The federal government continues its aggressive efforts to detect and punish employers who do not properly document the employment eligibility of their workers. In addition to companies facing administrative fines and civil forfeitures, owners and managers also run the risk of criminal charges, fines and prison terms for violations of these requirements.
U.S. employers are required to complete a Form I-9 Employment Eligibility Verification Form for each employee hired on the first day of the person’s employment. The form requires the employer to inspect the original documents an employee presents to verify his/her ability to work in the U.S. and record them on the form. Employers are also required to update the employee’s form under certain circumstances if they have presented documents that have expiration dates.
Instead of relying on worksite raids that gained a great deal of media attention in the past, the U.S. Immigration and Customs Enforcement (ICE) has changed tactics and now simply audits employers and their records. Instead of assigning 50 or more agents to one employer, ICE now assigns one agent to multiple employers resulting in a greatly increased reach (and employer exposure).
On April 14, 2014, 14 Massachusetts companies were fined over $175,000 for hiring unlawful employees following an investigation and audit of Form I-9 documents by ICE and Homeland Security Investigations (HSI). According to HSI’s special agent in charge of Boston, it conducted 56 inspections of employers in Massachusetts in FY 2013, almost double the 34 inspections it conducted in FY 2012.
The companies’ fines included the following:
Maine Restaurant Manager
On March 25, 2014, a Fairfield, Maine restaurant manager was sentenced to 14 months on harboring aliens, money laundering and tax charges. Mei Juan Zhang, 31, was also ordered to pay restitution of $54,288 to the IRS. Ms. Zhang pleaded guilty to the charges April 18, 2013. In addition to ICE and HSI, the IRS and the Waterville (Maine) Police Department were also involved in the investigation.
According to court records, between 2009 and 2011, Ms. Zhang was the manager of the Grand Asian Buffet and the Super China Buffet in Waterville, Maine. The investigation revealed that about half of the employees at the buffet over that period were undocumented, and her actions concealed about $250,000 in wages and prevented the collection of about $55,000 in employment taxes.
In addition, the workers were housed in a cramped residence and transported directly to and from work each day, where they were expected to work six to seven days per week, 12 hours per day. Ms. Zhang paid the workers under the table with cash generated illegally by the employment of undocumented aliens, and filed numerous false quarterly employment tax returns in which the undocumented aliens were not disclosed and employment taxes were not properly withheld or paid.
On January 28, 2014, a Denver-based paving corporation was sentenced to pay nearly $185,000 in forfeiture of criminal proceeds for its criminal practice of hiring illegal aliens. Premier Paving Inc. (PPI) was charged on August 21, 2013, and pleaded guilty on October 9, 2013, to unlawfully hiring illegal aliens.
According to the stipulated facts contained in the plea agreement, from January 2007 through September 2012, PPI knowingly hired and continued to employ illegal aliens who were not authorized to work in the United States. During this period, it hired aliens who lacked the documents required by law to complete an employment eligibility verification form (I-9).
In 2007, ICE audited PPI’s employment records, finding violations of hiring employees not authorized to work in the U.S. That investigation resulted in the company agreeing to pay a civil fine of $11,000.
After entering into that settlement agreement with ICE, PPI began working with a Denver entity known as Servicios de Migracion Para Todos. As a result of that relationship, Premier Paving again began employing illegal aliens who were not authorized to work in the U.S. Another review by ICE in September 2012 determined that the company employed unauthorized workers and failed to adequately complete I-9 forms for a number of employees hired between January 1, 2011, and September 20, 2012. Some of these unauthorized employees performed work on federal transportation contracts.
On January 29, 2014, three owners of a Kansas framing company were each sentenced to more than a year in prison in federal court for harboring undocumented workers.
Each of the three had previously pleaded guilty to one count of conspiracy to harbor illegal aliens for commercial advantage at Advantage Framing Systems Inc., a Spring Hill, Kansas business. James Humbert, 45, business owner; Kimberly Humbert, 47, wife of James and co-owner; and Charles Stevens II, 51, brother of Kim and part owner, were sentenced to a year and a day in federal prison. Each admitted their company provided local builders and contractors with engineered floor, pre-built wall panel and roof truss systems, and also provided illegal aliens as on-site framing labor.
Each also admitted they paid undocumented workers who were members of framing crews through a method requiring crew leaders to obtain insurance. The company paid the crew leaders, who were responsible for paying the undocumented workers on their crews.
Although not a recent case, the Nationwide Pallet Company (IFCO) case bears repeating. In September 2011, several of its managers plead guilty to conspiring to transport, harbor, encourage and induce illegal aliens to reside in the U.S. for commercial advantage and private financial gain. When they were arrested, ICE agents also arrested 1,187 of the company's illegal alien employees in 26 states.
In addition to criminal charges, this resulted in $20 million in forfeitures to the federal government.
The following is a list of civil fines and criminal penalties for I-9 violations. These do not include possible forfeiture actions that can be brought by government agencies. (Click on table to enlarge.)
Every manager and executive involved in his or her company’s hiring and documenting the employment eligibility of its workers needs to always remember that the federal government continues to seek large fines, forfeiture funds and criminal penalties through their investigations of U.S. employers regarding their I-9 practices. While taking shortcuts or ignoring these requirements altogether may work in the short term, the risks are far outweighed by the potential consequences.
James G. Aldrich, Jr. is a Member in Dykema’s Labor and Employment Practice Group, whose practice focuses on immigration law. He helps clients coordinate their business goals with immigration benefits, and counsels clients — both public and privately held — on a full range of corporate and immigration matters.