How to De-ICE Your Business

The most recent numbers from ICE reflect the dramatic increases in ICE audits, civil fines, forfeitures, criminal charges and debarments. Specifically:

• ICE audits (or inspections) of employers increased from 500 in FY 2008 to approximately 2500 in FY 2011;
• ICE civil fines of employers increased from $675,000 of 18 employers in FY 2008 to $10.46 million of 385 employers in FY 2011;
• ICE's forfeitures and criminal fines increased from $22 million in FY 2008 to approximately $36.6 million in FY 2010. In the first five months of 2012, ICE fined or accepted forfeitures of $100,000 or more at the following companies or business executives in these amounts: Atrium Companies ' $2 million; Advanced Containment Systems Inc. (ACSI) ' $2 million; HerbCo ' $1 million; Sun Drywall and Stucco ' $225,000; two executives of LTCI Ltd. ' $223,000; and J & J Industrial Supply ' $150,000.
• ICE criminal charges of immigration violations by managers/owners/officers of companies increased from 135 in FY 2008 to 221 in FY 2011;
• ICE criminal convictions of managerial and non-managerial employees for worksite enforcement immigration violations have remained steady ' 561 in FY 2007 to 586 in FY 2011;
• ICE debarments from federal contracts of companies and individuals increased from 53 individuals and 30 companies in FY 2009 to 115 individuals and 97 companies in FY 2011.

Even if an ICE audit does not result in any fines, forfeitures, criminal charges or debarments, it may cause the discharge of numerous employees who cannot prove valid work authorization. Here are some recent high-profile examples: Chipotle Mexican Grill in Minnesota ' 450 employees; American Apparel in Los Angeles ' over 1,000 employees; Lone Star Bakery in Texas ' 200 employees; and Pacific Steel Casting Co. in the San Francisco-area ' 200 employees (33% of workforce).

Additionally, ICE audits may create problems with other government agencies. In the past month, the Securities & Exchange Commission (SEC) has begun an investigation of Chipotle Mexican Grill. Also, Pacific Steel Casting recently settled a charge filed by a union with the National Labor Relations Board concerning its termination of employees after implementation of E-Verify.

The I-9 Form

Although the I-9 form, which all new hires and their employers must complete, is only one page, there are usually an incredible number of errors, most unintentional, by employees and employers alike. Section 1 must be completed, signed and dated by the employee on the first day of employment (or beforehand as long as it is after an offer of employment). The requested data is fairly simple: name, including maiden name, if applicable; address (not P.O. Box); date of birth; Social Security number (though not required unless using E-Verify); and status ' U.S. citizen, permanent resident including Alien (“A” number, which does not change upon renewal, marriage or divorce), work authorization document (EAD) with A number and expiration date of authorization, and U.S. national (for those born in Northern Mariana Islands, Marshall Islands, or Micronesia).

The employer must complete Section 2 within three days of hire. (Use the Thursday rule: If the first day of work is Monday, the I-9 must be completed by Thursday.) The employer fills in information in List A, or Lists B and C based upon acceptable document(s) listed on the backside of the I-9 form. The most common List A documents are a U.S. passport, permanent resident card and work authorization card. For List B, it is a driver's license or state identification and for List C, a Social Security card or government-issued birth certificate (not a hospital-issued one no matter how cute it is). After the information is listed, the employer representative must certify the examination of document(s) with a signature, company name and address, representative's title and the date employment began.

Section 3 is utilized for several purposes ' reverification of an employee's EAD, which is due to expire; when an employee is rehired within three years of original hire date, an employer may use Section 3, if the I-9 edition has not expired, or opt to use a new I-9; and when an employee receives a new last name through marriage or divorce (though this is not required).

Guidelines

In completing an I-9 form, here are some guidelines:

• Do not ask a job applicant to fill out an I-9 form until an offer of employment has been made;
• Do not tell the employee which documents to present;
• Do not accept an expired document for List A, B or C; and
• Do not single out certain employees for scrutiny.

Compliance Programs

Before ICE comes knocking on your door, your company should develop an immigration compliance program, including an audit of your I-9 forms, training for applicable management, and drafting and implementing
immigration compliance policies.

