Handling I-9 Investigations By Government Agencies
 

Handling I-9 Investigations By Government Agencies

Posted on 09-27-2017

By: Jacob T. Muklewicz—Kirton McConkie

This article provides guidance on responding to an investigation (i.e., an audit) by a government agency of an employer’s I-9 records. The article mainly focuses on the Department of Homeland Security’s (DHS) Immigration and Customs Enforcement (ICE) agency, which conducts most I-9 government audits.

ALL U.S. EMPLOYERS ARE REQUIRED TO VERIFY THE identity and work authorization of their U.S. employees hired after November 6, 1986, pursuant to the Immigration Reform and Control Act of 1986 (IRCA). Employers should document employment authorization verification on Form I-9. Further, employers are required by law to maintain the forms for government inspections.

Step 1: Who Performs Government Audits?

The following government entities may conduct Form I-9 audits:

  • Department of Justice’s (DOJ) Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices
  • Department of Labor (DOL)
  • ICE, which carries out most I-9 government audits

OSC Investigations

The OSC investigates and prosecutes allegations of discrimination under Section 274B of the Immigration and Nationality Act (the Act or INA) (INA § 274B; 8 U.S.C. § 1324b). Investigations focus primarily on allegations of national origin and citizenship status discrimination in hiring, firing, and recruiting for a fee, but they also deal with unfair documentary practices during the I-9 employment verification process.

You must therefore advise employers that they may not specify which documents the employee must present to establish identity and employment authorization as this may lead to charges of discrimination by the OSC. You must also advise employers that they may not over-document (i.e., ask for more documents than necessary to complete the I-9 process) or require re-verification for certain classes of employees, such as lawful permanent residents. This may also lead to charges of document abuse by the OSC.

DOL Investigations

The DOL also has the authority to inspect Forms I-9. The DOL may in its discretion issue a Warning Notice to a person or entity alleged to have violated the employer sanctions provisions under INA § 274A (8 U.S.C. § 1324a) for the knowing hire of an unauthorized worker or the continuing employment of an unauthorized worker. This Warning Notice will contain a statement of the basis for the violations and the statutory provisions alleged to have been violated.

The DOL may also inspect Forms I-9 in connection with alleged violations of the Fair Labor Standards Act (FLSA) for failure of employers to pay required wages.

ICE Investigations

As stated above, ICE performs most I-9 government audits. It may inspect an employer’s Forms I-9 at any time whether triggered by a complaint or on its own initiative. For the remainder of this article, we will focus on ICE as the investigating agency.

ICE audits employers’ Forms I-9 and other documents to ensure that employers properly and timely complete the employment verification process required by IRCA. This article identifies chronologically the events that occur during an I-9 investigation by ICE and how you should assist employers in responding to and preparing for such an audit.

Step 2: What Steps Are Included in the Audit Process?

This section of the article addresses key phases of ICE’s I-9 audit process and provides guidance on handling and responding to such audits.

Receiving and Reviewing the Notice of Inspection

ICE initiates an I-9 audit by serving a Notice of Inspection (NOI) compelling the production of I-9 forms and other relevant documents. ICE may serve an NOI with an attached document list or with a subpoena. ICE may serve an NOI and subpoena at an employer’s headquarters. Alternatively, if the employer has offices dispersed throughout the United States, ICE may serve an NOI or subpoena at any individual office.

The NOI should clearly identify the employer subject to the I-9 audit. The NOI should also specify whether the employer must produce I-9 forms for only current employees or for current and terminated employees. The NOI will explain that the employer has three business days to gather and produce the requested I-9 forms and supporting documentation to ICE. 8 C.F.R. § 274a.2(b)(B)(ii). The NOI will additionally give the employer an option to waive the three-day notice period and immediately turn over the requested information. It will usually identify the date, time, and location for turning over the I-9 forms and other documentation that ICE may request.

