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.