Many employers have faced this moment: An employee who presented authentic-looking identification for Form I-9 later admits it was not his or her ID and offers new documentation. What should an employer do? Should the employee be discharged? Remain employed? Be reported to the authorities? Though there is no one right answer to these questions, employers do have options to consider.
Each employer should start by submitting the IRS Forms W-2c and W-3c to correct any wages reported in error to someone else's Social Security number. The employer may also need to file amended employment tax returns, such as the 941-X; the accounting department must be alerted to ensure proper forms are filed. The employee should be advised that tax consequences may arise if he or she did not pay appropriate taxes, and the employee should seek tax advice on filing amended returns.
In terms of reporting this employee to the authorities, legal guidance should be sought. The employee may have actually been legally allowed to work in the U.S. originally, or is now legally allowed, so deportation may not be an issue. Tax evasion or identity theft may be of concern. An employer's legal counsel can review the facts and make recommendations for reporting.
For an employee authorized to work in the U.S., many employers will choose to terminate the employee for dishonesty with company documents, whereas others may not take such a hard line. Even though the employee had been dishonest, he or she is now coming clean, and if the employee otherwise has a good work record, the employer may wish to retain this employee. If so, most will usually issue a final warning for dishonesty and the use of false identification; if the new identification also turns out to be false, the employee would be immediately terminated. Any new documentation should be reviewed carefully, and employers may wish to check with the Social Security Administration to determine if the name, date of birth and number are a match. If so, personnel records should be corrected, payroll records changed, a new Form I-9 completed, and any benefits and beneficiary information updated. Some employers may even consider doing a complete termination and rehire after consulting with their attorney.
If the employer discovers the false documentation after the employee has left employment, there is not much for an employer to do but file Forms W-2c and W-3c to at least correct the wages reported in error to that Social Security number.