The Office of the Chief Administrative Hearing Officer (“OCAHO”) recently issued a Final Decision and Order assessing $228,300 in civil penalties against M&D Masonry, Inc. (“M&D”), a Georgia masonry contractor who failed to properly complete Form I-9’s for over 300 employees. The Form I-9 is the government form that an employer is required to complete on every new employee as part of the process of verifying that the employee is legally authorized to work in the United States.
This case arose in 2010 after a hiring foreman for M&D was quoted in an Atlanta Journal Constitution article as saying that the company was employing unauthorized workers on a project at the Atlanta airport. The Department of Homeland Security, Immigration and Customs Enforcement (“ICE”) then commenced a worksite enforcement investigation and, in May 2010 issued a Notice of Inspection seeking the Form I-9’s and other employment records for the current and former employees of M&D going back to May 2007.
At the conclusion of its investigation, ICE issued a Notice of Intent to Fine to M&D and then filed a complaint with OCAHO alleging that M&D had committed Form I-9 violations with respect to 364 individual employees. Specifically, ICE claimed that M&D had failed to prepare or present any Form I-9’s with respect to 87 employees. ICE also alleged that, in 277 other instances, the Form I-9’s were defective, either because M&D had failed to ensure that the employee had properly completed Section 1 of the Form I-9, or because M&D had itself failed to properly complete Section 2. ICE claimed that all of these violations were substantive Form I-9 violations (which, by statute, can result in penalties ranging from $110 to $1100 per individual) rather than technical or procedural infractions. Notably, however, ICE did not allege that M&D had engaged in the more serious violation of knowingly hiring or employing unauthorized workers.
ICE ultimately withdrew its allegations with respect to 25 of the 364 employees because those 25 employees had been terminated by M&D prior to ICE’s May 2010 inspection. ICE then moved for summary disposition of its complaint, granted only when there are no “triable issues of material fact”, requesting that the OCAHO Administrative Law Judge (“ALJ”) impose a civil penalty of $981.75 against M&D for each of the remaining 339 alleged violations, totaling $332,813.25 in fines. M&D vigorously opposed ICE’s motion, arguing that there were triable issues of fact both as to the alleged violations and the monetary penalties sought.
On March 11, 2014, the ALJ issued a Final Decision and Order, holding M&D liable for 338 of the 339 violations, including violations for 252 defective Form I-9’s and for 86 instances where the Form I-9 was simply missing. The ALJ refused to assess the $332,813.25 in total penalties sought by ICE, but instead fined M&D $650 for each of the 252 defective Form I-9’s and $750 for each of the 86 missing Form I-9’s, for civil penalties totaling $228,300. M&D filed a request for administrative review, but, by Order dated April 16, 2014, the Chief Administrative Hearing Officer refused to vacate or modify the ALJ’s Final Decision and Order.
This case serves as a useful reminder about the importance of complying fully with all Form I-9 requirements – even those that may seem insignificant – during the hiring process. Although some of the violations for which M&D was penalized involved Form I-9’s that were unsigned or completely missing, others resulted from seemingly less egregious failures in completing the forms. OCHOA made clear that all of these infractions would be considered substantive Form I-9 violations for the purpose of assessing penalties against an offending employer.
This case also makes clear that, in setting the penalties for Form I-9 violations, the government has a significant amount of discretion within the $110 to $1100 range established by the Immigration Reform and Control Act of 1986 (“IRCA”), the governing statute. In assessing the penalties against M&D, the ALJ noted that IRCA requires consideration of only five factors: (1) the size of the business of the employer; (2) the good faith of the employer; (3) the seriousness of the violations; (4) whether any of the individuals involved were unauthorized; and (5) any history of previous violations by the employer. However, both the ALJ and the Chief Administrative Hearing Officer, on M&D’s request for review, indicated that other factors, such as the employer’s ability to pay and the number of violations committed, might also be taken into consideration.