It is recommended that an audit of an employer's I-9s be conducted or overseen by an immigration compliance attorney. Recently, ICE discussed the many difficulties of a company performing a self-audit, and the proper correction of errors on the I-9. There are acceptable and unacceptable methods for making these corrections. Unacceptable methods include filling out new I-9s while destroying the original I-9s with errors, and then back-dating the I-9s in order to try to correct errors with dates. Such mistakes in self-audits have
resulted in fines for companies.

Another common problem is that the company representative who is conducting the self-audit may also be the individual who filled out the company's portion of the I-9. Because it is always more difficult to discover one's own mistakes, it is advisable to have a second set of eyes review the I-9s for accuracy.

Having a written I-9 compliance policy will answer many important questions, including:

• Who is in charge of immigration compliance?
• Will the company retain supporting documents for the I-9? (Some, but not all immigration compliance attorneys recommend this);
• What is the retention policy? (Former employees' I-9s must be maintained for the longer of three years from date of hire, or one year after employee's employment ends);
• Where will the I-9s be maintained? (They should be in two files, active employees and former employees, not in the employees' personnel files);
• Will the company use E-Verify?
• Is E-Verify required under state law?
• Is FAR E-Verify required?

Verification

It is vital for employers to understand E-Verify and FAR E-Verify in order to determine whether to utilize it or whether it is required. E-Verify is an Internet-based employment verification system that matches information from employees' I-9 forms with databases of the Social Security Administration (SSA), DHS, and the Department of State. It is important to remember that E-Verify is not a pre-screening tool in the application process. Rather, an employer may not submit an inquiry to E-Verify until after an employee is hired. Furthermore, an employer is strictly prohibited from using E-Verify to verify existing employees.

FAR E-Verify is mandatory for contractors with contracts of $150,000 or more, and related subcontractors with contracts of $3,000 or more that were entered into after Sept. 8, 2009 with a federal government agency. FAR E-Verify requires federal contractors/subcontractors to verify all newly hired employees, regardless of whether they are assigned to the federal contract, and all existing employees assigned to the federal contract. Additionally, federal contractors and subcontractors may elect to verify all existing employees regardless of whether they are working on a federal contract.

Some states require employers within their individual states to utilize E-Verify for newly hired employees. They are: Alabama, Arizona, Georgia, Mississippi, North Carolina, South Carolina and Utah. A few of these states have a minimum number of employees employed before E-Verify is required. These states require employers that contract with state and/or local government to utilize E-Verify: Colorado, Florida, Idaho, Indiana, Louisiana, Minnesota, Missouri, Nebraska and Oklahoma. Two states, Louisiana and Tennessee, have “non-mandatory” E-Verify requirements ' meaning private employers can either sign up for E-Verify and receive protection under state law, or copy and maintain one of the specified identification documents. A few local governments require companies contracting with the local government to utilize E-Verify. However, California prohibits any local government entity from requiring employers to utilize E-Verify.

In order to utilize E-Verify or FAR E-Verify, an employer must sign a Memorandum of Understanding (MOU) with DHS. An employer must post notices provided by DHS announcing its participation in E-Verify. Although most employers detest government-issued posters, E-Verify posters are an employer's friend because they inform prospective applicants without legal status that they will be subject to E-Verify and thus only employable for less than two weeks before final non-confirmation.

The initial step in E-Verify and FAR E-Verify is the same as I-9 verification. The employee and employer fill out the I-9. The employer logs onto the E-Verify website and enters the I-9 data. If the employee is verified, the system will generate a confirmation number.

When There Is No Confirmation

If a Notice of Tentative Non-Confirmation (TNC) is received, the employer must ask the employee whether he wants to contest the Notice. If the employee does not contest the TNC, the employer should advise the employee that he is terminated due to ineligibility for employment. If the employee chooses to contest the TNC notice, the employer should advise the employee to contact the SSA or the DHS within eight federal business days to resolve the discrepancy. And remember, an employer is prohibited from discharging or disciplining an employee who is contesting the TNC, unless the employer obtains independent knowledge that the employee is not authorized to work.