Responding to a Notice of Inspection

The first thing the employer should do is to notify you as designated legal counsel. The employer must treat an NOI as any other service of process and immediately report through the appropriate internal channels. Since the law allows only three business days for the production of the I-9 forms and requested documents, it is important that the NOI receive immediate attention. If the employer allows only certain designated representatives to accept service of legal process, the receptionist or other administrative personnel must immediately notify designated legal counsel whenever ICE serves an NOI. If the ICE officer asks questions while serving the NOI, the investigative record will include any information it receives in response to these questions. Therefore, only you should provide information to ICE. Employees should advise ICE that they are not authorized to speak on behalf of the employer.

Never Waive the Three-Day Notice Period

In accordance with federal regulations, the employer has three business days to produce the I-9 forms and requested documents to ICE. 8 C.F.R. § 274a.2(b)(B)(ii). Even if the employer believes that the I-9 forms and other documents are in order, you should use the three days allowed by law to review all I-9 forms and other requested documents as well as make any allowable corrections. Specifically, you should make sure that the employer has an I-9 form for each employee identified in the other documents that ICE requests. For example, ICE requests in most NOIs copies of the employer’s payroll records and quarterly wage reports submitted to the appropriate state authorities. ICE requests these documents because it wants to identify all employees who have received compensation. The employer should have completed I-9 forms for each employee hired after November 6, 1986, and listed on payroll records and quarterly wage reports.

If the employer fails to produce I-9 forms for employees hired after November 6, 1986, and listed on payroll records and quarterly wage reports, ICE will penalize the employer for failing to complete I-9 forms for the employees. As explained below in the subsection entitled “Common Errors on Forms I-9,” this is a substantive violation (as opposed to a less serious technical violation). Therefore, you and the employer should use the three-day period afforded by law to reconcile the employer’s payroll records and quarterly wage reports to ensure that it produces an I-9 form for each employee hired after November 6, 1986.

Communicate Professionally with the ICE Agent as an Adversary

Service of an NOI is a legal process that can lead to significant civil and criminal penalties for non-compliance. See Developing an I-9 Policy and Best Practices for I-9 Compliance — Step 6: Determine How the Employer Prevents Liability for Unauthorized Workers. Therefore, you and the employer should not approach an I-9 audit initiated by ICE as a friendly exchange of documents. Any information that the employer’s representatives divulge to ICE will be part of the administrative record. Therefore, only you as designated legal counsel should communicate with ICE.

Carefully Read the NOI and Any Accompanying Subpoena

An NOI or subpoena may come in a variety of forms—some may be vague, while others may be specific. The employer should understand the scope of the NOI or subpoena issued by ICE and, if possible, narrow it.

For example, you must pay close attention to whether the NOI requests I-9 forms for both current and terminated employees, as well as what time frames the NOI covers. Requests for terminated employees’ I-9 forms do not always correspond to employers’ retention requirements. If the NOI requests a subset of I-9 forms for terminated employees that the employer must retain, the employer should provide only that subset. However, if the NOI requests I-9 forms for terminated employees whose I-9 forms have been properly purged, you should notify ICE accordingly. The retention period for Forms I-9 for terminated employees is three years from the date of hire or one year from the date of termination, whichever is later. 8 C.F.R. § 274a.2(b)(D)(2)(A).

Sometimes ICE agents may request documents beyond the proper scope of an I-9 investigation. ICE’s request for additional supporting documents must be relevant to the I-9 audit. If you believe that any documents that ICE requests are not relevant to the I-9 investigation, you must communicate to ICE in writing the reasons for the excessive scope of the NOI or subpoena.

Clarify Ambiguities in the NOI with the ICE Agent or Auditor

The ICE agent or auditor should provide his or her contact information or business card when serving the NOI. Every ICE agent or auditor handles audits differently. It is important to know the process that the agent or auditor will follow. Therefore, you should inquire about the ICE agent’s or auditor’s timeline, expectations, and process.

