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By Bruce Buchanan, Siskind Susser, PC
An Administrative Law Judge (ALJ) of the Office of Chief Administrative Hearing Officer (OCAHO) found a company committed 177 Form I-9 violations, and assessed a fine of $63,850, which was about 60% less than the fine sought by the Immigration and Customs Enforcement (ICE). See United States v. Niche, Inc., 11 OCAHO no. 1250 (2015).
Niche, located in New Bedford, Massachusetts, had a workforce of over 200 employees between 2009 and 2011 when it supplied cargo parachutes to the U.S. military for use in operations in Afghanistan and Iraq. When the Notice of Inspection (NOI) was issued in 2012, those contracts had ceased and the workforce had been substantially reduced - to 21 employees.
ICE issued a Notice of Intent to Fine alleging 165 violations related to failure to properly complete Section 1 of the I-9 form and/or failure to ensure proper completion of Section 2; 11 violations for failure to timely prepare I-9 forms; and one count for failure to prepare an I-9 form. Niche admitted to 174 or the 177 allegations. ICE sought a penalty of $157,220 based on a violation rate of approximately 73%.
Continuing to Employ Workers after their Employment Authorization cards expire
The only allegations in question involve three employees whose Employment Authorization cards were not re-verified when they expired and continued to be employed by Niche. Niche asserted since the employees received new work authorization documents but it had failed to re-verify them at the appropriate time, that there was no harm done; thus no violation. OCAHO case law does not support this position – an employer must re-verify employees whose Employment Authorization cards expired and failure to do so is an I-9 violation. Thus, the ALJ found Niche to be liable for the three violations.
Was Niche a Small Business entitled to Leniency?
A major source of disagreement between the parties was whether Niche is a small business. ICE cited to Niche’s employment of more than 240 employees in the audit period, while Niche cited to its current workforce of 21 employees. OCAHO case law says the size of the business is determined based on the size at the time that the ALJ renders a decision. Thus, the ALJ found Niche was a small business – entitled to a 5% mitigating factor and leniency under the Small Business Act. More importantly, the ALJ found the Small Business Act provides additional leniency to small businesses that undertake contracts in support of a war effort.
ALJ’s Substantial Reduction of Penalties
Based upon Niche being a small business with contracts toward the war and its $1 million financial loss in 2014, the ALJ reduced the penalties to between $350 (165 paperwork violations) to $600 (failure to prepare an I-9 form) for a total penalty of $63,850.
This case is another example of a company obtaining a substantial reduction in penalties. However, it should be noted that if Niche had conducted a self-audit before the NOI, the penalties could have been a fraction of the $63,850 assessed. Self-audits, especially those conducted or supervised by an immigration compliance attorney, can save companies from hefty penalties and ensuing litigation.