employment Eligibility Verification Is The Law, Federally Speaking

Pursuant to the Immigration Reform and Control Act, employers must use Employment Eligibility Verification Form I-9 to verify the lawful employment status of all new hires. The I-9 consists of three sections: (1) Employee Information and Verification; (2) Employer Review and Verification; and (3) Updating and Reverification. Note that the obligation to verify lawful employment status is triggered upon hire, which is defined as the actual commencement of employment for wages or other remuneration. Employers may not use the I-9 process to pre-screen employees for hire or as a basis to discriminate against applicants on the basis of national origin. Employers must retain completed I-9 forms for three years after the date of hire or one year after the date of termination, whichever is later.

Proper completion of the I-9 is key and often presents an unrecognized stumbling block for employers. Sections one and two seem fairly straightforward; employees provide information evidencing their lawful employment status and employers verify this information by review of the documentation specified by the I-9. Employers may, however, have difficulty determining whether the documentation employees provide is fraudulent. Some employers may not even know what some of the proper documentation should look like, especially where foreign nationals working pursuant to lawful employment status are concerned. For example, many employers are not familiar enough with the Employment Authorization Document, or EAD card, to recognize a forgery. There are also restrictions on the types of documents that foreign workers can use to establish lawful employment status. These nuances create obstacles to the proper completion of I-9s.

Section three of the I-9 also creates problems for employers who forget to reverify the employment status of employees whose employment authorization (as noted in Section 1) expires. Employers who employ foreign nationals with time limitations on their ability to work lawfully in the United States must take care to reverify lawful employment status pursuant to Section three of the I-9.

Consequences for improper I-9 completion and/or retention can be significant. Penalties include fines of $110 to $1,100 per employee whose I-9 is not properly completed or retained (for violations occurring on or after September 29, 1999). Penalties for knowingly hiring, recruiting, or continuing to employ an unauthorized alien include both civil fines and criminal penalties. Fines for first offenses can range from $250 to $2,000 per unauthorized alien where the offense occurred before September 29, 1999, and from $275 to $2,200 for each unauthorized alien where the offense occurred on or after September 29, 1999. Fines increase substantially for second and third offenses. Use of fraudulent identification documents or issuing false attestations for the purpose of satisfying the employment eligibility verification requirements may result in up to five years of imprisonment.

Until recently, many employers have viewed I-9 completion with complacence because I-9 compliance has not been in the federal enforcement spotlight. Recent raids on large employers by Immigration and Customs Enforcement ('ICE') should, however, put I-9 enforcement back on employers' radar, especially in light of the stiff criminal penalties with which ICE seeks to punish violators. For example, in a highly publicized raid of IFCO Systems, ICE raided IFCO plants and offices in multiple states. Problems at IFCO ranged from workers using invalid Social Security numbers to fraudulent or completely absent documentation of employment eligibility. ICE's IFCO raids marked a significant change in enforcement tactics used by ICE. ICE noted that it was steering away from focusing on civil liability, instead pushing for criminal sanctions as a more effective means of combating immigration violations in the workplace. Accordingly, it arrested both executives and employees in its IFCO raids. ICE's new focus on criminal sanctions should be a wake-up call for employers who previously viewed fines and other civil penalties as a mere business cost.

2. Increasingly, Employment Eligibility Verification Is The Law Locally (For Now)1

A slew of states and localities have passed laws targeting illegal immigrants in the workforce. While some legal pundits predict that these laws will be found pre-empted by federal law, for the time being they create a heightened emphasis on employment verification.

Colorado, for example, has passed a state law effective on January 1, 2007, that, among other immigration-related measures, takes employment verification beyond the I-9. In addition to completing the I-9, employers with an employee inside Colorado must affirm: 1) that they have examined documents establishing work authorization for all new hires beginning January 1, 2007; 2) that they have not altered or falsified employees' identification documents; and 3) that they have not knowingly hired unauthorized aliens. Penalties for 'reckless disregard' of the law include a $5,000 fine for the first offense and $25,000 fine for any subsequent offense. The Colorado Department of Labor and Employment has the authority to audit employers for compliance.

Increasingly, counties and cities are weighing in with their own measures affecting employment verification. In October 2006, Suffolk County, NY, passed a law effective on January 1, 2007, that requires organizations doing business with the county to submit affidavits verifying that every worker at the organization has filled out an I-9 form. Penalties for violation of the law include fines ranging from $250 to $5,000 and jail time for employers guilty of falsifying the affidavit.

On the city scale, Hazleton, PA, sparked a trend among localities of legislation directed at reducing the employment of unauthorized workers. Hazelton passed the Illegal Immigration Relief Act Ordinance ('IIRAO'), which has already met resistance in a federal court (a temporary restraining order against the City Council prohibited enforcement through November 14, 2006). The IIRAO covers a broad range of activities affecting the citizens of Hazelton. Landlords or others 'harboring' illegal aliens face suspension of their rental licenses and fines in addition to license suspension for second and subsequent violations. Businesses applying for permits to engage in any type of work in Hazelton must sign an affidavit affirming that they do not knowingly utilize the services of or hire any person who is an unlawful worker. The Hazelton Code Enforcement Office, charged with enforcing the IIRAO, may suspend the business permits of non-compliant businesses.

Hazelton's measures inspired similar laws to be passed in other municipalities. Many localities across the country have similar laws pending. Though many of these laws are being challenged in the courts and may eventually be declared invalid, those currently in force place a very real impetus on employers to improve the incidence and accuracy of employment verification.

3. I-9 Compliance Springs Up Where And When You Least Expect It

Do I need to have an I-9 for an employee who has worked here for the last 30 years? Would you rather answer this question at your own leisure, or in the face of a governmental audit that already has you in a tailspin to gather information? If you have no idea what shape your I-9s are in, an I-9 self-audit may be the key to having the option of the former rather than the latter.

If, for example, you are a federal government contractor or subcontractor to whom affirmative action obligations apply, an I-9 review may be a part of an audit by the Office of Federal Contract Compliance Programs ('OFCCP'). At the desk audit stage, the OFCCP will send contractors a letter requesting the submission of certain affirmative action materials. The letter also informs contractors that if an on-site audit is warranted, the OFCCP will inspect I-9s and will require payroll records or other documentation sufficient to identify all employees for whom I-9s are needed.

Even if you are not a federal government contractor, you are not off the hook. Aside from the upswing in ICE raids discussed earlier, the Wage and Hour Division of the Federal Department of Labor also has the authority to check for I-9 compliance. As with affirmative action audits, audits for compliance with wage and hour laws such as the Fair Labor Standards Act may also involve I-9 review. The potential for a review of I-9 compliance to arise in various governmental audit scenarios makes self-initiated I-9 reviews a valuable tool for employers.

Employers are often lulled into a false sense of security with regard to I-9 compliance, underestimating the nuances of proper I-9 completion. Other employers lag even farther behind and fail to complete and maintain I-9 forms altogether. No matter what state of I-9 compliance your business is in, an audit of I-9 forms is a crucial step toward remedying improper documentation and developing clear employment eligibility verification practices and policies. Further, because I-9 compliance can save time and resources needed during government audits, prevent the imposition of harsh penalties for non-compliance, and allow your business to operate smoothly in the face of ever-increasing immigration measures, funding allocated to I-9 self-audits is money well spent.

1 Please note that as the state and local laws referenced face new challenges almost daily, the most recent developments may not be addressed in this article.

Published December 1, 2006.