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Small Sign and Awning Manufacturer Fought Diligently for Fines to be Reduced to $500-$600 per I-9 Vi

Small Sign and Awning Manufacturer Fought Diligently for Fines to be Reduced to $500-$600 per I-9 Violation

Stanford Sign and Awning, Inc. (“Stanford”), a sign and awning manufacturer, is a small company with no HR department that employs 52 employees in two different locations. Stanford says that “profits, if any, are put back into the business to upgrade vehicles, computers, and overhead, and that because its business is linked to the construction industry the past two years have been difficult with sales going down and expenses going up, and that the company has had to reduce management salaries, freeze employee wages, take away vacation time, and reduce participation in health insurance.” U.S. Immigration and Customs Enforcement (“ICE”) audited Stanford, alleged violations, and Stanford diligently fought against ICE’s allegations. The court looked at the factors discussed below and reduced the penalties for errors they found to be more serious to $600.00 per violation and less serious to $500.00 per violation. For a small company that is struggling to provide vacation time and health insurance to employees, the cost of their I-9 errors is no doubt a hard hit on the company’s financial well-being.

Common Errors Found on Employee I-9 Forms

The errors on Stanford’s I-9 forms are exactly the type of errors we find on company I-9s during an audit. The following are the kinds of errors that the court noted in Stanford’s case:

Less Serious Errors:

  • 1. Stanford failed to ensure that employees properly completed section 1

  • 2. Stanford failed to ensure that an employee signed the attestation in section 1 of the I-9

  • 3. Stanford failed to ensure that three employees checked a box in section 1 of their forms; No alien number was entered anywhere on the form for these three employees. The I-9 of one of the employees reflects that he checked a box indicating he was a lawful permanent resident but there was no alien number in section 1, on any of the form, and no copy of the I-551 was kept with the I-9.

  • 4. Stanford failed to properly compete section 2 for a number of employees; For example, A CA driver’s license was entered as a List A document for an employee and a copy was retained, but a driver’s license is not a List A document and no List C document was provided. Also, a list C document was entered for an employee but no List B document and vice versa.

  • 5. Stanford failed to provide a document title, identification number, and/or expiration date for a document in section 2 of two I-9 forms and did not retain copies of their documents or present them at the time of inspection

  • 6. Stanford failed to re-verify the authorization of an employee in section 3 before the expiration date on his card, and waited two months to do so. Similarly, the work authorization document of another employee expired in 2004 and that employee was not re-verified until January 20, 2010.

More Serious Errors:

  • 7. Failing to prepare an I-9 for an employee

  • 8. Backdated forms; For example, an employee I-9 form reflects a hire date of September 9, 1998 and both section 1 and section 2 are similarly dated, but the version of the form utilized is the revision effective June 5, 2007. Additionally, the manager who signed the form was not even hired herself until March 24, 2003 so she could not have prepared the form on September 9, 1998.

  • 9. Stanford failed to sign or date the attestation in section 2 for three employees

Penalty Factors for I-9 Violations

As laid out by the Immigration Reform and Control Act (“IRCA”), civil money penalties range from $110 - $1,100 per I-9 violation and the factors that must be given due consideration in setting the appropriate penalty amounts are:

  • 1. The size of the employer’s business

  • 2. The good faith of the employer

  • 3. The seriousness of the violations

  • 4. Whether the individual was an unauthorized alien

  • 5. Any history of previous violations

The Seriousness of the Violations

The court provided guidance on the seriousness factor by explaining that it is best evaluated on a continuum because not all violations are necessarily equally serious. Recent cases of the Office of the Chief Administrative Hearing Officer (“OCAHO”) have acknowledged that while failure to enter either a List A or a List C document showing employment authorization in section 2 is serious, it is not as serious a violation as is an employer’s failure to complete an I-9 at all or to sign the attestation in section 2. In 2011, United States v. Alyn Indus., Inc. set a penalty of $700 for each failure to complete an I-9 or to sign the section 2 attestation, but assessed $500 for each failure to enter a List A or C document. Additionally, in 2010, in United States v. SnackAttack Deli, Inc. the court found all the violations serious as all involved either failure to prepare an I-9 at all or failure to sign the section 2 attestation.

In Stanford’s case, OCAHO found an increase in the penalty amount based on the seriousness of the violation was appropriate for six violations. It was appropriate for failing to prepare one I-9, backdating two I-9 forms, and failing to sign the attestation in section 2 on three employee I-9s. OCAHO determined the penalties for these violations were $600.00 per I-9 and the less serious violations were $500.00 per I-9. Stanford put forth great effort in defending their case against ICE and although they were successful in getting their penalties reduced, the difference is a mere $100 between less and more serious violations.

Is Your Company Prepared for a Visit From ICE?

It is vital for employers to recognize that even if OCAHO decreases their penalties, high costs are still associated with numerous aspects of I-9 violations. Stanford is still required to pay $500.00 - $600.00 per I-9 violation, for a substantial sum of $9,600.00. Moreover, costs of defense, attorney’s fees, and compliance, on top of the total penalty amount, deliver a significant blow on an already distressed company’s finances. To protect the value of your company, you should regularly perform internal I-9 audits and training to ensure employee I-9s are in compliance and you are well prepared for an impromptu visit from ICE. An extremely helpful article on how to prepare for ICE I-9 Audit/Inspection can be found here.

United States v. Stanford Sign and Awning, Inc. 06/21/12 10 OCAHO No. 1152

Jessica Haefele Corporate Immigration Attorney The Mdivani Law Firm, LLC

Corporate Immigration Training:

Corporate Immigration Compliance Officer Training I-9 Auditor Training

I-9 Self Audits: The Best Way to Prevent I-9 Disasters

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