Trends in Fines Assessment for I-9 Paperwork Violations — OCAHO Update

19 August 2013 Labor & Employment Law Perspectives Blog

A string of recent decisions issued by the U.S. Department of Justice’s Office of the Chief Hearing Officer (OCAHO) provides useful insight into current trends in determining the amount of fines that may imposed on employers for mistakes made on Form I-9, the document that must be completed to verify the identity and employment authorization of all new hires.

OCAHO is the government agency that hears disputes between employers and U.S. Customs and Immigration Enforcement (ICE) arising under provisions of the Immigration and Nationality Act governing the knowing hire and ongoing employment of foreign nationals who are not authorized to work in the United States. These disputes include alleged violations of the Form I-9 requirements, as well as immigration-related unfair employment practices and immigration-related document fraud.

In I-9 enforcement cases, ICE may assess civil money penalties for mistakes employers make in completing I-9 forms. These types of mistakes are known as paperwork violations, as opposed to more serious violations that stem from hiring unauthorized workers. As the applicable regulations illustrate, the permissible fines that may be imposed for paperwork violations range from a minimum of $110 to a maximum of $1,100 for each violation. In determining the amount of fines to impose, ICE is required to give due consideration to the size of the business, the seriousness of the violations, the status of the worker, the employer’s good faith or lack thereof, and any history of prior violations.

Several recent decisions illustrate how these principles can interplay. In U.S. v. Pharaoh’s Gentlemen’s Club, the OCAHO administrative law judge (ALJ) found ICE’s fines assessment to be unduly harsh. During its investigation, ICE found 40 paperwork violations and imposed the maximum penalty of $44,000, contending that the number of violations showed the employer’s lack of good faith. The ALJ found that a poor rate of I-9 compliance is insufficient to show a lack of good faith absent some other culpable conduct and significantly reduced the fines imposed.

In contrast, in U.S. v. Super 8 Motel & Villella Italian Restaurant, OCAHO again rejected ICE’s application of the aggravating factor of lack of employer good faith based solely on the employer’s failure to complete the forms without any additional culpable conduct. However, the ALJ still found that the proposed fines were on the low side given the seriousness of the violations, which included a failure to even complete the required I-9 Forms. Nonetheless, the ALJ declined to alter the fine amount given the poor economic state of the employer’s business.

In a third decision, U.S. v. A&J Kyoto Japanese Restaurant, Inc., ICE set the fines for the 91 paperwork violations it found near the maximum allowed. ICE found that although the assessment was mitigated by the size of the business, employer good faith, and the absence of unauthorized workers, the seriousness of the violations was a significant aggravating factor. OCAHO then found the fines assessment to be excessive because the penalty constituted up to 135 percent of the business’s recently reported income. The ALJ reduced the fines from $79,942.50 to $30,475.   While these decisions show a willingness on the part of OCAHO to closely examine ICE’s attempts to aggravate fines assessments based on lack of employer good faith without egregious conduct that goes beyond paperwork violations themselves, the tone of these decisions reinforces the fact that paperwork violations are serious and can lead to financial consequences for employers who are lax in properly completing Form I-9. Employers should thus pay careful attention to make sure they properly complete such forms.

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