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The U.S. Department of Homeland Security's Immigration and Customs Enforcement (ICE) imposed substantial fines on a small transportation employer for I-9 form violations. The majority of the fines were upheld by the 2nd U.S. Circuit Court of Appeals.
Section 274A(b) of the Immigration and Nationality Act requires employers to verify that their employees are legally authorized to work in the United States. Employers must prepare the Employment Eligibility Verification Form (known as the I-9 form) within three days of hire. An employer may be "considered to have complied" with the I-9 requirements if there is only a "technical or procedural" mistake on the form. However, failure to prepare an I-9 at all constitutes a substantive violation pursuant to Immigration and Naturalization Service guidance.
[SHRM members-only HR Q&A: I-9: Q&As related to Form I-9]
ICE audited the I-9 forms of Buffalo Transportation Inc. (BTI), a small travel company with 138 employees. ICE found six technical or procedural errors, and 138 substantive I-9 violations for either failing to prepare or present Forms I-9 for employees or failing to prepare I-9s on a timely basis (that is, within three days of hiring). As a result of these violations, ICE levied a fine of $935 for each violation. However, ICE reduced the fine as a result of the following mitigating factors: absence of bad faith, absence of illegal workers and no history of prior violations by BTI. Despite these mitigating factors, ICE still assessed what constitutes an upper-range penalty.
BTI appealed the fine to the Office of the Chief Administrative Hearing Officer for the Executive Office for Immigration Review (OCAHO). An administrative law judge (ALJ) for OCAHO found the penalties proposed by ICE to be disproportionate in light of the mitigating factors and because ICE failed to establish why the two different violations—the failure to prepare or present I-9s versus the failure to complete the forms on a timely basis—had the same penalty when they carry differing degrees of seriousness.
The ALJ reduced BTI's penalty cost to the midrange of penalty amounts permitted, based on the presence of differing degrees of violation and mitigating factors, which included: the small size of BTI's business, the lack of bad faith, the absence of unauthorized workers, the absence of a history of noncompliance and financial factors (i.e., inability to pay) raised by BTI. The ALJ imposed a $600 per violation fine for I-9 violations related to past employees and a $500 per violation fine for the I-9s of current employees.
BTI appealed the ALJ's decision to the 2nd Circuit. The court held that the ALJ made an allowable judgment in reducing the fines after assessing the various factors, including the degree of seriousness and number of violations. The $500 and $600 fines were upheld.
Buffalo Transp. Inc. v. United States, 2d Cir., No. 15-3959-ag (Oct. 18, 2016).
Professional Pointer: This case provides a crucial reminder to employers about the importance of correctly completing I-9 forms. An employer's diligence in ensuring that new hires complete the I-9 in a timely and correct manner can mean avoiding costly fines and defense costs later. In particular, it is critical to train HR professionals tasked with maintaining I-9 forms, and it may be wise to conduct periodic internal audits in order to ensure compliance.
Shelby S. Skeabeck is an attorney with Shawe Rosenthal LLP, the Worklaw® Network member firm in Baltimore.
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