By Bruce Buchanan, Siskind Susser

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In what may be the smallest I-9 form penalty assessed against an employer, the Office of Chief Administrative Hearing Officer (OCAHO) has reduced Immigration and Customs Enforcement’s (ICE) proposed penalty of $1,776.50 to $500 in U.S. v. Keegan Variety, LLC, 11 OCAHO no. 1238 (2014).

Keegan Variety is a mom-and-pop convenience store in Van Buren, Maine on the Canadian border. The store employed only two people – a mother and cousin of the owners. When the two employees were hired in 2006 and 2010, Keegan Variety did not complete I-9 forms for them. It stated they were unaware of any such requirement and because they were relatives, they knew they were authorized to work as U.S. citizens.

After ICE served a Notice of Inspection on Keegan Variety, it determined the company had failed to timely prepare the two I-9 forms. Since the company only had two employees, ICE found 100% error rate and set the baseline fine at $935 per violation. ICE reduced the fine by 5% because of the small size of the business; thus, the penalty was $888.25 per violation.

After Keegan Variety declined to pay the $1,776.50 penalty, the case was litigated before OCAHO. In its decision, OCAHO declined to mitigate the penalty based upon good faith or the lack of seriousness of the violations. OCAHO found ignorance of the law -- not knowing of the requirement to have I-9 forms on each employee -- was not an affirmative defense; thus, it declined to mitigate the fine based upon the company’s good faith. Furthermore, OCAHO found the violations to be “serious” but declined to aggravate the penalty on this basis.

OCAHO used the analysis set forth in U.S. v. Ice Castles Daycare, 10 OCAHO no. 1142 (2011), and U.S. v. Red Bowl of Cary, 10 OCAHO no. 1206 (2013), and the Small Business Regulatory Enforcement Fairness Act, to find the penalty should be reduced to $500 for the following reasons:

Penalty adjustment to the lower midrange of permissible penalties is warranted due to the small size of the business, the fact that no unauthorized aliens have been hired, the fact that since 2006 Keegan has hired only two employees who are relatives known to be citizens of the United Sates, the general public policy toward leniency to small business entities, and Keegan’s ability to pay the proposed fine on account of operating losses suffered in 2012 and 2013.

This case begs the question: was it really worth government resources to litigate a case where the maximum penalty was $1,776.50 ? ICE should not be expected to ignore blatant I-9 violations, but perhaps this case could have been resolved with a written warning.

A copy of the OCAHO decision is available here.
Cite as U.S. v. Keegan Variety, LLC, 11 OCAHO no. 1238 (2014)