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I-9 E-Verify Immigration Compliance


  1. OCAHO Holds Partner is not Employee; thus no I-9 is Required; by Bruce Buchanan, Siskind Susser

    Office of Chief Administrative Hearing Officer (OCHAO) held, in United States v. Santiago's Repacking, Inc., 10 OCHAHO no. 1153 (2012), a partner, who has meaningful control and management of the partnership, is not required to complete an I-9 form for the partnership. However, his partnership's failure to have any I-9s of their 24 current employees or 30 former employees for the past six months is a clear violation of Immigration Reform and Control Act of 1986 (IRCA). Thus, Santiago's Repacking was fined for the failure to have the I-9 forms of 54 employees. However, the partnership successfully had the penalties reduced by about 60%.
    Santiago's Repackaging is located in Nogales, Arizona. It was served with a Notice of Inspection on July 1, 2009 requesting their I-9 forms and payroll records for current employees, and those employees terminated since January 1, 2009. Santiago was only able to produce one I-9 form, a partially completed one for one of its three partners.
    Santiago asserted it reviewed and maintained the applicable documentation for all newly- hired employees but was unaware of the need to complete I-9 forms. Of course, retention of applicable
    documentation without completion of the I-9s is a clear violation of IRCA.
    Santiago argued it was not required to complete an I-9 for a partner because he is not an employee of the company. After a thorough analysis of the applicable case law, including Clackamas Gastroenterology Associates v. Wells, 538 U.S. 440 (2003), Simpson v. Ernest & Young, 100 F.3d 436 (6th Cir. 1996), and Solon v. Kaplan, 398 F. 3d 629 (7th Cir. 2005), OCAHO held: "Unlike the
    partners found to qualify as employees in Simpson, Santiago's Repacking is not a large national firm in which any "partner" lacked meaningful control or voting rights. Santiago Moreno is one of only three original partners in Santiago's Repacking . . . has a one-third interest and shares equally in profits and losses as well as in the management of the partnership business. The government made no suggestion that Moreno is subject to supervision, discipline, or performance evaluations, or that apart from the appearance of his name on the unemployment tax and wage reports, there are any other indicia of employee status. The preponderance of the evidence accordingly indicates that Moreno's status is that of a working partner, not an employee."
    As for the fines, ICE set a baseline at $935 per violation based upon the fact it violated IRCA on 100% of the employees reviewed. It mitigated the fine by 5% because it was a small business. However, it increased the baseline by 5% each for the seriousness of the violations and the fact that over 1/2 of the employees reviewed were unauthorized. Overall, ICE sought a civil fine of $52, 500.
    OCAHO, as it is apt to do, saw fit to lower the fines. It stated: "This is a small company with ordinary business income in 2010 of only $58,457; its payroll for that entire year was $226,531. The penalties as proposed are thus quite close to the total of the company's business income for 2010. In the exercise of discretion the penalties will be adjusted to $400.00 for each of the violations in Count I and $350.00 for each of the violations in Count II for a total of $20,100."
    In this case, it certainly was worthwhile for Santiago's Repackaging to challenge ICE's allegations. By doing so, it had one of the three counts dismissed while reducing the penalty by about 60% for the other two counts.   
    Even if an employer has not had legal representation during an ICE audit (which is not a wise decision), it should certainly obtain counsel before agreeing to pay any fines. Counsel can
    evaluate the matter and determine the best course of action.
  2. Office of Special Counsel Settles Lawsuit against Casino for Unlawful Immigration Practices; by Bruce Buchanan, Siskind Susser

    Tuscany Hotel and Casino LLC in Las Vegas has resolved a lawsuit, filed by the DOJ's Office of Special Counsel for Immigration-Related Practices, which alleged that the casino discriminated in
    the employment eligibility verification and reverification process.  
    The lawsuit, filed on May 11, 2012, alleged Tuscany treated non-citizens differently from U.S. citizens during the employment eligibility verification and reverification process.   The complaint alleged the casino required non-citizen employees to provide more or different documents or information than it required from citizen employees during the initial employment eligibility
    verification process.  According to the complaint, the company then used the documents or information it gathered to impose improper document requests on noncitizens during the reverification process as a condition of continued employment.    The complaint further alleged that the casino subjected non-citizen employees' documents to a heightened review process by senior human resources representatives that was not applied to documents presented by U.S. citizens.      
    Under the settlement agreement, Tuscany will pay $49,000 in civil penalties to the United States and full back pay to a victim.  Tuscany also agreed to implement new employment eligibility verification policies and procedures that treat all employees equally regardless of citizenship status, conduct training of its human resources staff on their responsibilities to avoid discrimination in the
    employment eligibility verification process, and be subject to reporting and monitoring requirements.
    This is just another example of the Office of Special Counsel cracking down on employers.  Remember it is important to treat citizens and non-citizens alike in the I-9 process.
  3. Owners of Clarion Hotels Face Seizure of Hotels for Immigration-Related Violations; by Bruce Buchanan, Siskind Susser