The employer must check the employee's information through E-Verify at least 24 hours after the employee informs the employer he has visited the SSA or DHS office, but no later than 10 working days after the employer sent the referral information to the SSA or DHS.

If the employee contests the TNC, there are four possible outcomes: 1) “Authorization” notice, meaning the employee may continue employment; 2) Final Non-Confirmation notice, meaning the employee should be terminated; 3) DHS Tentative Non-Confirmation, which the employee may contest in a similar manner as a SSA Tentative Non-Confirmation; or 4) “Review and Update Employee Data” message, meaning there will be further investigation.

Potential Fines

The beginning of the article discussed the large amount of fines being assessed by ICE. There is a formula for determining fines. Specifically, it is $110 to $1,100 per I-9 form for technical and substantive violations. The size of the fine for a substantive violation is based upon a sliding scale that starts at $110 for 0 to 9% and gradually increases to $275, $440, $605, $770 and finally to $935 for 50% and over of substantive violations. In addition, there are five aggravating or mitigating factors, each worth 5% up or down. They are: size of business, good faith, seriousness of violations, whether any employees were unauthorized, and history of previous violations.

An employer may also be fined $375 to $16,000 for each unauthorized worker employed (depending on first or subsequent offenses); $375 to $6,500 per instance of accepting fraudulent documents (depending on first or subsequent offenses); and $550 to $1,100 for each failure to notify the DHS that it continued to employ an individual, who was determined to be ineligible by E-Verify.

Conclusion

Hopefully, this article has provided some education on immigration compliance, and maybe serves to warn the reader to take immigration seriously or possibly face costly consequences.

Bruce E. Buchanan is an attorney at the Nashville, TN, office of Siskind Susser, P.C. He represents individuals and employers in all aspects of immigration law, with an emphasis on immigration compliance for employers, and employment/labor law. Phone: 615-345-0266. E-mail: [email protected].

The importance of immigration compliance continues to grow as more and more companies realize the negative consequences of violating the Immigration Reform and Control Act (IRCA). This article explores how to avoid these negative consequences.

Background

At the beginning of the Obama Administration, the Department of Homeland Security (DHS) and its agency, Immigration & Customs Enforcement (ICE), stated that it would de-emphasize the high-profile raids of employers, such as Agriprocessors, Inc. in Pottsville, IA, and Howard Industries in Laurel, MS. Instead, ICE created a “Culture of Compliance” through I-9 audits, civil and criminal sanctions, and education.

The most recent numbers from ICE reflect the dramatic increases in ICE audits, civil fines, forfeitures, criminal charges and debarments. Specifically:

• ICE audits (or inspections) of employers increased from 500 in FY 2008 to approximately 2500 in FY 2011;
• ICE civil fines of employers increased from $675,000 of 18 employers in FY 2008 to $10.46 million of 385 employers in FY 2011;
• ICE's forfeitures and criminal fines increased from $22 million in FY 2008 to approximately $36.6 million in FY 2010. In the first five months of 2012, ICE fined or accepted forfeitures of $100,000 or more at the following companies or business executives in these amounts: Atrium Companies ' $2 million; Advanced Containment Systems Inc. (ACSI) ' $2 million; HerbCo ' $1 million; Sun Drywall and Stucco ' $225,000; two executives of LTCI Ltd. ' $223,000; and J & J Industrial Supply ' $150,000.
• ICE criminal charges of immigration violations by managers/owners/officers of companies increased from 135 in FY 2008 to 221 in FY 2011;
• ICE criminal convictions of managerial and non-managerial employees for worksite enforcement immigration violations have remained steady ' 561 in FY 2007 to 586 in FY 2011;
• ICE debarments from federal contracts of companies and individuals increased from 53 individuals and 30 companies in FY 2009 to 115 individuals and 97 companies in FY 2011.

Even if an ICE audit does not result in any fines, forfeitures, criminal charges or debarments, it may cause the discharge of numerous employees who cannot prove valid work authorization. Here are some recent high-profile examples: Chipotle Mexican Grill in Minnesota ' 450 employees; American Apparel in Los Angeles ' over 1,000 employees; Lone Star Bakery in Texas ' 200 employees; and Pacific Steel Casting Co. in the San Francisco-area ' 200 employees (33% of workforce).

