You Will Pay If You Don’t Make USCIS Form I-9 an Essential Part of Your New Employee Paperwork

Joel SowalskyFinding great employees can be very hard for small businesses.  But, once you hire them, completing all of the required paperwork can be even harder.  One essential document that sometimes is overlooked is USCIS Form I-9.  This is a form from the federal government that is intended to ensure that your new hires are eligible to work in the United States.  You can get a copy of the form here.

You are required to have a completed Form I-9 for every person on your payroll.  It must be completed no later than the end of your new employee’s first day of work.  The form is not filed with any state or federal agency.  Instead, once completed, the form must be kept in your files throughout the time that your employee works for you and for 1 year after the employment ends.  If the employee works for you for only a short time, you must still keep the form for at least 3 years. 

The government’s office of Immigration and Custom Enforcement (ICE) randomly selects industries and businesses for spot checks.  Both big companies and small companies are subject to inspections.  The construction industry regularly gets checked.  The government considers the failure to complete Form I-9 fully and on time to be a serious violation.

A recent case illustrates how important it is even for small businesses to make sure that they complete this form on time for every employee.  Anodizing Industries is a small metal finishing company in California.  In 2010, it had 26 employees and $2 million in revenue.  On July 30, 2010, Anodizing received a Notice of Inspection from ICE.  It required Anodizing to turn over all copies of its I-9s within 2 weeks, by August 13.  In those 2 weeks, Anodizing went through its paperwork, finished the I-9s that were incomplete or had not been done, honestly dated them on the dates they were completed, and submitted them on August 12.  

ICE went through these forms and determined that all of the employees were eligible for employment in the United States.  However, because the forms had not been completed on time, it assessed a penalty against Anodizing in the amount of $25,525.  Anodizing appealed the fine, arguing that it was a small company, that it had acted honestly and in good faith, that it had produced all of the required paperwork, and that all of the employees had been properly eligible for hire.  The hearing officer rejected all of these arguments, but as a matter of discretion chose to reduce the fine by about $10,000, to $15,600.  I can’t help but wonder if the amount that Anodizing paid to its excellent lawyer was more than the $10,000 reduction in fines.

General Counsel says:  The amount of paperwork that legally must accompany your new hires seems to grow every day.  These include payroll forms, insurance forms, labor department forms and more.  And then there are the other forms that you, as a smart businessperson, want to have your new hires sign, like non-disclosure and non-competition agreements.   Every company should have a comprehensive checklist of all documents and forms that are needed from its new hires, along with the dates by which the forms must be completed.  Make sure that your checklist includes Form I-9 and that it is completed no later than your new employee’s first day of work.

At DailyGC, we provide legal advice and counsel on the full range of legal problems and legal-related business issues that small businesses and startups routinely face in their management, sales, operations and administration. The following are examples of these kinds of problems. You may use these descriptions on your Priority Issues Identifier Form� or you may write your own descriptions.
Business Contracts and Relations:
� Customer Contracts and Disputes
� Vendor Contracts and Disputes
� Collections
� Bank/Lender Relations and Issues
� Landlord/Tenant Relations and Issues
� Bonding/Insurance
� Nondisclosure and Confidentiality Agreements
� Procurement and Management of Outside Counsel
� Recruiting/Hiring Practices
� Employment Agreements
� Employee Compensation and Benefits
� Employee Manuals, Policies and Procedures
� Compliance with Government-Required Benefits Programs
� Payroll Compliance with Court Orders
� Discrimination and Harassment Claims
� Management and Discipline of Problem Employees
� Terminations
� Unemployment Insurance Claims
� COBRA Procedures
� Hiring Independent Contractors
Dispute Resolution:
� Case Analysis and Assessment
� Mediation/Arbitration
� Strategies for Litigation, Discovery and Negotiation
� Settlement Analysis
General Corporate:
� Entity formation
� Corporate Governance and Record-Keeping
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� Compliance with Governmental Regulations
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� Contract Review, Analysis and Negotiation Coaching