I-9 compliance

All employers, without exception, are required to comply with the federal regulations requiring them to verify the employment eligibility of all workers. Failure to do so can result in fines levied against the company and, in cases involving willful refusal to comply, criminal charges against the individual(s) within the company responsible for compliance.

In the past, the INS limited its enforcement sanctions to relatively small fines. This policy is now history. ICE has already established a practice of levying substantial fines. More significantly, they have started indicting employers who turn a blind eye (“willful blindness”) to deficient employee records. This typically occurs when an employer receives a Social Security “no-match” letter stating that the employee name and Social Security number do not match. When an employer does nothing following receipt of such a letter, but continues to employ the worker, ICE now regards this as “willful blindness” and has been indicting such employers on felony criminal charges.

In fiscal year 2002, for example, the INS filed 25 criminal indictments for these types of charges, together with 425 administrative arrests of illegal workers. By 2007, these numbers had grown to 863 criminal indictments and 4,900 administrative arrests. By 2008, these numbers jumped to 1,103 criminal arrests and 5,184 administrative arrests.

On July 1, 2009 Immigration and Customs Enforcement (ICE) announced that they had just sent out I-9 notices of inspection to 652 companies. This number is greater than the total number of inspections conducted in fiscal year 2008 and represents a quantum increase in inspection activity. The ICE notice said that these notices were driven by leads developed by ICE. We know that ICE is data mining government databases to develop lists of companies they suspect of failing to comply with existing laws.

With the Obama administration change in emphasis from arresting illegal workers and instead arresting owners, managers, supervisors, and HR employees, we can expect to see a dramatic increase in the number of criminal arrests in 2009 and succeeding years. DHS Secretary Napolitano has said that she intends to make I-9 compliance the cornerstone of her agency’s enforcement efforts. In furtherance of this goal, she has increased enforcement division staffing and re-prioritized I-9 compliance. Employers can expect to receive visits from ICE in the very near future. Unlike previous visits, where minor paperwork indiscretions were overlooked, this time around ICE intends to adhere to a policy of strict compliance. Those not in compliance can expect to be fined.

Typical I-9 problems fall into the following groups:

I-9 Forms are improperly completed and/or I-9 documentation is reviewed without attention to detail;
Management’s need to hire workers causes HR personnel not to question the authenticity of I-9 documentation;
Management looks the other way when employees present inconsistent documentation than what was given when the employee completed the I-9;
The employer receives Social Security no-match letters but does not make any effort to resolve the issue;
Management ignores rumors or complaints that there are unauthorized employees or unauthorized contractors working for or at the company;
The pool of new hires consists largely of the friends and relatives of existing workers;
Hiring decisions are not subject to review and made by those that may be sympathetic to those desperately seeking employment or willing to hire for personal gain; and
The company ignores communications from agencies—e.g., worker’s compensation or other benefit issuing agencies—that advise the employer either that the submitted employee information is not valid, or that a rightful holder of the social security card faces denial of benefits because one of their employees is using the rightful holder’s information.

Employers who are fined and/or criminally prosecuted typically ran afoul of one of these problems. Simply avoiding these obvious traps, however, is not enough to ensure than an employer will not be sanctioned. The company must establish a formal training program for I-9 compliance, maintain honest records, and regularly undergo self-audits to assure compliance. Companies that take these actions significantly reduce the likelihood that they will be sanctioned, even if problems are found in their records. Establishing that an employer has made a good faith attempt to comply is the best possible defense.

ICE has established a list of “best practices” they expect all employers to follow (http://www.ice.gov/partners/employers/worksite/besthire.htm). These include:

Use the Basic Pilot Program for all hiring.
Establish an internal training program, with annual updates, on how to manage completion of Form I-9 (Employee Eligibility Verification Form) and how to detect fraudulent use of documents in the I-9 process.
Permit the I-9 and Basic Pilot Program process to be conducted only by individuals who have received this training—and include a secondary review as part of each employee’s verification, to minimize the potential for a single individual to subvert the process.
Arrange for semi-annual I-9 audits by an external auditing firm or a trained employee not otherwise involved in the I-9 process.
Establish a self-reporting procedure for the reporting to ICE of any violations or discovered deficiencies.
Establish a protocol for responding to no-match letters received from the Social Security Administration.
Establish a Tip Line for employees to report activity relating to the employment of unauthorized aliens, and a protocol for responding to employee tips.
Establish and maintain safeguards against use of the verification process for unlawful discrimination.
Establish a protocol for assessing the adherence to the “best practices” guidelines by the company’s contractors/subcontractors.

