U.S. Department of Homeland Security (DHS) recently announced that it intends to begin fining employers for errors and omissions in their I-9s that it previously treated as minor and fixable “technical” errors, significantly increasing the potential cost of an official I-9 audit.

The Basics of Form I-9 Compliance and Retention

All employers are required to prepare and retain a Form I-9 for all new hires. While the Form I-9 has changed in appearance many times since its introduction in 1986, the substance and purpose of the form have remained essentially the same. The new employee must complete Section 1 of the form by no later than their first day on the job. The new hire must then provide evidence of their identity and employment authorization to a representative of the employer, who must complete and sign Section 2 of the form by no later than the third day of employment. The employer must then retain the original I-9 for the duration of the employment relationship and for a specified period after termination.

How Homeland Security Investigations (HSI) Conducts I-9 Audits

I-9 compliance is monitored and enforced by Homeland Security Investigations (HSI), the principal investigative arm of DHS, and the primary law enforcement agency within U.S. Immigration and Customs Enforcement (ICE). Typically, HSI begins an I-9 investigation with service of a Notice of Inspection (NOI). Employers are then provided at least three business days to produce the Forms I-9 along with copies of any associated work authorization and identity documentation retained by the company (if any). HSI also normally requires employers to provide supporting business documentation, including copies of their payroll records, a list of active and terminated employees, business registration/formation documentation, and business licenses.

Substantive vs. Technical Violations: The Traditional Approach

HSI then reviews the I-9s and accompanying documentation and notifies the employer of its findings. Historically, if HSI discovered relatively minor errors or omissions (e.g., missing employee date of birth, missing name or title of the employer representative, or missing document number or expiration date for the document(s) provided by the employee), it would notify the employer of these “technical violations” and provide it with at least 10 business days to make corrections. If HSI discovered more serious errors or omissions, classified as “substantive violations” (e.g., missing I-9 form, I-9 prepared late, missing employee signature in Section 1, or missing document information in Section 2), HSI would either issue a warning to the employer or a Notice of Intent to Fine (NIF). Whether HSI imposed fines depended on a variety of factors, including the seriousness and volume of errors, evidence of the employer’s good faith effort to comply (or lack thereof), and whether any employees lacked work authorization. Fines could be imposed for substantive violations, uncorrected technical violations, knowingly hiring unauthorized workers, and/or continuing to employ individuals who lack work authorization.

Base fines for substantive violations are increased on a regular basis to account for inflation and currently run $288 to $2,861 per form (though they will soon increase to between $300 and $3,000). There are five base fine tiers. ICE then considers five factors (business size, good faith, seriousness of the violation, presence of unauthorized workers, and history of past audit or violations), which may either increase or decrease the total fine imposed by up to 25%.

ICE’s Updated I-9 Enforcement Policy: Increased Fines and Stricter Penalties

ICE recently updated its official policy statement (“Form I-9 Inspection Sheet”) that describes how ICE conducts I-9 audits, evaluates employer compliance, and assesses penalties. Significantly, and reversing 30 years of past practice, ICE will now treat almost all I-9 errors and omissions as substantive violations and impose fines accordingly. This change is significant because employers may now be fined for simple discrepancies they were previously allowed to correct without penalty. Further, in many cases, the base fine for each violation will be higher because a higher percentage of violations will be treated as substantive rather than technical, which will increase the base fine tier level. Current fines for substantive violations vary between $288 and $2,861 per form. ICE’s primary factor for determining which level of fine to impose is the number of I-9s that contain substantive errors relative to the total number of I-9s audited. The maximum fine is imposed if 50% or more of an employer’s I-9s contain substantive violations. Because of ICE’s change in policy, employers are more likely to be fined, and the fines are likely to be much higher than in the past.

By way of example, previously, if ICE audited an employer with 100 I-9s and only 25% of those forms contained substantive violations, with 50% containing minor technical violations, the fine might only have been $7,200 (25 x $288). Under ICE’s new policy, the fine could be at least $214,575 (75 x $2,861).

The bottom line is that employers should take their I-9 obligations seriously and ensure every box on every form is correct, complete, and prepared in a timely manner.

I-9 Compliance: 6 Steps to Minimize Audit Risks and Fines

1. Maintain vigilance and a compliance-minded stance. Compliance starts at the top down, and more than ever, employers need to pay attention to every field in every section of the form. Employers that take their I-9 compliance seriously are less likely to be audited in the first place and less likely, in the event of an audit, to have serious violations for which fines may be imposed. Further, evidence of good faith effort to comply is a mitigating factor that can reduce the cost of any fine imposed.
2. Audit now. With the assistance of an I-9 expert, make all corrections and insertions permitted by law to ensure all I-9s (including those for terminated employees) are in as good a position as possible prior to any ICE audit. Remember to never white out, erase, falsify, or backdate an I-9 record, and that not all deficient I-9s may be corrected. When conducting a self-audit, include both I-9s and the business records that ICE regularly asks for to ensure consistency between I-9 and payroll records (e.g., employee’s name, Social Security Number, and date hired).
3. Use the correct and current forms. Check the official I-9 website regularly and always be sure to use only the currently authorized version of the I-9 form. Use only the English language version of the form. Only employers in Puerto Rico may use the Spanish-language version of the form.
4. Implement periodic reviews. After a comprehensive audit, periodically review all new I-9s to ensure they are being prepared correctly, completely, and in a timely manner.
5. Choose compliance over complacency. Do not wait for a self-audit or HSI audit to make corrections. The best time to ensure an I-9 is correct and complete is at the time of hire. It is all too easy for employer representatives to skip over review of Section 1 (the portion completed by the employee) and focus only on Section 2 (completed by the employer’s representative). While many of the omissions from Section 1 were treated as correctible “technical violations” in the past, they may now be considered “substantive violations” and subject to a fine. The best practice is to make a habit of carefully reviewing Section 1 with the new hire before ever moving on to Section 2. If information is missing or in the wrong place (e.g. employee’s first and last names are reversed, employee put today’s date in the date of birth field and vice versa, employee failed to check the box indicating their immigration status or checked more than one, signature or date is missing or in the wrong place), ask the employee to correct or insert it before moving on to Section 2.
6. Navigate electronic and remote I-9 procedures carefully. If preparing and storing I-9’s electronically or utilizing remote document review procedures, ensure that such electronic preparation or storage is 100% compliant with DHS’ specific requirements for both. The compliance requirements for electronic I-9 systems are governed by regulation and extensive. The reporting burden is much higher than for paper I-9s. ICE’s new policy clarifies that every I-9 that is prepared or stored electronically in a way that is not 100% compliant will now be treated as a substantive violation and fined accordingly. Similarly, while ICE relaxed the document review procedures for some employers during COVID, those temporary rules have expired, and most employers are required to again meet with new hires and review their original documents in person. Remote/electronic examination of employee documents is now limited only to employers that participate in E-Verify and that meet other “alternative procedure” requirements . The new policy statement clarifies that preparation of I-9s by remote/electronic review of employee documents that does not satisfy the alternative procedure requirements will be considered a substantive violation and fined accordingly.

With ICE enforcement activity on the rise and the potential cost of any I-9 audits increasing exponentially, employers should consult with experienced legal counsel and carefully review their I-9 records and procedures today.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.