By John Fay
At first glance, an I-9 looks like a simple, relatively straightforward government form with a straightforward purpose: verifying and documenting your new hire’s identity and eligibility to work in the U.S. But if you dare to look further, you will often find a confusing (and convoluted) process that is ripe for errors and costly mistakes.
All it takes is a forgotten signature, incorrect document choice, or a missed reverification to turn your relatively benign-looking I-9 form into a possible ticking time bomb of potential liability when the government comes knocking at your door and asks for your hiring paperwork.
And last week, the Department of Homeland Security (DHS) raised the stakes when they announced an increase to the civil penalties that can be assessed against employers for failing to complete their I-9s as required under the law.
But before we explore those changes, let’s briefly review how Form I-9 penalties are assessed (and why this should matter to you).
Let’s say you just received a Form I-9 “Notice of Inspection” (NOI) from Immigration and Customs Enforcement (ICE). Resisting the urge to panic, you read through the notice and learn that you must turn over all of your I-9s and a wide variety of HR and business documents to ICE within as few as 3 days. Again, resist the urge to panic.
Upon receipt of those I-9s, ICE will review the forms to identify any technical or procedural violations (e.g., a missing date of birth or address), substantive violations (e.g., missing signature, missing documents, etc.) and any instances when an employer may be knowingly employing an undocumented worker.
By law, ICE must notify you of the technical or procedural violations and provide you with as few as 10 business days to make corrections. If you’re able to correct the errors, those violations can be exempted from fines. On the other hand, if you’re unable to make corrections, those errors can turn into “substantive” violations, which are fineable by ICE.
If ICE decides to assess a penalty, they will typically add up the number of substantive violations and divide it by the number of error-free I-9 forms that you should have presented (in an alternate universe, perhaps). This number becomes the error rate for substantive violations. For example, if you should have 100 I-9 forms but ICE identifies errors on 75 of them, the substantive error rate will be 75%.
Once the error rate is calculated, ICE typically utilizes a graduated scale for the fine amount, which is assessed at the I-9 level. For many years, I-9 paperwork violations were assessed at a range of $110 to $1,100 per errant form. However, in August 2016, the fine amounts for I-9 violations became a constantly moving target – courtesy of a rule that enables government agencies to increase monetary penalties across the board on an annual basis in order to account for inflation and to ensure that the fines continue to maintain their deterrent effect.
Which brings us back to our news for today. On January 13, 2023, the Department of Homeland Security published a notice in the federal register, announcing their annual inflation adjustments to a wide variety of civil monetary penalties, including Form I-9 related fines. Not surprisingly, this year’s adjustment (an approximately 7.7% increase over 2022) reflects the high inflationary trends in the U.S. economy and represents the largest increase in fines that we’ve seen since the inflationary adjustment rule went into effect.
Pursuant to this rule, the “New Penalty Amount” shown below will be effective for I-9 paperwork penalties assessed after January 13, 2023 where the associated violation occurred after November 2, 2015 (when the inflationary rule went into effect).
It’s also important to remember that uncorrected Form I-9 mistakes are treated as “continuing violations” by the agency, which means that ICE will consider them to have occurred after November 2, 2015 (even if the error occurred many years ago) for purposes of assessing the fine.
In addition, the penalties for knowingly hiring, recruiting, referring, or retaining an unauthorized worker will increase per unauthorized individual to $676 - $5,404 for the first offense; $5,404 - $13,508 for the second offense; and $8,106 - $27,018 for subsequent offenses.
Review your current I-9 policies and practices with your counsel: employers (ideally with the assistance of counsel), should carefully analyze their current I-9 policies and procedures to ensure they are complying with the latest I-9 and E-Verify rules. As part of this process, employers may consider developing a formal I-9 and E-Verify SOP (Standard Operating Procedure) which outlines all of the various I-9 and E-Verify tasks and responsible parties.
Improve the Process: Many employers today utilize a smart electronic I-9 system which can help you detect and prevent errors or omissions and also help you facilitate the overall management of your I-9 and E-Verify processes.
Correct historical I-9s now (while you can): as described above, the law enables employers to wash away some of the sins of the past and avoid some of the fines and penalties for certain types of technical or procedural errors (which just so happen to be very common in the I-9 world). While a project like this can be a daunting task, employers can take advantage of automated tools and outsourced assistance to help them facilitate the correction process amidst these ever-changing rules.
If you are looking for assistance with managing your I-9s for your organization, take a look at our I-9 Management suite of services, or learn more by downloading our HR Checklist for I-9 Enforcement.
The information provided is intended as general guidance and is not intended to convey any tax, benefits, or legal advice. For information pertaining to your company and its specific facts and needs, please consult your own tax advisor or legal counsel. Equifax Workforce Solutions provides services that can help employers reduce their compliance risks. Details on our provision of these services and related support will be contained in your services agreement. Links to sources may be to third party sites. We have no control over and assume no responsibility for the content, privacy policies or practices of any third party sites or services.