At this point, it is worthwhile to review the basic I-9 compliance requirements. All new hires must complete and submit a form I-9. This form changes frequently, so employers must make certain that they have the most recent edition. Using outdated an edition of the form on the day the I-9 is executed is a violation and will likely result in a fine being imposed after an audit.

Which employees must execute an I-9?

All new hires are required to execute an I-9. No matter how short term the employment, if the worker is going to be paid by the employer, the worker must complete an I-9 and the employer must verify the worker’s documents. This includes both personnel who are given W-2 forms at the end of the year as well as “day workers” who are paid immediately. If they are under the employer’s control and supervision, they must execute I-9 forms.

This requirement does not apply to an existing employee who has completed an I-9 at another location of the company and is being transferred. It is a good idea, however, to “re I-9” such employees. The law does not prohibit this practice and doing so permits the company to correct any problems that may have existed with the prior I-9 by executing a new one. This policy also applies to former employees rehired within three years of their termination. Again, while executing a new I-9 is not required, it is a very good idea.

Genuine independent contractors are not required to complete I-9 forms. Understand that the federal government employs a strict definition of the term “independent contractor” and presumes that anyone who works at the employer’s location, or under the employer’s supervision and control is an employee. The burden rests with the employer to prove that the worker is an independent contractor and not an employee.

When must an I-9 be executed?

Section One of form I-9 must be executed on the day that the employee begins work. This means that the employee must declare whether he or she is a US citizen, lawful permanent resident, or nonimmigrant authorized to accept employment. The employee must execute and sign this portion of the form before starting work.

The remainder of the form (Section Two) must be executed and signed within three (3) business days of the start of the worker’s employment. The employer must personally review and verify the documents presented by the worker to comply with this portion of the form. An exception to this rule lies in situations where the worker will be hired for three days or less. In such instances, Section Two must be completed immediately.

Which documents must be used to verify employment?

An employer may not specify which documents or combination of documents the employee may submit. Rather, the employer must accept any lawful document or combination of documents specified on form I-9. Employers may not look behind the documentation that is offered. Unless it appears to be clearly unacceptable or fraudulent, the employer must accept the documents presented. An example of a clearly unacceptable document would be a photocopy of form I-551 (alien registration receipt card, or “green card”). An example of a clearly fraudulent document would be a document that obviously has been altered, such as a new name or photograph inserted. Unless a document is clearly unacceptable or fraudulent, the employer must accept it at face value.

The employer must verify that the documents presented, in fact, match the employee. If there is a name discrepancy, for example, the employer must inquire into the reason. If it is something as simple as a name change due to marriage, then the employer should attach a memorandum to the I-9, explaining this. If the explanation is more complex, the employer should insist upon documentation that substantiates the name change. Without such documentation, the employer cannot accept non-matching evidence.

The employer must also make certain that the types of documents offered match the status claimed. For example, if someone claims to be a lawful permanent resident or U.S. citizen, but then offers a foreign passport and a form I-94 that shows currently valid nonimmigrant status, that is a problem. The evidence presented to establish status must bear a reasonable relationship to the status claimed. An employer cannot simply accept anything on the list of documents. The employer must record all file number and validity period information shown on the documents.

What are the most common mistakes involved in completing I-9 forms?

Section 1 of the form:

· The employee did not sign or date the form

· The employee did not complete section 1 on the date of hire

· The employee did not check one of the three boxes regarding status

· The employee checked the wrong box regarding status

· The employee did not list an alien number, admission number, or expiration date

Section 2:

· The employer did not sign section 2

· The employer did not date section 2

· The employer did not fill in the date of hire

· The employer did not complete section 2 within three business days of hire

· The employer photocopied the employee’s documents but did not complete the form

· The employer representative who signed the form was not the person who saw the original documents

· The employer accepted unacceptable documents (hospital birth certificates, foreign birth certificates, etc.)