You should also confirm with the ICE agent or auditor any ambiguities in the NOI, which may include, but are not limited to, the following:

  • Which documents is ICE requesting? For example, determine if the ICE agent or auditor is requesting only I-9 forms or I-9 forms and supporting documents as well.
  • In what format should the employer provide the information? For example, some agents and auditors want the payroll records in Excel or Word or another electronic format rather than in hard copy form.
  • What is the exact time and date that the ICE agent or auditor will return to retrieve the I-9 forms? If this information is not included in the NOI, you should negotiate when the ICE agent or auditor will retrieve the documents.
  • Which employees are subject to the NOI? For example, is ICE requesting I-9 forms only for current employees or also for terminated employees?
  • Which are the employer entities or locations that are subject to the NOI? This can be an issue if ICE serves the NOI at an employer’s remote office and not at its headquarters. Whether or not to raise this issue is a strategic decision for you as designated legal counsel. Typically, if ICE serves only a single location and the NOI does not indicate otherwise, ICE is auditing only that location.

Production of Requested Documents

After confirming with the ICE agent or auditor the proper scope of the I-9 investigation, the employer must gather the I-9 forms and relevant supporting documents that ICE requests in the NOI or subpoena. ICE uses the supporting documents to confirm whether or not an employer has an I-9 form on file for each current and terminated employee as required by law.

After gathering the applicable I-9 forms and supporting documents, the employer, under your guidance must perform the following tasks before ICE’s document production deadline:

  • Make sure that there are I-9 forms on file for all current and terminated employees. Ensure this task is completed by checking each employee’s name against employee, payroll, and tax records.
  • Make sure that all I-9 forms are properly completed. For a checklist on completing Form I-9, see Checklist – Completing Form I-9.

ICE typically requests in an NOI or subpoena:

  • Original I-9 forms and one photocopy for all current employees and all terminated employees that were either:
  • Hired within three years of the date of the NOI or subpoena

–or–

  • Terminated within one year of the date of the NOI or subpoena

Storage of Forms I-9

Federal regulations allow employers to store I-9 forms on-site or off-site and in hard copy, on microfilm/microfiche, in an electronic format, or in any combination of the above. 8 C.F.R. § 274a.2(a)(2).

Regarding electronically-stored I-9 forms, federal regulations provide that at the time of an inspection by ICE, the person or entity required to retain the Forms I-9 must:

  • Retrieve and reproduce (including printing copies on paper, if requested) only the Forms I-9 electronically retained in the electronic storage system and supporting documentation specifically requested by an agency of the United States, along with associated audit trails. Generally, an audit trail is a record showing who has accessed a computer system and the actions performed within or on the computer system during a given period of time –and–Provide a requesting agency of the United States with the resources (e.g., appropriate hardware and software, personnel, and documentation) necessary to locate, retrieve, read, and reproduce (including paper copies) any electronically-stored Forms I-9, any supporting documents, and their associated audit trails, reports, and other data used to maintain the authenticity, integrity, and reliability of the records.

8 C.F.R. § 274a.2(e).

You should provide, if requested, any reasonably available or obtainable electronic summary file(s), such as a spreadsheet, containing all of the information fields on all of the electronically-stored Forms I-9 requested by a requesting agency of the United States.

Additional Documents ICE May Request in an NOI or Subpoena

Apart from requesting Forms I-9, ICE may request the following items:

  • Copies of employees’ documents. The employer should keep copies of identification documents that employees submit during the hiring process (e.g., passports, IDs, Social Security cards, drivers’ licenses, I-94s, I-151s, I-551s, I-688s, I-766s, or any other acceptable documents). Generally, employers may choose whether or not to retain copies of employees’ documents together with their I-9 forms. However, if the employer chooses to keep copies of documents, it must do so indiscriminately for all employees. 8 C.F.R. § 274a.2(b)(D)(3).

    If the employer participates in E-Verify, then it must keep copies of employees’ U.S. passports, U.S. passport cards, I-551s (Permanent Resident Cards commonly known as green cards), and I-766s (Employment Authorization Documents (EADs)).