    The owners of two Clarion Hotels in the Kansas City area have been in indicted for conspiracy to harbor undocumented immigrants, five counts of harboring undocumented immigrants, and four counts of wire fraud. If convicted, they face five to 20 years for each conviction, fines of up to $250,000 per count and seizure of their two hotels.
    Immigration and Customs Enforcement-Homeland Security Investigations (ICE-HSI) began their
    investigation based on a tip that the hotels were employing undocumented workers. It is unknown who provided the tip but two possibilities are a former employer or a competitor hotel. Thereafter, ICE-HSI in interviewed a number of employees and determined approximately 50% of the employees were undocumented.
    In the course of the investigation, ICE-HSI sent an undercover agent, who sought work while conceding he did not have "any papers." He was offered employment at less than minimum wage. When he inquired why, he was told because there would be no withholdings from his wages. Thus, the government alleges "the economic motive was to cut costs and to get an advantage on other hotels that abided by the law."
    By seeking the seizure of the hotels, the U.S. government is upping up the penalties for immigration fraud. This is just one more reason why employers should treat immigration compliance with the utmost seriousness.
  4. 570 Georgia Government Agencies face Penalties under Immigration Law; by Bruce Buchanan, Siskind Susser

    In September 2012, the Georgia Audits and Accounts Department sent a list of 570 government
    agencies to the Department of Community Affairs, saying they have not filed annual E-Verify reports and those not complying with the law could be cut off from certain state funding - including state community development block grants-until they file their reports with state auditors.
    Under Georgia's law requiring use of E-Verify by government agencies and private employers, government employers with two or more employees file annual reports certifying they and their public works contractors are using E-Verify. Some government agencies might have no or one employees and would therefore be exempt under the law.
    The state's list included four counties outside the Atlanta area, more than 130 cities across the state, including Atlanta-area cities of East Point, Lilburn and Norcross, and more than 400 other government entities, including hospital, housing and development authorities. Lilburn officials said they were using E-Verify as required by law and would send the state reports that certify this. East Point and Norcross officials said they were looking into the matter.
    Previously, on June 25, 2012, state auditors sent a letter warning nearly 1,200 government agencies
    that they were not complying with the law and the Immigration Enforcement Review Board could sanction them, including fines up to $5,000 for officials who "knowingly" violate the law.
  5. OCAHO Reduces Contractor's fine by 40%; by Bruce Buchanan, Siskind Susser

    Office of the Chief Administrative Hearing Officer (OCAHO) has found Four Seasons Earthworks
    Inc. (Four Seasons) violated the Immigration Reform and Control Act (IRCA) but reduced its proposed fine from $15, 361.50 to $9,000.
    In United States v. Four Seasons Earthworks, 10 OCAHO No. 1150 (2012), Four Seasons was charged with 19 violations of IRCA for its failure to ensure the completion of Section 1 and failed to complete Section 2 and 3. Four Seasons, a family-owned building contractor, based in Wilmington, North Carolina, was audited by Immigration and Customs Enforcement (ICE) in November 2009. Interestingly, ICE only requested the I-9s of the 22 current employees and 21 former employees, whose employment ended after January 1, 1999. Normally, ICE goes back at least two years for terminated employees.
    The violations concerned its failure to ensure completion of Section 1 and/or failure to properly complete Section 2 or 3. Essentially, Four Seasons only entered data in List B even though IRCA requires you to complete both List B and C or List A. Four Seasons argued the above violations were technical, not substantive, because the I-9s provided the social security numbers in Section 1 and the employees' personnel files contained social security cards and birth certificates - both List C
    documents. Furthermore, Four Seasons produced some of these documents for ICE after the initial audit.
    OCAHO dismissed Four Season's arguments as contrary to established law, citing 8 C.F.R. section 274a2(b)(3) which states: "the copying or electronic image (of identity documents) does not relieve the employer from the requirement to fully complete section 2 of the form I-9." Furthermore, OCAHO stated that Four Seasons late production of copies of supporting documents does not excuse the company's failure to enter the necessary information on the I-9. It would not even have excused Four Seasons' violations even if timely produced.
    Concerning the fine, the range is from $110 to $1,100 per violations. Thus, based on 19 violations, the range is from $2,090 to $20,900. ICE determined there were 19 violations which was divided by 43 - the total number of employees/former employees, equaling about 44%. According to ICE's grid, a percentage between 40 and 49% equals a base fine of $770 per violation.
    After the base fine is determined, the following five factors must be assessed: 1) the size of the business of the employer, 2) the good faith of the employer, 3) the seriousness of the violation(s), 4) whether or not the individuals involved were unauthorized aliens, and 5) any history of previous violations by the employer.  ICE found a 5% aggravation for the seriousness of the violations but did not increase/decrease the base fine on the other four factors. Thus, $770 + $5% = $808.50.
    Four Seasons argued it should be treated as a small company, and was entitled to a 5% reduction in the base fine. OCAHO agreed based upon its gross receipts of $1.9 million in 2010 and its current workforce consistently of only 22 employees. OCAHO did not concur with Four Seasons' argument that it should be found to have committed serious violations.       
    OCAHO concluded the base fine should be reduced to $500 per violation or a total of $9,500. In so doing, OCAHO found: "Given the downward trend in construction and the subsequent bankruptcy of a separate family-owned company it is reasonably clear that there have been significant financial setbacks for this small company over the last few years. Considering the record as a whole and the statutory factors in particular, the penalties will be adjusted as a matter of discretion to an amount closer to the midrange of permissible penalties.
    This decision continues a trend that companies who contest their ICE fines for substantive I-9 violations will have the amount of their fine substantially reduced.
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