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 The ABC’s Of Employer Compliance: Penalties and Risks

What penalties does an employer face for Form I-9 violations?  

Employers can face stiff penalties for IRCA violations that include substantial fines and debarment from government contracts. Penalties can be imposed for hiring unauthorized employees as well as simply for committing paperwork violations even if all employees are authorized to work. Fines for hiring unauthorized employees will amount to anywhere from $250 to $16,000 per employee depending on the prior history of violation. Employers can also be barred from competing for government contracts for a year if they knowingly hire or continue to employ unauthorized aliens. Paperwork violations can also result in significant fines. Each mistake or missing item on a form can result in a $110 penalty up to $1,100 for each form. A missing form would automatically be assessed at $1,000. An employer, for example, that had 100 employees and did not complete I-9 Forms might face a $100,000 fine. IRCA investigators have considerable discretion in assessing fines and will look at factors like the size of the company, the seriousness of the violations, whether the employer was trying to comply in good faith and the pattern of past violations.

Employers should also be cautioned that knowingly accepting fraudulent documents from employees is a different kind of violation that can be criminally prosecuted under other immigration laws.

Aside from federal violations, several states have passed or are considering passing laws that would penalize employers violating IRCA including barring such employers from state contracts and revoking their business licenses.

Penalties are as follows for IRCA’s unlawful employment violations: 

Civil Penalties (effective March 27, 2008) 

Hiring or Continuing to Employ Unauthorized Aliens

  • first offense: $375 to $3,200 for each unauthorized employee

  • second offense: $3,200 to $6,500 for each unauthorized employee

  • subsequent offenses: $4,300 to $16,000 for each unauthorized employee

Failing to comply with the Form I-9 requirements: $110 to $1,100 per individual employee for failing to properly complete, retain and/or make available for inspection Forms I-9. DHS will consider the following factors in setting the fine: 

  • business size

  • employer's good faith

  • seriousness of the violation

  • whether the individual was, in fact, unauthorized to work

  • history of violations by the employer

Injunctions

If the Attorney General has reasonable cause to believe that an employer is engaged in a pattern of unlawful employment, recruitment, or referral activities, the Attorney General may bring a civil action in the appropriate U.S. District Court requesting relief such as a temporary or permanent injunction, restraining order or other order against an IRCA violator. 

Indemnification

If an employer unlawfully requires an employee to put up a bond or indemnify against an IRCA violation, employers are liable for a civil penalty of $1,000 or each violation and to make restitution to the person who was required to pay the indemnity or to the U.S. Treasury. 

Criminal Penalties 

Employers can also be criminally sanctioned for IRCA violations. Employers who engage in a practice or pattern of hiring or continuing to employ unauthorized employees face fines up to $3,000 per employee and imprisonment for up to six months. 

Injunctions

DHS may seek a temporary or permanent injunction or other order against a person or entity believed to be engaged in a pattern or practice of employment, recruitment, or referral in violation of IRCA’s employer sanctions rules.  

Indemnity Bonds

Employers who require employees to post a bond or indemnify the employer against IRCA violations can be fined up to $1,000 per violation and subjected to an order to return the money to the employee. 

Document Fraud

Employers who assist in the production and use of false documents for employees to use to document employment eligibility are, not surprisingly, subject to penalties. Fines range from $275 to $6,500 per document depending on whether it is an employer’s first offense or not. Criminal penalties may be imposed on persons who fail to disclose that they have prepared or assisted in the preparation of false documents. Fines and imprisonment up to five years may be imposed for a first offense and subsequent offenses may result in 15 years of imprisonment.

 

What are the penalties for unlawful discrimination? 

OSC can seek several remedies when an employer has been found to have engaged in prohibited discriminatory practices under IRCA. It has the power to seek an order requiring an employer to  

·  to hire individuals adversely affected with or without back pay (if back pay is ordered, there is a limit of two years);

·   to post notices to employees about their rights and the employers’ obligations;

·  to educate all personnel involved in IRCA compliance about IRCA’s anti-discrimination rules;

·  to remove (in applicable cases) a false performance review or false warning from a personnel file;

·  to lift (in applicable cases) restrictions on an employees assignments, work shifts, or movements. 

Significant financial penalties may also be ordered. As of March 27, 2008, they are as follows: 

  • First Offense: Between $375 and $3,200 for each individual subjected to discrimination;
  • Second Offense: Between $3,200 and $6,500 for each individual subjected to discrimination;
  • Subsequent Offenses: Between $5,300 and $16,000 for each individual subjected to discrimination.

Document abuse comes with a separate penalty of $110 to $1,100 for each individual subjected to discrimination. The size of the penalty will depend on 

  • the size of the business, the good faith of the employer,

  • the seriousness of the violations,

  • whether the employee covered in the particular Form I-9 was an unauthorized immigration, and

  •  the history of previous violations of the employer.

Employers found to have violated Title VII of the Civil Rights Act of 1964 may be ordered to 

  • hire, reinstate, or promote with back pay and retroactive seniority the individual subjected to discrimination;

  • post notices for employees regarding their rights and the employer’s obligations; and/or

  • remove false information from an employee’s personnel file.

