By Bruce E. Buchanan
For Office of the Chief Administrative Hearing Officer (OCAHO) gurus like myself, it was exciting to learn of this new decision, as it is their first decision on an I-9 case in calendar year 2019. The decision is U.S. v. Intelli Transport Services, Inc., 13 OCAHO no. 1319 (April 23, 2019), wherein OCAHO determined that even though Respondent had not completed any I-9 forms until after the delivery of the Notice of Inspection (NOI), the penalties sought by Immigration & Customs Enforcement (ICE) should be reduced from $1,862 per violation or $21,506 to $450 per violation or $4500.
Intelli Transport Services (also referred to as Respondent), located in Inglewood, CA, was served with a Notice of Inspection (NOI)/subpoena on January 31, 2017. Intelli Transport Services responded on February 7 with 11 Forms I-9 , all of which had been completed after delivery of the NOI. On February 22, Intelli Transport Services was served with a Notice of Intent to Fine (NIF), which charged the company with failing to timely prepare I-9 forms for 11 employees. ICE assessed a fine of $21,506 based upon a baseline penalty of $1774 plus 5% increase for seriousness of violations for each of the 11 Forms I-9.
Company Defenses
Intelli Transport Services asserted several defenses. First, it stated it was not liable for failing to complete an I-9 form for Taewon Park because he is the owner. ICE contended it included Mr. Park in the violations because Respondent listed him on its employee list and the quarterly wage report showed he received remuneration. OCAHO case law has recognized that an “individual is not an employee of an enterprise if he has an ownership interest in, and control over, all or part of the enterprise.” U.S. v. Alpine Staffing, Inc., 12 OCAHO no. 1303, 11 (2017), U.S. v. Santiago’s Repacking, Inc., 10 OCAHO no. 1153, 6 (2012). Since Mr. Park acted on behalf of the Intelli Transport Services during the ICE audit, OCAHO found was evident that he has substantial ownership interests in and substantial control over Respondent. Thus, ICE failed to establish Mr. Park was an employee. Therefore, Respondent was not required to prepare and possess Mr. Park’s Form I-9.
Second, Intelli Transport Services asserted it was only required to retain Forms I-9 for three years after the hire date. Respondent was mistaken as to the law and was referencing a part of the test in retention of former employees’ I-9 forms. For current employees, the employer is required to retain an I-9 form for that individual for the duration of his or her employment and for one year after termination or three years after the original date of hire, whichever is longer.
Third, Intelli Transport Services asserted ICE failed to provide a 5% mitigating reduction for being a small business. ICE agreed it was a small business but asserted being a small business means I-9 compliance is easier. Such an argument is contrary to the statute and caselaw; thus, OCAHO found a 5% mitigation is warranted.
Fourth, Respondent argued the applicable penalty range is $110 to $1100, not $224 to $2,236, because some of the violations occurred before November 2, 2015, the date when the penalties essentially doubled. However, OCAHO has held the duty to prepare an I-9 does not terminate on the third day after hire; rather, it continues until the I-9 form is actually completed, and thereafter until the retention period expires. Thus, ICE’s violation theory rests on “the continuing failure to prepare I-9s, and the penalties assessed are for contemporaneous violations.” Thus, these violations occurred on November 2, 2015 and thereafter.
OCAHO case law makes clear that penalties approaching the maximum permissible fine amount should be reserved for the most egregious violations.” U.S. v. Int’l Packaging, Inc., 12 OCAHO no. 1275A, 8 (2016). Penalties “should be sufficiently meaningful to accomplish the purpose of deterring future violations” but penalties should not be unduly punitive. A&J Kyoto Japanese Rest., 10 OCAHO no. 1186 at 8 (2013). Thus, OCAHO found the violations were not so egregious as to call for a maximum penalty.
OCAHO Conclusions
Based on their analysis, including the statutory factor of small size of the business, OCAHO found a penalty adjustment to the lower range of permissible penalties was warranted. Thus, proposed penalties were reduced to $450 each or a total penalty of $4500.
Takeaways
Intelli Transport Services should consider itself lucky to receive such a substantial reduction in penalties when it blatantly violated the law. (Recently, one of my clients was lucky enough to get a major break after it initially did not have any I-9 forms when the NOI was served.) Your company may not be so lucky; thus, one should strongly consider an internal I-9 audit under the supervision of an experienced immigration compliance attorney. Contact me if you are interested.
To find out more about internal I-9 audits as well as other employer immigration compliance issues, I invite you to read The I-9 and E-Verify Handbook, a book that I co-authored with Greg Siskind, and is available at http://www.amazon.com/dp/0997083379.
Siskind Susser PC [email protected] www.visalaw.com