How Employers Can Ensure I-9 Forms Are Correct

By Richard D. Alaniz

When Abercrombie & Fitch's Michigan stores ran into problems with properly completing I-9 forms, it turned out to be a seven-figure mistake. In September 2010, the US Immigration and Customs Enforcement's (ICE) Office of Homeland Security Investigations (HSI) announced a $1,047,110 fine for violations of the Immigration and Nationality Act that related to the clothing retailer's obligation to verify the employment eligibility of its workers. The fine was imposed even though the clothing retailer fully cooperated with investigators, and there was no proof it knowingly hired illegal workers. 
 
"Employers are responsible not only for the people they hire, but also for the internal systems they choose to utilize to manage their employment process, and those systems must result in effective compliance," said Brian M. Moskowitz, special agent in charge of ICE HSI for Ohio and Michigan, in a press release.
 
Abercrombie's troubles are an example of how ICE has been, and will increase, cracking down on employers who make mistakes with their employment verification forms. In order to ensure compliance and avoid stress, business disruption, and costly fines, companies need to ensure they have rigorous processes in place to verify employment eligibility. 
 
There has been much talk recently about immigration reform. In addition to President Obama's call for substantial reform, bipartisan support also has increased significantly following the November elections, with key Republicans, including Marco Rubio and John McCain, endorsing a significant immigration overhaul. All the immigration plans being discussed include reform of the employment verification system and increased workplace enforcement.
 
Dealing with I-9 Forms
 
Employers should be familiar with Form I-9, Employment Eligibility Verification, since some variation of it has been mandatory since 1986. The I-9 is used by every employer to verify the identity and employment eligibility of all new employees to prove they're American citizens, US nationals, or immigrants authorized to work in the United States. 
 
An I-9 must be completed within three days of employees starting work. In order to complete the I-9, workers have to present appropriate documentation, and employers must examine the document or documents to decide if they reasonably appear to be genuine and relate to the individual. 
 
I-9 forms must be kept on file for at least three years, or one year after employment ends, whichever is longer. Employers keep the forms as part of their own records, but they must make them available for inspection by government officials from the US Department of Homeland Security, US Department of Labor, US Department of Justice, or other authorized agency.
 
Employees can present a single document to prove both identity and employment eligibility, such as a US passport or permanent resident card, or separate documents that establish identity, such as a driver's license, and employment eligibility, such as a Social Security card. The list of acceptable documents appears on Form I-9.
 
Employers can use several online services to quickly ensure that the information employees provide for their I-9 forms matches up with government records. These programs include E-Verify, the Social Security Number Verification Service (SSNVS), and the Records and Information from DMVs for E-Verify (RIDE) program. The federal government has been strongly encouraging companies to use E-Verify, and some states require it.
 
Potential Problems Areas
 
While completing an I-9 form may seem straightforward, it can quickly get complicated. Even employers with the best of intentions and well-trained employees may find themselves trying to work through situations they never anticipated.
 
Some errors result from simple typos, misspellings, or information left unintentionally blank. In some cases, employees may legitimately have documents with different last names. For example, a newly married or divorced employee may have changed his or her name on a driver's license but not on a Social Security card yet. 
 
Discrimination, whether deliberate or inadvertent, is another challenge employers need to consider. It may seem easiest to only hire "people who look like Americans" and avoid any concern with employment eligibility, but that kind of discrimination is illegal. Companies must treat immigrants who are in this country legally and eligible to work just as they would US citizens. Employers also must be sure they don't overcompensate and commit "document abuse" or ask employees to provide more or different documents than those on the approved I-9 list. 
 
Determining whether documents "reasonably appear" to be genuine is another problematic area. The federal government insists that it doesn't expect employers to become experts on the differences between authentic and forged documents or documents issued to someone other than the employee. But many companies may feel they're walking a fine line between being too flexible if documents look questionable and risking discrimination claims if they reject documents that an employee presents. 
 
