On July 8, 2015, the Office of the Chief Administrative Hearing Officer (OCAHO), the administrative court with jurisdiction to review penalties for I-9 violations, issued a decision in the matter of United States v. Hartmann Studios, Inc., 11 OCAHO no. 1255 (2015), ordering the employer to pay civil penalties in the amount of $605,250. In Hartmann, the employer, Hartmann Studios, Inc., an event design and production company, had undergone an I-9 enforcement audit conducted by the U.S. Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE). On May 14, 2013, ICE had issued a Notice of Intent to Fine, seeking penalties in the total amount of $812,665.25. On June 12, 2013, the employer had filed a request for a hearing before OCAHO.
In its decision, OCAHO discussed the seriousness of the violations as well as the employer’s lack of good faith prior to the commencement of the audit. While the majority of the errors were related to paperwork completion failures, OCAHO found that the company’s I-9 procedures were sufficiently defective to foreclose a claim of either good faith or substantial compliance. In its decision, OCAHO stated that the employer appeared to need “additional motivation to conform its employment verification processes to what the law requires.”
The majority of the errors in Hartmann were for failure to sign Section 2, failure to have the employee attest to an immigration status in Section 1, failure to properly complete the document information portion in Section 2 and failure to record updated employment authorization documents in Section 3. While most employers would consider such violations to be minor if there are no unauthorized workers found on-site, OCAHO found that they are in fact extremely serious
The company pointed to its good faith conduct during and after the inspection, but OCAHO case law assessing good faith looks primarily to the steps an employer took before issuance of the Notice of Inspection, not what it did afterwards. Section 2 contains a certification section where the employer’s signature attests to having examined the original documentation presented by the employee, that the documentation appears genuine and that it reasonably relates to the employee. OCAHO case law refers to Section 2 as being at the very heart of the I-9 process. Even though the employer claimed it had examined the workers’ actual identity and employment authorization documents, she did not fill out Section 2 herself, and the date in Section 2 may not be the date that the documents were actually reviewed. OCAHO considered such actions to be so defective as to preclude a finding of good faith or substantial compliance.
Also worth noting is that the company had previously been subject of an I-9 audit in or around 1994, reinforcing the fact that, even if an employer has been subject of an audit in the past, it is not safe from a re-audit. In fact, in the event of a re-audit, the government may enhance the penalty amount for any repeat violations. Therefore, employers who were previously audited by ICE should be particularly careful when evaluating their I-9 compliance and preparing for a re-audit.
As the above case demonstrates, it is imperative that employers commit to implementing proper I-9 practices. Further, the case demonstrates the importance of undergoing an in-house audit by competent counsel to ensure compliance prior to receipt of an ICE Notice of Inspection. Employers must ensure that acceptable proof of such audits and training is kept so that it may be used as evidence of good faith in OCAHO/CAHO proceedings. Finally, the above case shows that having been subject of an enforcement I-9 audit does not provide any sort of blanket protection from a re-audit. On the contrary, the base fine for second violations is higher, and a history of prior violations may result in a significant fine enhancement.
With such large fines becoming the rule rather than the exception, companies cannot afford to forego ongoing I-9 evaluations by competent immigration counsel.