Is Your Business At Risk For Damages And Civil Money Penalties Based On Violations Stemming From Improper I-9 And E-Verify Procedures?

by FordHarrison

Executive Summary:  The Office of Special Counsel for Immigration-Related Discrimination (OSC) within the Civil Rights Division of the U.S. Department of Justice (DOJ) has made it a priority to pursue employers who allegedly misuse or abuse access to the E-Verify program and unlawfully discriminate against applicants and employees in hiring and termination on the basis of citizenship status discrimination and document abuse.  Employers suspected of engaging in a pattern or practice of discriminatory employment verification procedures could face months of costly investigation and be forced to pay civil money penalties, back wages and punitive damages.  What's more, they could be ejected from participating in the E-Verify program, lose the right to do business in states that mandate private employer participation, and face debarment from federal contracting rights.    

Background Information

Under the Immigration Reform and Control Act of 1986 (IRCA) and the implementing regulations of the U.S. Citizenship and Immigration Service (USCIS), all U.S. employers are required to verify the identity and employment eligibility of newly hired or rehired employees by properly completing DHS Form I-9 within three business days of the first day of employment and prior to the expiration of time-limited DHS work authorization documents.  Certain federal contractors and employers doing business in states that mandate participation in the federal E-Verify program must do more than just complete a paper I-9 form -- they must also submit employee I-9 data for verification through the DHS operated E-Verify data base system.   Employers may also enroll and participate in E-Verify on a voluntary basis under current law.  

The Rules Governing E-Verify Participation and Use

As a condition of E-Verify enrollment, employers must sign a Memorandum of Agreement with the Department of Homeland Security (DHS) and the Social Security Administration (SSA) committing to limit use of the E-Verify system under the terms of the agreement and applicable regulation.   For example, participating employers are prohibited from permitting untrained and unauthorized agents and employees from accessing the E-Verify data base and I-9 records; must establish adequate security practices and procedures to ensure data privacy and notify DHS of any security breach (defined as any instance of authorized access to E-Verify personal data); and are prohibited from using the system to investigate the immigration status of incumbent workers except as authorized under the Federal Acquisition Regulations for certain federal contractors.   Further, participating employers must agree to abide by the rules for tentative non-confirmation of social security account numbers and DHS work authorization status, including providing timely personal notice to affected employees of their right to contest the mismatch and refraining from taking adverse action against workers who elect to contest tentative SSA and DHS non-confirmation results; closing out E-Verify cases in a timely manner; notifying DHS that employees with final confirmation notices have been terminated; and maintaining required E-Verify information  and paperwork with related I-9 files.

How OSC Learns of Potential I-9 and E-Verify Pattern and Practice Citizenship Status and Document Abuse Discrimination

Reports of alleged employment discrimination growing out of inappropriate I-9 and E-Verify employment verification procedures can reach OSC through multiple channels.   An individual who feels that he was subjected to discriminatory treatment in the verification process based on national origin or citizenship status can file a charge of discrimination with OSC, EEOC or a state or local fair employment practices agency, which could trigger a broad investigation of the respondent employer's I-9 and E-Verify practices.  OSC could also open an investigation based on an anonymous tip reported on the agency's hot line.  For the past several years, OSC has also pursued enforcement leads received from the CIS Verification Division's Office of Monitoring and Compliance and from the DHS Office of Homeland Security Investigation (HSI), a division of Immigration and Customs Enforcement (ICE) responsible for enforcement of the I-9 verification and paperwork rules. 

OSC has broad investigatory authority under Section 274B of the Immigration Reform and Control Act of 1986 (IRCA) to identify and deter intentional discrimination in hire and termination by covered employers based on national origin (employers employing more than three and fewer than 15 employees) and citizenship status (all employers employing more than three employees).    Backed by the subpoena power vested in the DOJ Executive Office for Immigration Review Office of the Chief Administrative Hearing Officer (OCAHO), OSC has successfully required respondent employers to produce all I-9 and E-Verify records, application forms, and verification policies and training materials covering extended time periods.  The agency is looking for direct and indirect anecdotal and statistical evidence that the employer subjected foreign workers to disparate treatment through practices such as insisting that such workers produce a DHS work authorization document for I-9 and E-Verify purposes and by terminating foreign workers upon receipt of a tentative non-confirmation notice without first giving them timely notice and an opportunity to resolve the original no-match situation.  

Should OSC conclude an investigation with a finding of "reasonable cause" of discrimination, the agency would file an administrative complaint against the employer with OCAHO seeking civil money penalties, back pay, compensatory and punitive damages, reinstatement, and other affirmative relief on behalf of identified, aggrieved individuals or one or more classes of aggrieved individuals of unknown identity.   Months of pleadings, motions, discovery, hearings and briefing would follow.   At the end of these proceedings, should the administrative law judge find the employer guilty of violating Section 274B, the judge could issue an order directing the employer to pay civil money penalties ranging from $250 to $1100 per violation (in a first offense case) and such other damages as OSC has proved at trial.  In addition, the court could order the employer to hire or reinstate individuals who were denied employment or lost their jobs as a result of the employer's unlawful conduct.   Conviction could also lead to termination of the employer's right to participate in the E-Verify program – a result that could lead to debarment as a federal contractor and the imposition of state fines and penalties for failure to meet state E-Verify mandates.

To avoid costly and protracted litigation with OSC and the complications flowing from a liability finding, many employers agree to resolve OSC discrimination charges and complaints through conciliation agreements.  Although such agreements typically provide that the employer denies liability for the alleged violations, the employer nevertheless must agree to pay civil money penalties to the federal government and full back wages to injured workers, submit to random OSC inspections over the term of the agreement,  provide anti-discrimination training to all managers and officials with responsibility for making I-9 and E-Verify employment eligibility determination decisions, and consent to enforcement of the settlement agreement by the United States district court with jurisdiction over the employer. 

How to Protect Your Business

The government encourages E-Verify employers to conduct internal compliance assessments to ensure compliance with the privacy, anti-discrimination, usage, and paperwork retention requirements of the E-Verify MOU.   To guide employers in measuring the rate of compliance, DHS has developed a detailed 77-point E-Verify compliance check list and encourages employers to track the effectiveness of corrective action measures over time. 

Any documents related to such self-assessment audits would be subject to future discovery in the event of litigation with the OSC or other parties, unless protected under the attorney client and work product privileges.   As such, it is highly recommended that employers refrain from engaging in conducting E-Verify self-assessments except where performed at the direction of counsel for the purpose of rendering legal advice, with appropriate precautions taken to ensure the confidentiality of all working papers and advice memoranda.  

Requesting an E-Verify Assessment

If would like to know how your business measures up under DHS E-Verify compliance standards without creating potentially damaging evidence for future discovery,  we  have developed a spot-check audit protocol for detecting serious I-9 and E-Verify compliance issues. 

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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