By: Bruce Buchanan, Siskind Susser

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In United States v. 7-Eleven, 11 OCAHO no. 1258 (September 2015), the Office of Chief Administrative Hearing Officer (OCAHO) found a 7-Eleven franchisee had committed numerous serious I-9 violations but reduced the proposed penalties by about 55%.

After service of a Notice of Inspection (NOI), Immigrations and Customs Enforcement (ICE) determined 7-Eleven had a 100% error rate on its I-9 forms. Specifically, ICE alleged 7-Eleven failed to timely prepare or present 27 I-9 forms and failed to ensure proper completion of eight I-9 forms. ICE sought a penalty of $34,408 based on a baseline penalty of $935 plus 5% enhancement for lack of good faith – backdating many I-9 forms. 7-Eleven, who was not represented by counsel, raised 19 affirmative defenses, almost all of which had no basis under the law.

The 27 I-9 forms that were not timely prepared or presented varied in their substantial defects: two employees did not have an I-9 form at all; five I-9 forms were backdated using the 2013 I-9 form for employees hired in 2012; 11 Form I-9s were not timely completed as they used the 2013 I-9 form and listed hire dates between 2010 and 2012; and nine other I-9 forms had numerous substantive errors, such as missing page 2, unsigned by employer and/or employee, and missing other pertinent data.

One of 7-Eleven’s principal defenses was that the employees hired were authorized for employment because the franchisee was required by 7-Eleven to submit information and data concerning new hires into a centralized information system, which determined employee’s work eligibility. This defense was found to be without merit. As OCAHO stated, “no other scheme or system an employer wishes to use to circumvent or replace the form I-9 completion and retention requirements…”

One issue which appears frequently in OCAHO litigation is whether the backdating of I-9 forms is evidence of bad faith. Although at first blush it might appear so, OCAHO has repeatedly stated that absent an indication that ICE instructed the employer not to backdate the I-9 forms, the government fails to prove bad faith and the 5% enhancement. In this case, ICE failed to offer any such proof; thus, the 5% enhancement failed.

Concerning the penalties, even though most of the violations were considered serious, 7-Eleven was substantially aided by the franchisee being a small employer. As OCAHO has repeatedly found, an employer’s small business status under the Small Business Regulatory Enforcement Fairness Act provides for leniency in penalties. Thus, OCAHO reduced the penalties from $34,408 to $15,450.