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I-9 E-Verify Immigration Compliance

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  1. OCAHO Reduces Restaurant’s Penalty

    By: Bruce Buchanan, Sebelist Buchanan Law

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    In one of its last decisions of 2016, the Office of Chief Administrative Hearing Officer (OCAHO) reduced the penalty of a restaurant from $96,398 to $58,850 for 107 violations. See U.S. v. Pegasus Family Restaurant, Inc.,12 OCAHO no. 1293 (Dec. 2016).

    This case stated almost three years ago – in December 2013 – when Immigration and Customs Enforcement (ICE) served a Notice of Inspection (NOI) on Pegasus, a small restaurant in Hamburg, New York. Pegasus provided approximately 81 Form I-9s. Thereafter, ICE filed a Notice of Intent to Fine (NIF) alleging Pegasus failed to prepare and/or present 31 Form I-9s and failed to properly complete 76 Form I-9s - it failed to record any documents in section 2, only recorded a List B document, a driver’s license or state ID card, or failed to ensure the completion of Section 1 with a signature or attesting to the employee’s status, U.S. citizen, permanent resident, etc. Pegasus admitted liability on all the I-9 violations. Thus, the only issue before OCAHO was the amount of the penalty.

    In seeking a penalty of $96,398, ICE used a baseline penalty of $935 per violation due to Pegasus having a violation rate of over 90%. ICE found Pegasus’s small size and the individuals in Count I as eligible for employment to be mitigating factors while the seriousness of the violations to be an aggravating factor. The remaining statutory factors of history of violations and good faith were considered neutral.

    Pegasus asserts its lack of history of violations and no conclusive evidence that any of the employees were unauthorized to work were mitigating factors. Furthermore, it asserts the following non-statutory factors warrant mitigation – general public policy of leniency toward small businesses, company’s high turnover rate, its cooperation with ICE during the investigation, including enrollment in E-Verify, and its inability to pay the proposed penalty.

    OCAHO agreed with Pegasus that the government failed to prove any of the employees were unauthorized to work. In an unusual finding, OCAHO stated this was a mitigation factor, rather than a neutral factor, although it recognized that it could have been accepted as a neutral factor. However, OCAHO declined to find the lack of a history of I-9 violations as a mitigating factor.

    Concerning its inability to pay, OCAHO found it failed to show it could not pay the penalty, but found the proposed penalty was “unduly punitive.” Thus, OCAHO considered the company’s financial situation.

    Although OCAHO found an employer’s post – inspection remedial measures may support mitigation, it declined to final such in this case. Furthermore, it declined to view a high turnover rate as a mitigating factor.

    In conclusion, OCAHO found the penalty should be reduced from between $888 and $935 per violation to $550 per violation. Thus, this total penalty was $58,850. As the facts demonstrate, if Pegasus would have performed an internal I-9 audit before ICE arrived with the NOI, many of the I-9 violations could have been corrected and not subject to a penalty.
  2. OCAHO Finds No Jurisdiction Over Case

    By Bruce Buchanan, Sebelist Buchanan Law

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    Office of Chief Administrative Hearing Officer (OCAHO) found it did not have jurisdiction concerning alleging allegations of national origin discrimination and retaliation against a U.S. Army captain. See Windsor v. Captain Landeen, 12 OCAHO no. 1294 (Dec. 2016).

    Washington Younggil Kim Jung Windsor (“Windsor”) sought employment as a recruiter at the U.S. Army Recruiting Command in New York. Windsor was not hired and alleged in a charge with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) that it was because he is from South Korea. (At this time, Widsor was a lawful permanent resident. He later became a U. S. citizen).

    The OSC dismissed Windsor’s charge because it determined it did not have jurisdiction over the U.S. Army. However, the OSC told Windsor that he could pursue a complaint with OCAHO against the U.S. Army and Captain Landeen. Thereafter, Windsor filed a complaint before OCAHO alleging the same facts as he did in his charge with the OSC.

