Recent mergers and acquisitions by industry giants like Oracle and SAP are a tell-tale sign that service providers are heading in an all-in-one direction. With the increase in I-9 Form inspections by U.S. Immigration Customs and Enforcement (ICE), enterprise management software has expanded to include electronic I-9 and E-Verify software as part of a bundled package with HRMS, benefits, payroll, administration and ATS. While the benefits for an enterprise may seem great, buyer beware! Every C-Level executive (and HR Directors) should consider these risks before signing (or letting others sign) on the dotted line:
Risk 1: Size Matters: All-in-one vendors are gigantic corporations boasting Fortune 500 companies as clients. It is not uncommon for all-in-one vendors, who might be experts with HRMS, benefits, payroll, administration and ATS, to also include an electronic I-9/E-Verify component as a loss leader while making up the cost in its other, more specialized service lines.
What’s the C-Level Concern? I-9 and E-Verify resides in a legal universe of its own. There are multiple iterations of rules and regulations which vary from state to state and literally month to month. If your enterprise is in multiple states- beware! DHS has absorbed more than $10 million in fines for FY2011. When your company is hit with an ICE notice of inspection to provide documents in three days, how will your gigantic all-in-one vendor support you during those 3 days and beyond? Is there a dedicated I-9 audit response team? Who will you call? Will there be experts to speak to? How much more money will this “support” cost your company? How will potentially large fines impact the value of your company’s stock? What kind of bad publicity will your company receive as a result? The size of the all-in-one vendor can significantly impact the level of service your company receives in an audit crisis.
Risk 2: Bypassing the RFP Process: The purpose of a Request for Proposal is to examine all vendors in a way that conforms to the values, standards and risk level of your organization (and stockholders). All-in-one vendors typically price their I-9 and E-Verify software components in a way that makes it easy for its customers to sign on the dotted line even though the legal compliance component and the substantive customer support may be severely lacking.
What’s the C-Level Concern? The stakes for fines, penalties, debarment and criminal prosecutions are high (read about fines here). If you bypass the RFP process, and an audit results in significant fines, would this be grounds for a potential lawsuit from stakeholders? Could you personally be named in a civil lawsuit by stakeholders? Moreover, what happens when your company decides to migrate to a more robust and legally compliant stand-alone I-9/E-Verify vendor? How will your all-in-one vendor cooperate? Will there be additional migration costs? Will they hold your data hostage? The RFP process helps to spotlight these issues in advance so you can reduce your company’s overall I-9 and E-Verify compliance risks.
Risk 3: There is no “I-9” in Team: All-in-one vendors may know a thing or two about its other product lines but I-9/E-Verify is a complex beast! You hire special auditing companies to prepare your financial statements and 10K filings. I-9s are no different! The legal rules are just as complex and dynamic. The players in the game are government inspection auditors, attorneys and judges and security experts. Who will be your guide and coach? Will your all-in-one vendor have a dedicated internal team of experts devoted solely to this area? Or are those experts paid consultants in which the costs will be passed on to your company? Will the vendor know how to extract necessary I-9 audit data from one silo to another? Do they understand the cyber-security risks?
What’s the C-Level Concern? Few companies have the extra funds to dole out in the event of a substantial penalty which is why contracting with a software vendor who specializes in I-9 and E-Verify is critical. What types of I-9 resources does your all-in-one provider offer? Do they employ I-9 attorneys or audit experts who have experience managing the I-9 and E-Verify process on an ongoing basis? How do they keep up with the changing rules and regulations? Are they relying on their own expertise or the expertise of others? In recent meetings, Immigration and Customs Enforcement (ICE) has expressed its concerns regarding electronic I-9 vendors who fail to incorporate compliance measures that meet regulations and vendors who “over-automate” the process. Does your all-in-one vendor’s internal legal team have the resources to keep up with these changing government concerns?
Risk 4: Pay Now or Pay A Lot More Later: The old adage “you get what you pay for” can have serious consequences. (Read the cautionary story here.) Enterprise companies should seek out the best and most qualified I-9 and E-Verify vendors and ask the hard questions which can make or break a system. What warranties, guarantees or indemnifications are offered? How strong is their underlying data security? Have they allied with partners in the industry who can provide additional expertise in the I-9 arena? Do they employ legal compliance attorneys or experts on a full-time basis?
What’s the C-Level Concern? When it comes to compliance, security, and risk management, C-Level executives take ultimate ownership in the event of the worst-case scenario related to an I-9 or E-Verify penalty or criminal prosecution. The costs of changing to a compliant vendor early on will pale in comparison to the cost of paying I-9 fines later or losing a federal contract because of the vendor’s electronic system was non-compliant with E-Verify rules.
Action Items: Not all I-9 and E-Verify software vendors are created equally. In fact, many vendors scramble to keep up with changing rules and regulations. How can you separate the serious I-9 vendors from the wannabes? Ask the tough questions outlined above. Examine the product history and organic client references. Above all, seek advice from experienced I-9 counsel. It may seem like a chore now, but you will thank yourself later in the likely event of an audit!
Originally published by LawLogix Group Inc. Reprinted by permission
Ann Cun is a U.S. based immigration attorney who has helped companies in the technology, science, business, sports, entertainment and arts fields secure complex work visas for their employees. With more than a decade of experience as a paralegal and attorney, Ms. Cun possesses a stellar record of success. Her legal expertise also includes conducting internal I-9 audits for companies and developing I-9 compliant strategies and solutions. She is a graduate of UCLA and UC Hastings School of Law and has been invited to speak by the Bar Association of San Francisco and the American Immigration Lawyers Association on U.S. immigration related topics, as well as other international conferences. Ms. Cun is a contributing author and currently serves as Counsel and Principal Editor for LawLogix Group.