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I-9 E-Verify Immigration Compliance

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  1. 5th Circuit Overrules OCAHO Decision Concerning $226,000 Penalty

    By: Bruce Buchanan, Sebelist Buchanan Law, PLLC

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    The Fifth Circuit Court of Appeals in Employer Solutions Staffing Group II, LLC v. OCAHO (August 11, 2016) reversed an OCAHO decision concerning the issue of personal versus corporate attestation of employee’s documents in Section 2 of the I-9 form; thus, it vacated the $226,000 civil penalty.

    ESSG is a staffing company based in Edina, Minnesota. It contracted with Larsen Manufacturing Co. in El Paso, Texas to provide employees. Then ESSG subcontracted with Flexicorps, Inc. to make all the hiring decisions for temporary employees at the Larsen facility.

    In so doing, ESSG had Flexicorps supervise the completion of Section 1 of the I-9 forms by employees and examine original documents presented by the employees for Section 2. However, instead of Flexicorps completing the employer certification at that time, ESSG had Flexicorps make color copies of the documents and send the I-9 forms and color copies of the documents to ESSG’s corporate headquarters. At that point, an ESSG employee examined the photocopies and completed Section 2, including the signed attestation that the employer examined the documents and they appeared to be genuine.

    In 2011, Immigration and Customs Enforcement (ICE) served a Notice of Inspection on ESSG for the Larsen facility and thereafter determined ESSG’s procedure in signing the certification was contrary to the law. After a hearing before an Administrative Law Judge (ALJ) of OCAHO, OCAHO agreed with ICE, found 242 violations and assessed a penalty of over $226,000.

    The 5th Circuit analyzed the statute, the Immigration and Nationality Act (INA), the accompanying regulations, and any applicable case law. The INA states a “person or entity must attest… on a form” that it has verified the employee’s document(s). See § 1324a (b)(1)(A). Thus, ESSG argued corporate attestation is consistent with the INA.

    The regulations state “an employer, his or her agent, or anyone acting directly or indirectly in the interest thereof, must” complete Section 2 on the I-9 form and sign the attestation. § 274a.2(b)(1)(ii)(B). The Court said it did not read this regulation to require the same person who met the hired employee and examined the original documents to be the one to sign the attestation.

    The Court then reviewed whether ESSG had fair warning of OCAHO’s reading of the statute and regulations. It found it did not, especially given the fact there were no prior OCAHO decisions on the matter and the ALJ only cited “commonsense” for her ruling, not any statute, regulation or case law. Thus, given the language of the INA and its regulations, the Court found ESSG lacked fair notice of OCAHO’s position.

    The Court concluded a “reasonable interpretation” permits corporate attestation due to the language of the INA. Thus, the Court concluded ESSG did not violate the INA. However, before employers celebrate the victory, it must be noted the Court went on to state their holding “does not address whether ICE can lawfully prohibit corporate attestations”; only that ESSG was not given fair notice.

    Since this is a Court of Appeals decision, it does not change ICE’s and OCAHO’s position and they are free to clarify whether corporate attestation is prohibited.

    An interesting question is whether this decision may provide an avenue to resolve the remote hire issue where the employer does not view the original documents. Obviously, it will depend on ICE’s and OCAHO’s position on this issue going forward
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  2. Employer’s Failure to Notify USCIS Costs $183,000

    By Bruce Buchanan, Sebelist Buchanan Law

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    A Department of Labor (DOL) Administrative Law Judge ruled in Matter of: Administrator, Wage, and Hour Division v. ME Global, Inc. that the employer failed to perfect the bona fide termination of its employee; therefore, ME Global owed the employee $183,000.

    ME Global hired Petar Peric on a three-year H-1B Visa in 2008. After only two months, ME Global fired Peric for unsafe conduct. Although the company notified Peric of his termination, it failed to provide notification to the USCIS of his termination.

    Under immigration laws, when an employer terminates an H-1B Visa holder, it must inform the employee, notify the USCIS, and offer to pay transportation costs for the employee to return to his home country.

