TBA Law Blog


Posted by: Christy Gibson on Mar 11, 2015

by Bruce E. Buchanan*

In 2014, there were significantly fewer decisions issued by Office of Chief Administrative Hearing Officer (OCAHO) related to potential I-9 violations under 8 U.S.C. § 1324a.  There were only 17 Form I-9-related decisions in 2014 while there were 30 decisions Form I-9-related decisions in 2013.[i]

The following 1324a decisions were issued in 2014 with penalties sought by ICE, and penalties assessed by OCAHO:

Name

Penalty Sought By ICE

OCAHO’s Decision

Two for Seven d/b/a/Black and Blue Restaurant

$264,605

$88,700

Minerva Indian Cuisine

$77,000

$77,000

New Outlook Homecare

$21,000

$9,450

M&D Masonry

$332,813

$228,300

Golf International d/b/a Desert Canyon Golf

$113,742

$57,650

Crescent City Meat Company

$14,025

$6,750

Century Hotel Corp. d/b/a Scottsdale Thunderbird Suites

$55,000

$25,500

Senox Corp.

$67,000

$44,800

Jalisco’s Bar and Grill

$26,668

$13,000

Clean Sweep Janitorial Service

$12,623

$6,750

Durable

$329,895

$329,895

Romans Racing Stables

$150,535

$76,100

Mott Thoroughbred Stables

$68,161

$33,500

Leed Construction

$9,740

$3,630

Keegan Variety

$1,776

$500

Dr. Robert Schaus, D.D.S.

$10,300

$5,400

Reduction in Penalties

ICE sought $1,554,883 in penalties in 2014 while ICE assessed $1,006,925 for an average reduction of 35.25%.This is a much lower reduction than in 2012 and 2013 when the reductions averaged 41.5% and 46.5%, respectively. This drop in the reduction of the penalties appears to be partially explainable by the fact that ICE’s second largest proposed penalty - $329,895 - was not reduced by OCAHO. In only two cases, Durable and Minerva Indian Cuisine, OCAHO declined to reduce ICE’s proposed penalties.

The main reason for the reduction in penalties was OCAHO’s finding that the penalties were “excessive” and “unduly harsh”.  This finding was made in at least 10 cases.  Of those cases, OCAHO cited the Small Business Regulatory Enforcement Fairness Act as a significant factor in finding the penalties excessive in seven cases. Other factors in lowering the penalties were inability to pay, the “principle of proportionality”, and when a company had ceased to exist, thus, there was no deterrent effect.

Type of Employers Targeted by ICE

The following industries were involved in OCAHO decisions: Hospitality – 5; Food preparation/Manufacturing – 3;[ii] Construction – 3; Health care – 2; Horse Racing – 2; Retail – 1; and Service – 1.  As for the size of the employers, 11 of the 17 employers were classified as small employers – usually defined as under 100 employees.

Significant or Interesting Legal Issues

Knowingly Employing/Hiring Unauthorized Workers

In Jalisco’s Bar and Grill, OCAHO found the employer to have “knowingly” employed an unauthorized worker because that employee told his employer that he was unauthorized.  However, in two other cases, Minerva Indian Cuisine, and Durable, OCAHO found the circumstances suggested the employers knowingly employed undocumented workers, but the facts did not conclusively prove such.

Repeat Offender

In Durable, OCAHO was faced with the issue of whether an employer is a repeat offender and thus subject to substantially higher penalties.  The evidence clearly established that in 1989 Durable entered into a Settlement Agreement with INS whereby it agreed to pay $30,000 in fines for “knowingly” employing 17 undocumented workers. Durable discounted this settlement because it occurred almost 25 years ago under different ownership; thus, it should not be found to have a history of prior I-9 violations. ICE asserted Durable was the same corporate entity regardless of any change in owners. Furthermore, ICE argued that a fine was supposed to have a deterrent effect on employers, and the $30,000 fine apparently did not have a sufficient deterrent effect. OCAHO sided with ICE and found Durable was the same corporate entity; thus, it was a repeat offender.

