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By: Bruce Buchanan, Sebelist Buchanan Law
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.
By: Bruce Buchanan, Sebelist Buchanan Law
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 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.
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.
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.
By: Bruce Buchanan, Sebelist Buchanan Law
The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), an agency within the Department of Justice, reached settlements resolving claims that the Denver Sheriff Department and the Aldine, Texas Independent School District discriminated against work-authorized immigrants in violation of the Immigration and Nationality Act (INA).
The investigation found that from approximately January 1, 2015 until March 23, 2016, the Denver Sheriff Department discriminated based on citizenship status by requiring applicants for deputy sheriff positions to be U.S. citizens and publishing job postings with U.S. citizenship requirements, in violation of the INA. The INA’s anti-discrimination provision prohibits employers from limiting jobs to U.S. citizens except where the employer is required to do so by law, regulation, executive order or government contract. The Denver Sheriff Department was not subject to one of the INA’s exceptions.
Under the settlement agreement, the Denver Sheriff Department will pay $10,000 in civil penalties; identify applicants who may have been disqualified from consideration for deputy sheriff positions due to the citizenship requirement and consider these applicants’ qualifications without regards to their citizenship; train its human resources staff on the anti-discrimination provision of the INA by attending an OSC webinar; provide the OSC every 6 months for the next three years the completed I-9 forms of all new hires and all recruiting advertisements; and review and revise its policies and procedures to comply with the requirements of the INA’s anti-discrimination provision.
The other investigation found that Aldine School District required non-U.S. citizens, but not similarly-situated U.S. citizens, to present specific documents when reverifying their employment eligibility once their original documents expired. The INA’s anti-discrimination provision prohibits employers from making specific documentary demands based on citizenship or national origin when verifying or reverifying an employee’s authorization to work.
As part of the settlement agreement, Aldine School District will pay a $140,000 civil penalty, revise its policies and procedures, and train its human resources staff on the anti-discrimination provision of the INA by attending an OSC webinar.
In a unique remedy, Aldine School District will implement a three-year program to train students and students’ parents on the requirements of the INA’s anti-discrimination provision. Specifically, the training program will be focused on educating adult participants in Aldine’s parent literacy/English as a Second Language (ESL) classes, 12th grade students enrolled in certain classes and the school district’s employees.
By Bruce Buchanan, Sebelist Buchanan Law
A trucking company, Ideal Transportation, significantly reduced its penalties for I-9 violations due to its truck drivers possessing “Transportation Worker Identification Credential” (TWIC) cards, which were issued by the Transportations Security Administration (TSA). See U.S. v. Ideal Transportation Co., Inc., 12 OCAHO no. 1290 (2016).
Ideal Transportation operates a small intermodal carrier transporting international ocean containers between several ports in the northeast. Its drivers must have TWIC cards because they have unescorted access to secure areas of port facilities and certain vessels at the ports. In order to obtain a TWIC card, an individual must provide biometrics and pass a “security threat assessment” conducted by TSA. Furthermore, one must be a U.S. Citizen or be lawfully in the U.S. In this case, all of Ideal’s truck drivers possessed TWIC cards.
After Ideal was served with a Notice of Inspection, it reviewed its employees’ I-9 forms and determined they were “soiled, torn and illegible and the information was outdated”; thus, all new I-9 forms were completed. Furthermore, Ideal shredded the existing “soiled” I-9 forms.
Based upon this background, Immigration and Customs Enforcement (ICE) found 12 violations because the I-9 forms were not timely completed. ICE proposed a penalty of $11,220 based upon a baseline penalty of $935 per violation. In its filing with the Office of Chief Administrative Hearing Officer (OCAHO), Ideal asserted its drivers had TWIC cards, were U.S. citizens and had completed I-9 forms when initially hired. Thus, it asserted it did not violate the law.
OCAHO found Ideal’s argument, that the timely prepared I-9 forms and subsequent destruction because they were damaged, was not a valid defense to liability. Although OCAHO recognizes “impossibility” as an affirmative defense to the failure to present I-9 forms when the I-9 forms were unavailable through no fault of the employer, those facts were not presented in this case. Rather, the destruction of the original I-9 forms was attributable to the company’s own actions. Thus, OCAHO found Ideal liable for 12 Form I-9 violations.
