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Small New York Business Could Have Been Shut Down Due to ICE Form I-9 Penalties

All businesses may be subject to an ICE Form I-9 Inspection, including those companies that do not have financial stability to pay what are sometimes pretty hefty fines that result from these inspections. However, if a hearing is requested with OCAHO (Office of the Chief Administrative Hearing Officer), companies have the opportunity to contest the penalty assessed by ICE and can ask that the Administrator consider a set of factors outlined in the United States Code to lower the penalty amount.

Why was this small storage business fined by ICE? On February 17, 2011, Metropolitan Warehouse (“Metropolitan”), a warehouse and storage business based out of New York, was served by ICE with a Notice of Inspection (NOI) and was subsequently served a Notice of Intent to Fine (NIF) on October 2, 2012. It was alleged by ICE in three different counts that Metropolitan committed serious violations. Some of these “serious violations,” which may not seem serious the average person, included: not completing Form I-9s on their employees; backdating I-9s; not completing Section 2 correctly or at all; and failing to prepare I-9s in a timely manner. Out of the seventeen violations ICE alleged, Metropolitan only disputed one. The total penalty requested by ICE was $15,895, an amount which Metropolitan stated to the judge that it could not afford to pay. Therefore, Metropolitan requested a hearing and filed a complaint with OCAHO to attempt to lower this fine amount.

How did the government decide the penalty amount? When making a decision on a case, an Administrative Hearing Officers (what businesses often refer to as “I-9 Judges”) must consider certain factors according to the United States Code: 1) the size of the employer’s business; 2) the employer’s good faith; 3) seriousness of the violations; 4) whether or not the individual was an unauthorized alien; and 5) the employer’s history of previous violations. Along with these five factors, the Administrative Hearing Officers can also look to any additional factors that may or may not help the business. Metropolitan stated in its answer to the allegations that it should receive lowered amount in penalties because the company’s managers did not act in bad faith, as ICE had suggested, by not having any I-9s or by backdating the I-9s, because Metropolitan did not intend to “mislead or frustrate the inspection process.” The company argued that the fine should be lowered because there was a basic “misunderstanding” between the ICE agents and the I-9 preparers at Metropolitan of how to properly complete I-9s.

Why was the penalty amount eventually lowered? Metropolitan centered its argument for a lowered penalty on the size of the company and the effect of the amount of fines. Metropolitan emphasized that it was a small business with only six employees and, if forced to pay the fines as they are, the company would “have to substantially reduce its workforce or close its operations entirely.” The Administrative Hearing Officer decided the nearly $16,000 fine was not appropriate “in light of the company’s resources” and lowered it to $7,400, but is still a large fine for such a small company.

What does this mean for employers? In this case, the OCAHO court showed a willingness to adjust penalties for small companies, but the adjustments are never guaranteed. Not only is a company not guaranteed to be shown mercy by OCAHO for I-9 penalties, but ICE does not discriminate between flourishing and struggling companies when it decides which to target for inspection.

Danielle Atchison, Business Immigration Attorney MDIVANI CORPORATE IMMIGRATION LAW FIRM 7007 College Blvd., # 460, Overland Park, KS 66211 USA Phone :: 913.317.6200 Email ::

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