  • Quarterly payrolls. The employer should keep a copy of its last two quarterly payrolls, including payments to independent contractors. Although employers are not required to complete and maintain I-9 forms for independent contractors, employers may not knowingly hire independent contractors to employ foreign nationals who are not authorized to work lawfully in the United States. See 8 C.F.R. § 274a.5.
  • List of employees.The employer should keep a list including each employee’s full name, date of birth, Social Security number, hire date, and termination date, if applicable. If possible, the employer should provide its list of employees in an electronic format such as an Excel spreadsheet, which ICE prefers.
  • List of contractors.The employer should keep a list of all independent contractors/subcontractors including the full name, date of birth, Social Security number, and dates worked. If the independent contractor/subcontractor is a business entity, the employer should provide:
    • An Employer Identification Number (EIN)
    • A Taxpayer Identification Number (TIN)
    • A Social Security number (SSN) –and–
    • Address information, a telephone number, and an e-mail address

    If possible, provide this information in an electronic format such as an Excel spreadsheet. You should additionally provide copies of all information provided to independent contractors (IRS Form 1099).

  • Service agreements. The employer should keep copies of all service agreements with independent contractors.
  • Corporate documents.The employer should keep copies of the following:
    • EIN
    • TIN
    • Owners’ Social Security numbers, addresses, telephone numbers, and e-mail addresses
    • Copies of articles of incorporation/organization, if applicable
    –and–
  • Copies of business licenses

  • Quarterly tax statements. The employer should keep copies of quarterly tax statements (IRS Form 941).
  • Social Security No Match letters. The employer should keep copies of any and all prior correspondence from the Social Security Administration (SSA) to the employer regarding mismatched or no-matched Social Security numbers. These forms are known as Employer Correction Requests or Requests for Employee Information and commonly referred to as No Match letters. Note that the SSA no longer issues such letters due to budgetary constraints.
  • E-Verify and SSNVS enrollment. The employer should keep documentation confirming whether or not the employer is a current or previous participant in E-Verify or the Social Security Number Verification Service (SSNVS) and if so, provide the date(s) when the employer began using the program(s).
  • Copies of employees’ documents required by E-Verify. If the employer participates or has participated in E-Verify, it must provide copies of all results for E-Verify inquiries. In addition, it must provide photocopies of Permanent Resident Cards and EADs for employees who provided those documents for employment verification and were hired after the employer began participating in E-Verify.
  • SSNVS results. If the employer participates or has participated in the SSNVS, it must provide copies of all results for SSNVS inquiries.

If Necessary, Request an Extension for Production of Documents

If the employer needs to extend the document production deadline, you must submit on its behalf a written request to ICE explaining why it needs an extension and provide a reasonable proposed timeline for when the employer will produce the documents. It is up to the specific ICE office and agent conducting the investigation as to whether ICE will grant an extension. The employer and you should never assume that ICE will grant an extension of the threebusiness-day document production deadline.

Obtain a Receipt for Documents Produced

The ICE agent or auditor will review the I-9 forms and other documents for at least several weeks or months, generally at an ICE field office. Therefore, before the document production deadline, the employer should make a complete copy of all I-9 forms and other documents provided to ICE.

When the employer provides the I-9 forms and other documents to ICE, it should request an inventory receipt from the ICE agent or auditor listing the documents that the employer produced to ICE. You should retain a copy of the inventory receipt issued by the ICE agent or auditor. If ICE were to allege that the employer failed to produce the documents listed in the NOI or subpoena, the inventory receipt would serve as evidence that the employer timely produced the documents ICE requested.

Step 3: What Are the Post-audit Notifications an Employer May Receive?

Once ICE completes the I-9 audit, it will provide written notification to the employer of the results of the audit. At this stage, ICE issues, as applicable, various notices, including the following:

