In the period of 2022 to the present, the Office of the Chief Administrative Hearing Officer (OCAHO) has issued eight decisions concerning the amount of I-9 penalties. In all cases, the employers underwent Immigration and Customs Enforcement (ICE) I-9 audits pursuant to Notices of Inspection (NOIs). On average, OCAHO reduced the penalties by 34.16%.
The OCAHO decisions covered large and small penalties sought by ICE – from $2,535,272 to $19,480. Below is a summary of these decisions:
In one of the largest I-9 penalty decisions, ICE charged a staffing company with over 2,000 Form I-9 violations and sought penalties of $2,535,272. One count centered on whether the company provided 511 Forms I-9 to ICE when responding to the NOI. The company’s payroll manager asserted she provided the I-9 forms to ICE while ICE’s forensic auditor stated they were not provided. The receipt provided by ICE was of no assistance as it merely states “3 large boxes of original Forms I-9.” OCAHO found the forensic auditor and the payroll manager were equally credible. Since OCAHO found when “the evidence is evenly balanced” ICE fails to meet its burden of proof, these allegations were dismissed.
Count III alleged the company failed to timely prepare and/or present 213 Forms I-9. The issue in this count revolved around what were the employees’ actual first day of employment. The employer asserted as a staffing company there are two dates involved: (1) date when an employee accepts an offer to be staffed and is entered into the assignment pool; and (2) date an employee is actually assigned to a job. OCAHO found “the evidence shows that for the 213 I-9s at issue, using the later date, the employees began working and receiving wages prior to completing section 2 of the I-9”; thus, the company failed to timely prepare I-9 forms for 213 employees. The last count listed almost 1,200 violations, where the company failed to ensure that the employees properly completed section 1 and/or the company failed to complete section 2 and/or 3. OCAHO found ICE properly established Count III violations.
Concerning the five statutory factors, OCAHO found the company to be a small business, equaling a mitigating factor while the violations were serious, which was an aggravating factor. The rest of the factors were neutral. The company asserted an inability to pay the $2.5 million in penalties and provided “documentary evidence, testimony, and expert testimony.” OCAHO found cash flow data and tax losses cannot establish an inability to pay. Thus, OCAHO found the company failed to establish an inability to pay.
However, OCAHO decided to not order the upper limit of penalties and lowered the penalties to between $731 to $1,457 per violation. Thus, OCAHO ordered penalties of $1,527,308.
In another case, a construction company was charged with and admitted to failure to prepare Forms I-9 for 136 employees and ICE sought $286,356 in penalties. The company sought a reduction in penalties because: 1) it’s a small business, which is a 5% mitigating factor, 2) ICE’s inability to prove unauthorized status of 84 employees, and 3) economic hardship/inability to pay the penalty.
At the time of the audit, the company employed 136 people. By 2020, due to the pandemic, it only employed 60 people. In 2022, there were about 154 employees. The gross revenues were as follows: $7.9 million in 2017, $10.4 million in 2018, and $8.08 million in 2019. As for profit/loss, in 2019 there was a profit of $70,000; in 2018 there was a loss of $95,000; and in 2021 there was a loss of $362,000. Based upon these facts, OCAHO declined to find the business to be a small business. Additionally, OCAHO declined to find there were 84 unauthorized workers. OCAHO stated “Complainant relied solely on its auditor’s declaration, who was in turn citing to another auditor’s findings. Those findings were not provided, nor was any information included regarding the search, how it was performed, and how reliable the findings are… Therefore, it is insufficient, standing alone, to meet the government’s burden.”
The company argued it demonstrated a substantial reduction in operations during the COVID-19 pandemic/recession and revenues. OCAHO agreed and stated: “[I]t appears a high proposed penalty will further contribute to the company’s income losses… The Company demonstrated that it operates within a very thin margin, and accordingly a large penalty would likely cause Respondent to have difficulty meeting its obligations, resulting in significant harm to the business.” Accordingly, OCAHO reduced ICE’s proposed penalty of $2,045 per violation to a mid-range penalty of $1,350 per violation.