However, OCAHO stated the TWIC cards demonstrated the employees were authorized to work, which undercuts ICE’s argument that Ideal was “at high risk to hire employees that may not be authorized to work.” Furthermore, the TWIC cards demonstrated the lack of seriousness of the violations as well as the company’s good faith.
OCAHO also found due to Ideal’s very small size, the general public policy of leniency to small business entities should be considered in determining the appropriate penalty. Based upon these factors, OCAHO determined a penalty of $2700 was appropriate.
Although Ideal greatly reduced its penalty, the lesson to be learned here is not to destroy the original I-9 forms even if you determine the I-9 forms need to be re-done. Instead, attach the original I-9 forms to the new I-9 forms even if they are soiled or torn.
By: Bruce Buchanan, Sebelist Buchanan Law
In one of the most interesting recent decisions, the Office of Administrative Hearing Officer (OCAHO) rejected the company’s argument that the I-9 forms in error or missing were the “fruit of the poisonous tree” and should be excluded from the evidence considered. See U.S. v. Frimmel Management, LLC, 12 OCAHO no. 1271c (October 2016).
This case arises out of the notorious Maricopa County, Arizona and Sheriff Joe Arpacio. The Maricopa County Sheriff’s Office (MCSO) conducted a criminal investigation into Frimmel Management alleging it knowingly hired or employed unauthorized workers. A state court dismissed the criminal complaints for a variety of reasons involving misdeeds by the MCSO.
Because of MCSO’s investigation, Frimmel Management’s identity was disclosed to Immigration and Customs Enforcement (ICE), who decided to issue a Notice of Inspection (NOI). Thus, in August 2013, ICE issued a NOI and subpoena on Frimmel Management. The company provided the I-9 forms that it possessed but many employees did not have any I-9 forms and others had I-9 forms fraught with errors.
As a result, ICE filed a Notice of Intent to Fine, a Complaint and Amended Complaint alleging numerous errors. Count I alleged 225 violations for failure to ensure employees properly completed Section 1 and/or the company failed to complete Sections 2 and 3 of employees’ I-9 forms. Count II alleged the same type of violation except all the employees were unauthorized to work. Counts III and IV alleged Frimmel Management failed to prepare and/or present I-9 forms for 63 employees, 29 of which were alleged to be unauthorized.
ICE sought a $935 baseline penalty based upon 84% error rate and aggravated the violations for lack of good faith and the employment of some unauthorized workers.
Frimmel Management argued all of the violations violated their 4th and 5th Amendment rights as the evidence was gathered illegally; thus, asserting the documents were the “fruit of the poisonous tree.” However, OCAHO declined to exclude this evidence because the only information that ICE obtained from the MCSO investigation was the identity of the company. OCAHO cited Supreme Court caselaw that this did not constitute grounds for exclusion as “fruit of the poisonous tree.” OCAHO agreed. OCAHO also stated even assuming ICE’s evidence was the “fruit” of MCSO’s illegal conduct, the evidence was not a “direct result” of MCSO’s conduct. Thus, this argument also failed.
There was very little dispute about the I-9 form errors – Frimmel Management committed numerous substantive paperwork violations, including failure to prepare I-9 forms, failure to ensure the employees checked an appropriate box as to their work authorization – U.S. Citizen, permanent resident, etc., failure to ensure employees signed the attestation, and failure to provide appropriate information in Lists A, B or C.
Thus, ICE determined Frimmel Management committed 380 violations. The company was successful in showing ICE could not establish 38 employees were unauthorized. ICE relied on several documents, including a Notice of Suspect Documents, which were insufficient to prove unauthorized status.
OCAHO did lower the baseline penalty to $900 for most of the violations and $1000 for the ones involving unauthorized workers.; thus, the total penalty was $347,500.
This case demonstrates the need for employers to be aware of their I-9 obligations and to take them seriously. If Frimmell Management had been more careful in the completion of the I-9 forms and had completed I-9 forms on all employees hired, their penalties would have been much lower.