    In 2010, Peric filed a complaint with DOL alleging he was owed back wages because of ME Global’s failure to notify the USCIS. Essentially, Peric argued that he was “benched” – placed in non-productive status.

    ME Global argued the complaint was beyond the 12 month statute of limitations; thus, it should be dismissed. The ALJ rejected that argument and found it was a continuing violation and was timely filed as long as it was filed within one year of when Peric left the United States. Since he filed the complaint in 2010 before leaving the U.S. in June 2011, it was not time-barred.

    Thus, the ALJ ruled ME Global owed Peric back wages from November 2008, when he was fired, until June 2011, when he left the United States.

    As you see, the employer’s failure to properly notify the USCIS of an employee’s discharge was costly.
  3. Disney, Consultants, and Terminated Workers Continue to Fight Over H-1B Visa Claims

    By Bruce Buchanan, Sebelist Buchanan Law

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    As I previously discussed and has been widely reported, two terminated Disney World employees have sued Disney World and two consulting firms, HCL, Inc. and Cognizant Technology Solutions Corp., alleging violations of Racketeer Influenced and Corrupt Organizations Act (RICO).

    The employees have alleged the consulting companies lied to the U.S. Department of Labor in their Labor Condition Application (LCA) when it stated the hiring of H-1B nonimmigrant employees would not adversely affect the working terms and conditions of other employees of the consulting firms. The employees have also alleged Disney World conspired with consulting firms leading to the RICO lawsuit.

    Cognizant has argued it did not even make those assertions in the LCA because the workers in question were exempt, and even if the workers were not exempt, Cognizant only was certifying no Cognizant employee would be affected. Cognizant stated it had no duty to make any certification for Disney Workers.

    Furthermore, Disney World and the defendants have stated Cognizant failed to allege the existence of an enterprise, necessary for a RICO Act claim; rather, Disney and Cognizant had a consulting relationship. In a later filing, HCL and Disney World made similar assertions as to why the lawsuit should be dismissed.

    More recently, the former Disney World employees responded that RICO had been sufficiently pled and Cognizant “could not help Disney World pursue the profit by hiring cheaper foreign labor without Cognizant filing the H-1B petitions.”

    In Disney World’s latest filing in the class action lawsuit, it stated that the plaintiffs’ lawsuits were “in search of a legal claim.” Disney World further stated the lawsuits do not have “any viable theory on which to proceed.”

    I will get you updated on further filings and rulings on the case.
  4. Negotiating with ICE Concerning Penalties

    By Bruce Buchanan, Sebelist Buchanan Law
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    The issue always arises as to whether it is worthwhile to negotiate with Immigration and Customs Enforcement (ICE) after it issues a Notice of Intent to Fine (NIF) to an employer. In my opinion, it is almost always worthwhile unless the fine amount is less than several thousand dollars.

    However, in order to negotiate over the penalty, one must notify the ICE attorney in writing within 30 days of the NIF that you wish a hearing on the matter. That does not mean there will be a hearing but it preserves the employer’s right to a hearing before Office of Chief Administrative Hearing Officer (OCAHO) if a negotiated reduction in the penalty cannot be reached.
    There are a number of items to review in the NIF to determine whether ICE committed any mistakes in their calculations. These possible mistakes are related to substantive errors on the I-9 forms and/or the alleged presence of undocumented workers. These are some of the areas to review:


    (1) Failure to accurately count the three business days for the employer signing section 2. This is sometimes caused by the ICE auditor looking at employee’s signature date and determining more than three days passed from the employee’s signature to the employer’s signature. However, if the employee signed the I-9 form before his first day of work, then more than three days is allowed.

    (2) Timeliness violations concerning the completion of Sections 1 and 2 which are beyond the 5-year statute of limitations. If so, there is no violation.

    (3) Was the error technical? If so, was the opportunity to correct it provided?

    (4) Is the individual without an I-9 form an owner with meaningful authority? If so, no I-9 form is needed. Many ICE auditors miss this one.

    (5) Are any of the I-9 violations beyond the scope of the Notice of Inspection (NOI) because they were terminated employees not covered by the NOI? If so, those employees are not covered by the NOI. Employers may prevent some of these issues by timely purging I-9 forms.