    OCAHO initially determined that despite the complaint being filed against Captain Landeen, it alleged acts of Captain Landeen in his official capacity with U.S. Army. Thus, it reviewed whether a complaint can be brought against the U.S. Army under the Immigration and Nationality Act.

    OCAHO found the U.S. Army was a part of the U.S. Department of Defense, a federal agency. Based upon that finding, it determined “absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit.” OCAHO found no such waiver existed under the INA. Thus, it followed OCAHO caselaw which has held “federal government agencies are not amenable to suit under 8 U.S.C. § 1324b” (cases alleging discrimination due to citizenship status, national origin, retaliation or document abuse). Based upon this analysis, OCAHO dismissed Windsor’s complaint.
  3. Prior Settlement Agreement Destroys Employee's OSC Claim

    By Bruce Buchanan, Sebelist Buchanan Law

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    Despite reaching a Settlement Agreement with Discover Financial Services, wherein the Complainant, was paid over $73,000, Ashntosh Sharma filed a charge with the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) alleging he was discriminated against because he is a lawful permanent resident (LPR). OSC declined to proceed with a complaint. Sharma then submitted his claim to the Office of Chief Administrative Hearing Officer (OCAHO), which dismissed his complaint because he had previously reached a Settlement Agreement, Waiver, and Release of Claims. See Sharma v. Discover Financial Services, LLC, 12 OCAHO no. 1292 (Dec. 2016)

    Sharma was employed by Discover for a period of time during which he alleged Discover favored H-1B visa holders over U.S. citizens or LPRs in training opportunities and promotions. Sharma applied for five job openings and two training opportunities but did not receive any of them. In October 2014 and January 2015, Sharma filed charges with the Equal Employment Opportunity Commission (EEOC) alleging discrimination and retaliation. After filing the charges, Sharma hired an attorney to negotiate a settlement. On May 29, 2015, Sharma and Discover reached an agreement where Discover paid Sharma over $73,000 and Sharma agreed to withdraw his EEOC charge and waive and release Discover from any other claims or liability.

    Before reaching this settlement, Sharma filed a charge with the OSC on March 15, 2015. After the settlement, Sharma filed a Complaint with OCAHO on April 27, 2016 alleging citizenship status discrimination and retaliation.

    Discover responded that Sharma’s claims overlapped with his EEOC complaint and the claims before OCAHO were released and waived by Sharma through the May 29 settlement and release. The Settlement Agreement, Waiver, and Release of Claims states the parties are settling “any and all claims that have been or could have been asserted by Sharma related to his employment with Discover and end any and all employment relationships between them.” Although the Settlement Agreement, Waiver and Release does not specifically list claims under 8 U.S.C. § 1324b (citizenship status discrimination, etc.), OCAHO quoted caselaw finding a party need not enumerate the specific claims an employee is waiving in a general release. Furthermore, Sharma was clearly aware of any claims under 8 U.S.C. § 1324b when he signed the Settlement Agreement as the alleged acts began as early as June 2014 and were set forth in his March 2015 OSC charge. Thus, OCAHO found the release covered any claims brought under 8 U.S.C. § 1324b. OCAHO also found the Settlement Agreement, Waiver and Release was knowing and voluntary given Sharma’s education and that he hired an attorney to negotiate the settlement. Furthermore, Sharma did not even challenge the knowing and voluntary nature of the release.

    For these reasons, OCAHO dismissed Sharma’s complaint. The question in my mind is why would Sharma pursue a claim before OCAHO when he clearly had released Discover for any further liability. It should be noted Sharma did not have legal counsel before OCAHO, presumably because counsel who negotiated the Settlement Agreement, Waiver and Release informed him that he lacked the basis of any further claims or liability against Discover.
  4. Court Affirms OCAHO's Decision Finding Constructive Knowledge of Unauthorized Workers

    By Bruce Buchanan, Sebelist Buchanan Law

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    The 10th Circuit Court of Appeals has upheld a decision of the Office of Chief Administrative Hearing Officer (OCAHO) in Split Rail Fence Company, Inc. v. USA (10th Cir. Dec. 2016). In doing so, it found Split Rail violated the law by retaining 10 employees after having constructive knowledge of their undocumented status.

