ICE I-9 Inspection Activity and Company Action

Tuesday, September 7th, 2010

The recent Notice of Inspections and Subpoenas being issued by Immigration and Customs Enforcement (“ICE”) tells us two things: ICE I-9 inspections are picking-up speed and employers can take responsibility for complying with immigration law with a sound and comprehensive I-9 policy.

Take for example, an August 3, 2010 Notice of Inspection and Subpoena issued by the ICE Chicago Field Office on a company seeking a litany of various immigration and employment documents spanning over the last three years.  The August 3rd subpoena requests that the employer produce the information and documentation by the 9th of the same month.  The various information and documentation spanning a 3 year period includes a list of all current employees with dates of hire, a list of all terminated employees with hire and termination dates, copies of quarterly wage and hour reports and payroll data for all employees current and terminated, quarterly tax statements, assigned account numbers if the company is a current or previous participant in E-Verify, business information to include Employer Identification Number (EIN) and owner’s Social Security Number (SSN) and other information, copies of Articles of Incorporation, copies of business licenses and other company information, the company’s Standard Operating Procedure (SOP) or Policy delineating hiring practices, an organizational chart of company management, a list of all Contractors, Sub-Contractors, and Independent Contractors utilized as well as a sample of the company’s standard contract with independent Contractors if utilized, a list of all recruiters or referrers for a fee utilized, and a list of all temporary labor agencies utilized.

Although here, as with routine inspections, ICE must provide the company with at least three days of notice to prepare.  However, if an audit is linked to a criminal investigation, ICE agents will show up unannounced at a company with the necessary search warrants.  As discussed below, with the right I-9 policy already in place and immigration counsel providing guidance, all of this information and documentation can be produced without incident. 

There are no set criteria for how a company is selected for an audit of its I-9 employment eligibility forms, said Dean Boyd, an official with ICE.  Usually, ICE receives a tip about potential illegal aliens working at a company, and the agency follows up, he said. He added that tips leading to I-9 form audits cover a broad spectrum of industries. 

Immigration counsel is important when companies receive such a subpoena.  Counsel can help slow down or control the audit process where there is good reason to do so.  In fact, there are regulations that allow employers to meet ICE officials at a different location than their business.  Moreover, an ICE subpoena is an agency document that must be enforced by a judicial order. A client who perceives that an ICE request for documents is overbroad can go into federal court.  Indeed, employers should be careful that government enthusiasm does not lead to the voluntary turnover of documents the government should not be requesting.  During an inspection, auditors may want to question the employer. Initial questions will likely focus on a company’s hiring practices and whether the documents are being completed in a timely fashion and in accordance with regulations.  ICE will want to compare a company’s documents with the documents in the agency’s database to determine if illegal aliens are being employed.  However, ICE may be required to seek either a criminal or civil search warrant to view related documents.  There is a risk that the employer could go overboard and terminate people in a manner that creates liability under state and federal employment laws.  Immigration counsel will ensure that the process is controlled and that the company make a complete copy and gets an itemized receipt for everything they turn over to the government in order to establish compliance if the government makes a finding of violation and you want to challenge it. 

If a company is found to be in non-compliance with I-9 form requirements, it can face a wide range of penalties.  Koch Foods of Cincinnati was fined $536,000, a Missouri roofing company was fined $36,000 and a forfeiture of $185,36, Pilgrim’s Pride Corp. agreed to pay $4.5 million to avoid prosecution for hiring unauthorized aliens, a poultry-processing company was fined $450,000, an Annapolis business owner was sentenced to 6 months in half-way house with 3 years probation and a forfeiture of $1 million in property.  Administrative fines can be imposed on an employer for paperwork violations varying depending upon the circumstances of each case.  There could be a fine regardless of whether the company is employing illegal aliens but it may be larger if the company was in fact employing illegal aliens.  In addition, if the inspectors develop evidence that a company is knowingly hiring illegal aliens, criminal charges can be pursued.  Criminal penalties would depend on the charges brought, but they could range from up to six months in jail for knowingly hiring illegal aliens to a maximum of 10 years in prison for harboring illegal aliens. ICE has also adopted a new strategy of pursuing charges against employers who launder money related to the hiring of illegal aliens. The penalty for money laundering in those cases can be up to 20 years in prison.  ICE is also aggressively pursing assets acquired from illegal alien employment and not just company assets. Personal assets such as a house or cars that were purchased with money earned using illegal alien labor can be seized as profits of an illegal activity.

By working with experienced immigration counsel and by implementing best practices, a company can increase the chances it will not end up with a large number of illegal aliens on its payroll or suffer from paperwork fines.  For example, there is a statute of limitations on I-9 enforcement, which says that after five years, the government cannot impose a paperwork fine. But five years from what date is the question. If the employer never did an I-9, it’s five years from the date of hire. If it’s incomplete, the five years begins to run only from the date of correction to make it complete. That’s why it’s highly important that employers take a look now to make whatever corrections can be made. At least the clock on limitations can begin to run. The other thing is, employers have the right to throw away I-9s after a period of time under a so-called retention rule.

Employers need to take responsibility for complying with immigration law. Companies can assume that responsibility with a sound and comprehensive I-9 policy.  Companies should work with immigration counsel to devise, implement and execute such a policy.  The components of a sound I-9 policy include: completion of I-9’s, appropriate action if an employee does not produce documents by the deadline, re-verification of temporary work authorization and a tickler system to trigger re-verification, correction of errors found after verification, storage and required retention of I-9 forms and document copies, in-house audits, responding to government I-9 inspections, and responding to social security no-match letters.  Companies must be vigilant by working with immigration counsel to conduct self-audits of their I-9 forms.  If a company receives Social Security Administration letters questioning the validity of an employee’s Social Security number, it should work with immigration counsel and have a protocol in place to get to the bottom of that issue.  The keys to ensuring sucess with an I-9 compliance policy include formalizing it in writing, consistent interpretation and application, training of employer personnel who perform I-9 verifications, and periodic professional in-house audits of I-9’s.

Immigration counsel can further help identify common errors revealed in I-9 audits and can assist with I-9 challenges including employment incident to status, H-1B portability, re-verification, the 240 day rule, the receipt rule, and correcting I-9s after initial verification.

Immigration counsel can help employers implement training programs on proper I-9 procedure and take steps to avoid immigration-related unfair employment practices. Also, employers should strongly consider adopting an electronic I-9 system which programmatically prevents over- documentation (e.g., if employee presents DL and SS card, employer cannot then also choose a green card on the electronic I-9).

Although under this administration ICE I-9 activity is on the rise, employers can take responsibility for complying with immigration law with a sound and comprehensive I-9 policy.

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