· The employer accepted documents that did not "reasonably relate" to the employee (different names, dates of birth, etc.)

· The employer reviewed too many documents (items on list A, B, and C), which can lead to a discrimination charge against the employer

· The employer keeps copies of documents for some employees, but not all. (There is no requirement under federal law to keep copies, but the employer’s policy should be consistently applied for all employees.)

Section 3:

· The employer did not re-verify Form I-9 when required

· The employer did not complete the information required in section 3

· The employer did not sign section 3

When must the employer re-verify documents?

If the employee’s work authorization documents are time limited, such as a nonimmigrant I-94, then the employer must note this and re-verify employment authorization no later than the day the present authorization expires. Employers should caution all non-resident foreign national employees that they must show the employer all newly issued forms I-94 immediately. When a nonimmigrant employee departs the United States, his or her nonimmigrant status expires immediately upon departure. The I-94 used for the most recent I-9 is no longer valid. When the employee returns, he or she will be given a new I-94 card. The status validity date on the new I-94 may be the same as the old one, it may be shorter, or it may be longer. In any case, the employer and employee must update the I-9 with this new information.

Lawful permanent residents receive I-551 alien registration cards with expiration dates. Employers must understand these are like the expiration dates of U.S. passports. That is, they do not signify the expiration of the person’s lawful permanent resident, only the validity of the card. Upon expiration of the “green card,” a lawful permanent resident does not lose his or her LPR status; they only need to renew their card.

Should an employer make copies of the documents?

There are different schools of thought concerning making copies of Section Two documents. One thing is certain; if an employer makes copies of the documents of some employees, the employer must make copies of the documents of all employees. The employer may not discriminate in this regard.

We recommend against making copies. The copies are of no value to an employer during an audit. If the employer has recorded everything properly, there is absolutely no need to keep a copy. If the employer didn’t, having a copy will not cure a failure to record things properly on the form. The biggest problem is that keeping a copy allows the government, during an audit, to double check the originals for errors. Thus, if the employer inadvertently transposed numbers when recording the document information on the form, having a copy will prove this mistake and potentially subject the employer to a fine.

Are there provisions for automatic extensions of employment authorization?

Employers also need to be aware that the law provides for an automatic 240 extension of stay and work authorization for nonimmigrants, such as E, H, and L temporary workers, who file timely applications for extension of stay. A timely application is one that is physically delivered to the CIS prior to the expiration of the nonimmigrant’s authorized stay. In such cases, the filing fee receipt acts as evidence of continuing work authorization for a period of 240 days from the date of the expiration of the prior grant (not from the filing date) or until the extension of stay is approved, whichever occurs first.

As a matter of best practices, employers should keep their I-9 records apart from regular personnel files. If the government audits the employer’s records, and the I-9s are in the personnel files, the government agents then have a right to examine the personnel files. It is better to keep separate I-9 files. Within these, the employer should have one set of files for current employees and another for employees who have left the company.

How long should an employer maintain I-9 files?

For former employees, the employer should destroy all I-9s where the present date is more than three years since the date the employee was hired and one year from the date of termination of employment. Such records do not have to be maintained. They should not be maintained as they represent potential liability. Destroy them at the earliest possible legal opportunity.

How should an employer handle re-verification?

Current employees with I-9s that require reverification should be calendared for review. These employees should be notified that reverification is required at least four months before the expiration date of the relevant document. The employer review the status of all such cases at least every two weeks until the I-9 has been reverified successfully.

Is it a good idea to conduct a “self-audit” of I-9 files?

Employers should plan and conduct I-9 self-audits at least twice yearly. This ensures both the accuracy of the I-9 collection as well as provides an opportunity for continuing in-house training of HR staff in I-9 verification. Employers that have formal, written I-9 compliance programs, and follow through on them diligently are given special consideration by the government auditors if problems are discovered during a government audit.

Should the company develop a formal policy for I-9 compliance?

