United States: ICE Chills The Summer With Thousands Of Audit Notices Issued To Businesses Nationwide

Last Updated: July 24 2019
Article by Dawn M. Lurie

Seyfarth Synopsis: The temperature may be heating up in the nation's capital, but Immigration and Customs Enforcement (ICE) is keeping things cool. Government insiders indicate that agents have been busy serving thousands of Notices of Inspection (NOI) across the country, initiating Form I-9 audits for companies of all shapes and sizes. With the current enforcement climate, there may even be a resurgence of pre-dawn enforcement actions – otherwise known as "raids" – to surprise both workers and their employers. Companies should expect penalties to climb sky high, with recent reports of multi-million dollar fines, especially for non-compliant electronic I-9 systems — that's right, something that has nothing to do with unlawful workers.

What is an NOI?

An NOI initiates a government administrative inspection of a company's Forms I-9 to determine whether they are complying with existing law. U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) leadership considers civil administrative audits to be just one of many tools that ICE can use to reduce the demand for unauthorized unemployment and to protect opportunities for U.S. workers. The current enforcement strategy includes an expanded use of civil penalties, employer audits, and debarment, as well as the criminal prosecution of employers who knowingly break the law.

What Happens When A Client Receives an NOI?

An ICE audit begins when an auditor and/or an ICE agent arrives at the client's doorstep to serve the NOI.

  • Service can also be accomplished via certified U.S. mail, return receipt requested. Ensure you have a protocol to have a NOI reach the right party in a timely fashion. For your reference, we have previously provided Quick Guidance: What To Do In The Event of a Visit By The DHS-ICE Agents.
  • If in person, the agent will generally deliver the notice and will request to see a manager, or the person charged with Form I-9 duties. The employee receiving service of the NOI will need to sign a document acknowledging the receipt. It's ok to sign, you can still keep your first born, I promise.
  • The company will then be provided with three (3) days to respond to the NOI, but extensions may be granted with good reason. Those three days will go by very quickly and it is critical that companies use them wisely.
  • NOIs should be taken very seriously. In 2017, the largest judgment in U.S. history was levied against Asplundh Tree Expert Co. for illegally employing undocumented immigrants —the company had to eventually pay a total of $95 million in forfeitures and civil claims.

What do companies need to know?

HSI leadership has been instructed to continue increasing the number of inspections; it is expected that many companies will receive these government subpoenas during the next week or so. Historically, ICE has prioritized investigations involving critical infrastructure and traditionally targeted industries – including the service industry, restaurants and hospitality, construction, brick and mortar retailers, production and packaging, landscaping, maintenance, and manufacturing. The majority of NOIs are driven by tips and leads. We have several companies that have received multiple NOIs, at different worksites, across state lines. It's possible this is purely a coincidence, or it could be proof of a more coordinated effort between the twenty-six (26) local offices, or Special Agents in Charge (SACs) as they are called, than we have seen in the past. It's too early to tell.

What should you do if you receive a NOI ?

Receipt of a NOI should be taken very seriously, regardless of the size of the company. If you receive one, it is critical that you act immediately. The law requires employers to provide ICE with the Forms I-9 for each active employee (and for employees terminated within the retention period) within three days of being served the NOI. Failing to timely complete, or doing a sloppy job of completing an I-9 for employees can result in fines of $230 – $2,292 and employing undocumented worker can cost companies a steep $573 – $22,927, per employee. Under no circumstances should a company waive the three days that they are afforded to submit the Forms I-9. During that time, missing Forms I-9 will need to be located, and/or completed when necessary. Documents, such as employee lists, payroll, E-Verify and SS no-match information, business entity and staffing agency/contractor information will need to be collected, in addition to the Forms I-9. The submission neatly organized for the government, Working with experienced counsel is can simplify a stressful time.

What can companies do to ensure they are ready for a government inspection?

Be proactive and address gaps in immigration compliance. Following are some of the practices that will ensure just that:

  • Internal Assessment, I-9 Audits, and Remediation. The Form I-9 is often referred to as "the most complicated 3-page form in America." Companies should consider an internal I-9 audit under the direction of experienced counsel. Before deciding to take on a full audit, however, companies should look at alternatives such as an internal assessment of policies and processes, in conjunction with a sampling of I-9s and E-Verify hygiene, where applicable. Such a project may be more appropriate and cost effective. Then, companies can decide if a full I-9 review or broader cross section is necessary. Either way, the timely remediation of any issues discovered on I-9s is critical. These include, but are not limited to, simple paperwork violations, missing I-9s, expired work authorizations, and fraudulent documents. Acting on the results is key, and the more serious issues should be addressed as quickly as possible. Being proactive will reduce fines and penalties and will also establish a good faith defense in the event of an ICE audit.
  • Review/Establish Policies and Procedures. Management cannot turn a blind eye to what is happening in the field, and should insist upon compliant practices. Don't Ask, Don't Tell-based immigration policies are something ICE appears to be interested in targeting. Companies should look at their pre-hire applications, I-9 retention schedules, photocopying policies, Social Security (SS) number-related "mismatch" issues (they are back!), reverification policies and practices, and other relevant processes to ensure compliance with the law. From an anti-discrimination perspective, these policies and processes should be implemented consistently.
  • Conduct Due Diligence. Whether in the context of a merger, acquisition, or restructuring, understanding the current state of compliance is important. This is particularly important for public companies that could face issues with shareholders over the roles executives played in allowing non-compliance to transpire. Accordingly, in cases where I-9 issues were deprioritized before closing, post deal clean up should be addressed as soon as possible. 2. Another area of compliance that is often overlooked is performing diligence on electronic Form I-9 systems. Not all systems are compliant with the electronic I-9 regulations, and ICE is starting to focus on reviewing these systems and fining for flaws. In fact, the government has recently issued fine notices topping the $10 million mark, where threshold issues include audit trails and digital signatures.
  • Be Proactive. Do not ignore government notifications including SS no-match letters, Affordable Care Act health insurance notices, and other unconventional no-match notifications (such as unemployment claims of employees not working at your company), or potential identity theft issues. Do not ignore existing liability on the books, including individuals whose I-9s indicate that they are unauthorized to work. Consider the use of E-Verify and other government recommended best practices. Review IMAGE best practices (https://www.ice.gov/image) and consider attending an HSI IMAGE training. This program has recently been revamped and is currently offering companies immunity to fines in exchange for joining the program. IMAGE is not for every company and the decision to engage with the government should considered careful with counsel. Finally, here are a few quick fixes to reduce exposure:
    • Ensure there is a Form I-9 on file for every active employee;
    • Ensure all Section 3 reverifications are completed where an employee's work authorization has expired and/or set a cadence to ensure Section 3 is completed timely; and,
    • Maintain copies of identity and work eligibility documents on a going forward basis (if not already being done).
  • Invest in Ongoing Training. While tight policies and procedures can reduce errors, the churn of HR personnel, combined with the new Form I-9 and updated United States Citizenship and Immigration Services (USCIS) guidance, make reinforcement of ongoing training, job aids, and in-house subject matter expertise critical. Aside from imparting technical knowledge, trainings should highlight the importance of the Form I-9 and the need to take the process seriously. Companies should review free government related online resources and organize an accessible library for their I-9 Administrators while also keeping that space up to date.
  • Prepare for a Government Visit. Companies should prepare for a knock at the door by the government. Regardless of industry or company size, this is an event for which every company should have a plan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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