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Avoiding 'I-9' Penalties

February 1, 2000
Related Topics: Immigration, Featured Article
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He was a great hire. Excellent credentials, glowing references, a stellar job interview. Although foreign-born, he graduated with honors from an outstanding U.S. university and his papers appeared to be in order. Your company never had a second thought about hiring him until today.

Today, immigration officers arrived at your office and asked to see documents proving that your new employee is authorized to work for you. You thought you followed all the specified procedures, but now you wish you knew more about the immigration responsibilities of employers.

Here's a short primer that may help you if you ever find yourself in this situation.

Requirements of the Law.
Included in the Immigration and Nationality Act is section 274A(a). This section provides that it is unlawful for an employer to hire an "alien" (i.e., a non-citizen) knowing that he or she is not authorized to work in the United States. To do so is a "knowing" or "substantive" violation of the law.

It also is unlawful to hire anyone without complying with certain "employment verification procedures." Section 274A(b) directs each employer to verify that every employee hired after November 6, 1986, is authorized to work in the United States. This obligation applies to citizens and alien job applicants alike.

Verification takes place when the employer and employee complete the "Employment Eligibility Form," commonly known as form "I-9." The I-9 serves two functions: First, it allows employers to assist the INS in enforcing the immigration laws. Second, the I-9 may be used as evidence against an employer who fails to properly complete and store the forms, whether or not any of its employees are illegal aliens.

Employers also are liable for any discrimination, whether intentional or inadvertent, that results from an overzealous attempt to comply with the sanctions provisions of the law.

There are a variety of penalties under the law. They begin with penalties for paperwork violations, such as faulty completion of the I-9 form. A simple paperwork violation can result in fines ranging from $100 to $1,000. Considering that a single I-9 may contain multiple violations, and that an employer with a single illegal worker may have committed hundreds of paperwork violations, such fines can be very damaging. For example, Disneyland paid a fine of $260,000 to the INS, even though the company claimed that it never had violated the laws knowingly.

There are additional penalties for "knowingly hiring" an alien or for continuing to employ an alien not authorized to work in the U.S. Fines start at $250 to $2,000 per alien for first violations, and can increase to $10,000 per alien for subsequent violations. Employers also are subject to criminal penalties for a "pattern or practice" of knowing violations which can include jail sentences.

Practical Advice for Employers
In a move to help educate employers, the INS published a "Handbook for Employers." The booklet is designed to educate employers as to their obligations under the employer sanctions section of the immigration law. It contains the latest version of the I-9 form and walks the employer through the employment verification process.

For all the INS' efforts, however, the handbook leaves many important questions unanswered, particularly with respect to effective, practical ways that employers can protect themselves from sanctions. The following are some recommendations.

  1. Make certain each I-9 is completed fully, and in a timely manner. Make sure that every new employee completes Section One of the I-9 on his or her first day of employment. By the third day of employment, each new hire must provide acceptable documentation showing identity and employment eligibility, and the employer must complete Section Two of the I-9. An employer who observes these two deadlines already has avoided the most common mistakes.

    The employer need not, and probably should not, examine these documents prior to the date of hire. Asking questions concerning the potential employee's age and ethnicity may leave the employer open to a charge of discrimination in the event that the candidate is rejected. The courts have ruled that an offer of employment does not constitute a "hire," and therefore does not require employment verification prior to the commencement of employment.


  2. Keep adequate records. The regulations clearly require employers to retain the original I-9s or a microfiche copy of them. As a safeguard, employers may go one step further and photocopy all documents presented by an employee in support of an I-9, as is permitted, but not required, by INS regulations.

    If a supporting document turns out to be fraudulent, the photocopy will establish that the employer examined the document and that it appeared to be genuine on its face. Since an employer is not required to be a document expert, a photocopy helps to establish that the employer examined the document and had no visual cues to doubt the document's authenticity. Photocopying the documentation may help to insulate an employer from sanctions liability.

    The employer must examine original or certified rather than photocopied documents in completing the I-9. The courts have ruled that employers must exercise "due care" in accepting documentation and cannot simply accept the representations of an employee regarding employment eligibility.

    Furthermore, the employer should always make a photocopy of the original I-9 and accompanying documents for its own personnel records, separate from the records it keeps in the event of an INS audit. The INS requires inspection of the original documents and is very likely to confiscate the originals in the course of an investigation, leaving the employer and employer's counsel with no records from which to build a defense.


  3. Establish a system for updating I-9 records. It is prudent to establish a "tickler" system for those I-9s, which require periodic re-verification. A tickler system will avoid any inadvertent failure to update the I-9, a clear violation of the law. Given the volume of I-9 records, a tickler system also will serve to remind the employer to discard outdated I-9s.

    Keep in mind that termination does not necessarily mean that the employee's I-9 may be discarded immediately. Remember the rule: Maintain the I-9 for three years after hire or one year after termination, whichever comes later.


  4. Segregate I-9 forms from personnel files. It's a useful precaution to create a separate file for I-9s, apart from standard personnel files. Employers are frequently caught unprepared for I-9 audits, and often must scramble to compile the necessary records. This simple precaution greatly reduces the employer's burden and anxiety should an audit ever be conducted.

    Moreover, maintaining a separate I-9 file will better serve an employee's privacy interests and lessen the employer's liability for failing to protect those interests. Most employers wouldn't care to have government investigators combing through their personnel files and thereby gain access to confidential information irrelevant to the I-9 audit. In the event of government inspection, counsel should be aware that employers are entitled to three days notice to produce their I-9 forms.


  5. Be judicious in locating the I-9 originals. Designate where you will store your I-9s and who will be responsible for their safekeeping. Retaining I-9s at a central location could pose logistical problems if the INS decides to conduct an inspection at a lone local office. For example, if the INS is auditing a business in Los Angeles but the forms are stored at the company headquarters in another state, the employer still must produce the I-9s for inspection within three days or face monetary penalties.

    This situation illustrates how photocopies of the I-9s and their accompanying documents may be of use. While this courtesy in no way alleviates the employer's duty to provide the original I-9s for inspection, it does at least show the employer's good faith compliance with the inspection.


  6. Conduct internal audits periodically. Conduct in-house audits on a regular basis to ensure that you are in compliance with the law. These in-house audits should be conducted by someone who has knowledge of what INS investigators look for when they conduct audits.

    The government recently increased the number of temporary (H-1B) visas that are available to foreign professionals, creating a larger talent pool from which employers may choose. The current labor crunch ensures that U.S. employers will seek qualified candidates wherever they can find them. Therefore, it's more important than ever to ensure that immigration hiring laws are followed as scrupulously as possible. Awareness of the requirements, and a few simple precautions, should eliminate the risk of penalties should your company incur unwanted INS scrutiny.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion.

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