    In 2009, Immigration and Customs Enforcement (ICE) provided a Notice of Inspection (NOI) and a Notice of Suspect Documents (NSD) concerning 32 employees, to Split Rail. The NSD stated the I-9 documentation reviewed by ICE shows certain individuals are not authorized to work in the U.S. and “unless the employees present valid identification and employment eligibility documentation acceptable for completing the Form I-9, other than the documentation previously submitted to you, they are considered by ICE to be unauthorized to work in the United States."

    Split Rail videotaped serving the NSD on the 32 employees. At that time, 23 of the 32 employees admitted they were unauthorized to work and Split Rail terminated them. However, nine employees insisted they were authorized to work and Split Rail accepted their verbal statements without requiring new documentation to support these assertions.

    Thereafter, Split Rail sought guidance from the Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) on how it should respond to NSD without violating IRCA’s anti-discrimination provision. Although OSC stated it could not provide an advisory opinion, it stated that a NSD “may provide a non-discriminatory reason” to re-verify an employee’s employment eligibility. Despite this guidance, Split Rail declined to request documentation for the nine employees in question. Later, Split Rail asserted their position on re-verification was consistent with OSC’s guidance, which OCAHO and the Court totally disagreed with.

    After ICE served Split Rail with a Notice of Intent to Fine (NIF), Split Rail settled the matter. Inexplicably, the settlement only involved substantive paperwork violations, not the continued employment of the nine employees. Apparently, ICE believed Split Rail had terminated all 32 employees.

    In June 2011, ICE returned with another NOI. Several months later, ICE issued a new NSD. Since nine of the 10 employees in the NSD were the same as 2009, Split Rail did not take any action because the employees had previously stated they were authorized to work. After ICE issued another NIF, Split Rail’s owner wrote a letter to ICE wherein he stated he “had absolutely no reason to believe... that any of the employees in the 2011 NSD are anything but law abiding residents” of the U.S. He also noted “each appeared authorized to work in the United States because they had bank accounts, houses, and mortgages.” OCAHO and the Court found the owner’s statements were not a substitute for requiring employees in question to provide new documentation to support verification.

    The Court found ICE established a prima facie showing of the employee’s unauthorized status with evidence that ICE’s computer search of its records showed employees were suspected to be unauthorized due to false I-9 documentation. Furthermore, evidence of the NSD and the employer’s inaction to re-verify the individual’s work eligibility established prima facie evidence of Split Rail’s constructive knowledge of the employees’ unauthorized status. The Court noted constructive knowledge meant “knowledge which may fairly be inferred through notice of certain facts and circumstances which lead a person, through the exercise of reasonable care, that would indicate that the alien is not authorized to work.” See also 8 C.F.R. § 274a.1.

    Split Rail’s defense included testimony from a retired ICE agent that errors may result from USCIS and/or DHS database searches. Additionally, Split Rail relied on the owner’s testimony that the nine employees assured him that they were authorized to work and the employees had bank accounts, homes, mortgages and cars.

    Although OCAHO and the Court acknowledged mistakes can be made in NSDs, ICE relied upon computer searches and uncontested investigation reports. Plus, ICE provided an opportunity to employees to present alternative documentation. But, the employees never did so. The Court found Split Rail failed to rebut ICE’s prima facie case. Specifically, Split Rail’s response to the NSD, though its owner’s actions and statements, was inadequate. Thus, the Court agreed Split Rail had constructive knowledge of the employee’s unauthorized status.

    Concerning the 10th employee in question, Split Rail accepted a foreign passport with an I-551 stamp authorizing his employment for one year in the completion of the employee’s I-9 form. The Court stated, upon the expiration of the stamp, Split Rail had a duty to reverify the employee’s work status but failed to do so. Split Rail’s argument that the employee was a lawful permanent resident and did not need to re-verified was rejected because the I-551 stamp was only employment authorization for one year. Once Split Rail failed to re-verify the employee after the expiration of his I-551 stamp, the Court found Split Rail was working an unauthorized employee.

