Smart HR: Improve I-9 Compliance or Pay the Price

June 4, 2015 was a record-setting day for U.S. Immigration and Customs Enforcement (ICE).

On that date, the agency levied a record-breaking $2.25 million fine on Washington company Broetje Orchards, the largest fine ever for an agricultural firm. According to ICE, the company employed nearly 1,000 unauthorized workers -- and continued to do so even after auditors of the company's I-9 forms uncovered that fact.

While Broetje Orchards broke the record, they aren't the only firm to get grilled. ICE is turning up the heat -- conducting more than 50 I-9 compliance inspections every week. In this article, you'll learn practical tips for staying compliant, spotting and correcting errors, preparing for an audit, and avoiding a firestorm of fines.

Start Here: When You're Getting an ICE Audit

A Notice of Inspection (NOI) is often the first notice a company has that it's time for their ICE audit. Here's what you need to know about your NOI:

  • When an NOI appears, you have three business days to produce a Form I-9 for each employee.
  • You'll need a Form I-9 for each current employee and a Form I-9 for certain terminated employees. Keep the I-9 for each employee for three years after the date the employee was hired or one year after the employee was terminated, whichever is later.
  • Violations on a form? You have 10 business days to set it right. However, your business can still be fined for substantial violations.
  • No I-9s, incomplete I-9s, or inaccurate I-9s? You may face penalties from ICE.

No wonder an NOI makes management break into a cold sweat!

No NOI (Yet!): Tips for Getting (and Staying) Compliant

Turn a "cold sweat" into "no sweat." If you're not facing an NOI (yet), here's how to get your I-9 forms in compliance and keep them that way:

Recognize the most common mistakes.

The most common mistakes employers make when filling out the I-9 include:

  • accepting incorrect or incomplete documentation of an employee's citizenship status,
  • failing to reverify citizenship status when needed,
  • failing to keep or destroy I-9 forms within the right time frames,
  • failing to fill out the form completely and correctly,
  • failing to complete Section 3, and
  • failing to ensure the form is properly signed or dated.

Avoid the most common mistakes.

The easiest way to avoid these top errors is to create a consistent policy that is designed to avert these mistakes. Make sure your HR team:

  • only accepts valid forms of documentation,
  • reverifies existing work authorizations on schedule, and
  • reviews payroll records frequently in order to spot and fix I-9 errors.

Make correct corrections.

Spotting an error is the first step to improving compliance. The second is to fix it without making another mistake.

Never use correction fluid, tape, ink or an eraser to obscure an entry on an I-9. Instead, write the correction above the incorrect information, initial it, write the date, and briefly explain why the correction was made (e.g., "per self-audit"). Scratching out information can lead to unnecessary questions and delays during an ICE audit.

Include the I-9 in your employee termination policy.

Have HR add a step to your company's termination procedure so that when an employee leaves, I-9 compliance doesn't fall through the cracks. In this step, calculate the date on which the form should be destroyed, and add a reminder to the business's usual calendar or reminder system. Then, make sure forms that are due for destruction are actually destroyed.

Take advantage of E-Verify.

E-Verify is a free online program that compares the data on your company's I-9s with data in U.S. government records. Although not every business is required to use E-Verify, doing so can help your team spot errors or missing information on Form I-9. It can also help you demonstrate to ICE that your company took proactive steps to ensure your I-9s were in compliance.

Why Comply? When the Healthcare Plan Takes the Hit

Criminal penalties or a fine like the $2.25 million levied on Broetje Orchards are hefty enough to make even the most well-heeled company take note. But fines and criminal penalties aren't the only risks companies face for I-9 noncompliance.

In a federal case in California, an employee gave an invalid Social Security number on his I-9, then enrolled his newborn children in the company's self-funded multi-employer health and welfare plan. The plan had a stop-loss contract to cover large claims. When the stop-loss carrier realized that the employee was not authorized to work in the United States, it denied coverage.

The court held that the stop-loss carrier couldn't refuse to pay the claim solely because the worker was undocumented. However, it based this conclusion on a clause in California state law that prohibits companies from denying "all protections, rights, and remedies available under state law" to undocumented workers. In a state that does not offer such legal protections, an insurance carrier can refuse to cover an undocumented worker -- leaving the company to deal with the aftermath.

In other words, ICE isn't the only reason to ensure your I-9s are in full compliance. Doing so can also ensure your company doesn't get stuck with some very large bills.