Regardless of whether Congress can come together to pass a comprehensive immigration reform bill this year, any immigration legislation that does pass likely will contain stricter enforcement against employers at the worksite. In fact, employers already are facing expanded I-9 enforcement by the Department of Homeland Security (DHS) in recent years. As a result of new enforcement policies announced in 2009, DHS has dramatically increased the number of I-9 inspections and audits it conducts against employers.
In fiscal year 2008, U.S. Immigration and Customs Enforcement (ICE), the component agency within DHS that is responsible for enforcing I-9 requirements, conducted 500 I-9 inspections of employers nationwide. That number increased to 3,004 by fiscal year 2012. This dramatic increase in enforcement activity has spurred increasing numbers of employers to consider enrolling in the DHS E-Verify employment eligibility verification system. Increasing numbers of businesses have also enrolled in the program because of a wave of state and local legislation in recent years that has mandated its use in addition to requirements for many federal contractors to use the program.
Many employers have turned to technology to help them more effectively manage their I-9 compliance obligations. Electronic I-9 programs help employers avoid many of the common mistakes that are made when completing paper I-9 forms and also help employers keep track of deadlines during the I-9 process. Electronic I-9 programs, which can also seamlessly connect with the DHS E-Verify program, can also help to ease implementation of the E-Verify process. However, as we will discuss below, it is very important for employers to carefully assess their I-9 program’s compliance with DHS regulatory requirements, or it may face unexpected liabilities with regards to its I-9 records. Not all electronic I-9 programs have invested sufficient efforts into ensuring strict compliance with those DHS requirements. Additionally there is evidence that the government will be more focused in the future on the compliance of underlying electronic I-9 systems when conducting I-9 inspections of employers that use them.
1. Current Enforcement Environment
Since 2009, employers have reported a significant increase in I-9 enforcement, particularly in the form of Form I-9 audits. While employers can be fined for having knowingly hired or employed unauthorized immigrants, many employers who have been penalized for Form I-9 violations actually never hired unauthorized workers, but instead failed to complete and maintain their I-9 forms correctly during the employment verification process. An employer can be fined in a range from $110 to $1,100 for each form with an error or omission. When a significant number of an employer’s I-9 forms have errors or omissions (frequently called “paperwork errors”), the potential fines can add up quickly. In some instances, fines for poor record keeping can reach seven figures. ICE also is less willing than before to negotiate regarding the level of fines it seeks to impose for paperwork errors. In guidance the agency has issued to its agents in the field the level of fines that will be assessed, which will be based almost entirely on the percentage of I-9 forms the agency audits that have errors.
Furthermore, employers have had to walk a legal tightrope because the Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices also has been more aggressive in its enforcement of the antidiscrimination provisions under the Immigration and Nationality Act. IRCA prohibits employers from making hiring or firing decisions based on an employee’s actual or perceived national origin or citizenship status, so long as the employee is authorized to work. Also prohibited is the practice of “document abuse,” which occurs when the employer demands more or different documentation to complete the I-9 after the employee has presented legally sufficient documentation. This, along with ICE’s increased enforcement, requires employers to walk a narrow and precarious line between asking for too little and too much documentation to ensure full compliance with all applicable federal laws.
2. Anatomy of the Form I-9 and Penalty Assessment
The Form I-9 consists of three sections. No later than the first day of work but not before a job is offered and accepted, the employee completes Section 1 which contains personal information and a self-attestation regarding the employee’s immigration status and his or her eligibility to work in the United States and for how long. No later than the third business day after the date of hire, the employer must examine the documents that an employee presents to demonstrate identity and eligibility for employment, record in Section 2 information from the documents examined, and attest under penalty of perjury that the documents appear legitimate and relate to the employee. The government has always interpreted this to mean that the employer must examine the employee’s original documents when the employee is present.
I-9 forms must be retained by the employer for three years from the date of hire or one year from the date of termination, whichever is later.
3. Incorporating Technology
The government’s increased enforcement efforts and the increasing mandates on many employers to enroll in the E-Verify program have led many employers to incorporate technology into their I-9 compliance processes. The Form I-9 itself could only be completed and signed in paper form until 2006, when DHS promulgated interim regulations pursuant to Congressional mandate that allowed for the completion, signature, and retention of I-9 forms in electronic format. ICE published final regulations in 2010 with relatively minor changes from the interim rules.
Electronic I-9 systems can have substantial compliance benefits. Much like popular income tax preparation software packages, an electronic I-9 program can dramatically reduce the number of I-9 errors and omissions that regularly result from human error during the paper I-9 process. For example, electronic systems can prompt users when all fields have not been completed or when there is a discrepancy between entries made in different fields. Electronic I-9 systems can also track expiration dates for employees with temporary work authorization and send reminders to employees and their supervisors that their expiring work authorization documentation needs to be updated on the I-9 form. Moreover, a good system should streamline the verification process by linking with E-Verify so that employers who participate in E-Verify can satisfy both requirements in one transaction and will not have to enter the same information two times.
