Holding firm to its promise of cracking down on companies that employ undocumented workers, government officials are conducting record numbers of worksite enforcement investigations and issuing higher fines than ever before.
Since 2009, the Obama Administration has pursued companies that hire illegal immigrants, but it has stepped up enforcement efforts during the last two years. U.S. Immigration and Customs Enforcement (ICE), a unit of the Department of Homeland Security, initiated a record 3,904 worksite enforcement investigations in fiscal year 2012—more than any previous year dating back to 2007. Compliance audits are also on rise, with 3,020 conducted last year—up from the 2,496 conducted in fiscal year 2011.
ICE is conducting audits and investigations across the country and across industries, including retail, hospitality, agriculture, manufacturing, and others. No one industry is a target, and no one industry is immune from scrutiny, employment lawyers warn.
The outcome of these investigations consequently has lead to more enforcement actions. A record-breaking 240 business owners, managers, supervisors, and human resource employees faced criminal charges in fiscal year 2012, surpassing the previous record of 221 in fiscal year 2011.
Immigration officials show no signs of slowing down. Last year, ICE also issued a record number of Notices of Inspection—the first stage of a Form I-9 audit. That means the number of enforcement actions and fines are likely to continue to climb. “The government isn't just letting these notices fall off their radar screen,” says Scott Wright, a partner and group leader for the labor and employment group at law firm Faegre Baker Daniels. “They're concluding every one of them.”
Immigration officials use the Form I-9 as the basic document for verifying work authorization and as the basis for whether to perform a compliance audit. Thus, companies that believe their Form I-9 documentation is not fully in compliance with immigration laws should not wait for the government to come knocking on their door before deciding to act, says Wright.
What to Expect
On receiving a Notice of Inspection, a company has just three days to turn over all of its Form I-9s, which can be a daunting task for any large employer. In some cases, however, ICE is taking these audits even further by issuing subpoenas to acquire a series of additional documents—such as quarterly tax statements, payroll records, company ownership documents, and more.
Kevin Lashus, former assistant chief counsel with DHS and now a managing partner at law firm Jackson Lewis, says that effectively means that employers “need to throw together teams of people to collect this information and pore through it to ensure they're in compliance before handing it over to immigration officials.”
Valentine Brown, a partner in the employment, labor, benefits, and immigration practice group for law firm Duane Morris, advises that companies “make as many corrections as possible and get all missing Form I-9s filled out before sending the whole bundle off to be audited.” One thing companies should never do, however, is backdate the form to make it appear that it was filled out correctly the first time if it wasn't, she warns.
Employers sometimes fear that making any sort of corrections to their Form I-9s will look bad in the eyes of the government, Brown adds, “but as long as a company is completely transparent on all of its corrections and all of the dates when the I-9 forms were completed—even if it was late—that will show good faith to the government and could possibly reduce some of the fines that a company might have to pay.”
Fines for even the most minor technical errors left unfixed can lead to increased scrutiny and penalties as high as $1,100 per violation for each faulty I-9. Technical violations can include something as simple as a name misspelling, or a photo identification that doesn't appear to match the applicant.
“As long as a company is completely transparent on all of its corrections and all of the dates when the I-9 forms were completed … that will show good faith to the government and could possibly reduce some of the fines that a company might have to pay.”
—Valentine Brown,
Partner,
Duane Morris
Once a company has produced its documentation for the audit, ICE will issue a “Notice of Suspect Documents,” which is a list of all employees the government has identified as potentially unauthorized to work in the United States. “The employer then has a legal obligation to notify those employees, and give them the opportunity to produce the appropriate work authorization documents within ten days of receiving the notice,” says Lashus.
Finally, companies with immigration issues may receive a Notice of Intent to Fine—the final stage of an ICE audit. That's a telltale sign that the company has “serious errors or omission” on their Form I-9s, says Wright.
Such substantive violations—such as knowingly hiring or continuing to employ an unauthorized worker—can cost a company up to $11,000 per violation. “The bottom line is that employees need to get that two-page I-9 form done right,” says Lashus.
Proactive Measures
Companies would be wrong to assume an ICE audit starts upon receipt of a Notice of Inspection, says Wright. In reality, most companies selected for these audits have been on the government's radar screen for several months, based off tips they've received, he says.
Lashus says that immigration officials are often tipped off by various sources, including disgruntled current or former employees, industry competitors, or customers. “Each of those complaints could serve the basis of an investigation,” he says.
One way companies can reduce their exposure to an ICE audit is to be “proactive and responsive to allegations and reports of potential problems,” says Wright.
