The Importance of the Form I-9 and How to Conduct an Internal Audit

9/14/2012

By Patrick D. McGuiness

Whenever a business hires an employee, the Form I-9 should be completed. This form is used to verify two things. First, it is used to confirm that the employee is who they say they are (identity). The second is to confirm that the employee is authorized to work in the United States (authorization).
 
Documentation and identification
The I-9 requires that the employee submit identification to the hiring company to confirm these two things. The instructions which accompany the form require either a document from those listed in column A of the instructions, or a document from column B AND column C. The most commonly used ID, which can confirm both identity and authorization, is a valid United States Passport, which is found in Column A. Other common types of documentation include a valid driver's license (column B) and a social security card or birth certificate (both column C). There are numerous other documents that satisfy the requirements of the I-9 and they are all listed on the instructions. Spend some time getting familiarized with the form, the instructions and the valid types of documentation.
 
Should copies of documents be made?
When an employee presents their supporting documents, should the employer make photocopies? The law does not require that photocopies are made, so it is up to the employer whether or not they would like to do so. However, be careful to avoid violating anit-discrimination laws. If an employer makes copies of some workers documents, but not copies of other workers documents, then it is possible discriminatory intent can be shown. If an employer chooses to make copies of employee's documents, they should do so for all employees, and not just select employees.
 
Procedures to be put in place 
Create a standard procedure when hiring new employees. Have one person designated as being responsible for making sure all new and current employees have a completed Form I-9 on file with the company. Further, have that person be responsible for viewing (and copying if so chosen) the documentation which confirms both identity and authorization. This employee should have overall responsibility for all I-9s and should receive periodic training on the law and regulations which affect I-9s and other hiring issues.
 
Once the employee responsible for all I-9s has verified they were completed and has checked the documentation, then the completed forms should be put in a separate file, exclusively for I-9s. Do not put each employee's Form I-9 in that employee's personnel file. If an employee only has a temporary authorization to work in the United States, then a reminder system should be put in place to initiate a re-verification of the employee's authorization. It doesn't matter whether the reminder is in the company's calendar system, or an email reminder system. However it is done, it is extremely important to set up a system. The last thing that a company wants is to be found in violation of I-9 compliance due to simple forgetfulness. 

Audits and consequences
The Immigration and Customs Enforcement division (ICE of the Department of Homeland Security is responsible for conducting I-9 audits. In recent years, ICE has stepped up enforcement with the purpose of identifying those employers who knowingly employ workers without proper employment authorization. Even if I-9 violations are only technical violations and not "knowing" violations, ICE can still cite a business for the violations. 
 
Often, ICE will send a Notice of Inspection (NOI), which is a letter providing notice that an audit will take place. When a company receives an NOI, it must be prepared to allow ICE to inspect the I-9s that are on file as well as payroll records, employee lists and possible other company information. Failure to allow ICE to inspect these documents can result in ICE obtaining a subpoena or a warrant to force compliance.
 
When ICE visits a company, they can choose to audit all I-9s that the company has on file, or only a random sampling. This will largely depend on the size of the business and the number of employees. ICE will check to see that the I-9s on file match the names on payroll records, and that the I-9s were properly completed for each current employee an former employees. The audit will generally extend back three years, so make sure that the company retains the I-9s for all employees, even if they no longer work for the company.
 
If a company is found to have fraudulently altered an I-9, penalties of up to $3,200 per violation can be assessed. Additionally, failure to properly complete an I-9 or make it available for an ICE inspection can result in penalties of up to $1,100 per violation. Finally, in rare cases individual liability can be assessed against company owners or officers.
 
Practice internal audits
The best way to make sure that your company's I-9s are properly completed and retained is to conduct a practice audit. Have your human resources manager or a third party consultant perform a mock audit. Prepare a list of employees that have worked for the company in the past three years. Cross-check to ensure that each employee has an I-9 on file, and that any accompanying documentation is accounted for. Finally, make sure that the form was properly filled out and stored in the proper location. If any errors are found, they should be noted and, if necessary, a new Form I-9 should be filled out by the employee.
 
The Form I-9 can be confusing, so make sure that your company understands how the form works and has systems in place to assure compliance. Provide regular training to employees that handle I-9s and make sure that internal audits are conducted on a regular basis. If you take these steps, you can reduce or eliminate company liability in the event ICE chooses to audit your business.

This article provides general information on employment law matters and should not be relied upon as legal advice. A qualified attorney must analyze all relevant facts and apply the applicable law to any matter before legal advice can be given.
 
Patrick McGuiness is one of the founding partners of Zlimen & McGuiness, PLLC. His law practice focuses on assisting contractors & other small business owners. He can be reached at pmcguiness@zmattorneys.com.  If you would like more information regarding employment law or other legal matters, please contact Zlimen & McGuiness, PLLC at 651-206-3203 or www.zmattorneys.com.