Since the passage of the Immigration Reform and Control Act (“IRCA”) in 1986, employers have been required to fill out an I-9 for every employee hired by the company. Although the I-9 seems rather innocuous, there are serious ramifications for errors committed by an employer.

While many employers are unaware of the risks of I-9 errors, the issue has started to emerge as more and more business find themselves subject to I-9 audits by Immigration and Customs Enforcement (“ICE”), the police division of the Department of Homeland Security. With the federal government cracking down on non-compliant businesses, employers need to take immediate steps to get their I-9s in order or risk severe criminal and civil penalties.

The New Method of Enforcement

The ability of ICE to audit employers, and issue civil and criminal penalties against the employer, is not a new concept. The federal government has had the ability to audit employers since IRCA passed in 1986, though they rarely conducted audits until recently. However, beginning in 2009, ICE issued a memorandum directing its agents to begin targeting employers for failing to properly fill out I-9’s on their employees. Unfortunately for employers, this change occurred with almost no public notice, and ICE has begun to levy hefty fines and penalties against employers for even minor errors on I-9’s.

In 2010, ICE audited over 2600 companies and is well on its way to greatly surpassing that number in 2011. The federal government sees I-9 audits as the lynchpin to curbing illegal immigration: if it becomes too risky for an employer to take the chance of hiring an illegal immigrant, available jobs will decrease and the incentive to come here illegally will also decrease. Whether or not this rationale is correct, the end result is that employers are getting slapped with severe civil and criminal penalties for even minor violations.

Corporate Risk

Despite being only one page in length, the instructions for the I-9 are over 68 pages long! ICE estimates that over 99% of ALL employers have errors on their I-9’s, and the average I-9 has five errors. The rules are confusing because the USCIS issues the official regulations on the I-9, but a separate agency, ICE, enforces the regulations and issues its own unofficial regulations, which often contradict the official USCIS guidelines. Employers are often left guessing about how to ensure I-9 compliance until ICE shows up for an inspection. At that point it’s too late.

ICE will enforce criminal penalties against the individuals running the company (from the president down to the HR manager), along with civil penalties levied against the individuals and the company for failing to properly comply. ICE has been targeting employers primarily for criminal charges if any workers are found to be illegal. Within the last year, several managers, CEOs and presidents have been sentenced to prison for hiring undocumented workers (one CEO got 27 years in prison).

Additionally, ICE has levied heavy civil fines and sanctions against employers ranging from several thousand dollars to multi-million dollar fines. ICE has also enforced civil fines against individuals, which in some cases exceeds $250,000/person. Moreover, ICE has begun to bring discrimination suits against employers who “over-document” their foreign-born legal employees (such as green card holders).

The risks are severe, and the greatest danger is the lack of knowledge amongst employers of the consequences of non-compliance, both for the company and individually. I-9 noncompliance is a corporate landmine that every company should be aware of.

Employer Risk Even If All Employees Are Legal

Even if every employee is legal, you can still face civil fines, penalties, and discrimination charges based on your I-9’s. For example, ICE recently fined Abercrombie & Fitch over $1 million for non-compliance because it’s Michigan branch had not properly complied with I-9 requirements. Abercrombie paid a third party to electronically store its I-9s, and the third party’s system had a glitch. When ICE audited and discovered the glitch (which was not Abercrombie’s fault), Abercrombie was still heavily fined for the innocent error.

Additionally, employers are liable for any errors made on their independent contractors’ I-9s! Although that may not seem intuitive, ICE has enforced civil and criminal penalties against employers who fail to monitor the actions of their independent contractors. Even if every worker is legal, ICE will still seek to enforce civil penalties against the employer in any way they can.

How to Protect Yourself And Your Business

In order to protect your business (and yourself), there are a few things every employer should do. First, every employer should have their I-9’s audited by a Corporate Immigration Attorney to assess any errors that have occurred, many of which are correctable. (Note, however, that an employer should never review its own I-9’s and make changes without being advised by an attorney first).

After an attorney performs the company’s self-audit, HR personnel should be trained on how to properly comply with I-9 procedures, and the company should adopt an I-9 compliance policy. The compliance policy should emulate “ICE Best Practices,” which are the guidelines ICE suggests each employer should adopt.

Once those steps are finished, the employer should have an annual compliance audit performed for any new employees hired since the prior audit. If an employer follows these steps, the risks of non-compliance will be greatly decreased and the employer can better protect herself and her business.

Further Information

This article barely scratches the surface on I-9 compliance. I will be hosting a free Webinar on Thursday, May 19, 2011 from 12pm-1pm where I will address the risks a business faces for failing to comply with corporate immigration laws, how to survive an I-9 audit, and what preemptive measures every business should take to ensure immigration compliance and avoid liability.

This webinar is free, but space is limited. Be sure to sign up here today.