What Every Employer Needs to Know about I-9's

What Employers Need to Know about I-9’s

• ICE penalties from worksite enforcement inspections increased to $5,300,000 in FY 2010, up from $1,033,291 in FY 2009, with average fines exceeding $110,000
• ICE criminally charged a record-breaking 180 owners, employers, managers and/or supervisors in FY 2010, up from 135 in FY 2008 and 114 in FY 2009.
• ICE conducted more than 2,200 I-9 audits in FY 2010, up from more than 1,400 in FY 2009.
• ICE debarred 97 business and 49 individuals in FY 2010, up from 30 and 53, respectively, in FY 2009.

US Immigration and Customs Enforcement announced earlier this year that it has notified about 1,000 companies throughout the country that it will be auditing them to ensure they are not employing undocumented workers.  The audits include employers in every industry across all 50 states.

• Hiring an unauthorized worker can result in fines up to $5,500.
• Improperly filed I-9 forms that are missing information can lead to fines up to $1,100 (even if the employee in question is legally authorized to work in the United States).
• Knowingly committing or participating in document fraud can lead to fines up to $3,200 per document for the first offense and up to $6,500 per document for subsequent offenses.

On July 22, 2010, the Department of Homeland Security (DHS) published a final rule amending the June 2006 interim regulations relating to I-9 forms.  The final rule clarifies that the employer has 3 days from the first day of work for pay but not including the actual date of hire to complete Section 2 of the Form I-9; or, Thursday if the employee begins work on Monday.  Most employers need not count weekends or federal holidays when determining its Form I-9 completion deadlines. Retailers and other similarly situated employers may still be held responsible for weekends and holidays if those days are ordinarily "days on which the employer conducts business" pursuant to 1997 INS guidance. 

USCIS now requires additional information to be recorded such as the DS-2019 and I-20 numbers.  Employers with F, J & M employees clearly have additional work to do and more training to provide to HR staff.

For an H-1B employee’s Form I-94/I-94A issued for employment with a previous employer, the employer should retain the following documents with the employee’s existing Form I-9 to prove filing for an extension of stay on the employee’s behalf:

• A copy of the new Form I-129
• Proof of payment for filing a new Form I-129; and
• Evidence that you mailed the new Form I-129 to USCIS

Further, employers are not required to update Form I-9 when an employee changes his or her name, but they may nevertheless do so in Section 3. Employers may accept a document with a different name than what was entered in Section 1 (e.g., due to married name, compound name, or misspelling) as long as the employer is satisfied that the document(s) reasonably appear to be genuine and relate to the employee.

When the employment is time limited, as in the case of aliens authorized to work for a specific period of time, the date of expiration must be noted and the I-9 revisited prior to that time so that it can be updated and the individual’s status re-verified in Section 3. Failure to do so can be financially costly to the employer who is audited by ICE and found to have unauthorized individuals on payroll.

The final rule clarifies the audit trail requirements such that an electronic Form I-9 system need not show every time a Form I-9 is viewed or accessed, but it must track any:

1. creation,
2. completion,
3. alteration,
4. update, or
5. other modification

of a Form I-9 by recording:

1. the date of access,
2. the identity of the individual taking the action, and
3. the particular action taken.

If an electronic Form I-9 storage method is utilized, it must contain an indexing system that is comparable to a reasonable hardcopy filing system.  Lastly, DHS addressed the requirement that electronic Form I-9 systems be capable of printing a transaction record that must be given to the employee at the time of Form I-9 completion. DHS did modify the regulation in part, however, by only requiring that a receipt be provided when an employee requests it. The receipt only needs to be issued within a reasonable time, and it may be transmitted via e-mail rather than printed.

In Summary

It is obviously a wise choice to pay meticulous attention to any new rules put forth by the DHS. Noncompliance can clearly result in a heavy financial burden—and no employer wants to face possible criminal prosecution. It is always in an employer’s best interest to diligently follow the DHS rules for I-9 compliance and to be fully informed about new updates and amendments to existing regulations. 

Rehan Alimohammad is an Attorney and CPA.  In the past two years our firm has given over 100 seminars in the areas of immigration law and tax law.  Please visit our website at www.attorneyrehan.com, or call our offices at (281) 340-2074 or (800) 814-3920 for more information.

Disclaimer:  This article is not meant as specific advice regarding a person’s individual case.  An attorney should be consulted.  This article does not create an Attorney-Client relationship.   Any tax information or written tax advice contained herein (including any attachments) is not intended to be and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed on the taxpayer.  (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.)