Hot Topics In I-9 Compliance

Thursday, November 1, 2007 - 01:00

by Johanna Marmon

In a time when the United States government is ramping up audits, raids and even criminal indictments against corporations suspected of employing unauthorized workers - a high profile case against Wal-Mart Stores, Inc., saw penalties levied against the retail giant to the tune of $11 million in 2003 - the ability to confidently navigate the immigration minefield has become nothing short of utterly vital. A look at Immigration and Customs Enforcement (ICE) statistics lends additional insight into the trend, and removes any doubt of its gravity: in 2006 the agency, created four years ago as an arm of the Department of Homeland Security (DHS), arrested 716 individuals on criminal charges related to illegal employment and more than 3,600 on administrative. These figures are some seven times higher than the number of arrests that the Immigration and Naturalization Service made during its last year in operation - and are only expected to increase in years to come.

Make no mistake, employers are square in the crosshairs of the government's drive toward more thorough immigration enforcement, regardless of whether they knowingly employ ineligible workers or not. And no industry or business sector is immune. Near the heart of the issue is Form I-9, which verifies an employee's eligibility to work. It may look on the surface no more innocuous than a simple piece of paper, but the truth is, it digs much, much deeper. Today, I-9 compliance - which involves everything from the proper completion and storage of the form to its presentation to authorities in the event of an audit - is as critical a business function for U.S. employers as anything else. Complicating matters is conflicting state legislation, making compliance especially challenging for companies headquartered in one state but with operations across several others.

So what can (or should) U.S. businesses do to mitigate exposure stemming from their I-9 programs? Cynthia Lange, managing partner of the Northern California practice of Fragomen, Del Rey, Bernsen & Loewy, one of the nation's pre-eminent immigration firms, offers her perspective on the top three tools a company can use to help keep its I-9 program in compliance - as well as the drawbacks associated with such strategies.

Tool Number One: The Self-Audit

One of the best ways for a company to ensure its house is in order is to undertake annual self-audits of its I-9 forms. But Ms. Lange, who also heads Fragomen's I-9 Service Center and compliance practice, cautions that as many mistakes can be created as corrected during the course of an in-house assessment. "Human resources representatives or the person charged with handling a company's I-9 program will realize a form needs correcting and make a change, but what they don't realize is that the mistake might not have been fixed correctly," she says. "My pointer is, don't write explanatory notes on the I-9 during an audit. Even more important is to understand that companies should conduct an audit under the auspices of attorney-client privilege."

Indeed, says Ms. Lange, it simply doesn't make sense for a company to create documentation of its I-9-related mistakes - in the name of fixing them - and not subject the audit records to attorney-client privilege. Here also is where the notion of skilled representation comes in; immigration is no longer an administrative task, and companies need experienced counsel to help them navigate the landscape, says Ms. Lange.

While a major part of a self-audit is examining the paperwork already on file, Ms. Lange says it's a good idea to take a hard look at the underlying I-9 process and its management; oftentimes, future paperwork mistakes can be avoided - as well as the resulting fines - by examining how an I-9 program is run. "Who manages it, and how have they been trained? How are the forms stored, and what type of review system is in place? A self-audit is much more than just looking at paperwork," says Ms. Lange. Many corporations also assume that once an I-9 form is filled out and stored, it's something that drops off the radar screen, but that is certainly not the case. Ms. Lange points out that there's an onus on a company to make sure its employees are authorized to work every single day they come to work - and that responsibility needs to be reflected in a company's I-9 process. "This obligation is something that we remind employers of all the time," says Ms. Lange. "Expiration dates on work authorization are a great example of an employer's continuing responsibility to monitor I-9s."

Process examination is especially critical for companies that have operations in multiple states, as well as for companies that use E-Verify, a voluntary, free, web-based system that lets an employer quickly verify a new employee's eligibility (see Tool Number Three for more information). "It's very important to take into account the different systems you're using for eligibility and consider how to apply them across the company," says Ms. Lange.

Tool Number Two: Electronic I-9s

In 2005, President Bush signed a law allowing for the electronic storage and signature of I-9 forms, and it's a tool that Ms. Lange says is catching on. "As companies are starting to do everything else electronically that they can wrap their heads around an electronic I-9," she says, noting that there's no single government-standard software that businesses are required to use. "The I-9 is a deceptively simple form that has sophisticated immigration law at its core, things you wouldn't pick up from just looking at it. One of the benefits to our clients of using our electronic system is that it walks you through the form, making it less likely to succumb to its pitfalls."

