I-9 Compliance During Mergers and Acquisitions

16 January 2013 Labor & Employment Law Perspectives Blog

U.S. Immigration and Customs Enforcement (ICE) continues to increase its Form I-9 (employment eligibility verification) enforcement activities with more than 100 arrests in the first two weeks of 2013.  In 2012, ICE initiated more I-9 audits, increased its investigations, imposed more fines, and made more arrests than it has in four years. 

In the midst of a corporate merger or acquisition, companies can take certain steps to protect themselves from such penalties, and from inheriting the employment eligibility verification mistakes of former employers.

A new “employer” is created on the effective date of a merger or acquisition according to the Department of Homeland Security (DHS).  The new employer may choose to treat all employees as:  1). Continuing in their employment by retaining the previously completed Forms I-9; or 2). New hires by completing new Forms I-9 for all of these employees.

When the new employer chooses to keep old forms, the company is exposed to liability created by the I-9 errors of the previous employer.  If ICE initiates an I-9 audit, the employer may be exposed to monetary fines that range from $110 to $16,000 per violation.  Moreover, prison time may be imposed for managers and executives determined to have knowingly employed, or conspired to employ, unauthorized workers.

Compliance is required immediately; no grace period exists for new employers formed as a result of mergers and acquisitions.  ICE’s targeted industries include, among others:  health care, energy, critical food, agriculture employers, water treatment, high-profile restaurants, and nuclear reactors.

A complete audit of all employers’ Forms I-9 is the most effective way to avoid liability.  In the event of a merger or acquisition, the new employer should complete new Forms I-9 with legal counsel.

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