Number of Immigration Compliance Audits Soars

Keeping its promise to crack down on employers that hire illegal workers, government officials are conducting record numbers of immigration compliance audits and worksite enforcement investigations. And they warn that plenty more are on the way.

The Department of Homeland Security's Immigration and Customs Enforcement unit conducted 2,746 compliance audits last year—more than doubling the 1,191 audits it conducted in 2008. It also issued 2,196 Notices of Inspections last year—up from the 1,444 notices it issued in 2009 and 503 in 2008.

The spike in investigations is also leading to more enforcement actions. A record-breaking 180 business owners, employers, and managers faced criminal charges in fiscal 2010, up from 114 in 2009 and 135 in 2008.

“The likelihood that you may face a compliance audit is higher than it has been in the past decade,” says Daniel Brown, a partner with law firm Berry Appleman & Leiden.

 In February ICE announced that 1,000 more companies will soon receive a Notice of Inspection—the first step in a Form I-9 audit—to determine if companies are violating U.S. employment laws by hiring illegal workers. ICE officials won't release the identities of companies it plans to audit, but did warn in a statement: “The inspections will touch on employers of all sizes and in every state in the nation—no one industry is being targeted, nor is any one industry immune from scrutiny.”

How to prepare? ICE officials use the Form I-9 as the basic document for verifying work authorization, so compliance departments should start there. “If you don't do them correctly, you are not in compliance,” says Nancy-Jo Merritt, an immigration lawyer with law firm Fennemore Craig. Employers are required to keep Form I-9s for three years from the date of hire, or one year from the date of termination.

Errors in the I-9 are fairly common, and can lead to increased scrutiny and penalties that range from $110 to $1,100 per violation. Common technical mistakes include misspelled names, missing addresses or birth dates, or failure to provide a business name and address.

More substantive errors, which bring penalties in the upper range, include missing employee names, unsigned or undated forms, late forms, or lack of authorization documents.

The attestation boxes in Section I—where employees must check off whether they're claiming to be a U.S. citizen, permanent resident, or someone authorized to work in a country for a particular period of time—“seem to cause the most trouble,” says Diane Butler of the law firm Lane Powell. “Employers do not understand the significance of requiring employees to check that box. It seems to be a trap for the unwary.”

Clerical errors aside, penalties for knowingly hiring and employing illegal workers range from $375 to $16,000 per violation; repeat offenders receive penalties at the higher end of the range. 

“Employers do not understand the significance of requiring employees to check [the attestation box in Section I]. It seems to be a trap for the unwary.”

—Diane Butler,

Shareholder,

Lane Powell

Violations can also lead to criminal prosecutions and jail time. Earlier this month, federal prosecutors sentenced Rick Vartanian, president of Brownwood Furniture, to 16 months in federal prison for obstruction of justice and continuing to employ illegal workers.

Vartanian's case provides a vivid reminder to respond truthfully to immigration audits. According to court documents, Vartanian told ICE agents that unauthorized workers identified during an earlier audit had been terminated. In reality, ICE identified 18 of 30 unauthorized workers that the company kept on the job.

Audit Preparation

When immigration officials conduct audits, they review payroll records, quarterly tax returns, and documentation on independent contractors, in addition to Form I-9s. Companies typically have only three days to turn over all documentation. “Three days is really not a lot of time, so calling legal counsel immediately so that you can evaluate what needs to be done is important,” says Ashlee Bekish, an associate of law firm Larkin Hoffman.

Many I-9 errors can be identified before ICE ever comes knocking on your door, Bekish adds. Employers need to conduct routine internal audits of their I-9 forms and practices, and make appropriate corrections. She says that technical errors, such as misspellings and incorrect dates, can be corrected after a Notice of Inspection is received. Employers with substantive errors, however, are better off completing an entirely new, correct I-9 form and attaching it to the original. The goal there: to demonstrate that all changes have been clearly documented.

“You always want to make it clear to a government auditor exactly when the changes were made and by whom,” Brown says. He recommends that employers use an electronic I-9 Form to help reduce errors.

The single most important piece of advice: Never backdate the form, Bekish says. Never make it appear that it was filled out correctly the first time if it wasn't.

