Why Should Employers Have an Internal I-9 Audit?
by Ken C. Gauvey

I-9 forms appear simple. It's a one page form, half of which the employee fills out. Yet, errors in completing the I-9 form can result in significant civil and criminal penalties being brought both against the company and human resources managers individually. These penalties may be reduced or avoided with a proper internal audit of both the I-9 procedures and I-9 forms maintained by the employer. It should be noted before going through the penalties that absent knowing violations, whether constructive or actual, penalties may not be assessed without giving employers an opportunity to correct the problem.

Penalties for violating proper I-9 procedures range from criminal penalties for engaging in a pattern or practice of violation to civil penalties. The criminal penalties include fines of no more than $3,000 for each unauthorized alien and imprisonment for not more than six months.¹ From a company perspective, these criminal penalties may be applied to anyone who participated in the pattern or practice of violation from CEO's to human resources managers. According to an April 20, 2006 memo issued by ICE, I-9 enforcement is now focused on criminal prosecution. ICE is moving to bring criminal charges of I-9 violations as well as money laundering and harboring illegal aliens whenever possible.² The penalties associated with these charges are potentially 20 and 10 years in prison. As a result of this new stance by ICE, arrests for criminal violations brought by ICE has increased from 24 in 1999 to 716 arrests in 2006 and 3,667 administrative charges.³

Civil penalties are broken down by knowing violations and failure to comply violations. Civil penalties for knowing violations can range from $250 for the first violation up to $11,000 per violation for repeated violations.⁴ For example, if a company currently has three undocumented workers on payroll, the fee would not be $250 times three violations but rather it would likely amount to $11,000 times three violations. Penalties for failure to comply with the employment verification requirements, whether the error was intentional or not, can range from $100 to $1,100 per violation.⁵ The penalties are assessed taking into consideration several factors including the size of the business, the good faith of the employer, the seriousness of the violation, whether the violation concerned an undocumented worker and the history of violations of the employer.⁶

In assessing penalties, the Code of Federal Regulations recognizes that constructive knowledge may be imputed on the company and its managers by "notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition."⁷ One of these "certain facts" is the failure to properly fill out the I-9 form. This is why demonstrating a good faith effort to comply with I-9 procedures is necessary to avoid the fines and penalties associated with "knowing" violations.

By demonstrating a good faith effort in complying with I-9 procedures, employers can avoid the penalties associated with knowing violations, which range from $250 to $11,000 per violation. Such violations may be reduced to failure to comply violations, resulting in $100 to $1,100 fines or even no fines at all if corrections are made after notification of the existence of the errors. Therefore, to avoid exposure to the higher fines it is important that companies do an annual internal audit of their I-9 procedures and their I-9's on file.

Kollman & Saucier, P.A., The Business Law Building, 1823 York Road, Timonium, MD 21093   Phone: 410-727-4300
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