With a constant stream of impending immigration reform and frequent, high-profile congressional debates, it is easy to forget the daily realities of immigration compliance practices and related enforcement that should concern companies of all sizes and industry affiliation. Unfortunately, this comes at a price. Immigration status may be buried under multiple corporate interests, but it can bring operations to a halt and cause not only significant fines, but public relations disasters, unwanted attention from multiple government agencies and severe reputational damage.
Am I at Risk?
“Our company does not employ any foreign workers, everyone is born and bred in the United States.” “Why would we worry about immigration if we do not sponsor any work permits?” “We are too small and too busy to think about this—immigration is for the Microsofts of this world.” Some of the most worrisome discussions for immigration lawyers start with these statements. Why should a busy executive or risk manager be concerned with immigration compliance when there are many more pressing daily worries? The answer is simple: all U.S. employers are required to follow certain, very specific immigration compliance steps, and paperwork violations alone may render substantial fines, depending on the size of the company and the nature of the malfeasance. Immigration audits are quickly becoming a convenient and readily available source of government revenue and no one wants to contribute to this particular revenue stream.
A few years ago, businesses could predict the likelihood of an immigration audit fairly accurately. Large manufacturing companies, factories employing manual laborers, and construction and hospitality businesses were likely and easy targets. Indeed, these “high risk” industries were responsible for keeping the limited resources of enforcement agencies reliably tied up. Others paled at the high fines levied against these corporations and convinced themselves that they were unlikely targets for similar treatment.
This changed in recent years, however, as the government started taking a new approach. Predictable “problem industries” no longer bear the brunt of enforcement efforts, and companies can no longer enjoy a comfortable sense of invincibility. The enforcement universe has changed and, while government immigration audit costs appear to be decreasing, related business costs are steadily on the rise—and judging by the U.S. Immigration and Customs Enforcement (ICE) annual fines reports, related revenues are increasing as well. Your odds of an audit grow daily, and the question now is not “if” ICE will show up at your door, but “when.”
The good news is, with a certain amount of preparation and preventive measures, the inevitable disruptions of an audit can be minimized, risks assessed and weighed, and remedial measures taken well in advance of ICE’s visit. Key proactive steps include immigration policies and practices evaluation, and establishment and implementation of a clear and concise compliance program.
A Proactive Approach
Basic immigration compliance planning and training should ideally be addressed in the early days of a company’s operation. In practice, you definitely want to consider it as soon as you have finished reading this article. Questions to ask from the risk management perspective are:
- Is there an immigration compliance program?
- Who is in charge?
- Are records kept and maintained appropriately and consistently?
- What are the likely damages of an audit?
- Are there other immigration matters, such as sponsored foreign workers, that the company is or should be aware of?
- What remedial measures should be taken and what are the specific steps and timelines?
Immigration compliance programs tend to be strongest when administered by a designated human resources or legal professional who undergoes both initial and frequent refresher training. For companies with multiple offices, having an immigration compliance officer with designees at each location can render the best results. A written policy affirming the company’s commitment to immigration regulations and outlining compliance procedures not only helps streamline the program, but will also be a valuable tool during the course of audits by the government and corporation, including the process of in-house review and self-correction.
Auditors at the Door
Technically, several federal agencies may request I-9 Employment Eligibility Verification files, but the most likely auditor is ICE. Per the recently adopted model, one or two officials inconspicuously serve a subpoena providing a three-day notice requiring the business to produce the original I-9 files outlining documentation for provision.
More often than not, a subpoena is not limited to the I-9 files, but also includes basic corporate documents such as articles of incorporation, employee roster, and wage and hour records. A three-day notice is mandatory and standard but, depending on the specific circumstances, the notice period may be extended based on the needs of the business. For example, auditors may consent to a longer documentation provision timeline for multi-facility companies that have to ship records from out-of-state. However, assumptions should not be made regarding an extension for documents production, and it is best to conduct any negotiations with auditors through legal counsel.
Even if you are confident that your I-9 records are in order, you should never waive the notice period. Rather, immediately upon subpoena receipt, it should be reviewed by counsel. The first step in audit documentation preparation is an assessment of the compliance landscape. The best practice is to review a representative sampling of I-9 forms from different periods of the operation and, if applicable, completed by different personnel. This initial assessment should provide a reasonably accurate picture of the state of your company’s compliance efforts.
If proper policies have been implemented, you probably have little to worry about and, while disruptive of business, the audit should be nothing more than an inconvenience. Even if auditors determine that some of the employees are working without authorization, so long as the company acted in good faith and properly complied with I-9 rules and procedures, it should not be subject to penalties and fines. After all, employers are not expected to act as police officers or forensic experts and can hardly be held accountable for honest mistakes with regard to document validity, especially since the fake document industry is a multibillion-dollar business.
