Immigrant Employees Or Not: Making Sure That You Are Satisfying Form I-9 Requirements

During the past couple of years, the U.S. government has reduced the number of raids on businesses that knowingly, or unwittingly, employ illegal immigrants. Instead, the government is now checking to see if employers are properly satisfying Form I-9 requirements; the way employer's verify an employee's identity and establish that the worker is eligible to accept employment in the United States.

Employers with large workforces that fail to properly manage the Form I-9 process can face fines of hundreds, or even millions, of dollars. Furthermore, employers and managers can face criminal prosecution if they deliberately neglect their legal responsibilities in this area.

We talked with Blake Helppie, the CEO of JobApp Network, a company that can source, screen, and score future employees for organizations, and streamline the hiring process, and improve the quality of hire. He's says I-9 audits are a growing problem and that franchisees need to mind the store on the issue.

What do multi-unit franchise operators need to know about I-9 audits?
Under the Obama Administration the federal government shifted its focus from illegal aliens to the employers that employ them. The primary enforcement tool has become the I-9 Audit, where the Immigrations and Customs Enforcement unit of the DHS will audit I-9s for all current and many former employees. Such audits have increased nearly 500 percent since 2008; in fact, through early July 2011, a record breaking 2,338 employer audits had been announced, already making fiscal year 2011 a record breaker (just Google "ice audits 2011").

Just one incorrectly completed I-9 can result in fines of $1,100--even if the underlying employee was, in fact, work authorized and legal. Considering that an average of 50 percent of all I-9s completed on paper without the aid of an electronic I-9 compliance solution are found to contain material technical errors, the average audit yields more than $100,000 in fines per audited employer. Two heavily franchised industries, in particular, have found themselves in the government's crosshairs: foodservice (particularly quick service restaurants) and retail.

In what ways can these audits affect franchisees?
I-9 audits can result in the mandatory termination of a large percentage of the audited employer's workforce, as well as significant monetary fines for the employer. Where the government believes that the employer's managers and/or owners had knowledge of the illegal status of certain employees, civil and criminal charges will often be filed, which have resulted in prison time for some managers, executives, and franchisees.

What kinds of fines are involved and what determines them?
The fine for knowingly hiring and continuing to employ a non-work authorized individual can range from $375 per employee up to $14,050 per employee, depending on the percentage of the workforce in question and other factors determined during the audit. For incorrect I-9 forms, the fines can range from $110 to $1,100 per incorrect I-9, depending on the percentage of I-9s in violation. The average fine per audited employer thus far in 2011 is over $100,000 and some fines have been well into the millions. The fines are assessed and calculated by the Immigration and Customs Enforcement unit within the DHS.

What are the civil and criminal risks involved?
Criminal charges often result in situations where the employer's managers, executives, or owners had knowledge of hiring individuals not authorized to work in the United States. Civil charges and fines are applied in cases where the employer should have known, but may not have had direct knowledge or involvement.

How can franchisees avoid hiring violations?
Franchisees can reduce their risk by educating their managers about the importance of the Form I-9, considering the use of E-Verify and regularly conducting internal audits of I-9s across their units. One of the most cost effective ways to ensure managers are correctly completing I-9s for all employees is to utilize an electronic I-9 compliance solution. There are several such products in the marketplace.

Are there different kinds of violations and what should franchisees watch out for?
If franchisees have not implemented an electronic I-9 compliance solution, they should be particularly focused on over-documentation and under-documentation in Section 2 of the I-9 as well as any discrepancies between the employee's document(s) and section 1 of the I-9. Without an electronic I-9 compliance solution in place, it is wise to have all managers review and study the government's M-274 handbook on I-9s (just Google "M-274").

Have there been any changes to the I-9 requirements?
The last changes to the I-9 form were implemented in 2009. There were several technical changes to the form itself and the usage of any sort of expired document was prohibited (previously, for example, an expired US passport could have been used to evidence both identity and work authorization).

How do franchisees comply with I-9 requirements?
Compliance can be best achieved by utilizing an electronic I-9 compliance solution. To reduce risk even further, franchisees can utilize a free "one-click" integrated E-Verify solution with their electronic I-9 product. If a franchisee would like to continue to use paper I-9 forms, they must absolutely ensure that all of their managers involved in I-9 verifications are intimately familiar with the rules and consequences for non-compliance and have reviewed the key sections of the M-274 handbook.

What documents are critical for franchisees to keep records of?
Many employment attorneys would now argue that I-9 forms are the most important documents for franchisees to properly and correctly maintain. Next to financial records and documents for IRS compliance, I-9 compliance must be considered a top priority for all franchisees if they're serious about staying in business.

How long should employers keep employee records?
Employers are required to maintain properly and correctly completed I-9s for every current and past employee for the longer of 3 years from the date of hire or 1 year from the date of termination. This effectively means that employers are held responsible for I-9s that pertain to historical employees. Any good electronic I-9 compliance solution will automatically determine the need to retain each I-9---or purge I-9s that are no longer needed. Purging I-9s for terminated employees that are no longer subject to retention requirements is a good practice considering that every non-purged I-9 is fair game for audit purposes.

What else do franchisees need to know here?
Franchisees should ask around within their system to find out which franchisees are already using electronic I-9 solutions. JobApp Network currently has hundreds of franchisees across over 50 franchise systems that are utilizing its electronic I-9 solution. Beyond JobApp there are several other compliant vendors, such as LawLogix, Tracker I-9, and others.