ICE Raises the Stakes for Employers’ I-9 Compliance Failures

Businesses already navigating tougher scrutiny of foreign workers are bracing for dramatically higher financial penalties for paperwork violations identified by US Immigration and Customs Enforcement.

Larger companies that rely on electronic programs to manage high volumes of I-9 forms—the documents required to prove employees have work authorization—will be even more under the microscope in a new enforcement approach adopted by ICE.

Earlier this year, the agency quietly rolled out guidance that did away with an I-9 enforcement framework in place for decades giving employers a window to correct minor or technical document errors before they were slapped with serious fines. That grace period is now gone for errors like missing employee birthdays or hire dates and companies could see more fines and bigger financial penalties—from $288 to $2,861 for each form.

Immigration attorneys said the guidance also reflects a bigger government focus on failures in electronic programs that could make it easier to get hit with big fines. A business with 100 I-9 forms containing errors could face a penalty of more than a quarter million dollars. For the biggest employers managing thousands of forms, a faulty compliance system could easily mean a fine in the tens of millions.

“It’s very important for employers to strongly vet the electronic systems that they’re using to ensure compliance, because if there’s an issue it will impact every single I-9,” said Amy Peck, a principal at Jackson Lewis PC.

ICE didn’t respond to questions about the intent of the guidance or when it will apply to actual fine notices.

Altered Compliance Landscape

Under the first Trump administration, the Department of Homeland Security made worksite enforcement a major priority with then acting ICE Director Tom Homan pushing a massive increase in I-9 audits.

Businesses haven’t received serious scrutiny of hiring practices so far during President Donald Trump’s second term. But with Homan, now White House border czar, taking on a bigger profile after the ouster of former DHS Secretary Kristi Noem, paperwork violations are expected to be an even bigger focus.

Immigration attorneys have pressed DHS and ICE for years to issue regulations clarifying what kind of I-9 errors would trigger the most serious sanctions. Instead, since 1997 the government has relied on guidance known as the Virtue memo outlining a 10-day window for businesses to correct technical or procedural errors on the forms before they’re hit with civil penalties.

The new ICE guidance wipes away that window by turning most technical mistakes into “substantive” errors that trigger immediate penalties, attorneys said.

That means “a lot more, and a lot higher fines immediately,” said Dan Brown, a partner at corporate immigration firm Fragomen.

Brown and other attorneys said the guidance should spur employers to check I-9 forms as well as the systems they use to manage large volumes of the documents.

Audit Trail

For companies using those electronic programs, the key question is whether they maintain a clear audit trail—a record of who entered what data into the I-9 records and when.

“The I-9 might not have an error on it,” Brown said. “If the audit trail is insufficient, they can invalidate it or attempt to invalidate it.”

ICE has always had the authority to find violations connected to electronic I-9 programs, and has used it, said Dawn Lurie, senior counsel at Seyfarth Shaw LLP. But identifying them as standalone violations and training auditors on the requirement signals a new enforcement focus, she said.

“Electronic I-9 violations are an easy enforcement win: one systemic deficiency like a bad audit trail can sweep in hundreds, or thousands, of records at once,” Lurie said. “That’s a faster path to a large fine than picking apart individual forms.”

The most recent high profile I-9 enforcement action involved retail giant Walmart Inc., which ICE slapped with a $24 million proposed fine over thousands of record keeping violations. DHS found that the audit trail for thousands of electronic I-9s didn’t show that the employees themselves had logged into the software system and submitted a signature attesting to basic information like their name and date of birth.

The US Court of Appeals for the Eleventh Circuit rejected a constitutional challenge by the company to the Department of Justice’s Office of the Chief Administrative Hearing Officer, which issues decisions on I-9 violations.

Legal Challenges

The government will likely pursue more cases because it can rack up high dollar settlements quickly based on systemic issues, said Mary Pivec, an attorney at Pivec & Associates PLLC. But OCAHO judges may find that they’re not bound by guidance that didn’t go through a formal rulemaking process, she said.

Although the Virtue memo was never formalized in regulations, ICE relied on the framework for decades, including in OCAHO complaints and arguments before federal appeals courts. That precedent will likely serve as the basis for litigation challenging the fines, according to Pivec—starting in that administrative law system.

“Now you suddenly abandon it almost 30 years later,” she said. “It cries out as a due process violation.”

The new framework doesn’t preclude companies from proactively correcting issues before they’re identified by ICE, attorneys noted.

They should “absolutely” be getting their houses in order now, said Tim D’Arduini, a partner at Klasko Immigration Law Partners LLP.

“ICE will want to test how far they can go,” he said.