Statute of Limitations

In Leeds Construction, ICE alleged the construction company employed 21 unauthorized workers. However, the evidence established their employment ceased beyond the five-year statute of limitations, set forth in 28 U.S.C. § 2462. Thus, OCAHO found no violations.

Signing Section 3 in lieu of Section 2

A second interesting issue raised in Durable was whether the company’s execution of Section 3 excused its failure to execute Section. Durable argued it “complied with the spirit of Form I-9”; thus the 116 situations where this occurred did not support a violation. OCAHO disagreed, pointing out that signing Section 3 in lieu of Section 2 was insufficient, especially given that Section 3 “does not require either the date of hire or any issuing authority for any documents examined.” OCAHO found omitting the date of hire from the I-9 form “renders it impossible to determine whether the employee truly completed the attestation as to their citizenship or immigration status upon the date of hire” and whether it was timely completed.

Employees Working 3 Days or Less

OCAHO confirmed in Black and Blue Restaurant that employers will not normally be held responsible for having I-9 forms for employees working three days or less. However, in Speedy Gonzalez, the company was unsuccessful in using that leeway to cover a situation when employees worked sporadically. The company asserted that if an employee had worked three days or less, but over four to six business days, it was excusable to not complete an I-9 form. OCAHO disagreed because the employee was on the payroll for more than three business days.

Missing/Damaged I-9 Forms

In Jalisco’s Bar and Grill, OCAHO confirmed the fact that when an employer’s I-9 forms are destroyed or damaged, the employer should promptly draft a memorandum on the applicable circumstances and should not backdate the I-9 forms that are completed to substitute for the damaged/destroyed I-9 forms. Similarly, Durable failed in its assertion that the 116 instances of signing Section 3 were valid reverifications because, even though the original I-9 forms could not be located, the HR employees believed I-9 forms were originally completed for these employees. 

No Violation for Lack of I-9 Forms for Owners

In Speedy Gonzalez, OCAHO reiterated a position that it has taken in the past - owners of a company with substantial control of the company do not need to complete I-9 forms.

Common Types of I-9 Form Errors

In 13 out of 17 cases, the employer failed to prepare, or timely prepare, I-9 forms for the employees.  This is usually the most common error committed by employers in cases litigated before OCAHO.  In 12 out of the 17 decisions, the employer failed to properly ensure completion of Section 1 and/or failed to complete Section 2 of the I-9 form. These errors included failure to ensure the status was checked in Section 1; failure to ensure Section 1 was signed; failure to ensure the alien number was provided; failure of the employer to sign Section 2; failure to provide a document number and/or issuing authority in Section 2; failure to list documents from List B and/or C; and failure to complete any information in Section 2.

Takeaways

As previously stressed, litigation before OCAHO can result in substantial reductions in penalties. However, many of these reductions can be obtained in a well-articulated argument to ICE attorneys before the issuance of a Complaint.

One final point - it is important for all employers, large and small, to conduct annual self-audits under the direction of an immigration compliance attorney and have a written I-9 Compliance Policy.  If employers take both of these actions, their chances of liability for I-9 form violations can be significantly reduced.


[i] For purposes of this article, I am only counting substantive decisions, not procedural-related decisions.

[ii] U.S. v. Speedy Gonzales Construction was litigated in 2014 but the amount of penalties was determined by OCAHO in 2015.

This article was adapted from my article written for LawLogix, located at http://www.lawlogix.com/observations-2014-ocaho-decisions.

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*Bruce E. Buchanan is an attorney at the Nashville and Atlanta offices of Siskind Susser, P.C.  He is a graduate of Vanderbilt University School of Law. Bruce is the Chair of the Immigration Law Section.  He writes a blog on employer immigration compliance for ilw.com, located at www.EmployerImmigration.com, and is a contributor to LawLogix’s I-9 and E-Verify Blog, located at http://www.lawlogix.com/blog and HR Professionals Magazine. Bruce may be reached at bbuchanan@visalaw.com or (615) 345-0266.