I-9 Compliance Alert: ALJ rejects ICE Fine Methodology and Reduces Proposed Civil Money Penalties 75%

I-9 Compliance Alert: ALJ rejects ICE Fine Methodology and Reduces Proposed Civil Money Penalties 75%

by Mary Pivec and Manesh Rath

The Department of Justice, Office of the Chief Administrative Hearing Officer, a division of the Executive Office for Immigration Review, has just released the December 22, 2010 final decision and order issued by administrative law judge (ALJ) Ellen Thomas in United States of America v. Snack Attack Deli, Inc. d/b/a Subway Restaurant #3718. The decision spells good news for all employers because the ALJ rejected the penalty formulas published in internal agency guidance as controlling in determining the appropriate fine amounts to be levied even for serious I-9 violations.

In Snack Attack Deli, the employer conceded that it had failed to prepare or present Form I-9s for 97 employees and that it had submitted 11 Form I-9s with serious Section 1 and Section 2 errors. Utilizing the Immigration and Customs Enforcement (ICE) Guide to Administrative Form I-9 Inspections and Civil Money Penalties, the ICE auditor assessed a base fine of $935 and tacked on an additional 10% per violation based on the employer's size and alleged bad faith. ICE offered no evidence that the any of the missing I-9s related to unauthorized workers.

Relying primarily on the relatively small size of the business, high turnover rate, and the disproportionate size of the proposed penalties, the ALJ reduced the total fine from $111,078 to $27,150, apportioned among the 106 serious I-9 violations cited in the Notice of Intent to Fine.

Implications of the Snack Attack Deli Decision

To regularize fine setting among I-9 auditors nationwide, in 2009, Department of Homeland Security (DHS) Secretary Janet Napolitano held an employer summit in Washington, D.C. at which the Department announced that it would apply the following guidelines in assessing civil money penalties against employers charged with I-9 errors:

% of I-9 Forms with

Errors

First Offense

$110- $1,100 @ Violation

Second Offense

$110- $1,100 @ Violation

Third Offense

$110- $1,100 @ Violation

0-9%

$110

$550

$1,100

10-19%

$275

$650

$1,100

20-29%

$440

$750

$1,100

30-39%

$605

$850

$1,100

40-49%

$770

$950

$1,100

50% or more

$935

$1,100

$1,100

As the foregoing fine chart illustrates, the higher the I-9 error rate percentage is found to be the higher the base fine level will be - regardless of the relative seriousness of the violations present or any other relevant fine setting factor.

After the base fine rate is set for all I-9 errors detected in the employer's production, ICE auditors then apply the following formulas to aggravate or mitigate the base fine amount:

Factor

Aggravating

Mitigating

Neutral

Business Size

+5%

-%5

+/-0%

Good Faith

+5%

-%5

+/-0%

Seriousness

+5%

-%5

+/-0%

Unauthorized Aliens

+5%

-%5

+/-0%

History

+5%

-%5

+/-0%

Cumulative Adjustment

+25%

-%25

+/-0%

Judge Thomas implicitly rejected this rigid formulation in the Snack Attack Deli case and that overall the agency must defend its fine determinations as fair and proportionate to the size of the business and the seriousness of the violations charged.

As a result of the Snack Attack Deli decision, employers can approach negotiations on fine reductions with greater confidence in their ability to obtain sizable reductions in proposed civil money penalties. Currently, Judge Thomas is the only ALJ assigned to hear employer appeals in I-9 cases.

Employers Encouraged to Correct I-9 Deficiencies Before An Audit Notice

In her decision, Judge Thomas makes clear that employers will derive no fine reductions if compliance efforts are ignored until after a Notice of I-9 Inspection is served. Implicitly, employers are encouraged to undertake self-audits and correct I-9 errors for the purpose of demonstrating good faith, a factor to be considered in mitigation of any penalties ultimately levied by ICE.

On January 20, 2011, DHS Undersecretary John Morton announced that ICE had established a special I-9 audit unit in Crystal City, Virginia, with the computer and forensic resources necessary to conduct large scale, multi-state employer audits. As a result, the nation's largest employers, which to this point have largely avoided being selected for I-9 audits will likely be targeted.

If you have questions or concerns about your company's I-9 compliance status, please contact Mary Pivec, Esq., 202-412-4212 (pivec@khlaw.com) or Manesh Rath, Esq., 202-434-4182 (rath@khlaw.com).

 

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