Judge Fines Company $173,250 after ICE Audit
Ketchikan Drywall Services (KDS), a drywall and framing company in the Puget Sound area of Washington, was found to have committed 225 separate I-9 violations and fined $173,250.
Immigration and Customs Enforcement (ICE) subpoenaed employees' I-9s and supporting documentation dating back 3+ years. Initially, KDS provided approximately 454 Form I-9s with some supporting documentation. Over a year later, KSB provided another 81 Form I-9s for a total of 535 Form I-9s.
ICE issued a Notice of Intent to fine alleging 271 Form I-9 violations and seeking a fine of $286,000. KDS disputed the proposed fine. Thus, the case went before the Office of the Chief Administrative Law Hearing Officer (OCAHO).
With over 250 alleged violations, there were a number of issues, including whether employees were recalled from layoff or rehired; whether information in supporting documentation is sufficient when the I-9 has none of that information; whether late production of a lawful permanent resident (LPR) card alleviates a substantive violation for no status box checked; and whether certain recorded information in Section 1 can alleviate a substantive violation for failure to check a status box or more than one status box.
The recall versus rehire issue was pertinent because there was a lot of seasonal employment and if KDS established it was recalling employees from layoff, there would not be a need for a new I-9 on those recalled employees. On the other hand, as a rehire, KDS would be required to fill out Section 3 of the old I-9 (if rehired within three years) or a new I-9. KDS successfully established that 19 of the employees were recalled and thus it did not commit a violation by not obtaining a new or re-verified I-9.
KDS was not as successful in its defense that possession of the supporting documents alleviates the need to fill out Section 2 - List A, B, or C. The Administrative Law Judge (ALJ) stated the supporting documentation could only be reviewed if there was human error in transcribing information on to the I-9.
There were a number of issues related to the employees' failure to check a status box for citizen, permanent resident, or authorized to work. For the employees who failed to check a box or write any information, the fact that KDS was able to later produce a LPR card was of no value - this is still a substantive violation. However, if an employee provided their A# but failed to check that box, it is not a substantive violation. Furthermore, if an employee checked both permanent resident and authorized to work boxes, it is not a substantive violation; if the citizen box was checked with permanent resident or authorized to work, it is a substantive violation because the checked boxes are contrary to each other.
The I-9s reflected a number of other violations which were really not in dispute - failure to sign the I-9s, failure to list any or all the necessary information in List A, B, or C, and acceptance of improper documentation. ICE asserted KDS should be fined $286,000 based on these calculations: (1) there were 271 Form I-9s with substantive violations out of 535 Form I-9s presented which equals approximately 50% of the I-9s; (2) on the sliding scale of $110 to $935 per violation, the 50% rate means the highest fine - $935; (3) there were three aggravating factors, size of business, seriousness of violations and number of unauthorized aliens, which increased the $935 base fine by 15%; and (4) 271 violations x $935 = $253,385 + 15% = $286,000.
The ALJ found ICE proved 225 substantive violations in the 535 Form I-9s for a 42% violation rate, which equates to a base fine of $770. As for the aggravating or mitigating factors, the ALJ found the size of business was a neutral factor and ICE failed to prove the number of unauthorized aliens. Although the ALJ agreed a 5% increase for the seriousness of the violations could be included, she exercised her discretion and declined to do so. Thus, 225 violations x $770 = $173,250.00. This was the fine set by the ALJ.
Bruce E. Buchanan is the partner-in-charge of Immigration Practice at King & Ballow, Nashville, Tennessee. Mr. Buchanan represents employers in immigration, labor, and employment law, as well as individuals in immigration law. He graduated from Vanderbilt University School of Law in 1982. Mr. Buchanan authors a blog, at www.kbimmigration.com/webline, which covers immigration compliance issues. He is the Chair of TBA's Immigration Law Section as well as editor of Immigration Law Section Newsletter, and Employment Law Comment. He may be reached at email@example.com.
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