Under the Immigration Reform and Control Act of 1986, all employers are subject to penalties for knowingly hiring and continuing to employ aliens who are not authorized to work in this country. Pursuant to this mandate, all employers must verify that every person hired is either a U.S. citizen, permanent resident, or a foreign national with authorization to work in the United States. To meet the law’s employment verification requirements, the INS requires all employees to complete Form I-9, the Employment Eligibility Verification form. Within three business days of commencing employment (or on the first day of employment if a job will last less than three days), the employee must present identity and employment eligibility documents. The employee is given the choice to present various documents (such as a Social Security card or a driver’s license) from lists of "acceptable documents." The employer may not require additional or different documents than the ones presented by the employee. The employer is then responsible for examining the documents to determine they are genuine and relate to the specific employee.

Employers must keep I-9 Forms on file and available to INS inspection for three years, or one year after employment is terminated, whichever is longer, for each employee. Copies of identity and employment eligibility documents are not required to be kept on file. If an employee has temporary employment authorization, a reverification of employment eligibility must be conducted prior to expiration of the employment authorization.

Concern by many members of Congress that employment verification requirements would lead employers to discriminate against U.S. workers who are "foreign" looking or sounding led to the inclusion of a key anti-discrimination provision in the law. Reverse discrimination against U.S. citizens is also prohibited. Unfair immigration-related employment practices, such as refusing to hire a protected individual because of national origin or citizenship status or refusing to accept documents that are legally acceptable, are prohibited. Generally speaking, employers may not use the law’s obligations as an excuse for discharging or not hiring a protected individual. The law does, however, provide an exemption from the anti-discrimination prohibition in cases when an employer gives preference to a U.S. citizen over an equally qualified non-citizen. But such a preference might still violate Title VII of the 1964 Civil Rights Act, and employers should be extremely cautious in such hiring practices.

Though the fines as large as the one imposed on Disneyland are unusual, the law’s penalties can, nonetheless, be quite serious. The INS employs 1,300 agents charged with spending a majority of their time on the law’s enforcement. In addition to complain-driven investigations, the law randomly chooses to examine 2,500 each year for violations. Fines range from $250 to $10,000 per violation and up to six months imprisonment for knowingly hiring or employing aliens lacking work authorization.

Paperwork violations, like those committed by Disneyland, are penalized by fines of between $100 and $1,000 per violation, with each mistake on an I-9 Form counting as a separate violation. Companies violating the anti-discrimination provision are subject to fines of up to $10,000 per worker plus attorney’s fees.

The best way for an employer to avoid problems is to establish a meaningful I-9 audit system. Such a program should include at leas the following elements:
* education of all personnel officials on the purpose of the law and how to comply with its requirements;
establishment of a scheduling system to automatically remind an employer when reverification of employment authorization is necessary;
* conduct a thorough, periodic review of all employee I-9 Forms or, for large companies, a review of a random sampling of I-9s.

I-9 audits should review and evaluate the employer’s current compliance procedures with respect to obtaining, completing and retaining I-9 Forms. If all I-9s are being reviewed, the I-9s should be compared to a tracking form listing all present and past employees to ensure that the verification process was never forgotten. Deficiencies in specific forms should be corrected and procedures enacted to ensure future compliance.

Finally, employers should pay special attention to I-9 issues in the settings of mergers and acquisitions. In cases where an acquiring company assumes successor liability, there is no requirement to complete new I-9s for employees of either company if the records of the acquired employer are maintained.

Nevertheless, liability for the acquired company’s errors is assumed and the prudent acquiring firm should reverify each employee with a new I-9. Furthermore, the acquiring company should consider requesting indemnification from the acquired company for inherited violations and should conduct an I-9 review as part of its normal due diligence. In cases where the acquiring company does not assume any of the acquired company’s liabilities, the acquiring company must get new I-9s. It should also review I-9s during due diligence and negotiate indemnification language as a precautionary measure in case successor liability is imposed by a court.