How immigration paperwork audit fines can catch employers by surprise

Kevin Smith, Partner, Crowe Horwath LLP

Think the odds of being fined for immigration law violations are slim to none? Think again. Even if every person working in your business is a legitimate U.S. citizen and/or eligible to work in the U.S., you can still run into trouble if you file immigration law paperwork with errors or omission or, worse, fail to file the papers at all.
Until recently, Form I-9 infractions have not been top of mind because it’s just a one-page form filled out during the new hire process. The odds of an ICE (U.S. Immigration and Customs Enforcement Agency) inspector showing up on your doorstep were miniscule. However, the risk has significantly increased over the last few years.
“This is the quickest and easiest employment law violation to find,” says Kevin W. Smith, a partner at Crowe Horwath LLP. “Inspections have been growing in number over the last three years, and it can cost up to $1,100 for each form containing an error.”
Smart Business learned more from Smith about how businesses can avoid having to pay for not having the proper immigration paperwork.

What should employers know about Form I-9?

In order to verify that all employees — citizens and noncitizens — are eligible to work in the United States, every employer needs to complete a simple two-sided, one-page form within the first three days of hire. It’s called a Form I-9, ‘Employee Eligibility Verification.’ The employer must be provided with the employment eligibility and identity document(s) by the employee, determine whether they reasonably appear to be genuine and record this information on the I-9. The form must be kept by the employer either for three years after the date of hire or for one year after employment is terminated, whichever is later.

Why should employers pay attention to this issue?

ICE was established in 2003 with the emphasis on finding and deporting illegal immigrants. Beginning in 2009, the emphasis has shifted to enforcing employer responsibility to ensure that new hires are eligible to work in the U.S. This has led to a record 2,196 notices of inspections to employers in fiscal 2010, surpassing the prior year’s record of 1,444, and more than quadrupling the 503 inspections in 2008. In 2010, judicial fines and fines for final orders, forfeitures and restitutions came to a total of $43,567,346.
Fines are levied regardless of whether illegal immigrants are found, as in the case of Abercrombie & Fitch stores being fined $1 million for a technologically deficient I-9 record-keeping system.

How does ICE investigate an employer if it suspects employees are working illegally there?

Once ICE begins an investigation, the agency will use confidential informants, cooperating witnesses and electronic surveillance. ICE may also visit the worksite or the homes of employees. ICE uses the following factors when determining criminal
liability: if there was a pre-existing immigration compliance program, how widespread the activity was, how high up the complicity of management was, timely voluntary disclosure of wrongdoing and cooperation in the investigation. One of the most
serious ICE violations concerns the harboring of persons in the country unlawfully.

What else do employers need to be concerned about regarding this issue?

In addition to strategically shifting from the focus of deporting illegal immigrants to holding employers accountable for noncompliance, ICE has changed its enforcement strategies in other ways:

■ Moving from high-profile, multisite raids to targeting a substantial number of small and medium-sized employers such as restaurants, construction companies and manufacturing plants.
■ Working closely with other government regulators — including the U.S. Department of Labor Wage and Hour Division, the Social Security Administration, the IRS, FBI and state counterparts — in ‘fusion centers’ that cross-train inspectors from other agencies to conduct I-9 audits.

How can employers defend violations and avoid noncompliance?

Businesses should be sure to have a comprehensive immigration compliance and ethics program in place, which comprises of established standards for detecting and preventing criminal conduct, screening of human resources processes, training regarding compliance and ethics for directors and employees, monitoring/auditing compliance programs and appropriate response to violations. Having a reasonable compliance program significantly improves the odds of reducing fines and criminal liability if an employer is found to be noncompliant.
Some other processes to consider:

■ Conduct a self-audit of your I-9 forms.
■ Keep I-9 forms separate from employee personnel files. Also, separate present and past employee forms.
■ Do not accept expired forms from new hires when completing the I-9 form.
■ Re-verify any expiring work authorization documents before they expire. Do not allow employees to work if they have expired documents.
■ Only accept documents from new hires that are on the List of Acceptable Documents and appear to be genuine.
■ If ICE shows up to conduct an audit, ask for a Notice of Inspection and know that you have three business days before you have to turn over your original I-9 forms.

By checking only 14 form attributes, our auditors have been able to consistently find missing or incorrect dates, signatures, IDs referenced and, worst of all, missing forms. Correcting these small errors can save employers from significant fines and even criminal charges.

Kevin W. Smith is a partner at Crowe Horwath LLP. Reach him at (214) 574-1008 or [email protected]

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