Tweet
In United States v. 7-Eleven Store No. 36802, 14 OCAHO no. 1361 (June 9, 2020), Office of Chief Administrative Hearing Officer (OCAHO) rejected 7-Eleven’s primary defense of flooding at the store made it impossible to produce many Forms I-9. However, OCAHO still reduced the company’s penalties by over 40%, despite finding most of ICE’s allegations to be meritorious.
After Immigration and Customs Enforcement (ICE) served a Notice of Inspection (NOI), 7-Eleven was able to only produce 13 Forms I-9 out of a possible 41 employees. ICE issued a Complaint alleging 28 violations for failure to prepare Forms I-9 and one violation for failure to properly complete an I-9 form. ICE sought $51,298 in penalties based upon $1,769 per I-9 violation, the dollar amount utilized for an error rate more than 50%.
Concerning the failure to prepare I-9 forms for 28 employees, 7-Eleven argued it was impossible to produce these forms as they were lost in flooding at the store in 2016 and 2017.
OCAHO case law recognizes that impossibility as an affirmative defense to the failure to present Forms I-9 where the Forms I-9 were actually completed but later became unavailable through no fault of the employer, such as fire, burglary, or flood. United States v. Noel Plastering & Stucco, Inc., 2 OCAHO no. 396, 763, 768 (1991). However, impossibility is not available as an affirmative defense when the destruction of the documents is attributable to the company’s own actions. United States. v. Ideal Transportation Co., 12 OCAHO no. 1290, 7 (2016) (finding liability where company stated that forms were discarded because they were mutilated, damaged, illegible, or outdated).
In their defense, 7-Eleven provided an affidavit from its owner stating, “In 2016 and 2017 I experienced flooding issues in the store basement. The store had a significant amount inventory, documents and other fixtures that were destroyed and thrown away due to these incidents. Included in the lost documents were Purchase invoices, Cash report summaries, Inventory records and HR documents. Unbeknownst to me at the time, I-9 Records were among the HR documents lost.”
OCAHO found the affidavit unpersuasive because it did not set forth sufficient facts to demonstrate the Forms I-9 were actually ever completed, was a regular business process to complete Forms I-9 for each employee, and how the owner found out that the Forms I-9 were destroyed. Furthermore, 7-Eleven failed to explain how the 13 Forms I-9 presented to ICE were not destroyed in the flooding when they were completed during the same years as those purportedly destroyed.
Concerning the statutory factors, ICE mitigated by 5% due to the small size of the business and treated the remaining four factors as neutral. OCAHO agreed with ICE’s analysis on four of the five statutory factors, finding the seriousness of the violations was an aggravating factor.
7-Eleven argued the penalties should be mitigated because of the inability of 7-Eleven to pay the fine and the proportionality of the fine to the size of the business and income of the 7-Eleven store. OCAHO agreed to mitigate on this basis because the owner’s affidavit and the tax returns indicate the store’s net income for the years 2014 to 2017 was a loss for three of the years of between $9,664 and $52,050, and a profit for one year of $13,004.
In determining the penalties to be assessed, OCAHO noted ICE’s requested penalties that were more than 80% of the maximum, which should only be reserved for the most egregious violations. OCAHO stated ICE’s proposed penalties was “disproportionate to the Form I-9 violations and mitigating factors.” Thus, OCAHO lowered the penalties to $967 per violation. Overall, OCAHO assessed penalties of $28,043.
If you want to know more information on I-9 compliance and related issues, I recommend you read The I-9 and E-Verify Handbook, a book I co-authored with Greg Siskind, and available at http://www.amazon.com/dp/0997083379.