BEST HIRING PRACTICES

The following are best hiring practices, as established under the “ICE Mutual Agreement Between Government and Employers” (IMAGE) Program.

Use E-Verify, the DHS employment eligibility verification program, to verify the employment eligibility of all new hires.

Use the Social Security Number Verification Service (SSNVS) for wage reporting purposes. Make a good faith effort to correct and verify the names and Social Security numbers of the current workforce and work with employees to resolve any discrepancies.

Establish a written hiring and employment eligibility verification policy.

Establish an internal compliance and training program related to the hiring and employment verification process, including completion of Form I-9, how to detect fraudulent use of documents in the verification process, and how to use E-Verify and SSNVS.

Require the Form I-9 and E-Verify process to be conducted only by individuals who have received appropriate training and include a secondary review as part of each employee's verification to minimize the potential for a single individual to subvert the process.

Arrange for annual Form I-9 audits by an external auditing firm or a trained employee not otherwise involved in the Form I-9 process.

Establish a procedure to report to ICE credible information of suspected criminal misconduct in the employment eligibility verification process.

Ensure that contractors and/or sub-contractors establish procedures to comply with employment eligibility verification requirements. Encourage contractors and/or sub-contractors to incorporate IMAGE Best Practices and when practicable incorporate the use of E-Verify in subcontractor agreements.

Establish a protocol for responding to letters or other information received from federal and state government agencies indicating that there is a discrepancy between the agency's information and the information provided by the employer or employee (for example, "no match" letters received from the Social Security Administration) and provide employees with an opportunity to make a good faith effort to resolve the discrepancy when it is not due to employer error.

Establish a tip line mechanism (inbox, e-mail, etc.) for employees to report activity relating to the employment of unauthorized workers, and a protocol for responding to credible employee tips.

Establish and maintain appropriate policies, practices, and safeguards to ensure that authorized workers are not treated differently with respect to hiring, firing, or recruitment or referral for a fee or during the Form I-9, E-Verify or SSNVS processes because of citizenship status or national origin.

Maintain copies of any documents accepted as proof of identity and/or employment authorization for all new hires.

Source: U.S. Immigration and Customs Enforcement.

Employers should also consider where they store I-9 forms; Bekish recommends they be kept separate from personnel files. Often times, employers will mistakenly put those files together, which can create privacy issues. During an audit, ICE is entitled to see only I-9 forms, not all personnel documents.

More to Come

Expect the increase in immigration compliance audits to continue. DHS Secretary Janet Napolitano recently unveiled a $57 billion fiscal year 2012 budget request—10 percent of which would go to ICE for workplace enforcement efforts.

Napolitano also said the DHS plans to continue worksite enforcement and improvement of its E-Verify program, with an additional budget request of $102.4 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. More than 246,000 employers are enrolled in the program on a voluntary basis.

ICE is also adding new infrastructure to pursue employers that hire illegal workers. In January, ICE Director John Morton announced the establishment of an Employment Compliance Inspection Center in Crystal City, Va. The center will be staffed by 15 auditors who will expedite Form I-9 audits of companies selected for inspection.

ICE said it also plans to expand its training efforts related to its “ICE Mutual Agreement Between Government and Employers (IMAGE) Program,” a voluntary program that allows employers to form partnerships with ICE as part of their efforts to comply with immigration laws.

Employers that seek to participate in IMAGE must agree to:

Complete a self-assessment questionnaire of hiring practices;

Enroll in E-Verify and the Social Security Number Verification Service;

Adhere to IMAGE Best Hiring Practices;

Undergo an I-9 audit conducted by ICE; and

Review and sign an official IMAGE partnership agreement with ICE

Upon enrollment in and commitment to the IMAGE Best Employment Practices, program participants are deemed “IMAGE certified,” a distinction DHS wants to become an industry standard.

The program doesn't enjoy universal support, however. “Frankly, we don't recommend to many of our clients that they join the IMAGE program,” Brown says. “It's not entirely clear what the benefits are to a company that's already taking its compliance obligation seriously.” He adds that circumstances may differ for a company that has had compliance issues in the past and “wants to make sure that it's on the straight and narrow path.”