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I-9 E-Verify Immigration Compliance

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  1. Attorney Pleads Guilty To Falsifying Visa Documents for H-1B Workers

    By: Bruce Buchanan, Sebelist Buchanan Law

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    A Virginia attorney, Sunila Dutt, pled guilty in a New Jersey federal court to criminal charges for submitting false documents to USCIS and Department of Labor and obstructing an investigation. These acts were part of a scheme to fraudulently obtain H-1B visas for foreign workers of two information technology companies, SCM Data Inc. and MMC Systems Inc.

    SCM Data and MMC Systems conspired with Dutt to falsify paperwork submitted to the federal government that stated the workers had full-time “in house” positions with the companies. In fact, SCM Data and MMC Systems would only pay the foreign IT consultants after placing them in roles working for third-party clients. Dutt also provided fabricated employment documents to the DOL after it started an audit of both companies. Furthermore, Dutt advised one of the foreign workers to lie to the USCIS about living arrangements to extend visa status.

    Dutt will be sentenced in February 2017 at which time he faces up to five years in prison and a $250,000 fine.
  2. OSC Settles Immigration-Related Discrimination Claim Against Utah Company

    By: Bruce Buchanan, Sebelist Buchanan Law

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    The Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), an agency within the Department of Justice, reached an agreement resolving claims that 1st Class Staffing LLC, a staffing company based in Orem, Utah, discriminated against work-authorized non-U.S. citizens in violation of the Immigration and Nationality Act (INA).

    The OSC’s investigation found that 1st Class Staffing’s office in Fontana, California routinely requested that non-U.S. citizens provide specific immigration documents to establish their authorization to work. However, it did not request specific immigration documents to establish their authorization to work from U.S. citizens. Under the INA, all workers, including non-U.S. citizens, must be allowed to choose whichever valid documentation they would like to present from the lists of acceptable documents to prove their work authorization. Failure to allow such because of their citizenship, immigration status or national origin is unlawful.

    Under the terms of the settlement agreement, 1st Class must pay for lost wages to the charging party whose complaint initiated the investigation; pay $17,600 in civil penalties to the United States; ensure all relevant personnel have the current version of the M-274 – I-9 Handbook for Employers, and M-775 – USCIS E-Verify Manual; train its human resources staff on the anti-discrimination provision of the INA by attending an OSC webinar; provide the OSC every 4 months for the next year a list of all individuals hired, including name, hire date and citizenship status, from which the OSC may select up to 150 individuals to review their I-9 forms; and review and revise its policies and procedures to comply with the requirements of the INA’s anti-discrimination provision.
  3. 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.
  4. EOIR Announces New ALJ for OCAHO

    By: Bruce Buchanan, Sebelist Buchanan Law

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    The Executive Office for Immigration Review (EOIR) announced the appointment of James McHenry as an administrative law judge (ALJ) in EOIR’s Office of the Chief Administrative Hearing Officer (OCAHO), effective November 14, 2016. The arrival of ALJ McHenry will provide OCAHO with a permanent ALJ to replace one ALJ, Ellen Thomas, who retired, and another ALJ, who transferred out of OCAHO.

    OCAHO adjudicates cases of hiring of undocumented workers, I-9 verification violations, complaints of discrimination based on an individual’s citizenship status or national origin or overdocumentation in the employment eligibility verification process, and allegations of immigration*-related document fraud.

    ALJ McHenry earned a Bachelor of Science degree in 1997 from the Georgetown University School of Foreign Service and a Juris Doctor degree in 2003 from Vanderbilt University. Prior to his appointment to OCAHO, Mr. McHenry was an ALJ for the Social Security Administration. Before that, Mr. McHenry served in a variety of capacities with the Office of the Principal Legal Advisor, Immigration and Customs Enforcement (ICE) and the U.S. Attorney’s Office.
    Tags: alj, eoir, i-9, ocaho Add / Edit Tags
  5. Company Off the Hook for Over $1.4 Million in Penalties

    By: Bruce Buchanan, Sebelist Buchanan Law

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    In an unusual case, the Office of Chief Administrative Hearing Officer (OCAHO) granted a Motion for Summary Judgment filed by Personnel Plus, Inc. in U.S. v. Spectrum Technical Staffing Services and Personnel Plus, Inc., 12 OCAHO no. 1291 (Nov. 2016).

    Immigration and Customs Enforcement (ICE) issued a complaint against Spectrum alleging it committed 2,147 substantive and uncorrected technical errors and sought a penalty of over $1.4 million. A few months later, ICE filed a Motion to amend the Complaint to add Personnel Plus as a Respondent. OCAHO granted the motion.
    Personnel Plus filed an Answer to the Amended Complaint asserting it was not a successor or alter ego of Spectrum. Thereafter, Personnel Plus filed a Motion to Dismiss/Motion for Summary Judgment seeking to be removed from the case.

    The underlying legal arguments and facts were somewhat complicated and centered around any relationship between Spectrum and Personnel Plus, and if such existed, whether liability should attach to Personnel Plus. ICE asserted Personnel Plus was a “mere continuation” of Spectrum and thus met an exception to the general rule that a successor company does not acquire the liabilities and obligations of a predecessor company; thus, it cannot be found liable. ICE stated four factors should be considered: (1) continuity of ownership, (2) time lapse between dissolution and formation of the respective companies, (3) continuation of the business, and (4) the assumption of liabilities by the new entity.

    Concerning ownership, Ms. Goslin was the owner of Spectrum while her husband, Mr. McKay, who was divorcing Ms. Goslin, was the owner of Personnel Plus. Although Spectrum initially listed both Ms. Goslin and Mr. McKay as owners, OCAHO accepted corporate documents filed with the state which showed Mr. McKay was not an owner of Spectrum. Second, although Spectrum curtailed its operations after the formation of Personnel Plus, it did not cease to exist as an entity and continued on a scaled-down basis. Finally, there was no evidence of assumption of liabilities by Personnel Plus although ICE stated it was seeking that information in discovery.

    One fact that ICE attempted to use in its favor is that the couple’s divorce decree stated Mr. McKay would receive 55% and Ms. Goslin 45% of profits if either Spectrum or Personnel Plus was sold. However, OCAHO did not find this to constitute common ownership. Another fault cited by ICE was that for a short period of time, Spectrum and Personnel Plus shared office space. However, OCAHO did not find this evidence sufficient to find liability on behalf of Personnel Plus.

    Personnel Plus argued there was not any significant transfer of assets from Spectrum to Personnel Plus, which is required before addressing a “mere continuation” analysis. ICE asserted there was a transfer of assets, but it was unable to provide proof of such, although it felt its discovery requests would provide such proof.

    OCAHO concluded ICE failed to demonstrate a transfer of all or substantially all of Spectrum’s assets to Personnel Plus, which is a prerequisite to establishing corporate successor liability. Assuming arguendo there was a transfer, OCAHO found the record does not show any exception to the general rule that a successor does not acquire the liabilities of the predecessor.

    The case will continue with Spectrum as the only Respondent. I will keep you informed of further developments in this case.
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