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I-9 E-Verify Immigration Compliance

Horse Breeder Finishes “In the Money” with OCAHO

Rating: 2 votes, 5.00 average.
By Bruce Buchanan, Siskind Susser

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Making this the third decision involving horse racing stables in the last year, an OCAHO Administrative Law Judge (ALJ) reduced a breeder-employer’s penalties by about 50% to $35,900 in United States v. McPeek Racing Stables, 11 OCAHO no. 1249 (2015).

McPeek Racing Stables trains thoroughbred race horses in New York, Kentucky and Florida and is owned by Kenneth McPeek, a horse trainer. On September 23, 2011, Immigration and Customs Enforcement (ICE) served a Notice of Inspection (NOI) on McPeek Racing Stables, which eventually led to a Notice of Intent to Fine. Count I of the complaint alleged McPeek Racing Stables failed to prepare I-9 forms for 62 employees. Count II alleged the company failed to ensure that 37 employees properly completed Section 1 of their I-9 forms, or it failed to properly complete Sections 2 or 3 of the I-9 forms.

ICE initially set the baseline penalty at $770 per violation because McPeek Racing Stables had a 40-49% error rate on their I-9 forms. ICE mitigated the penalties by 5% for each of these factors – small business, no unauthorized workers present, a lack of history of previous violations and a lack of bad faith. However, it aggravated the penalties by 5% due to the seriousness of the violations. Thus, ICE sought a penalty of $654.50 per violation for a total of $64,795.50 in penalties.

McPeek Racing Stables conceded liability for the 99 Form I-9 violations but disagreed with the amount of the penalties. It asserted the proposed penalties would force the company to close, and noted that the proposed penalties were more than 25% of McPeek’s 2013 income. However, McPeek offered only one tax return to support this argument. McPeek Racing Stables also argued that it had implemented I-9 Compliance Policy and Procedures in good faith, and that the horse racing industry is “transient”, which leads to a high staff turnover.

OCAHO stated that the failure to prepare an I-9 form is the most serious violation, and the failure to insure proper completion of Section 1 and to properly prepare Section 2 are also very serious violations. However, apart from the seriousness of the violations, all other factors were in favor of McPeek Racing Stables. OCAHO declined to find inability to pay the penalties as a viable defense because McPeek Racing Stables has substantial assets.

OCAHO held that “given the transient nature of the industry, and in light of the general public policy of leniency toward small entities”, the penalties should be lowered to $400 each for the 62 violations in Count I and $300 each for the 37 violations in Count II. The total penalties assessed by OCAHO are $35,900.

The Takeaway

Perhaps if McPeek had implemented an I-9 Compliance Policy before ICE served it with an NOI, the company could have avoided much of its liability. This case is another great example for the need for employers to have an I-9 Compliance Policy and to periodically self-audit to help detect missing I-9 forms and locate errors on existing forms.

A copy of the decision is available here. Cite as: U.S. v. McPeek Racing Stables, 11 OCAHO no. 1249 (2015).

ABOUT THE AUTHOR: Bruce Buchanan is an attorney with the law firm of Siskind Susser P.C. - www.visalaw.com - a full service U.S. immigration law firm representing employers and individuals nationwide for over 20 years. You can also follow Bruce on social media via Facebook and on Twitter @BuchananVisaLaw .

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Updated 05-07-2015 at 10:28 AM by BBuchanan

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