In a third case, a hospitality employer was charged with and admitted to failure to prepare Forms I-9 for 10 employees. ICE sought $19,480 in penalties in the Complaint. OCAHO declined to aggravate any of the penalties, as argued by ICE, because ICE failed to present proof of such. OCAHO held it was not going to issue penalties at the upper range, rather it would use the mid-range. Thus, the penalties were reduced to $13,500.
In another case, ICE issued Complaints against two restaurant chain franchisees, where they were charged with and admitted to failure to prepare Forms I-9 for 71 and 47 employees, and knowingly employing 61 and 40 unauthorized employees, respectively. ICE sought $431,609 and $284,012, respectively, in penalties. The employers argued their poor financial condition would cause them to go bankrupt if they paid the penalties. However, OCAHO held the businesses are somewhat profitable with “considerable income, along with solid assets and equity”; thus, OCAHO found the employers failed to meet their burden. Finally, the employers argued the penalties were excessive in relation to the magnitude of the offenses. Again, OCAHO did not accept this argument.
Despite rejecting all of the employers’ defenses, OCAHO found ICE’s penalties – $1,901 per violation for “substantive paperwork” violations – was too high and found penalties between $1,612 and $1,870 per violation appropriate. Concerning the violation of knowingly employing unauthorized workers, ICE sought $3,802 per violation. Again, OCAHO found this was too high and assessed $3,495 per violation. Thus, the employers received a substantial decrease in their penalties.
ICE sought penalties of $57,466 against a window installation company for its failing to prepare 23 Forms I-9 and failing to complete eight Forms I-9. The employer did not contest the violations but alleged an inability to pay the penalties and sought the statutory factors to reduce the penalties. OCAHO held the employer’s failure to present any financial documents meant it failed to establish its position. As for the statutory factors, the parties agreed the employer is a small business; thus, it should receive a 5% mitigating factor. ICE asserted the violations reflected the lack of good faith, which the employer disagreed with and asserted it acted with good faith. OCAHO found neither good nor bad faith and treated this factor as neutral. OCAHO found the violations as serious, which it does in almost all cases. Despite the employer’s failing to prevail on any points, OCAHO reduced the penalties to the mid-range. Thus, OCAHO ordered $32,130 in penalties.
OCAHO has issued two decisions in 2023 – one against a packaging supply store – and another against a produce wholesaler. In the first decision, ICE sought $70,305 in penalties for 70 Form I-9 penalties – failed to prepare Forms I-9 for two employees, failed to ensure 67 employees properly completed section 1 and/or failed to properly complete section 2 or 3 of the Forms I-9, including backdating six of the I-9s, and knowingly continued to employ one unauthorizing employee. The employer sought a reduction based upon the statutory factors. Concerning the size of the small business, OCAHO found there were more than 100 employees; thus, the employer was neither small nor large. ICE asserted the violations reflected neither good nor bad faith while the employer asserted it acted with good faith. OCAHO surprisingly found good faith as to the non-backdated I-9 forms, and bad faith as to the backdated I-9 forms. OCAHO found the violations as serious as “[P]aperwork violations are always potentially serious.”
ICE proposed a penalty between $1,008 and $1,054 for the substantive violations. OCAHO set the substantive violations at between $1,096 and $1,548. Concerning the remaining violation for knowingly employing one employee, ICE and OCAHO agreed on a penalty of $658.95. In a rare situation, OCAHO increased the penalties to $80,187.
In the second 2023 decision, ICE alleged the employer failed to ensure proper completion of Forms I-9 for nine workers, failed to prepare and/or present Forms I-9 for 20 workers, and knowingly continued to employ two unauthorized workers. For these violations, ICE sought $64,072. While the employer requested a hearing before OCAHO, it repeatedly declined to appear in the proceedings and waived its right to be heard on penalties. Without any arguments to the contrary, OCAHO assessed the penalties sought by ICE – $64,072.
Employers that want to know more information on I-9 compliance should contact their immigration attorney.