Another benefit of utilizing electronic I-9 signature and storage is that it helps companies instill regimented quality-assurance programs - thereby helping them to more easily maintain compliance and virtually eliminate the need for self audit altogether. "We're seeing a huge flood of companies looking into making the switch to an electronic I-9 system because of the government's I-9 enforcement," Ms. Lange says.

Of course, there are caveats associated with electronic I-9s - and one of the biggest, Ms. Lange says, deals with perception. "Once the data becomes electronic, people forget the special security and privacy protection that they wrap around the paper I-9, and we caution against that," she says. "Don't share the I-9 data with other systems indiscriminately. Don't commingle it with an employee's personnel file, and be wary of features in the electronic system you choose to use." Some electronic I-9 software, cautions Ms. Lange, encourages companies to pre-populate the form with data gathered for another purpose, such as a job application, and stores it within the human-resources system - something which should be seen as a big red flag. "Companies should always be aware of the significance of what they're doing," Ms. Lange says.

Tool Number Three: E-Verify

Perhaps the most important thing to keep in mind about E-Verify - formerly known as the Basic Pilot Program and operated by DHS - is that it's not something that in any way relieves an employer's responsibility to effectively and accurately complete an I-9. What it does do, says Ms. Lange, is check the data on an employee's I-9 by pinging its administrative agencies, coming back as work authorization confirmed or as a 'tentative non-confirmation.' "If that happens, the employee needs to contact the Social Security Administration or DHS to try to clear up the discrepancy in the record," Ms. Lange says. "The value of E-Verify is that it picks up people who are using false numbers."

What it does not pick up, however, is identity theft or fraud - one of E-Verify's weaknesses. "It might not identify those people who are using valid numbers but false documents," Ms. Lange says.Then there are also the errors in the government database; Ms. Lange points to a recent General Accounting Office (GAO) report that said there were some 17 million SSA errors affecting legal people who are authorized to work. "One of the other problems is that Social Security doesn't get notified when people become naturalized U.S. citizens," she says. "When their numbers are run through E-Verify, they'll come back as a tentative non-confirmation." A glaring example of E-Verify's pitfalls is what happened to Swift & Company, a meatpacking enterprise with operations in several states. The company had used E-Verify for its employees and was under the impression that they were indeed eligible to work. But in a 2006 raid, ICE officials arrested 1,300 people who had used valid - yet stolen - Social Security numbers and other documents in order to work. The result was some erosion of confidence in the still-voluntary program, even while Congress is considering making it mandatory across the country.

While some feel the Swift case and others like it call into question how robust a system E-Verify really is, individual states are crafting their own legislation regarding the program.Arizona, for example, will require all employers to use it beginning Jan 1, 2008, while Georgia and Colorado require it of any company that contracts with their respective states. Oklahoma also recently passed a mandatory-usage E-Verify law - while Illinois has passed legislation that says all employers are prohibited from using the system. One inevitable result? "Employers in Illinois that do business with Georgia and Colorado don't know how to handle it," says Ms. Lange. She does note, as well, that there are pending lawsuits against the legislation in Oklahoma, Illinois and Arizona (which has, incidentally, created its own I-9 scheme). "E-Verify notwithstanding, at least one-third of the states have some I-9 law in the making," she says. "The situation is changing all the time."

It's because of that exact fact - immigration is nothing if not fluid, though its rules, once instituted, are rigid, with the consequences of non-compliance dire - that employers are often well served to utilize the kind of representation Fragomen offers, says Ms. Lange. "No employer can say they are safe from I-9 enforcement," she says. "We're there to help prevent problems before they occur."

Cynthia Lange is Managing Partner of Fragomen's Northern California practice.A former trial attorney with the Immigration and Naturalization Service, she also manages the firm's I-9 Service Center and Compliance Practice. (clange@fragomen.com)

Johanna Marmon is a New York-based journalist and author who writes on a broad spectrum of industries, including law, pharmaceuticals and the luxury travel market.

Please email Cynthia Lange at clange@fragomen.com with questions about this article.