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
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
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
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