TBA Law Blog


Posted by: Christy Gibson on Mar 25, 2014

*Bruce E. Buchanan

The first thing that stands out about 2013 decisions from the Office of Chief Administrative Hearing Officer (OCAHO) is that there was a major uptick in the number of substantive decisions – 30, up from 11 in 2012.  There were also eight decisions which involved Office of Special Counsel issues – such as citizenship or national origin discrimination and document abuse. (These decisions will not be discussed in this article.)

Substantial Reduction in Penalties through Litigation at OCAHO

Of the 30 substantive decisions concerning I-9 form violations, 29 of them involved the issue of the amount of penalties.  One of the most interesting points in these decisions was the reduction in penalties sought by Immigration and Customs Enforcement (ICE) increased in 2013 from 45% to 46.5% in 2012.

Examples of OCAHO Decisions and Penalties Sought and Assessed

Below is a chart setting forth some of the OCAHO decisions, the penalties sought by ICE and the amount assessed by OCAHO.

Respondent

                Amount Sought

      Amount Assessed

Occupational Resource Management

$188,017

$108,000

Fowler Equipment Co.

$77,418

$41,400

Black & Blue Steak & Crab

$44,165

$32,850

El Azteca Dunkirk

$11,000

$2,200

Seven Elephants Distributing Corp.

$34,969

$14,500

Modern Disposal, Inc.

$33,275

$33,275

Subway #35029 & #23095

$82,280

$15,800

Silverado Stages, Inc.

$34,969

$14,500

Pharaoh’s Gentleman Club

$38,335

$17,500

Super 8 Motel/Villella Italian Restaurant

$41,223

$9,240

Red Coach Restaurant

$30,184

$16,300

Natural Environmental, Inc.

$26,881

$10,000

Platinum Builders of Central Florida

$70,966

$23,700

Metropolitan Warehouse

$15,895

$7,400

 

 Reasons for Reductions in Penalties

Of course, the question is what led to the reduction in the penalties by OCAHO.  The primary reasons for the reductions were the poor financial conditions of the companies (20 decisions) and the penalties were “unduly punitive” on small employers (13 decisions).  This was consistent with the 2012 OCAHO decisions, in which these were the two primary factors for reducing the penalties.  On a few occasions, employers were successful in prevailing on legal issues which caused OCAHO to dismiss these allegations.   

Interesting Legal Issues

There were also a few interesting legal issues that OCAHO tackled in 2013.  Two of the more significant ones were U.S. v. California Mantle and U.S. v. Occupational Resource Management, Inc.  In California Mantle, Inc., OCAHO faced the issue of whether the employer and Immigration & Customs Enforcement through their attorney reached a settlement whereby the employer paid $8000 in penalties and the case was dismissed.  ICE asserted no agreement had been reached because it was seeking a Consent Decree, not a settlement with dismissal of the allegations.  OCAHO explored the e-mail communications between the two parties and concluded the parties had agreed on such a settlement.

In Occupational Resource Management, OCAHO explored whether the employer had constructive knowledge of the employment of three unauthorized workers.  OCAHO decided the employer did have constructive knowledge.  The decision offers insight in determining constructive knowledge, which for many years has been difficult to determine. 

OCAHO’s decision in U.S. v. Monadnock Mountain Spring Water, Inc. is unusual in that it did not firmly decide the amount of the penalty owed by the employer.  Rather, OCAHO, using ICE’s previous offer as a guide, gave the employer an option – pay 100% of the $14,630 penalty over a three (3) year period or pay $10,500 immediately.

OCAHO’s Rejection of Defenses

Two common defenses that OCAHO rejected were: lack of awareness of the requirement for employers to complete an I-9 form for their employees, and the errors on the I-9 forms were technical, not substantive, errors and therefore the employer should have been given 10 days to correct the deficiencies.

Industries Affected by ICE Inspections

It is also interesting to see the type of employers, which received penalties, and litigated them before OCAHO.  There were 16 decisions which involved restaurants.  The next highest was retail/distribution companies – four decisions.  Even though construction and manufacturing are normally viewed as industries regularly audited by ICE, there were only three decisions in those industries.       

Conclusion

As this article reflects, it has been a busy year at OCAHO. Due to the fact, employers are getting so much relief – an average reduction in penalties of 46.5%, I anticipate more employers will be challenging ICE’s assessed penalties. Interestingly, an Office of Inspector General Report just issued reflecting employer received about a 40% reduction in penalties through negotiations with ICE before litigation. Remember, it is always best to get your I-9 forms and employees in order before ICE conducts an inspection so that you don’t face these heavy penalties and attorney fees to litigate the matter.

This article was adapted from my article written for LawLogix, which can be found at http://www.lawlogix.com/blog/what-are-formi9-penalty-trends-2013-ocaho-decisions.

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*Bruce E. Buchanan is an attorney at the Nashville Office of Siskind Susser, P.C.  He is a graduate of Vanderbilt University School of Law.  Mr. Buchanan writes a blog on employer immigration compliance, located at http://blogs.ilw.com/blog.php?29223-I-9-E-Verify-Immigration-Compliance, and is a contributor to LawLogix’s I-9 and E-Verify Blog, located at http://www.lawlogix.com/blog. He may be reached at bbuchanan@visalaw.com or (615) 345-0266.