Additionally, ICE audits may create problems with other government agencies. In the past month, the Securities & Exchange Commission (SEC) has begun an investigation of Chipotle Mexican Grill. Also, Pacific Steel Casting recently settled a charge filed by a union with the National Labor Relations Board concerning its termination of employees after implementation of E-Verify.

The I-9 Form

Although the I-9 form, which all new hires and their employers must complete, is only one page, there are usually an incredible number of errors, most unintentional, by employees and employers alike. Section 1 must be completed, signed and dated by the employee on the first day of employment (or beforehand as long as it is after an offer of employment). The requested data is fairly simple: name, including maiden name, if applicable; address (not P.O. Box); date of birth; Social Security number (though not required unless using E-Verify); and status ' U.S. citizen, permanent resident including Alien (“A” number, which does not change upon renewal, marriage or divorce), work authorization document (EAD) with A number and expiration date of authorization, and U.S. national (for those born in Northern Mariana Islands, Marshall Islands, or Micronesia).

The employer must complete Section 2 within three days of hire. (Use the Thursday rule: If the first day of work is Monday, the I-9 must be completed by Thursday.) The employer fills in information in List A, or Lists B and C based upon acceptable document(s) listed on the backside of the I-9 form. The most common List A documents are a U.S. passport, permanent resident card and work authorization card. For List B, it is a driver's license or state identification and for List C, a Social Security card or government-issued birth certificate (not a hospital-issued one no matter how cute it is). After the information is listed, the employer representative must certify the examination of document(s) with a signature, company name and address, representative's title and the date employment began.

Section 3 is utilized for several purposes ' reverification of an employee's EAD, which is due to expire; when an employee is rehired within three years of original hire date, an employer may use Section 3, if the I-9 edition has not expired, or opt to use a new I-9; and when an employee receives a new last name through marriage or divorce (though this is not required).

Guidelines

In completing an I-9 form, here are some guidelines:

• Do not ask a job applicant to fill out an I-9 form until an offer of employment has been made;
• Do not tell the employee which documents to present;
• Do not accept an expired document for List A, B or C; and
• Do not single out certain employees for scrutiny.

Compliance Programs

Before ICE comes knocking on your door, your company should develop an immigration compliance program, including an audit of your I-9 forms, training for applicable management, and drafting and implementing
immigration compliance policies.

It is recommended that an audit of an employer's I-9s be conducted or overseen by an immigration compliance attorney. Recently, ICE discussed the many difficulties of a company performing a self-audit, and the proper correction of errors on the I-9. There are acceptable and unacceptable methods for making these corrections. Unacceptable methods include filling out new I-9s while destroying the original I-9s with errors, and then back-dating the I-9s in order to try to correct errors with dates. Such mistakes in self-audits have
resulted in fines for companies.

Another common problem is that the company representative who is conducting the self-audit may also be the individual who filled out the company's portion of the I-9. Because it is always more difficult to discover one's own mistakes, it is advisable to have a second set of eyes review the I-9s for accuracy.

Having a written I-9 compliance policy will answer many important questions, including:

• Who is in charge of immigration compliance?
• Will the company retain supporting documents for the I-9? (Some, but not all immigration compliance attorneys recommend this);
• What is the retention policy? (Former employees' I-9s must be maintained for the longer of three years from date of hire, or one year after employee's employment ends);
• Where will the I-9s be maintained? (They should be in two files, active employees and former employees, not in the employees' personnel files);
• Will the company use E-Verify?
• Is E-Verify required under state law?
• Is FAR E-Verify required?

Verification

It is vital for employers to understand E-Verify and FAR E-Verify in order to determine whether to utilize it or whether it is required. E-Verify is an Internet-based employment verification system that matches information from employees' I-9 forms with databases of the Social Security Administration (SSA), DHS, and the Department of State. It is important to remember that E-Verify is not a pre-screening tool in the application process. Rather, an employer may not submit an inquiry to E-Verify until after an employee is hired. Furthermore, an employer is strictly prohibited from using E-Verify to verify existing employees.

