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  • Blogging: OCAHO Shows No Mercy to Modern Disposal by Bruce Buchanan

    Bloggings on I-9 E-Verify Immigration Compliance

    Bruce Buchanan

    OCAHO Shows No Mercy to Modern Disposal; by Bruce Buchanan, Siskind Susser

    After litigating before Office of Chief Administrative Hearing Officer (OCAHO), Modern Disposal, Inc., a New York company, was unable to receive any reduction of the $33,275 penalty.   Modern Disposal employed 168 workers at the time of the NOI in November 2009.

    ICE alleged Modern Disposal failed to timely prepare I-9 forms for 55 current employees. The company conceded they were not completed until after receipt of the NOI.

    ICE set the baseline penalty at $605 per violation, based upon a 34% substantive error rate. ICE aggravated the penalty by 5% based on the size of the company - it "failed to use its personnel and financial resources to comply with the law" and lack of good faith by not timely completing the I-9 forms. However, it mitigated the penalty by 5% based on lack of seriousness and lack of any unauthorized workers. Thus, the aggravating and mitigating factors cancelled each other out.

    The company argued ICE did not explain its rationale for $605 per violation. OCAHO found the penalty per violation was based upon ICE's matrix of the percent of substantive errors. A 34% error rate equals a penalty of $605 per violation. However, OCAHO failed to fully explore factors such as employer's overall revenues, profitability, and amount of the payroll.  

    In an unusual situation, OCAHO rejected ICE's attempt at leniency. Specifically, it rejected ICE's assertion that the company failed to use its personnel and financial resources to comply with IRCA, citing OCAHO decisions dating back to 1996 with the same holding. OCAHO also rejected the finding of lack of good faith, citing a 1990 OCAHO decision that found tardy completion of I-9 forms was not “necessarily an indication of bad faith." OCAHO also rejected ICE's mitigation on the lack of seriousness, stating "failure to prepare an I-9 in a timely fashion is . . . . always a serious violation because an employee could potentially be unauthorized for employment." In this case, the delays were between 3 and 10 years. 

    OCAHO concluded the penalties assessed were well within the statutory parameters; therefore, it upheld them. In so doing, OCAHO noted Modern Disposal characterized the penalties as "inappropriate and excessive" but failed to provide any evidence to support their position. Thus, an important point, if you are going to argue the penalties are excessive, explain why.


    OCAHO Reduces Penalities by 80% for Subway Restaurants; by Bruce Buchanan, Siskind Susser

    The Office of the Chief Administrative Hearing Officer (OCAHO) recently issued two decisions involving Subway restaurants in North Carolina - Siwan & Sons d/b/a Subway, #35029 & #23095, and Siwan & Brothers, Inc. d/b/a Subway, #37616.   In these two cases, Immigration and Customs Enforcement (ICE) sought penalties of $82,280 and $49,368, respectively. In both cases, OCAHO drastically reduced the penalties - by about 8o%. This result is similar to the result in 2010 when OCAHO decided another case involving a Subway franchisee in North Carolina. (Word to North Carolina Subway franchisees - carefully review your current I-9 forms or better yet have an immigration compliance attorney conduct an audit.)

    In December 2009, ICE served each company with a Notice of Inspection (NOI) requesting the I-9 forms of current employees and former employees in the past two years. Although the companies produced 88 Form I-9s and 52 Form I-9s, respectively, they only had less than 10 employees at each facility. ICE charged Subway, #'s 35029 and 23095, with 65 violations, involving failing to complete the I-9 forms in the required three-day period and backdating the I-9 forms, and eight violations of failure to present the I-9 forms of former employees. In Subway, # 37616, ICE charged the company failing to complete 45 employees' I-9 forms in a timely manner, backdating the I-9 forms, failing to produce the I-9 forms of three current or former employees and/or failing to complete Section 2 or 3.  

    ICE found each company's I-9 forms had over 80% error rate; thus, the baseline fine per violation was set at $935. As for the five factors, ICE argued the companies were not entitled to the 5% mitigating factor of being a small employer even though they had few current employees because Subway franchise owners had the benefit of corporate human resources training, including I-9 compliance. Rather, it treated the size of the employers as a neutral factor. Moreover, it aggravated the fines by 5% each for lack of good faith - backdating the I-9 forms and seriousness of the violations.

    The franchisee owner conceded the I-9 forms produced by the companies appeared to have been backdated. He explained he copied the employees' original I-9 forms onto new I-9 forms when the USCIS introduced a new version in 2009 because he thought all of the employees' I-9 forms had to
    be on the new version. Thereafter, he apparently destroyed the original I-9 forms. (Never destroy an I-9 form of a current or former employee unless it can be legally purged.) The owner blamed his error on his limited knowledge of English.  OCAHO accepted the franchisee's explanation concerning the appearance of backdating the I-9 forms and refused to find this was evidence of lack of good faith.

    The Subway franchisee also argued IT was a small employer, that the size of the franchisor was irrelevant; thus, they should receive the 5% mitigation. OCAHO agreed, as it has previously held, the size of the franchisor is not relevant to the determination as to the size of the franchisee.

    Furthermore, Subway asserted the penalties were unjust and would force the closing of the businesses.  OCAHO essentially agreed in finding "the penalties were excessive in light of the record as a whole", especially since the requested penalties were "so near the maximum possible as to appear out of proportion to the size and resources" of the small family restaurant operations. OCAHO cited prior case law that proportionality is critical to setting penalties and the penalties cannot be "unduly punitive." Therefore, OCAHO reduced the penalties to $200 per violation, thereby reducing the penalties to $15,800 and $9600, respectively.

    Employers, especially smaller employers, continue to receive favorable results through litigation at OCAHO.


    About The Author

    Bruce E. Buchanan is an attorney at the at Nashville Office of Siskind Susser, P.C. He represents individuals and employers in all aspects of immigration law, with an emphasis on immigration compliance for employers, and employment/labor law. Mr. Buchanan received his law degree from the Vanderbilt University School of Law in 1982 and a B.S. degree from Florida State University, where he graduated magna *** laude. Mr. Buchanan has been in private practice since 2003. Beforehand, he served as Senior Trial Specialist for the National Labor Relations Board for 20 years. He also served from 1991 to 2003 as Adjunct Professor at William H. Bowen UALR School of Law, where he taught courses in Labor Law and Employment Law. Mr. Buchanan was 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 is a frequent writer and speaker on immigration compliance as well as labor law, wage & hour law and proposed federal legislation. He is a member of American Immigration Lawyers Association (AILA) and serves as the Advocacy Liaison of the Mid-South Chapter of AILA. Mr. Buchanan also serves on the Board of Directors for the Nashville International Center for Empowerment (NICE) and is an associate member of the Mid-Tennessee Chapter of the Associated Builders & Contractors. Mr. Buchanan is admitted to practice in Tennessee, Florida, and Arkansas, before the U.S. Court of Appeals for the Fifth, Sixth, Eighth, and D.C. Circuits and the U.S. District Courts for the Middle District of Tennessee and the Eastern and Western Districts of Arkansas.

    The opinions expressed in this article are those of the author(s) alone and should not be imputed to ILW.COM.
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