  • Notice of Inspection Results. This notice, also known as a compliance letter, is used to notify an employer that ICE found the employer to be in compliance. No response to ICE is necessary.
  • Notice of Discrepancies. This notice advises the employer that based on a review of the I-9 forms and documentation submitted by employees, ICE is unable to determine some employees’ work eligibility. The notice will list the employees for whom ICE was not able to determine work eligibility. The employer must give those employees listed on the notice a copy of the notice and give them an opportunity to present ICE with acceptable documentation establishing their employment eligibility. If the employees have acceptable documents, the employer must present the documents to ICE. The employer must terminate employees who are unable to present acceptable documents. Also, when reporting to ICE the status of employees, the employer should explain all of the practices that it has implemented in good faith regarding employment verification to mitigate potential civil fines.
  • Notice of Suspect Documents. This notice advises the employer that ICE has determined that employees are unauthorized to work and advises the employer of the possible criminal and civil penalties for continuing to employ unauthorized workers. ICE gives the employer and employees an opportunity to present additional documentation to demonstrate work authorization if they believe the finding is in error. The employer must give those employees listed on the notice a copy of the notice and give them an opportunity to present acceptable documentation to ICE establishing their employment eligibility. If the employees have acceptable documents, the employer must present the documents to ICE. The employer must terminate employees who are unable to present acceptable documents. Also, when reporting to ICE the status of employees, the employer should explain all of the practices that it has implemented in good faith regarding employment verification to mitigate potential civil fines.
  • Warning Notice. ICE issues this notice when it identifies substantive violations, but the circumstances do not warrant a monetary penalty because there is an expectation of future compliance by the employer. No response to ICE is necessary.
  • Notice of Intent to Fine (NIF). The last written notification by ICE that an employer may receive regarding the results of an I-9 audit is a Notice of Intent to Fine (NIF). ICE will issue this notice when it has found substantive or uncorrected technical violations, as well as violations for knowingly hiring and continuing to employ unauthorized workers. For more information on NIFs, see the section directly below.

Step 4: What Are the Employer’s Potential Liabilities?

When ICE serves an NIF, it will also provide charging documents specifying the employer’s violations. Within 30 days of receiving a NIF, the employer has the opportunity to either negotiate a settlement with ICE or request a hearing before the Office of the Chief Administrative Hearing Officer (OCAHO). If the employer takes no action after receiving an NIF, ICE will issue a Final Order from which there is no appeal. 8 C.F.R. § 274a.9(f). After receiving a Final Order, the employer must pay the civil fines according to the terms specified in the order.

For detailed information on the range of civil fines and criminal penalties that ICE may impose upon an employer found to be in violation of the employer sanctions provisions of INA § 274A; 8 U.S.C. § 1324a , see Developing an I-9 Policy and Best Practices for I-9 Compliance — Step 6: Determine How the Employer Prevents Liability for Unauthorized Workers.

Appeals

If an employer requests a hearing of an NIF, OCAHO will assign the case to an Administrative Law Judge (ALJ) and send all parties a copy of a Notice of Hearing and the government’s complaint. The Notice of Hearing spells out the procedural requirements for answering the complaint and the potential consequences of failure to file a timely response.

Many OCAHO cases never reach the evidentiary hearing stage because either the parties reach a settlement subject to the approval of the ALJ, or the ALJ reaches a decision on the merits through dispositive prehearing rulings.

The ALJ may make one of the following findings regarding the civil fines calculated by ICE in the NIF: (1) uphold the fines, (2) decrease the fines, or (3) increase the fines.

Step 5: What Are the Proactive Measures an Employer May Take to Minimize Liability?

Establish Office Procedures to Prepare for a Potential Audit

The first step the employer should take to prepare for potential government I-9 audits is to disseminate and maintain at all its offices in all locations updated instructions explaining how to respond to the service of any legal process, including an NOI or subpoena involving an I-9 audit by ICE. Also, the employer should maintain updated contact lists for service of legal process so that employees at reception desks or in satellite offices know whom to alert immediately after receiving an NOI or subpoena. Generally they should alert you (or other designated legal counsel) about the NOI. The employer should send clear, concise instructions to employees at all locations that if any employee receives an NOI or subpoena, he or she is not authorized to speak on behalf of the employer and therefore lacks consent to waive the three-day notice period. In addition, the employer should send clear, concise instructions to employees at all locations that only you as designated legal counsel are permitted to communicate with ICE agents or auditors.

Lawfully Purge Terminated Employees’ Forms I-9

When an employer terminates an employee, the employer should calculate the date when it can lawfully purge the terminated employee’s I-9 form. An employer may purge a terminated employee’s I-9 form either three years from the date of hire or one year from the date of termination, whichever is later. 8 C.F.R. § 274a.2(b)(D)(2)(A).