FAR E-Verify is mandatory for contractors with contracts of $150,000 or more, and related subcontractors with contracts of $3,000 or more that were entered into after Sept. 8, 2009 with a federal government agency. FAR E-Verify requires federal contractors/subcontractors to verify all newly hired employees, regardless of whether they are assigned to the federal contract, and all existing employees assigned to the federal contract. Additionally, federal contractors and subcontractors may elect to verify all existing employees regardless of whether they are working on a federal contract.

Some states require employers within their individual states to utilize E-Verify for newly hired employees. They are: Alabama, Arizona, Georgia, Mississippi, North Carolina, South Carolina and Utah. A few of these states have a minimum number of employees employed before E-Verify is required. These states require employers that contract with state and/or local government to utilize E-Verify: Colorado, Florida, Idaho, Indiana, Louisiana, Minnesota, Missouri, Nebraska and Oklahoma. Two states, Louisiana and Tennessee, have “non-mandatory” E-Verify requirements ' meaning private employers can either sign up for E-Verify and receive protection under state law, or copy and maintain one of the specified identification documents. A few local governments require companies contracting with the local government to utilize E-Verify. However, California prohibits any local government entity from requiring employers to utilize E-Verify.

In order to utilize E-Verify or FAR E-Verify, an employer must sign a Memorandum of Understanding (MOU) with DHS. An employer must post notices provided by DHS announcing its participation in E-Verify. Although most employers detest government-issued posters, E-Verify posters are an employer's friend because they inform prospective applicants without legal status that they will be subject to E-Verify and thus only employable for less than two weeks before final non-confirmation.

The initial step in E-Verify and FAR E-Verify is the same as I-9 verification. The employee and employer fill out the I-9. The employer logs onto the E-Verify website and enters the I-9 data. If the employee is verified, the system will generate a confirmation number.

When There Is No Confirmation

If a Notice of Tentative Non-Confirmation (TNC) is received, the employer must ask the employee whether he wants to contest the Notice. If the employee does not contest the TNC, the employer should advise the employee that he is terminated due to ineligibility for employment. If the employee chooses to contest the TNC notice, the employer should advise the employee to contact the SSA or the DHS within eight federal business days to resolve the discrepancy. And remember, an employer is prohibited from discharging or disciplining an employee who is contesting the TNC, unless the employer obtains independent knowledge that the employee is not authorized to work.

The employer must check the employee's information through E-Verify at least 24 hours after the employee informs the employer he has visited the SSA or DHS office, but no later than 10 working days after the employer sent the referral information to the SSA or DHS.

If the employee contests the TNC, there are four possible outcomes: 1) “Authorization” notice, meaning the employee may continue employment; 2) Final Non-Confirmation notice, meaning the employee should be terminated; 3) DHS Tentative Non-Confirmation, which the employee may contest in a similar manner as a SSA Tentative Non-Confirmation; or 4) “Review and Update Employee Data” message, meaning there will be further investigation.

Potential Fines

The beginning of the article discussed the large amount of fines being assessed by ICE. There is a formula for determining fines. Specifically, it is $110 to $1,100 per I-9 form for technical and substantive violations. The size of the fine for a substantive violation is based upon a sliding scale that starts at $110 for 0 to 9% and gradually increases to $275, $440, $605, $770 and finally to $935 for 50% and over of substantive violations. In addition, there are five aggravating or mitigating factors, each worth 5% up or down. They are: size of business, good faith, seriousness of violations, whether any employees were unauthorized, and history of previous violations.

An employer may also be fined $375 to $16,000 for each unauthorized worker employed (depending on first or subsequent offenses); $375 to $6,500 per instance of accepting fraudulent documents (depending on first or subsequent offenses); and $550 to $1,100 for each failure to notify the DHS that it continued to employ an individual, who was determined to be ineligible by E-Verify.

Conclusion

Hopefully, this article has provided some education on immigration compliance, and maybe serves to warn the reader to take immigration seriously or possibly face costly consequences.

Bruce E. Buchanan is an attorney at the Nashville, TN, office of Siskind Susser, P.C. He represents individuals and employers in all aspects of immigration law, with an emphasis on immigration compliance for employers, and employment/labor law. Phone: 615-345-0266. E-mail: [email protected].