But what if the initial review of an I-9 sampling indicates deficiencies? The three-day notice period can be used to correct certain mistakes and even belatedly complete I-9 forms when they are missing. However, all corrections must be initialed and dated with the current date; thus, auditors will easily determine the timing and compliance “kudos” would be diminished accordingly. Still, a less-than-harsh auditor is likely to consider these delayed efforts as evidence of the company’s good will and serious attitude toward the audit.
Once the I-9 files are delivered to auditors, results may take a few weeks or, in some instances, months. Rather than passively await ICE’s feedback and the likely notice of fines, consider remedial measures. Even if the audit has noted deficiencies, handling the experience with due care and streamlining compliance efforts may help during settlement negotiations with the government. A proactive effort to be a good corporate citizen counts, even if initiated with less than perfect timing. This is a good time for broader compliance training, relevant policy establishment or update, and planning for the post-audit future.
Expectations of comprehensive immigration reform and a government-led effort to repair our malfunctioning immigration system are undoubtedly important, but successful businesses can hardly afford to wait passively. Understanding the basic compliance obligations and ensuring that one’s house is in order are part of the best practices list for experienced risk managers. A proactive approach equals financial and reputational savings and is well worth the effort.
Immigration Rules to Remember
Immigration compliance practices currently center around the completion of Form I-9 Employment Eligibility Verification and related procedures. Each U.S. employer is obligated to review documentation presented by every new employee, regardless of citizenship or position within the company, that demonstrates the worker’s legal status and ability to work in the United States. This requirement pertains to all workers hired after Nov. 6, 1986, when the I-9 verification requirements were created.
Verify and Complete: Form I-9 should be fully completed for each worker within three days of hire. Section 1 must be completed by the employee, and the employer’s representative is responsible for documentation review and Section 2 completion. The employee should choose which documents to present for verification, and facially valid documents should be accepted without question, regardless of the worker’s citizenship status. When choosing which documents to present, the worker should be offered a choice to select one document from List A on the back of Form I-9, or one document each from List B and List C.
Store: I-9 files, which include fully completed I-9 forms and copies of documents presented by employees at time of hire, should be kept separately and apart from other human resources files, such as personnel records. In case of an audit, documentation that is mixed with I-9 files may be reviewed by auditors and open the door to questions unrelated to I-9s and, possibly, additional audits.
Maintain: All documents presented need to be valid at the time of verification. While identity documents, such as driver’s licenses, do not need to be re-verified upon expiration, temporary employment authorizing documents, including Employment Authorization Documents (EAD), should be scheduled for re-verification at expiration time. When performing re-verification, employers should not request or require that a renewed document be presented. Rather, the worker should again decide which valid documents to present. The employer’s representative must complete Section 3 of Form I-9 at the time of re-verification.
Keep: Properly completed I-9s should be retained throughout the employee’s entire tenure at the company. Upon the worker’s departure, his or her I-9 file must be kept for one year from the date of employment termination or three years from the date of hire, whichever comes later. It is advisable to purge I-9 files upon completion of the mandatory record maintenance period, but even outdated records should not be destroyed upon receipt of an audit subpoena.
Self-Audit: In-house audits are an effective and inexpensive way to ensure that company records are in order and to avoid a pre-audit rush when a subpoena is issued. In-house audits should be performed approximately every six months and immediately after any significant business changes, such as hiring surges or layoffs. Personnel responsible for I-9s should be scheduled for refresher training on an annual basis.
Due Diligence: Maintaining proper I-9 records is a priority for every business, but it is equally important to include an I-9 review when preparing for a merger or acquisition of another business or its employees. An I-9 review may result in hefty fines if the new subsidiary’s records turn out to be deficient. This step is frequently delayed or forgotten amidst an increase in human resources activity.
Integrity: It is important to remember that perfectly completed and maintained I-9 files only protect your company if it does not have actual knowledge of illegal activity and does not have reason to believe any employees are unauthorized to work. Actual knowledge is a fairly straightforward concept, but there is occasional confusion as to what constitutes knowledge for a corporate entity. While rumor of a worker’s status is unlikely to be considered “knowledge” by even an aggressive auditor, information any supervisor has of a worker’s deficient employment authorization implicates the company. The concept of constructive knowledge (“the company should have known”) is harder to tackle, but, with very few exceptions, reliable signs of unauthorized employment or obvious deficiencies in I-9 documentation are considered evidence against the employer.