Employers should also prepare themselves for the eventuality of an I-9 audit, since ICE has dramatically increased the number of audits it performs. According to a recent Associated Press report, audits of employer forms increased from 250 in fiscal year 2007 to more than 3,000 in 2012. The amount of fines levied by the federal government for erroneous I-9s has also exploded, from $1 million in 2009 to nearly $13 million in 2012. 
 
Employers can also run into complications when the Social Security number or driver's license number an employee submits doesn't match up with government records. Frequently, the problems lie with the government's own recordkeeping, but employers still need to take specific actions to give employees a chance to correct any problems. Until a matter has been resolved, it's illegal to take immediate, adverse action against an employee when a mismatch is flagged. 
 
Best Practices for I-9 Compliance
 
Employers should take steps to formalize and improve their processes for completing I-9 forms. This will help companies manage the forms smoothly and efficiently and will allow for a quicker response if faced with an audit. Employers should:
 
1. Review and update current processes. Since the forms seem so simple, many employers don't put a process in place to oversee them. However, this casual approach too often leads to problems. It's important to create well-documented, step-by-step procedures that everyone who completes the I-9 form must follow. Employers need to work closely with HR, in-house counsel, and outside attorneys to ensure that they`re following all state and federal regulations and can anticipate any changes that may affect how they complete I-9s.
 
2. Designate staff to handle I-9s. Companies should assign specific staff members to be responsible for the I-9 process. These people should receive periodic training about which documents are acceptable and what conditions the federal government imposes on documents. Staff members should be trained about when and how to bring questions to ICE or other federal agencies. They should also serve as the single point of contact with state and federal government officials.
 
3. Conduct voluntary audits. Companies should regularly audit a random sample or all of their I-9s. This will help identify any problems that exist and allow companies to correct issues before the government conducts audits of its own. Regular internal audits also can help a company's defense in case a government investigation turns up questions or problems. 
 
4. Look into online services. If employers aren't currently using E-Verify, they should consider it. It's mandatory in some states and for federal contractors, and the federal government has been considering making it a requirement for all employers. It will likely become mandatory for all employers with immigration reform. Companies can either enroll directly in E-Verify through the US Department of Homeland Security or go through a third party. 
 
5. Improve the company's IMAGE  the ICE Mutual Agreement between Government and Employers. Employers who do a great deal of hiring or who work in business sectors that tend to attract illegal workers may want to look in to the ICE Mutual Agreement between Government and Employers (IMAGE) program. Through the program, ICE provides training and education on using E-Verify, identifying fake documents, and managing other aspects of employee identity verification. The downside is that by enrolling in the program, an employer basically gives ICE carte blanche to its employment records at any time.
 
Immigration reform remains a hot-button issue, but it has gained increasing bipartisan support. Additionally, the federal government is targeting employers who hire illegal workers. By anticipating and managing issues with I-9 forms, companies can ward off potential problems and better defend their processes if they receive an ICE Notice of Inspection or otherwise draw the attention of ICE.
 
Read additional labor and employment law articles by Richard Alaniz.
 
About the author:
Richard D. Alaniz is senior partner at Alaniz and Schraeder, a national labor and employment firm based in Houston. He has been at the forefront of labor and employment law for over thirty years, including stints with the US Department of Labor and the National Labor Relations Board. Rick is a prolific writer on labor and employment law and conducts frequent seminars to client companies and trade associations across the country. Questions about this article can be addressed to Rick at (281) 833-2200 or ralaniz@alaniz-schraeder.com.

You may like these other stories...

IRS must take oath on Lerner emails: judgeMackenzie Weinger of Politico reported on Thursday that a federal judge ordered the IRS to explain under oath how it lost emails connected to Lois Lerner, the ex-IRS official at the...
From May 20-23, the Association for Accounting Marketing (AAM) held its annual conference. Frequent contributor Sally Glick picked up some ideas that she will be sharing with us in the coming days, as she has done in...
Credit Suisse says pension assets at risk unless court delays sentencingJohn Letzing of the Wall Street Journal reported on Wednesday that Credit Suisse Group AG says its management of billions of dollars in assets for...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.