    (6) Are any employees grandfathered in, hired before 11/7/1986; thus, they do not require an I-9 form.

    (7) If the NIF alleges hiring undocumented workers, did the employer have knowledge of their undocumented status? ICE cannot rely on a Notice of Suspect Documents; rather, they must prove actual or constructive knowledge.

    (8) Are the five factors appropriately applied for 5% aggravating/mitigating penalties:

    (a) Size of business

    (b) Good faith/bad faith - ICE cannot use a poor rate of compliance as bad faith. Also, one cannot use cooperation in the NOI investigation to show good faith.

    (c) Seriousness of violations - This is difficult for an employer to win, especially if no I-9 forms or no status boxes were checked.

    (d) Whether any employees were unauthorized - ICE usually treats as neutral but OCAHO often awards 5% mitigation.

    (e) History of previous violations - ICE usually treats as neutral but OCAHO will sometimes award a 5% mitigation

    Besides these factors, an attorney should review the client’s financial situation. If the client has been operating at a loss, the attorney should request financial records from his client, preferably audited, to substantiate the poor financial condition and provide the records to ICE. If one can establish a poor financial condition, the attorney can argue for a large reduction of the penalties and a payment plan – two to five years, depending on different factors.

    There may be other factors to review in the NIF. It all depends on the individual case. But, overall, in my opinion, it is worthwhile to carefully review the NIF and seek an appropriate reduction in the penalty. The ICE attorney is aware if the case is litigated before OCAHO, in most cases, OCAHO will substantially reduce the penalty. Thus, they have an incentive to reach a negotiated penalty.
  5. Mary’s Gone Crackers Inc. Agrees to Pay $1.5 Million for Immigration Allegations to

    By Bruce Buchanan, Sebelist Buchanan Law
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    Mary’s Gone Crackers Inc., a natural food company based in Gridley, California, has agreed to pay $1.5 million and to establish a corporate compliance program under a non-prosecution agreement reached with the U.S. Attorney’s Office following an investigation into potential criminal violations of federal immigration laws.

    According to the agreement, in March 2012, Immigration and Customs Enforcement (ICE) audited Mary’s Gone Crackers’ I-9 forms for its employees. Thereafter, ICE provided a Notice of Suspect Documents (NSD) stating that 49 of Mary’s Gone Crackers’ employees appeared not to be authorized to work in the United States. After one employee provided corrected documentation, Mary’s Gone Crackers informed ICE that the other 48 had all resigned or been terminated.

    However, within less than a month, Mary’s Gone Crackers rehired at least 13 employees that it claimed had been terminated or resigned, all of them under new names. One of those 13, an operations supervisor, never stopped working for Mary’s Gone Crackers at all, but instead continued to work under a new assumed name and received payment as an independent contractor, rather than through the company’s ordinary payroll. Several other Mary’s Gone Crackers employees knew that the operations supervisor was not eligible to work in the United States. When a search warrant was executed at the company’s Gridley facility in January 2013, at least 12 of the 13 rehired individuals were still working at Mary’s Gone Crackers.

    During the course of the I-9 audit and its rehiring of individuals, Mary’s Gone Crackers had at times consulted with an outside counsel. After the search warrant, Mary’s Gone Crackers cooperated with the government’s investigation and took remedial measures, including terminating employees, stopping use of the outside counsel involved, and taking various steps to ensure compliance with immigration laws and I-9 regulations, including use of E-Verify and the Social Security Number Verification Service.
    The company also established an anonymous tip line so that employees can report any potential I-9 issues. The non-prosecution agreement requires Mary’s Gone Crackers to establish a corporate compliance program covering its I-9 procedures and its use of the E‑Verify system, and requires timely and complete disclosure of violations of immigration laws or regulations within 24 hours of discovery. It also requires Mary’s Gone Crackers to provide corporate compliance reporting to the United States Attorney’s Office for two years. No federal criminal charges will be brought against Mary’s Gone Crackers for the investigated conduct if the company complies with the terms of the non-prosecution agreement.
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