Screening for employee immigration status; understanding the Form I-9

As the line supervisor at Ink Widgets,Inc. you’re winding up production on a rainy February afternoon when you get a call. A woman two states away, after requesting unemployment benefits,has found that someone else has been using her Social Security Number. She’s discovered you’re that person’s employer and she’s mad. You’re completely confused. As a small business manager you scramble to contact an attorney, and he asks to see the employee’s Form I-9.

The I-9 Form… what I-9?

We’ve talked to more than one experienced business owner who’s never heard of this piece of “paperwork.”Since 1986 businesses have been required to verify that all employees are authorized to work in the U.S. Simple concept. But adhering to these requirements calls for careful procedures. Noncompliance can lead to steep fines and even criminal penalties; make the wrong sort of inquiry into a new-hire’s immigration status, however, and you face discrimination liability. It’s trickier than it seems. Proof of original employment authorization must be physically inspected and the Form I-9 must be completed within three days of a new hire. Properly completed, the form offers safe harbor for having unknowingly employed unauthorized foreign workers. But improperly completed or – worse- missing I-9 forms, may lead to civil fines and even criminal sanctions. The forms need to be retained for three years after the date of hire, or one year after the date employment ends, whichever is later. Generally, forms should not be kept any longer than necessary because they may create lurking liability.

In recent years we have seen increased enforcement by Immigration and Customs Enforcement (ICE). The trend is towards “silent immigration raids” through paperwork investigations. Businesses in industries with higher levels of unauthorized labor (e.g., agriculture, manufacturing, restaurants, construction) face an increased risk of targeted investigation or random audit. I-9 investigation is often a gateway toward broader investigations, especially in this era of increased inter-agency information sharing.

Penalties for non-compliance can be steep. “Willful” violations run into the multiple $100,000s in fines, not to mention the costsof defense litigation. Even seemingly clerical errors, like a missing signature, could be considered substantive violations that can add up across the workforce to substantial penalties. Worse yet, employers found engaging in a “pattern of practice” may face steep fines (up to $3,000 for each unauthorized alien, even on the first offense) and even imprisonment.

Because the federal government tends to use a ‘white collar dragnet approach,’ an I-9 investigation can lead to scrutiny of a company’s internal records and practices regarding other criminal matters. The Justice Department actively enforces a variety of laws that cover alien smuggling, encouraging an illegal alien to enter the U.S., fraud or misuse of visas, false statements, money laundering, and structuring transactions to evade reporting requirements, among others.

So this means employers should document the heck out of their employees’ immigration status, right? Ask lots of questions to job applicants and set strict standards for which employment authorization documents you want to inspect. Absolutely not. An employer who asks too many questions, or the wrong types of questions, may run afoul of anti-discrimination laws policed by the DOJ’s Civil Rights Division as well as the EEOC. Asking about “U.S. citizenship” or for specific types of work authorization documents can lead to exposure to liability for civil rights violations.

Zeal without knowledge is dangerous in the arena of I-9 compliance. Even mom-and-pop shops should take a by-the book approach and ensure that proper policies and practices are in place. These should encompass recruitment of new employees, applicant screening/interviewing, the on-boarding process, and records retention. Compliance isn’t onerous once sound policies and practices are in place, but they need to be carefully structured.

Some components of a good compliance program include:

• Advertising and recruitment for new positions;
• All steps of applicant screening and interviewing;
• Completion of the Form 1-9 and review of supporting records;
• Purging forms at expiration of mandatory retention periods;
• Periodic spot checks of 1-9 records to evaluate compliance;
• Review of contracts with service providers to ensure a would-be contractor is not actually an employee requiring an I-9; and
• Periodic review of the 1-9 policy.

In the world of I-9s, preventative medicine pays off. When an inspection notice is issued the employer has only 72 hours before the ICE agent comes knocking. Then, the company must produce all I-9s for the entire workforce, subject to document retention rules. But the damage is usually done by then and often cannot be effectively remediated. At that late hour, it’s time to batten the hatches and ride out the storm. Much better to be prepared long before any heavy weather hits.

Proper housekeeping prevents a mad scramble in the event of an audit. Such events derail management and grind operations to a halt, especially smaller employers without dedicated HR resources. When we assisted a small company in a pickle similar to that of Ink Widgets, Inc. (above), two senior managers were tied up for a couple of weeks, but with some compliance guidance they got their house in order before any ICE inspection was ever threatened. An ounce of prevention is worth a pound of cure. A business can’t just muddle along and hope its approach to I-9 records is good enough- it needs to act quickly and wisely to get its ducks in a row.

Sound I-9 compliance is not costly to implement. And that cost is certainly minor compared to the possible fines, anti-discrimination liability, or criminal sanctions that can result from non-compliance.

Thanks to attorney Mike Allen for co-authoring this article, which originally appeared in the Pierce County Bar Association’s newsletter.

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