THE INCREASING RISKS OF FORM I-9 COMPLIANCE

Transcription

1 THE INCREASING RISKS OF FORM I-9 COMPLIANCE

2 RISK Your company could be at greater risk than you realize. The enforcement of compliance for employment eligibility and verification laws, also known as Form I-9 compliance, is expected to intensify this year. Businesses of every size, in every industry across the nation are in jeopardy of facing hefty fines and penalties, due to non-compliance of the federal Form I-9 mandates. Increase in overall audits. Increase in fines charged. Enforcement is Intensifying In 2013, Immigration and Customs Enforcement (ICE) started a new wave of Form I-9 compliance audits, targeting more than 1,000 companies across the nation. Fines resulting from ICE audits have increased by 1,200% over the last five years. The actual number of audits has gone up 1,100% since The total amount of fines charged for an I-9 audit since 2009 has grown from $1.5M to $31.2M (1,980%). The Department of Homeland Security, Office of Inspector General states that since 2009, ICE has criminally arrested over 700 managers and business owners. In light of the record-breaking fines levied in 2013, Form I-9 audits, fines and arrests for non-compliance are expected increase at an alarming rate. ICE Audits Are More Demanding ICE audits do not focus solely on the accuracy of an employer s Form I-9s. Their Inspection Overview states that employers must update and re-verify employment authorization statuses. This leaves room for disaster, as it can be a very arduous task for HR professionals to properly maintain records and keep them up to date. If a current employee s work authorization is about to expire, the employer must re-verify that work authorization prior to the expiration date by completing Section 3 of the Form I-9. In 2013, Infosys, an Indian-based leader of IT services, was fined $34 million for assorted violations, the largest single penalty imposed so far in an I-9-related prosecution. The Department of Justice noted that Infosys was being penalized for a widespread failure to update and re-verify the employment authorization status of a large percentage of its foreign national employees. The ICE regulations specifying which records an employer is required to keep are complex and often confusing. For example, Forms I-9s must be kept for one full year after employment is terminated, or for three years after the employee was hired, whichever is longer. This means that if you hire a temporary employee for just a few weeks, you are required to maintain their Form I-9 for the next three years. Ketchikan Drywall Services, a company with only four full-time workers, was fined over $173,000 as a result of this requirement. Because this small company had hired a number of short-term workers for individual projects, and they were not fully aware of I-9 regulations, they were responsible for 271 individual violations. When the company was audited, they were expected to have Form I-9 documents on file for every temporary worker they had employed for the past three years. Hiring for a few weeks means maintaining a Form I-9 for the next 3 years. -2-

3 Unfair Document Practices Lead to Discrimination Law Suits The manner in which an employer approaches I-9 verification can trigger additional lawsuits related to anti-discrimination statutes, even if Form I-9s are correctly filled out. In June 2013, Macy s Retail Holdings and other Macy s entities (Macy s) entered into a settlement Macy s was ordered to pay a civil penalty of $100,000 for committing unfair documentary practices. They violated the Immigration and Nationality Act, during the Form I-9 employment eligibility re-verification process agreement with the U.S. Department of Justice, Office of Special Counsel for Immigration-Related Unfair Employment Practices. As stated in the settlement agreement, the Office of Special Counsel concluded that Macy s committed unfair documentary practices in violation of the Immigration and Nationality Act during the Form I-9 employment eligibility re-verification process. In general, unfair documentary practices can include treating workers differently in the employment eligibility verification or re-verification process by demanding more or different I-9 documents, or by limiting an employee s choice of I-9 documents, based on an individual s immigration status or national origin. Among the penalties in the settlement agreement, Macy s was ordered to pay a civil penalty of $100,000 and create a fund of $100,000 to compensate individuals who suffered economic damages including suspension, termination or other periods of lost work. Macy s was also ordered to restore seniority to individuals with economic damages and provide training to its human resources personnel across the country on the anti-discrimination regulation. One Violation Triggers Multiple Agencies to Take Action Not only are the demands of audits more complex, but if your company s Form I-9s are found to be out of compliance, the resulting violations may be shared among multiple federal agencies. If Immigration and Customs Enforcement finds anything out of compliance when it inspects your records, it may notify any of the following agencies, according to the National Law Review: The Department of Labor, (DOL), the Justice Department s Office of Special Counsel (OSC), the Equal Employment Opportunity Commission (EEOC) and the Office of the General Counsel of the National Labor Relations Board. Any of these entities may initiate its own investigation. The Infosys case was investigated by special agents and attorneys from the Department of State, Diplomatic Security Service, Homeland Security Investigations (HSI), and U.S. Citizenship and Immigration Services, according to the DOJ report. The Negative Impact on a Company s Reputation In the wake of an ICE Form I-9 audit and document inspections of 50 Chipotle Mexican restaurants, the restaurant chain fired hundreds of workers after the document inspections revealed that many of Chipotle s employees were not legally authorized to work in the U.S. The firings prompted protests in nine states. Protesters chained themselves together in restaurants, and claimed they were treated unfairly because they were not provided an opportunity to prove their employment eligibility. Chipotle stated that they met with each employee before termination, and did in fact provide every individual a chance to provide legal documentation to verify their work authorization status. According to Fox News 9 in Minneapolis, eight people were arrested during the protest in the Minneapolis restaurant. The protests and arrests portrayed Chipotle as treating their employees unfairly, which may not have been accurate. As ICE continues aggressive I-9 enforcement strategies, employers are at greater risk of negative publicity. 100 s of employees fired at Chipotle, triggering negative publicity -3-