Financial penalties may also be imposed under Title VII for financial losses and mental anguish as well as punitive damages for employers who act with malice or reckless indifference.

Finally, under either IRCA or the Civil Rights Act, the prevailing party may be ordered to pay attorneys’ fees. Under IRCA, reasonable attorneys’ fees may be awarded if the losing party’s argument is without reasonable foundation in law and fact. IRCA states that the U.S. government cannot be held liable for attorneys’ fees so this effectively means only the employer would pay this cost. Under the Title VII, a judge may award reasonable attorney’s fees (including expert fees) to either prevailing party and the U.S. government may be held liable for costs the same as the employer.  

 

Can employers who tried in good faith to comply avoid penalties?

Yes. If an employer has actually complied with the Form I-9 requirements in good faith and then been found to have hired an unauthorized employee, the employer would have a good faith defense. The government would need to show the employer actually knew the employee was unlawfully present. For paperwork violations that are technical or procedural, employers who have made a good faith attempt to comply may be excused. This good faith provision won’t apply if DHS has notified the employer of problems and the employer has not corrected the problems within ten days. This good faith provision also does not apply to employers who have been engaged in a pattern or practice of violations.  

Which cases must be investigated by Immigration and Customs Enforcement? 

ICE may investigate cases on its own initiative and need not have received a complaint. When ICE does receive a complaint, it has the discretion to decide whether the complaint has a reasonable probability of validity and whether to investigate. [8 CFR 274a.9(b)] 

What is the process for imposing penalties? 

If ICE investigates and determines that a violation of the employer sanctions rules has occurred, it may issue a Notice of Intent to Fine or, in the alternative, a Warning Notice. A Warning Notice must contain a statement of the basis for the violations and which sections of the law have been violated.

If a Notice of Intent to Fine is issued, the notice must contain the basis for the charge, the sections of the law violated and the penalty being imposed. It must also advise the employer of the right to counsel, that any statement given by the employer may be used against the employer and that the employer is entitled to a hearing before an ALJ.

If an employer wants to fight the fine, it must file for a hearing in front of an ALJ within 30 days from being served with the notice. If a written request for a hearing is not filed, ICE will issue a final order 45 days from the issuance of the Notice of Intent to Fine.  

Are entities at a company liable in addition to the one division targeted for penalties? 

When an order is issued against a specific entity in a family of distinct corporations, separate entities in the corporate family that do their own hiring are not considered subject to the order.

 

Does Immigration and Customs Enforcement have to provide advance notice of a Form I-9 audit? 

DHS, OSC, and DOL are each required to provide three day’s notice before they can inspect Forms I-9. The forms must be made available by the employer at the location requested by the agency inspecting the forms.

 

In what format must I-9s be provided to Immigration and Customs Enforcement auditors? 

The original forms must be provided for inspection except that recruiters or referrers for a fee who designate an employer to handle Form I-9 completion may present a copy of the Forms I-9.

If an employer retains Forms I-9 in an electronic format, the employer must retrieve and reproduce the specific forms requested by the inspecting officer as well as the associated audit trails showing who accessed the computer system as well as the actions performed on the system in a specified period of time. The inspecting officer must also be provided with the necessary hardware and software as well as access to personnel and documentation in order to locate, retrieve, read, and reproduce the requested Form I-9 documentation and associated audit trails, reports, and other related data.

Finally, an inspecting officer is permitted to request an electronic summary of all of the immigration fields on an electronically stored Form I-9.

 

What if records are kept at a different location than where the Immigration and Customs Enforcement agents will be visiting? 

If forms are stored at a location other than the work site, the employer must inform the inspecting officer where they are kept and cooperate with the inspector in making the forms available either at the location where they are kept or at the office of the government agency conducting the inspection.

 

Can an employer be penalized if they properly completed an I-9, but the employee turns out to be unauthorized? 

No. Employers who follow IRCA’s rules will have a good faith defense against any penalties that might be imposed for knowingly hiring an unauthorized employee. This assumes, of course, that the employer did not otherwise have knowledge, actual or constructive, that the employee is not authorized to work.

 

Aside from penalties under the Immigration and Reform and Control Act, are there other risks associated with not properly completing I-9s? 

Yes. There are a number of other reasons why an employer needs to be diligent in complying with IRCA’s Form I-9 requirements. They include 

  • qualifying to do business with large employers that now require contractors to be in compliance

  • qualifying for government contracts with local, state and federal agencies that require compliance

  • avoiding problems in a merger or acquisition where an employer’s I-9 records are requested as part of a due diligence review

  •  avoiding liability under new state laws which penalize employers for Form I-9 violations (including revoking business licenses and barring access to state contracts)

  • avoiding lawsuits filed by employees who have faced immigration problems as a result of an employer’s errors (particularly when such errors might have been identified if an employer re-verifed an employer’s Form I-9 and such re-verification failed to take place)

*****

 

Disclaimer: This newsletter is provided as a public service and not intended to establish an attorney client relationship. Any reliance on information contained herein is taken at your own risk.

Siskind Susser
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Memphis, TN 38119
T. 800-343-4890 or 901-682-6455
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Email: info@visalaw.com

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