It’s been 27 years since Congress passed the 1986 Immigration Reform and Control Act (IRCA) requiring employers to document the work permission status of ALL new hires, including US citizens, on Form I-9. After all those years, employers still contact our office wanting to hire, or continue employing undocumented workers, or they simply want to “help” an employee who they don’t realize lacks permission to work. Many employers sound clueless about IRCA requirements, even when there is so much information out there. In addition, mergers and acquisitions are picking up again in a number of industries. Determining actual or potential I-9 liability and other immigration related workplace compliance problems should be part of every due diligence effort.
Of course, there are many employers who know about their IRCA obligations but ignore them, betting they will not be the subject of enforcement action and penalties, and contributing to employment as the magnet for illegal immigration. By contrast, many employers don’t know if their employees are work authorized or not if they are using fraudulent documents or signing I-9 forms falsely. It’s not just those who entered the country illegally without inspection that employers want to hire or sponsor for visas and green cards. A substantial portion of the undocumented population are those immigrants who came to the US lawfully and overstayed visas, committed misrepresentation in getting their visas, or violated status by working without authorization when the terms and conditions of those visas prohibit employment (such as tourists, foreign students without authorized practical training, and H-4 spouses, to name a few examples). Hiring workers without authorization puts employers at risk as well as the unauthorized workers. Employers can be audited and fined at any time; the worker can be deported or at the least make the ability to get legal documents more complicated. Nonetheless, the fact that a worker does not presently have work authorization, doesn’t mean that they are ineligible to become work authorized later. Separate legal advice is recommended to determine a prospective employee’s status and strategy. Because of potential conflicts of interest between the employer’s liability and the employee’s right to work (or not), each may need separate legal advice depending upon state bar rules.
Without doubt, the direction of Congress has been and will continue to be increased enforcement penalties against employers. According to ICE, in 2012 the agency made:
-520 criminal arrests tied to worksite enforcement investigations, of which 240 were owners, managers, supervisors or human resources employees. They face charges such as harboring or knowingly hiring illegal aliens. The remaining workers who were criminally arrested face charges such as aggravated identity theft and Social Security fraud.
-Homeland Security Investigations served 3,004 Notices of Inspection and 495 Final Orders, totaling $12,475,575.00 in administrative fines.
-ICE debarred 376 business and individuals for administrative and criminal violations.
While these enforcement figures are fairly low, jobs in the US are still the magnet that attracts both legal and illegal immigration. As we have seen, when the economy is doing well, more immigrants come to the US. When employment slows, so does legal and illegal immigration.
Civil fines for employers who violate I-9 rules include $110-$1100 per paperwork violation or $375-$15,000 per knowing hire/continuing to hire violation per employee. Recent legislative proposals include increased fines for employers by factors of three to ten times what they are now. Employers can be penalized for technical “paperwork” violations (failing to complete I-9s, failing to properly complete I-9s, failing to keep I-9s, etc.) as well as for “knowingly hiring or continuing to hire unauthorized workers.” “Knowing” includes “constructive knowledge.” In addition, there are criminal penalties for a “pattern or practice” of knowingly hiring or continuing to hire undocumented workers. Penalties can include asset forfeitures if used in a crime, as well as debarment from various federal programs, business forfeitures, liability for back wages, damages, and legal fees and costs. In other words, it can be very, very expensive to hire undocumented workers just to save on payroll expenses or to “help someone out as a favor.” There are also the burdens and costs of public relations nightmares, fiduciary duties owed to shareholders, and loss of management and executive time, if not service to the company, if the CEO, owner, officer or manager is found liable. In egregious cases, employers may be dealing with USCIS, ICE, the IRS, Social Security, US Department of Labor, state labor offices, prosecutors, and potentially the SEC (relating to public filings and disclosures about company liabilities).
ICE publishes its penalty schedule. ICE considers five factors in determining penalties: the size of the business, good faith effort to comply, seriousness of violation, whether the violation involved unauthorized workers, and history of previous violations. Every employer should review ICE’s description of the I-9 audit process including the “enhancement matrix” based on the above listed five factors.
Employers should plan how the company or organization will respond in case of a Notice of Inspection (NOI). Employers have only three days to respond. Calling the company lawyer, who may not practice immigration or employment law, or contacting an immigration lawyer for the first time upon receiving a NOI, with only three days to respond, can make it very difficult to review personnel records and I-9s and/or to formulate an effective response in a short time frame under stressful conditions. Rather, companies should review their employment and compliance practices before ICE comes knocking on the door. Conducting an internal audit with counsel and training appropriate personnel to handle I-9s should be done well in advance.