4 Common Mistakes That Land Companies in Hot Water Lack of Expertise: Failing to completely comprehend and retain information from the complex 70-page Form I-9 handbook leaves ample room for administrative errors on Form I-9s. Failure to Use the Proper Form I-9: U.S. Immigration Services periodically issues new versions of the Form I-9. The last revision for use began in May, The latest version is two pages in length and has been substantially reconfigured from prior versions. Timing: Employers cannot afford to fall behind in getting Form I-9s filed; Section 1 must be completed within one business day of work for pay, and Section 2 must be completed within three business days. Failure to Review Employee s Section 2 Documents: Form I-9s require an in-person review of the employee s verification documents. This is a challenge for remote hires, where a company agent does not have a physical presence. Invalid or Missing Data: It is easy for employees and HR administrators to miss or fill in form fields incorrectly. Common form errors include missing signatures and incorrect dates. Telling the Employee What Documentation to Produce: Employees must provide either one acceptable List A document, or one acceptable List B and one List C document. Employers who specify which documents the employee should provide violate the Anti-Discrimination Provisions of the Immigration Nationality Act (INA), which the US Department of Justice Civil Rights Division enforces. penalty and fines As seen in the examples above, penalties and fines can escalate rapidly. One incorrectly filled Form I-9 can generate penalties between $110 and $1,100, depending on ICE s evaluation of the seriousness of the offense. If ICE deems that the employer was aware of a worker s illegal work-status, individual fines can be as high as $16,000. THE COST OF NON-COMPLIANCE Are you putting your company at risk? work stoppage A faulty on-boarding process may result in a loss of trusted employees whose paperwork isn t in order. Since the whole audit process occurs within days, companies may be unable to perform basic business functions due to staffing losses. The time consumed by complying with investigation procedures can be costly. arrest debarment In 2012, 240 owners, managers, and HR personnel were arrested by ICE on criminal penalties related to Form I-9 violations. This stark fact underscores the urgency of proper management of I-9 documentation. An organization found to be out of compliance with any I-9 regulation can be suspended or debarred (prohibited) from doing any work on federal contracts. -4-

5 Let s Recap That s all you ll have to be in full-compliance. Just like the above-mentioned organizations, your company, along with every U.S. organization is at risk of receiving an audit for Form I-9 compliance. No company is immune, and you could very well be responsible for the fines, arrests, and various penalties your organization may face. In the event that your organization receives an audit, can you be certain that you are able to comply within as little as three days? That s all the time you ll have to prepare your Form I-9s for inspection. Become Audit-Ready with a Cloud-Based Solution I-9 Advantage has found that 68% of Form I-9s are not compliant. Due the complex nature of Form I-9 compliance, there is a large margin for error on paper Form I-9s. I-9 Advantage s 100% cloud-based, and mobile-enabled solutions provide the best assurance for full compliance. Become a Form I-9 expert with innovative solutions, designed for the creation of flawless Form I-9s. Our error-checking algorithm reduces risk and ensures compliance by rejecting invalid or omitted data, signaling accurate data entry as the user types. Users will also receive step by-step intuitive help as they complete the Form I-9. approved Electronically convert and compliantly correct your archived paper Form I-9s to ensure they are up-to-date. Automatically purge Form I-9s to comply with the three year/one year rule. An electronic solution will also create a standardized Form I-9 correction process, which eliminates the liability of discrimination. I-9 Advantage solutions are designed for walk-up usability, and fully integrate with your existing HR platform, with immediate E-Verify submission (optional). Learn more about how you can become audit ready at i9advantage.com References: Immigration and Customs Enforcement: ice.gov The New York Times: nytimes.com United States Court of the Ninth Circuit: ca9.uscourts.gov The Department of Justice: justice.gov National Law Review: natlawreview.com The contents of this article are intended for general informational purposes only and are not intended for specific application to any particular set of facts and circumstances. This article is not a substitute for legal counsel on any particular matter, nor should it be construed as legal advice on any subject matter. This article does not create an attorney client relationship, and the receiver viewing of this article does not create an attorney/client relationship between the receiver/viewer and I-9 Advantage or any of its employees. -5-

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