However, the DHS regulations have very specific requirements that electronic I-9 programs must comply with or I-9 forms completed and retained on those systems can be invalidated by the government even where a particular form does not have otherwise have any errors. Thus it is very important for employers to ensure that they conduct sufficient due diligence, and we strongly encourage them to consult with immigration counsel, before adopting a particular I-9 system. There are a myriad of electronic I-9 systems and providers in today’s marketplace and not all programs are equal when it comes to compliance with the DHS regulations. Additionally, ICE has repeatedly stated in many public forums that they are not regulating electronic I-9 program vendors but will hold employers responsible if they utilize an electronic program that fails to meet the regulatory standards.
This is still a developing area of the law since it has only been seven years that employers have been able to complete I-9 forms electronically. ICE has the authority to examine the underlying electronic programs and determine their compliance with DHS regulations, but until recently auditors in many cases have chosen to review only print outs of the I-9 forms from electronic systems and have declined to review the legal sufficiency of the underlying system. However, in the past year there is evidence that this is changing and reason to believe that ICE auditors will be taking a more active role in reviewing the sufficiency of electronic I-9 systems in I-9 inspections in the future.
In August, 2012, the agency issued guidance to its staff in the field regarding certain legal requirements for electronic I-9 systems. Although not intended for release to the public, it ultimately was released pursuant to a request under the Freedom of Information Act. It is the first guidance we are aware of to ICE field investigators and auditors that interprets a number of the important legal requirements for electronic I-9 systems and provides guidance on assessing those systems for legal sufficiency. In its guidance, among other requirements, ICE underscores that any system must include an “audit trail” or a separate record of the particular actions taken in a system on each electronic record. The regulations require that electronic systems maintain audit trails and provide authority for ICE auditors to request the associated audit trails with each I-9 record, so that it is readily apparent to an ICE auditor what actions were taken on a specific I-9 record, who performed those actions in the system, and when those actions were performed. In our experience a number of electronic systems in the marketplace have not kept audit trails with sufficient detail to meet the guidelines provided in the ICE memorandum.
ICE has also recently amended the language on its standard Notice of Inspection, the letter it issues to an employer when the agency formally initiates an audit of that employer, to incorporate electronic I-9 information for the first time ever. ICE will now routinely require any employer using an electronic I-9 system to provide the name of the software and vendor utilized, documentation regarding the I-9 system and the audit trails associated with the I-9 records, in addition to the I-9 forms themselves. With increased focus by the agency on the underlying sufficiency of the electronic systems, we expect to see more cases in the future of penalties imposed on employers due to weaknesses in the systems they utilize. We strongly advise employers using electronic I-9 systems, particularly if they adopted those systems several years ago or if a legal review of the system was not conducted at the time it was adopted, to undertake a review of those systems to ensure that they are not facing any unforeseen liability for the I-9 records created on that system.
Given the government’s increased enforcement activity and focus on civil audits for I-9 errors it behooves an employer to consider using an electronic system to create and maintain I-9 forms. A trustworthy system that takes into account the regulatory requirements and ICE guidance should protect employers against liability resulting from administrative errors, and streamline the verification process by linking to E-Verify. However, it is critically important to conduct the appropriate level of due diligence before implementing any electronic I-9 solution and to include counsel in the process to ensure compliance with the DHS regulatory requirements.
 8 USC § 1324b(a)(1), (6).
 Miriam Jordan, Policing Illegal Hires Puts Some Employers in a Bind, Wall Street Journal, Jul. 15, 2010.
 71 Fed Reg. 34510 (Jun. 15 2006).
 Public Law 108-390, 11 Stat. 2242 (Oct. 30, 2004)
 75 Fed Reg. 42575 (Jul. 22, 2010).
 Memorandum from James Dinkins, Executive Associate Director, Guidance on the Collection and Audit Trail Requirements for Electronically Generated Forms I-9, (August 22, 2012).
 Abercrombie & Fitch fined after I-9 audit, http://www.ice.gov/pi/nr/1009/100928detroit.htm (last visited Oct. 13, 2010). The company reportedly had developed an in-house electronic I-9 solution that had a number of legal deficiencies and ultimately settled with ICE to pay an administrative fine of $1,047,110 related to I-9 forms created on the system for its retail stores in the state of Michigan.
Patrick Shen and Dan Brown are partners with Fragomen, Del Rey, Bernsen & Loewy's Government Strategies and Corporate Compliance Group. Prior to joining the firm, both Shen and Brown have held key leadership roles in the Department of Homeland Security overseeing the enforcement of immigration compliance at the worksite, including the development and promulgation of the 2006 electronic I-9 regulations.