OCAHO Rejects Employer’s Unique Defense to Form I-9 Violations

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The Office of the Chief Administrative Hearing Officer (OCAHO), in United States v. Buffalo Transportation, Inc. (October 2015), found Buffalo Transportation, Inc. (BTI) committed over 100 Form I-9 violations and rejected a unique defense raised by BTI. However, OCAHO reduced the proposed penalties from about $110,000 to $75,600.

ICE’s Findings of Violations

After service of a Notice of Inspection (NOI), Immigrations and Customs Enforcement (ICE) determined BTI had a 100% error rate on its 139 Forms I-9. Specifically, ICE alleged BTI failed to prepare or present 84 I-9 forms and failed to timely prepare I-9 forms for 54 employees. ICE based its proposed $109,675 penalty on a baseline amount of $935 minus 5% mitigation for each of these factors - small size of the employer, lack of bad faith, absence of undocumented workers, and no history of prior violations. ICE then enhanced the baseline amount by 5% to account for the seriousness of the violations. As a result, the assessed penalty for 100% violations was set at $794.25 per violation. To my knowledge, this is the first time that ICE mitigated a proposed penalty for absence of undocumented workers. Usually, this is considered a neutral factor.

Employer’s Affirmative Defenses

After requesting a hearing with OCAHO and receiving a formal complaint from ICE, BTI raised seven affirmative defenses, all of which OCAHO found had no basis under the law. The most unique defense was that ICE should be estopped from assessing fines from the 138 substantive violations because it waived its right to do so by failing to reference these employees in the previously served “Notice of Technical or Procedural Failures” on BTI. OCAHO did not find this defense applicable because the “Notice of Technical or Procedural Failures” contained a provision stating “Additional failures to meet the employment verification requirements of section 274A(b) of the INA may have been discovered. These failures are not included in this notification and may result in the issuance of a Notice of Intent to Fine.” (NIF)

Substantive v. Technical Errors

OCAHO stated there is a distinction between substantive paperwork violations and technical violations, which can be corrected to avoid fines. When ICE found six technical errors, it issued the Notice of Technical or Procedural Failures, which included the language quoted above regarding ICE’s ability to issue a NIF based on additional I-9 failures. The basic reason why the Notice of Technical Failures is issued first is because if the technical errors are not corrected, then they become substantive errors.

OCAHO concluded ICE followed the law in first issuing the Technical Errors notice and later the NIF. BTI failed to provide any support for this position in OCAHO case law, relevant statutes or pertinent regulations. Therefore, ICE did not violate BTI’s due process rights and BTI failed to establish its estoppel defense.

Retention of I-9s – How long?

BTI also argued that it was not required to retain five of the I-9 forms in question for former employees, because it was beyond the retention period. The retention period is “three years after the date of hire or one year after the date the individual’s employment is terminated, whichever is later.”

In this case, the date of inspection was August 28, 2013, thus, this was the date to apply in the retention period test. BTI was successful in arguing it did not need to retain I-9 for three former employees. It should be noted BTI did not have any I-9 forms for the three employees in question; if it had, ICE could have audited those I-9 forms and reviewed them for substantive or technical errors.

ICE’s Conclusions and Penalties

OCAHO found BTI did not rebut any of the violations; therefore it found 135 violations. BTI asserted its violations of failing to prepare or present I-9 forms for numerous employees was not a serious violation. OCAHO case law has repeatedly stated these are serious violations. Therefore, the 5% penalty aggravation was justified under the law.

Despite the numerous serious substantive violations, OCAHO determined that a civil penalty of $794.75 for each violation was too high because penalties in this range are reserved for the “most serious and egregious violations.” OCAHO determined that 81 violations for failure to prepare I-9 forms was more serious than the 54 instances when BTI did not timely complete the I-9 forms within three days of hire. Thus, OCAHO assessed the failure to prepare the I-9 forms at $600 per violation and the other violations at $500 each. Accordingly, the total penalties were $75,600.

Takeaway

Even though BTI was only successful in removing three violations, it was successful in reducing the penalties by about 30 percent. This is another instance which reflects the success in litigating I-9 form penalties before OCAHO. Of course, this assumes the employer could not persuade ICE to lower the fines sought in the NIF in order to resolve the case. Many times you can obtain a sizeable reduction in penalties in negotiations with ICE and avoid the cost of litigation. 

This post originally appeared on LawLogix. Reprinted with permission.


About The Author

Bruce E. Buchanan is an Attorney at the Nashville and Atlanta Offices of Siskind Susser, P.C. He represents individuals and employers in all aspects of immigration law, with an emphasis on employer immigration compliance, as well as employers in employment/labor law matters. He is Past-Chair of the Tennessee Bar Association’s Immigration Law Section from 2011 to 2012 and has been the editor of the TBA’s Immigration Law Section Newsletter and the TBA’s Labor and Employment Law Section Newsletter since 2009. Mr. Buchanan also serves on the Board of Directors for the Nashville International Center for Empowerment (NICE) and the United Cerebral Palsy of Middle Tennessee and Middle Tennessee Seminole Club. He is an associate member of the Mid-Tennessee Chapter of the Associated Builders & Contractors (ABC).


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