After the employer calculates the purge date, it should store the terminated employee’s I-9 form in an I-9 file reserved for terminated employees arranged by termination date. For example, if an employer hired an employee on January 1, 2016, and terminated him or her on January 1, 2017, the employer would calculate the purge date by adding three years to the hire date (January 1, 2016 + 3 years = January 1, 2019) and one year to the termination date (January 1, 2017 + 1 year = January 1, 2018). In this scenario, the later date of January 1, 2019, would be the purge date. The employer should store the terminated employee’s I-9 form in a file drawer for terminated employees and place the I-9 form in a separate folder for January 2019. In February 2019, the employer should purge all I-9 forms for terminated employees in the January 2019 purge folder. By timely purging terminated employees’ I-9 forms, the employer will avoid the imposition of any liability for an I-9 form that may have been improperly completed.

Note, however, that after receiving an NOI or subpoena from ICE, the employer cannot purge I-9 forms for terminated employees. If an employer were to do so, it would be liable for obstruction of justice. Since in most cases terminated employees are neither available nor willing to help the employer make correctable revisions to defective I-9 forms, the employer cannot eliminate its liability for such mistakes if it does not regularly purge I-9 forms for terminated employees before receiving an NOI or subpoena from ICE.

Prepare and Maintain Updated Organizational Charts

A significant issue in I-9 investigations is often which corporate entity is the target of the investigation. If an employer has several related corporate entities throughout the United States, it should maintain an accurate, updated organizational chart of all entities in all locations. These charts will be essential in explaining to ICE the employer’s complex organizational structure and in potentially minimizing the scope of an I-9 investigation.

Know the Storage Location of All Documents That ICE May Request

Most importantly, the employer and its entities must know at all times where all current and terminated employees’ I-9 forms are stored. Also, in anticipation of an ICE audit, for each electronic generation or storage system used, the employer and its entities must maintain complete descriptions of the following:

  • The electronic generation and storage system, including all procedures relating to its use –and–
  • The indexing system that permits the identification and retrieval of relevant documents and records maintained in an electronic storage system

The employer and its entities are not required to maintain separate indexing databases for each system if comparable results can be achieved without separate indexing databases. The employer must retain only those pages of the Form I-9 on which the employer, its entities, or employees enter data.

If the employer has over the course of time had different policies regarding the retention of employees’ documents, it should have copies of all internal policy memoranda explaining which policy regarding employee document retention was in place during all times. By retaining copies of policy memoranda, the employer can avoid potential claims of discriminatory document abuse.

Conduct Internal I-9 Audits Annually

By conducting internal I-9 audits annually, the employer can make correctable revisions on I-9 forms and prepare the supporting documents that ICE most likely will request in an NOI or subpoena. In fact, ICE encourages employers to conduct self-audits. Note that only the employee may make a correctable revision or addition to Section 1 of Form I-9, and only the employer may make a correctable revision or addition to Sections 2 and/or 3 of Form I-9.

Common Errors on Forms I-9

ICE classifies errors on I-9 forms as either technical or substantive. Substantive violations are more serious infractions that could have led to the hiring of an unauthorized alien. After turning over I-9 forms to ICE, employers cannot correct substantive errors. Substantive errors subject employers to civil fines. For examples of substantive and technical errors, see U.S. Immigration and Customs Enforcement, “Worksite Enforcement: Guide to Administrative Form I-9 Inspections and Civil Monetary Penalties” (Nov. 25, 2008).

Jacob T. Muklewicz is a shareholder at Kirton McConkie. His practice focuses on business and investor immigration. He helps employers and investors obtain the proper visas for their executive, managerial, and professional personnel and their families. He also counsels foreign nationals regarding the employment-based green card and naturalization process


To find this article in Lexis Practice Advisor, follow this research path:

RESEARCH PATH: Labor & Employment > Business Immigration > Employment Eligibility Verification > Practice Notes > I-9 and E-Verify


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