Surviving an I-9 Audit. Cynthia J. Lange, Partner

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1 Surviving an I-9 Audit Cynthia J. Lange, Partner April 2014

2 I-9 Compliance Marked increase in audits and fines Including critical infrastructure, government contractors, industries with high concentration of immigrant labor, and others Don t play the odds : audits and corrections do matter! 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 2

3 Foundational I-9 Principles I-9 for every employee hired after November 6, 1986 Who is an employee? Contractors, consultants, partners? Who is a re-hire where the old I-9 can be used? Must maintain for the duration of employment and the longer of one year post=termination or three years post-hire date 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 3

4 Tips for Section 1 Completed on or before first day of hire Completed by all new hires, including temporary or part time workers Completed for everyone working in US, regardless of payroll, not completed for people working outside the US, regardless of payroll Only Border commuters from Canada or Mexico may provide international addresses, no PO Boxes If employee checks Alien Authorized to work must provide USCIS Number or A-Number Fragomen, Del Rey, Bernsen & Loewy, LLP 4

5 Tips for Section 2 Section 2 must be completed within 3 business days from date of hire Employee must be Physically Present and Original Documents must be reviewed in-person Be sure to verify Identity and Work Authorization Person who reviews original documents must sign section 2 of the I-9 Employer may delegate Section 2 review and attestation to non employee (e.g. for remote hires) Fragomen, Del Rey, Bernsen & Loewy, LLP 5

6 Fragomen, Del Rey, Bernsen & Loewy, LLP 6 Document Tips All documents presented must be unexpired (after 4/3/09) ID card must be issued by a federal/state/local government agency Voter s registration card need not have photo to confirm identity (but see special rule for E-Verify) Social Security card not acceptable for work authorization if it contains notation Not Valid for Employment or Valid with INS [or DHS] Authorization only Laminated cards are acceptable unless otherwise prohibited by language on the card Birth certificate must be issued by state or local government authority (not hospital issued)

7 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 7 Auditing and Defending Your Clients I-9 Forms Substantive vs. Technical and Procedural ICE Operational Guidance, November 2008, (Regulations pending) Before any audit or negotiations with ICE on a NOIF start with this guidance

8 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 8 Substantive Errors Failure to prepare or present After NOI served? Copies? Section 1 Name of employee Status box A number (if copies not maintained) Attestation signed Attestation dated if before September 30,1996

9 Substantive Errors, cont d Section 2 Document title, number, expiration date (if copies not maintained) Attestation not signed Not dated within three days of date of hire 3 days after clarified by E-Verify; ICE agrees How does ICE count business days? 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 9

10 Substantive Errors, Cont d Section 3 Not signed Not completed before expiration of previous work authorization 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 10

11 Technical or Procedural Errors Section 1 Maiden name, address, birthdate Date of signature on date of hire, if hired before September 30, 1996 Translator or preparer signature Note: SSN is optional except for E-Verify employers 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 11

12 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 12 Technical or Procedural, Cont d Section 2 Failure to record document id info, if copies maintained Missing company name and address Missing hire date Date of attestation after September 30, 1996 Note: what is local ICE position on timeliness? Other violations Use of Spanish version? Use of wrong I-9 version?

13 Limitations on Reliance on Technical and Procedural Defenses Intent to avoid IRCA Repeated failures Reliance on technical and procedural guidelines False corrections Failure to follow warning notice 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 13

14 Audit and Corrections: Best Practices and Issues Only employee corrections in Section 1 Any exceptions recognized by ICE? Employer corrections in Section 2: remember under penalty of perjury : can the person signing really attest? Missing signatures Missing dates 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 14

15 Fragomen, Del Rey, Bernsen & Loewy, LLP 15 Substantive/Uncorrected Technical Violations Fine Schedule % of Violation in Total Workforce First Offense Second Offense Subsequent Offense Up to 9% $110 $550 $1,100 10% to 19% $275 $650 $1,100 20% to 29% $440 $750 $1,100 30% to 39% $605 $850 $1,100 40% to 49% $770 $950 $1,100 50% and Up $935 $1,100 $1,100

16 Knowing Hire/Continuing to Employ Fine Schedule % of Violation in Total Workforce First Tier $375-3,200 Second Tier $3,200-$6,500 Up to 9% $375 $3,200 $4,300 Third Tier $4,300-$16,00 10% to 19% $845 $3,750 $6,250 20% to 29% $1,315 $4,300 $8,200 30% to 39% $1,785 $4,850 $10,150 40% to 49% $2,255 $5,400 $12,100 50% and Up $2,725 $5,950 $14, Fragomen, Del Rey, Bernsen & Loewy, LLP 16

17 Fragomen, Del Rey, Bernsen & Loewy, LLP 17 Enhancement Matrix Factor Aggravating Mitigating Neutral Business Size + 5% - 5% +/- 0% Good Faith + 5% - 5% +/- 0% Seriousness + 5% - 5% +/- 0% Unauthorized Workers + 5% - 5% +/- 0% History + 5% - 5% +/- 0% Cumulative Adjustment + 25% - 25% +/- 0%