    This decision is an example of what not to do when an employer receives a NSD. If Split Rail had followed the correct procedure in response to the NSD, it would likely not have penalized over $30,000 for its I-9 violations.
  5. OCAHO Substantially Reduces Employer’s Penalties

    By: Bruce Buchanan, Sebelist Buchanan Law

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    In new ALJ James McHenry’s first decision, U.S. v. International Packaging, Inc., 12 OCAHO no. 1275a (Nov. 2016), the Office of Chief Administrative Hearing Officer (OCAHO) reduced the penalties proposed by Immigration & Customs Enforcement (ICE) from $88,825 to $38,050 for the 94 Form I-9 violations committed by International Packaging, Inc. (IPI).

    Notice of Inspection and NIF

    IPI was served with a Notice of Inspection and subpoena on February 17, 2011. On February 23, 2011, IPI produced some but not all its I-9 forms, inadvertently failing to produce 21 Form I-9s. ICE states it did not even learn of the existence of more employees until it examined IPI’s payroll records. After ICE requested nine of the 21 Form I-9s – all current employees – IPI complied.

    On August 16, 2011, ICE issued a Notice of Intent to Fine (NIF). ICE alleged in Count I that IPI failed to produce 21 Form I-9s, and in Count II alleged that on 73 occasions, the company failed to enter certain data, such as document title, identification number or expiration date, in Lists A, B or C of Section 2. IPI failed to present any documentation attached to the I-9 forms. Thus, ICE asserts these are substantive errors, not technical ones, citing the Virtue Memorandum. IPI asserts that the supporting documentation was requested in a cover letter, not a subpoena; thus, ICE had “insufficient process” to allege these violations where the documentation, if presented, would have established these errors were technical.

    For the 94 Form I-9 violations, ICE asserted a baseline penalty of $935 with a 5% mitigating factor due to IPI’s small size and a 5% aggravating factor for the seriousness of the offenses; the remaining three statutory factors were treated by ICE as neutral.

    Earlier OCAHO Decision

    In an earlier decision, U.S. v. International Packaging, Inc., 12 OCAHO no. 1275 (Apr. 2016), OCAHO sided with ICE and found nothing in the Virtue Memorandum requires an employer to copy and provide documents; rather, it is simply an affirmative defense. OCAHO found there was no conflict between 8 C.F.R. § 1324a.(b)(3) and the Virtue Memorandum. In this case, the employer did not provide the supporting documentation with the I-9 forms to ICE; therefore, the errors in Lists A, B and C were substantive. Furthermore, OCAHO found ICE is not required to ask for any supporting documentation; it is up to the employer to provide such and raise as an affirmative defense.

    IPI’s Defenses

    IPI asserted it demonstrated good faith before, during and after ICE’s audit. It specifically referenced IPI’s consultation with an immigration attorney several years before the audit on how to ensure compliance with the law. OCAHO found this reliance may have inadvertently caused subsequent confusion in ICE’s investigation – by failure to supply the backup supporting documentation for the I-9 Forms, which contributed to some of the violations. However, such reliance did demonstrate good-faith, which warrants some mitigation of the penalty.

    OCAHO’s Decision

    Furthermore, IPI asserted through affidavits and financial documents that it could not afford to pay the proposed penalties and remain in business. Despite unclear financial records regarding the company’s financial condition and conclusory testimony, ALJ McHenry took the company’s finances into account because calculation of penalties is to be sufficiently meaningful for future compliance, not to force an employer out of business. Finally, ALJ McHenry cited IPI’s small size and the public policy of leniency toward small businesses.

    Based upon these factors, OCAHO determined the penalty for failure to prepare and/or present I-9 Forms should be set at $500 per violation, rather than $935. As for the 73 substantive paperwork violations, OCAHO assessed those violations at $350 each.

    Takeaway

    IPI’s willingness to litigate the matter was advantageous from a financial perspective as it reduced the penalties by $50,000 or over 50%. This was despite losing on the initial legal issue of not being required to produce supporting documentation because it was not subpoenaed.
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