Another way to reduce exposure to an ICE audit or enforcement action is to conduct internal audits, at least once a year, recommends Brown. An internal audit should entail identifying any missing I-9 forms, fixing any technical errors in current forms, and re-verifying documents, when necessary. “Those kinds of things can all be corrected,” she says.
Brown further recommends that companies centralize the storage of Form I-9s collected throughout the company's various work locations or departments and put one person in charge of them. Such a process reduces the chance of making errors in the Form I-9 process, she says.
Wright agrees. “The most practical, inexpensive way to improve I-9 compliance is to centralize the function.” That individual should have the “accountability, responsibility, and authority to review everything and immediately follow up if things are out of place,” he adds.
Record Enforcement Action
In October, Infosys Corp., a consulting, technology, and outsourcing firm, was ordered to pay the Department of Justice a $34 million civil settlement—the largest ever in an immigration case—for engaging in systemic visa fraud and abuse of immigration processes. The audit revealed that “more than 80 percent of Infosys's I-9 forms for 2010 and 2011 contained substantive violations.”
WORKSITE ENFORCEMENT
Below is a look at the U.S. Immigration and Enforcement's (ICE) Homeland Security Investigations' (HIS) updated enforcement strategy.
On April 30, 2009, ICE HSI rolled out a revised worksite enforcement strategy. The strategy prioritizes the use of criminal prosecutions against employers that:
Utilize unauthorized workers as a business model
Mistreat their workers
Engage in human smuggling or trafficking
Engage in identity and benefit fraud
Launder money
Participate in other criminal conduct
Investigations involving national security, public safety, or those associated with our critical infrastructure and key resources sectors receive top priority. While HSI continues to prioritize criminal investigations, it now places increased emphasis on compliance and outreach. HSI utilizes all available civil and administrative tools, including Form I-9 inspections, civil fines and debarment. HSI also actively promotes the ICE Mutual Agreement between Government and Employers (IMAGE) outreach program. IMAGE is a voluntary partnership between the government and the private sector, whereby employers receive invaluable training and are provided with additional tools to strengthen the integrity of their workforce and curtail the employment of unauthorized workers.
HSI believes utilizing enforcement, compliance and outreach is an effective approach to deter illegal employment and create a culture of compliance.
Fiscal Year 2012 Accomplishments
HSI made 520 criminal arrests tied to worksite enforcement investigations.
Of the individuals criminally arrested, 240 were owners, managers, supervisors or human resources employees. They face charges such as harboring or knowingly hiring illegal aliens. The remaining workers who were criminally arrested face charges such as aggravated identity theft and Social Security fraud.
HSI served 3,004 Notices of Inspection and 495 Final Orders, totaling $12,475,575.00 in administrative fines.
ICE debarred 376 business and individuals for administrative and criminal violations.
HSI conducted 2,421 IMAGE outreach presentations to 15,906 employers.
Source: U.S. Immigration and Customs Enforcement.
The Justice Department also charged Infosys with failing to “maintain Form I-9 records for many of its foreign nationals in the United States in 2010 and 2011 as required by law, including a widespread failure to update and re-verify the employment authorization status of a large percentage of its foreign national employees.”
The worst outcome of an investigation, however, is not the fine, Lashus says, but rather the potential to be debarred from participating in federal contracts. Not being able to conduct business with the federal government, the largest consumer of goods and services in the world, could have a significant bearing on a company's bottom line, he says.
No Signs of Slowing
Don't expect any letup in ICE's stepped-up immigration enforcement efforts. Homeland Security Secretary Janet Napolitano recently requested a proposed $59.9 billion budget for fiscal year 2014—$5.3 million of which would be allocated to ICE. “Requested funds will continue the department's focus to promote compliance with worksite-related laws through criminal prosecutions of egregious employers, Form I-9 inspections, civil fines, and debarment, as well as education and compliance tools,” Napolitano said.
Napolitano also said the DHS plans to continue worksite enforcement and improvement of its E-Verify program, with an additional budget request of $114 million. E-Verify is a Web-based system that allows employers to check the Social Security and visa numbers submitted by workers against government databases.
Companies that use and participate in E-Verify have a much higher chance of completing the Form I-9 properly, says Wright. So far, more than 429,000 employers have voluntary enrolled in the program.
Employment lawyers say they don't expect enforcement to slow down any time soon. “They've had a lot of great success and made a lot of money off compliance audits,” says Brown. Last year alone, ICE imposed $12.5 million in fines—the highest amount since the agency's creation in 2003.
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