18 Fragomen, Del Rey, Bernsen & Loewy, LLP 18 Anatomy of an Audit Notice of Inspection Time and scope of the audit Work with agents to make scope manageable 72 hours response time unless extension granted ICE subpoena Inspection and audit Notice of Intent to Fine/Warning Negotiation civil penalty matrix 25% upward or downward adjustment Discretion still exists

19 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP

20 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP

21 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 21 Negotiating the Best Deal with ICE Always assert good faith: if no unauthorized aliens, ICE has discretion to warn on first offense Standard fines Knowing hire: $375-$4300 Substantive or uncorrected t and p: $110-$1100 Depends on percentage of substantive errors Mitigation/Aggravation factors: size, good faith, seriousness, unauthorized aliens, ICE history Remember: Statue of Limitations, Cooperation, Publicity, IMAGE program and other leverage

22 Electronic I-9 Regulations The regulations require the electronic system must: 1. Ensure the integrity, accuracy and reliability 2. Prevent, detect and track unauthorized or accidental creation or changes to electronically completed or stored Form I-9 3. Have an inspection and quality assurance program with regular evaluations of the system and stored Form I-9s 4. Have an indexing system and a retrieval mechanism that permits searches by any data element. 5. Reproduce readable hardcopies. Employer retains responsibility 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 22

23 Your challenge: Managing the Electronic I-9/E-Verify provider ICE has emphasized that employers cannot hide behind commercial providers Many reported problems with some electronic providers Abercrombie & Fitch fine $1 million Michigan only Internally prepared electronic system Essentially no I-9 s 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 23

24 What is E-Verify No cost Internet based system with information from DHS & SSA Matches name with information in SSA/DHS and other government databases Voluntary... Except: Federal Contractors State and local requirements STEM exception 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 24

25 Preparing to Enroll in E-Verify E-Verify Memorandum of Understanding (MOU) and the employer responsibilities Determine what entity is enrolling Determine what hiring site(s) enrolling Decide who will need to access E-Verify and who will be responsible for owning the process. Determine if any changes are necessary to the company s business processes 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 25

26 Preparing to Enroll In E-Verify Understand how E-Verify impacts the Form I-9 SSN List B documents Copies of supporting documents Data from the I-9 Understand how the company processes its Forms I-9 Where and When do employees complete the Form I-9 Does your company forward its Form I-9s to a central location Does each location where the Form I-9 is completed have a computer with internet access 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 26

27 Revisiting Your E-Verify MOU Note, it might have changed while you weren t watching! Gives broad authority to the government: permits DHS to review E-Verify records, I-9 forms, to interview the employer and employees! Requires safeguarding of access and data Penalty kicked out of the program Data sharing with other agencies 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 27

28 Fragomen, Del Rey, Bernsen & Loewy, LLP 28 E-VERIFY - NEW INITIATIVES Monitoring and Compliance Expanded List of Behaviors MOU with OSC Incorporation of commercial data Photo Matching U.S. Passports & RIDE (DMVs) Promoting Participation Worker Protection Videos advising workers of rights Self-Check

29 What is CTMS looking for? (It is tracking your behavior) Multiple use of Social Security Numbers Delay in 3-day rule Pre-screening Terminations for TNC Over-documentation 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 29

30 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 30 Some Questions for Employers to Ponder Do you know that all new hires are going through E-Verify? Do you know who has access to your E-Verify account? Are you sure they (they are you!) use the system properly? Applicant screening? Ex-husbands girlfriends? Sharing passwords? Deleting users? Do all I-9 s completed since enrollment in E-Verify include E-Verify authorizations?

31 More Questions for Employers to Ponder What are your processes when you get a TNC? Give the employee the requisite notices? Keep the employee on payroll? Keep checking the system? Terminate only on FNC? DON T terminate a TNC 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 31

32 Your Goal: Making E-Verify Compliance an HR Operational Priority What to do? Implement a compliance mindset requires high level of focus Develop your own E-Verify User Guide Train, train, train Name an E-Verify Compliance Owner and have them routinely and randomly look at system data Consider an outside audit 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 32

33 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 33 Negotiating the Best Deal with ICE Always assert good faith: if no unauthorized aliens, ICE has discretion to warn on first offense Standard fines Knowing hire: $375-$4300 Substantive or uncorrected t and p: $110-$1100 Depends on percentage of substantive errors What discretion does ICE have? Mitigation/Aggravation factors: size, good faith, seriousness, unauthorized aliens, ICE history

34 Negotiating the Best Deal: What can you offer ICE? Statute of limitations defense: E-Verify/IMAGE Cooperation clause Publicity 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 34

35 Questions and Discussion 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 35

36 2007 Fragomen, Del Rey, Bernsen & Loewy, LLP 36 THANK YOU! Cynthia J. Lange Fragomen, Del Rey, Bernsen & Loewy, LLP 2121 Tasman Dr. Santa Clara, CA

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