By: Bruce Buchanan, Sebelist Buchanan Law, PLLC

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In two recent decisions, U.S. v. Golden Employment Group, Inc., 12 OCAHO nos. 1274 and 1277 (2016), the Office of the Chief Administrative Hearing Officer (OCAHO) found Golden Employment Group, a staffing company, committed 465 Form I-9 violations and was ordered to pay $209,600. Immigration and Customs Enforcement (ICE) sought a penalty of $305,525.

Inspection and Notice of Intent to Fine

After ICE served a Notice of Inspection on Golden Employment, the company requested and received an extension of time of three days to respond to the NOI; thus, all I-9s and documentation were due on April 15, 2013. Later, in May and June 2013, Golden Employment presented additional I-9 forms and supporting documentation to ICE.

Thereafter, ICE issued a Notice of Intent to Fine (NIF) alleging the violations in eight separate counts. Count I alleged Golden Employment failed to timely prepare and/or present 125 Form I-9s; count II alleged the company failed to prepare or present 265 Form I-9s for its employees; counts III, IV, and V were similar and alleged the company failed to ensure five employees properly completed section 1 and the company failed to complete section 2 and/or section 3, the company failed to ensure 22 employees properly completed section 1, and the company failed to properly complete section 2 and/or 3 of the I-9 form for 73 employees. Counts VI through VIII made similar allegations of the failure to timely prepare or present I-9 forms for 15 employees.

In April 2014, ICE served a Notice of Suspect Documents alleging the I-9 forms of 433 employees could not be verified as work-authorized. The company only contested seven of the 433 employees and ICE found those arguments to be without merit. Thus, all 433 employees were terminated by Golden Employment.

In serving the NIF, ICE determined that Golden Employment had an error rate of 35% and set the baseline penalty at $605 per violation. It treated the size of the company as a mitigating factor (somewhat surprising due to the hundreds of employees employed) and the seriousness of the violations as an aggravating factor. Thus, the penalty remained at $605 per violation.

Golden Employment’s Defenses

In its defense, Golden Employment’s owner, Paul Hughes, stated “he was led to believe that submissions could continue after April 15, 2013 to demonstrate compliance with the regulations.” When questioned where he obtained that belief, Hughes could not name the ICE auditor or officer nor produce any letters, emails or memorandum to support his assertion. Golden Employment asserts if these “late-filed” I-9 forms were considered, its error rate would be substantially reduced; thus, the baseline penalty would be substantially reduced and its penalty would be $63,250. OCAHO found this defense to be meritless.

Golden Employment also asserted approximately 50 employees worked less than 24 hours for the company; thus, it had no obligation to obtain a completed I-9 form for these employees. OCAHO held there is no statute, regulation, or case law to support this proposition; rather, the case law concerns where the employee was terminated before the third day of employment, when section 2 of the I-9 form must be completed by the employer. But the number of hours worked over a period of days does not relieve a company of its I-9 obligation, especially when the employee has reached the third day of employment. However, Golden Employment was relieved of any liability for failure to complete section 2 of the I-9 forms for those 29 employees, who worked less than three days from their first date of employment.

Golden Employment also asserted its use of E-Verify on five employees excused its failure to complete an I-9 form for these employees. This defense is without merit because the E-Verify program “does not purport to insulate an employer from the necessity of proper I-9 completion.”

Conclusion

Overall, Golden Employment was found liable 140 violations concerning the failure to timely present I-9 forms, 236 violations for failure to prepare I-9 forms, and 89 violations for failure to properly complete I-9 forms.

OCAHO determined Golden Employment was entitled to the 5% mitigating factors of no history of I-9 violations with ICE or its predecessor, good faith in the investigation and no evidence that it knowingly employed unauthorized workers. The latter two findings appear to be are contrary to OCAHO case law which states good faith must be shown before the issuance of the NOI and the mere presence of unauthorized workers, knowingly or unknowingly, creates a 5% aggravating factor for those unauthorized workers.

In conclusion, OCAHO assessed $500 each for the 236 violations of failure to prepare or present I-9 forms and $400 each for the 229 violations for failure to timely prepare I-9 forms or committing paperwork errors. Thus, the total penalty was $209,600 or approximately a 1/3 decrease in ICE’s proposed penalty.

Takeaways

Due to the substantial reduction in the penalties, almost $100,000, the employer smartly litigated the matter. At other times, an employer can reach a resolution with ICE which will substantially reduce the penalties. If ICE refuses to reduce the penalties more than 10% and a substantial amount of money is in dispute, litigation is usually the best course. Of course, part of the decision-making process is the types of violations and your defenses.