DOJ Decision Sheds Light on Applicability of I-9 Penalties

by Ronald Shapiro

On Feb. 20, 2013, the Office of the Chief Administrative Hearing Officer (“OCAHO”) of the Department of Justice (“DOJ”) issued an illuminating written opinion in a case brought by the Immigration and Customs Enforcement agency (“ICE”) against Fowler Equipment Company, an employer based in New Jersey that was accused of:

  • failing to properly prepare I-9 forms;
  • failing to properly present them on request; and
  • failing to ensure that employees and the employer properly completed sections 1 to 3 of the I-9 forms.

According to the OCAHO, Fowler sold and serviced laundry equipment, had been in business since 1953, had 32 employees and no HR director or manager. OCAHO also entered findings that Fowler had no previous history of I-9 violations and, in fact, had no unauthorized employees in its workforce, though its paperwork was defective.

ICE had sought a penalty of $77,418 against the employer because:

  • Fowler allegedly failed to properly complete I-9 forms for 60 individuals over the years;
  • Fowler allegedly failed to present I-9 forms for 18 individuals on the date of ICE inspection, sending in some form of paperwork nearly two years after inspection; and
  • Fowler allegedly was acting in bad faith in committing these “serious violations.”

The OCAHO noted that the permissible range of penalties in this case, which alleged 76 total violations, went from $8,360 to $83,600, depending on whether the five factors used in I-9 penalty assessments were positive, negative or neutral, those five factors being:

  • the size of the business-employer;
  • the presence of good faith efforts to comply;
  • the seriousness of the violations;
  • the involvement of actual unauthorized workers; and
  • the existence of any history of violations.

The OCAHO rejected the notion that Fowler acted in bad faith, stating that there was no evidence of this in the record. “The government’s conclusion that bad faith is shown here because the I-9 process ‘was virtually ignored’ or because respondent’s failure to complete the attestations in section 2 was a ‘habitual practice’ must be rejected. In order to support a finding of bad faith, there must be evidence of some culpable conduct that goes beyond the mere failure of compliance,” the OCAHO explained.

The government was also scolded for not giving the employer credit for a lack of prior violations and for declining to favorably consider the absence of actually unauthorized workers. ICE had taken the position that Fowler deserved no such credit because the absence of prior I-9 violations or actual unauthorized workers was “not due to any acts of, or diligence on the part of Fowler.”

But the most enlightening aspect of this decision was likely the OCAHO ruling on whether Fowler deserved to be treated as a “small business” because the term is not defined by statute or rule.

ICE had taken the position that Fowler deserved neutral penalty treatment with respect to its size because the employer was well-established and not a “mom and pop” operation.

Ellen K. Thomas, administrative law judge for the OCAHO disagreed. “While I concur with the government that the violations are serious, I cannot concur in the suggestion that Fowler Equipment is anything other than a small employer,” she wrote. “Nothing in our case law suggests… that a business must be in danger of failing to be considered small, or that it must be a mom and pop operation. While it may be appropriate to look at matters in addition to the number of employees, such as revenue or income… no single factor can be determinative… Fowler Equipment is a small family business and neither the fact that it is profitable or that it has existed since 1953 changes that.”

As a result, Fowler’s penalty for 76 I-9 violations was reduced to $41,400, demonstrating that it is possible to win a battle with the government, at least in part.

If you are an employer or agent of an employer responsible for compliance with immigration law, please do not hesitate to contact our office at (847) 564-0712 for an appointment to speak with an experienced and qualified immigration attorney. You can also check out our immigration law Website for more information about how we might assist you.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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