American employers are acutely aware of their duty to comply with the Immigration Reform and Control Act of 1986. That duty goes beyond confirming the identity and employment authorization of all employees using Form I-9 at hiring. There are legal risks and compliance obligations throughout the employment relationship and even after it ends. Learn more on that topic in the dehs.com article, The Midwest Enforcement Wave and Your I-9 Obligations.
Employers should be prepared to respond to an I-9 audit, which can result in significant civil and criminal penalties. Audits are typically conducted by ICE, which is the sole entity that has authority to sanction employers for I-9 violations. While the Immigrant and Employee Rights section of the Department of Justice has the power to inspect I-9 forms while investigating discrimination under the Immigration Reform and Control Act of 1986 (IRCA) and can assess penalties for discrimination or retaliation, it cannot impose penalties for violations of Form I-9 requirements. DHS also permits the Department of Labor to permit certain Form I-9 inspections by the Wage and Hour Division, OSHA, and the Office of Federal Contract Compliance Programs.
ICE audits are often triggered by tips, whether from employees, government agencies, or even competitors, and can occur at any time for any reason. No judicial or administrative warrant or subpoena is required for an I-9 audit, but such tools may be used to compel the production of documents or testimony.
Typically, an audit is commenced with a Notice of Inspection requiring the employer to produce I-9s and payroll records. ICE can, at its discretion, review all I-9s or just a sample; the Notice of Inspection should explain the scope. The regulations require that the I-9 forms be made available in their original form at the location where the request for production was made; if the forms are kept at another location, the employer must notify the officer of the location where the forms are kept and make arrangements for the inspection. The timeline for compliance with an I-9 audit can be very short, as the law requires only three business days’ notice.
The primary purpose of an I-9 audit is to determine whether the I-9 process has been properly followed. ICE agents may also evaluate whether the documents employees provided are authentic, the employer’s E-Verify participation, and how the employer has responded to no-match letters. A notice of inspection may request more than just a review of a company’s I-9 records. Documents that may be demanded include: a list of current employees with dates of hire; a list of terminated employees for a particular inspection period, including hiring and termination dates; copies of payroll data for the inspection period; quarterly unemployment insurance and state tax statements; quarterly tax statements; E-Verify or SSN Verification Service account numbers for participating employers; all social security no-match letters received during the inspection period; copies of any USCIS or DOL filings from the inspection period; business information such as EINs and TINs, articles of incorporation, business licenses; lists of contractors, subcontractors, independent contractors, and temporary labor agencies used during the inspection period; independent contractor agreements; policies for hiring practices; and information about prior I-9 audits.
Once the audit is complete, ICE will issue a notice of the results. The following are possible results of an audit:
- Notice of Inspection Results. This notice, which is also known as a compliance letter, tells the employer it is in compliance with IRCA.
- Notice of Suspect Documents. This notice identifies employees that ICE has determined are unauthorized to work. An employer may present additional documentation if it believes the determination is in error.
- Notice of Discrepancy. This notice identifies employees for whom ICE was unable to determine work eligibility.
- Notice of Technical or Procedural Failure. This notice is for technical violations on the I-9 paperwork, such as omission of minor data like dates of birth. Employers are given ten days to correct these violations; if the issues are not remedied, ICE may impose civil fines.
- Warning Notice. This is a discretionary notice issued when ICE has identified substantive violations but has determined that the violations do not warrant assessment of a civil monetary fine.
- Notice of Intent to Fine (NIF). A notice of this type identifies substantive violations, uncorrected technical violations, and violations of the prohibition against knowingly hiring or continuing to employ unauthorized workers and sets forth the resultant fines. If an employer who receives an NIF chooses not to comply, it has 30 days to request a hearing before an Administrative Law Judge. It can also attempt to seek a settlement with ICE, as long as no final order has been issued. If the employer does nothing, the NIF will become an enforceable final order after 45 days.
The best practice is to be ready before any notice arrives by having a strong compliance policy, conducting regular I-9 training, and having a designated point person or team that is familiar with the legal obligations under the IRCA and your internal policies and procedures. Conduct periodic internal audits where you compare payroll records to I-9 records and identify deficiencies and possible issues, such as social security mismatch notifications and missing information. This will both mitigate risks and prepare you to work with your legal team should you be served with notice.
Davenport, Evans, Hurwitz & Smith, LLP, located in Sioux Falls, South Dakota, is ready to assist clients with employment law matters. To connect with our team, call 605-336-2880, email [email protected], or find a specific lawyer here.