TBA Law Blog


Posted by: Christy Gibson on Sep 8, 2015

by Bruce E. Buchanan*

In the first half of 2015, the Office of Chief Administrative Hearing Officer (OCAHO) has issued 10 decisions against employers in I-9 penalty cases and two substantive decisions against employers in OSC-related cases. Previously in 2014 and 2013, OCAHO issued 17 Form I-9 penalty decisions and 30 Form I-9 penalty decisions, respectively, while there were three and six decisions against employers in OSC-related cases under Section 1324b, respectively. 

2015 OCAHO Decisions under Section 1324a

The following decisions have been issued in 2015 along with penalties sought by ICE and penalties assessed by OCAHO:

Employer’s Name

Penalty Sought By ICE

OCAHO’s Decision

Foothill Packing

$168,455

$21,560

Employer Solutions Staffing Group (ESSG II)

$227,252

$227,252

Speedy Gonzalez Construction

$186,860

$97,000

Liberty Packaging

$19,354

$11,700

Horno MSJ, Ltd.

$30,575

$14,600

Kenneth McPeek Racing Stables

$64,795

$35,900

Niche, Inc.

$157,220

$63,850

Homestead Metal Recycling

$5,890

$2,450

PM Packaging, Inc.

$53,762

$27,200

Hartmann Studios

$812,665

$605,250

An analysis of the above numbers demonstrates OCAHO lowered ICE’s proposed penalties on average by 36 %, which is lower than the reductions in 2014 and 2013.  This is partially due to no reduction in penalties in ESSG II and only a 25% reduction in the largest penalty case – Hartmann Studios.

The industries involved in these decisions were manufacturing/food processing – five; hospitality – three; construction – one; and employee staffing – one.  These are the most common industries inspected by ICE. Six of the 10 employers involved in the OCAHO decisions were classified as small employers – usually defined as under 100 employees. 

Significant Decisions

There were several significant holdings in the cases reviewed.  In ESSG II, the employer failed to have the individual, who reviewed the original employee documents, sign Section 2; rather, an individual at the corporate office did so. This led to a penalty of over $225,000. In Homestead Metal Recycling Corp., OCAHO found two minor owners were legally considered employees because the individuals did not have any control of the company.

In PM Packaging, Inc., OCAHO found common ownership alone was insufficient to pierce the corporate veil, when this was the only connection between the two entities. In Niche, Inc., the employer violated the Act by continuing to employ workers after their Employment Authorization documents (EADs) had expired and the employer failed to timely re-verify these workers, who, in fact, had timely acquired new EADs.

Common Types of I-9 Form Errors

In the 2015 OCAHO decisions, the most common errors were the failure to ensure the completion of Section 1 by the employee, and failure to properly complete Section 2. These errors occurred in eight of the 10 cases. Other common I-9 errors were the employer backdating I-9 forms; failure to prepare or timely present I-9 forms for the employees; failure to provide a document number and/or issuing authority in Section 2; and failure to list documents from Lists A or B and C.

In Hartmann Studios, the employer failed to sign the Section 2 certification on 800 occasions. This led to a penalty of over $600,000.

Reduction in Penalties

The main reason for the reduction in penalties was OCAHO’s finding that the penalties should be adjusted to the mid-range of penalties and not be disproportionate to the employer’s responses, which occurred in at least six cases.  OCAHO also cited the Small Business Regulatory Enforcement Fairness Act as a determining factor in finding the penalties excessive in six cases.  On three occasions, OCAHO found the penalties were higher than the company’s ability to pay.

Discrimination Cases under Section 1324b

OCAHO issued two substantive decisions involving actions under 8 U.S.C. §1324(b) -immigration-related discrimination – U.S. v. Estopy Farms and Gonzalez-Hernandez v. Arizona Family Health Partnership.

In U.S. v. Estopy Farms, OCAHO found the employer discriminated against a qualified U.S. citizen in favor of hiring H-2A workers. This finding was based upon Estopy Farms providing a series of “shifting, inconsistent, and mutually contradictory explanations”, which were pretextual, related to why it failed to hire U.S. citizen, who was a qualified agricultural equipment operator. OCAHO found in Gonzalez-Hernandez v. Arizona Family Health, that a DACA recipient is not a protected individual for citizenship status discrimination.

Takeaways

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 knowingly employing undocumented workers and creating substantive errors on the I-9 form will be significantly reduced.

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*Bruce E. Buchanan is an attorney at the Nashville and Atlanta offices of Siskind Susser, PC.  He is a graduate of Vanderbilt University School of Law. He 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’sI-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.