To the extent that a company develops, implements, and attempts to maintain in good faith an I-9 compliance plan, government investigators tend to be forgiving of inadvertent mistakes. To benefit from this policy, a company must develop a formal compliance plan, train its personnel, and monitor compliance carefully. This policy should include clear guidelines regarding I-9 compliance. Typically, this involves:

· Identify the level of employee permitted to complete Form I-9 on behalf of the company to ensure that the employee trained and responsible.

· Ensure that employees have been trained to review I-9 documents and complete the I-9 without violating discrimination laws. Periodically review and update I-9 training materials, being sure to document such review and all efforts to provide training to hiring managers.

· Determine how I-9 records should be maintained and seek to ensure uniformity in completion and maintenance of the I-9s—hard copy or electronically. If the decision is made to maintain copies of the documents presented to verify employment eligibility, copy both sides of the document and ensure that copies are maintained for all employees going forward from the date of implementation. Maintaining copies of the documents is generally not recommended unless there is some unique, compelling reason to do so on a company-wide basis.

· Ensure that I-9 records are not kept with personnel files, but in a separate I-9 file, whether hard copy or electronic.

· Confirm that the company has a “tickler system” in place to re-verify work authorization for employees with temporary status or work authorization. The employer will want to ensure that its software system captures expiration dates from section 1 of the I-9 for temporary work authorizations—for example, employment authorization documents, visas, and I-94 forms.

· Make sure that I-9 documents are included in the company’s document retention schedules, as employers are permitted to destroy I-9 Forms and supporting documents after the statutory period of time. Employers may destroy I-9 records for former employees either one year after termination or three years after the date of hire, whichever is later.

· Set forth a schedule for conducting internal I-9 audits on a regular basis. This is one of the most important provisions of a compliance policy. The employer can analyze potential risks and possibly mitigate fines and damages by conducting internal audits prior to any government action.

In addition, the company policy should contain a process for handling Social Security no-match letters. The Department of Homeland Security (DHS) recently issued regulations relating to Social Security no-match letters and a new definition of “constructive knowledge” that an employee does not have work authorization. 72 Fed. Reg. 45611 (Aug. 15, 2007). While these regulations are presently the subject of litigation, and the government has been enjoined from enforcing them while the injunction remains in place, the injection could be dissolved at any time. Moreover, proposed regulations notwithstanding, receipt of a Social Security “no-match letter” puts an employer on notice of a problem.

The policy should include the following provisions:

· Management should not disregard no-match letters.

· Management should not assume the workforce is “illegal” based on receipt of the no-match letter.

· Employees identified in the Social Security correspondence should be advised in writing of the no-match letter.

· All employees subject to no-match letters should be treated in a consistent manner. The company should develop a standard time period within which the employee may address the discrepancy with the employer’s records and the SSA records.

Employers also need to develop an internal mechanism to address post-hire and initial I-9 completion issues, including instances in which third parties (for instance, clients or subcontractors) provide information indicating that an employee is not authorized to work.

It is critical that an employer ensure that the legal department or outside counsel reviews subcontractor agreements involving provision of temporary labor or services performed on company property. These agreements should include representations and warranties that the subcontractor(s) will comply with all federal, state, and local immigration laws. Employers may also wish to include a provision that subcontractors will indemnify the company for any damages and legal fees the company incurs should they fail to comply with applicable immigration laws.

The company needs to create a decision-making process through which it determines whether it will sponsor employees for lawful permanent residence or require the employee to bear immigration-related costs (when legally permitted). Avoid the appearance of discrimination or disparate impact by setting up a process that treats employees consistently, regardless of their national origin.

The U.S. Department of Justice’s Manual for United States Attorneys cites two mitigating factors to be taken into consideration when deciding whether to bring criminal charges against companies and their management. The first is whether the company had a robust, pre-existing compliance plan and whether the company made good faith efforts to implement it. The second is whether the company undertook regular self-audits to attempt to identify and correct problems. To the extent that companies can show that these two circumstances existed prior to the government audit, they are likely to escape with minimal fines and no criminal prosecutions for any violations found during the audit.

Immigration Information

I-9 compliance