OCAHO Holds that Late Section 2 Completion Constitutes Substantive I-9 Violation

Employers should take note of a recent worksite ruling issued by the Office of the Chief Administrative Hearing Officer (OCAHO), a division of the Department of Justice’s Executive Office of Immigration Review. After many years of silence on I-9 related issues, on March 18, 2010, OCAHO held in United States of America v. New China Buffet Restaurant that the failure of a business to complete Section 2 of the Form I-9 within 3 days is considered a substantive, rather than a technical/procedural violation. The facts of this particular case are murky, however this ruling could be viewed as a significant departure from previous case law that may result in increased fines for employers.

This ruling is also important because it impacts the types of deficiencies that employers can try to cure in order to avoid or minimize fines and penalties. Based on amendments made to the 1986 Immigration Reform and Control Act (IRCA), an employer has the opportunity to correct most "technical/procedural" errors during the ten-day period after ICE has provided a notice of the violations. An employer does not however, have the opportunity to correct "substantive" violations.

According to the recently published decision following the Notice of Inspection from ICE, New China Buffet Restaurant partially completed Section 2 of Form I-9 for seven employees several years following the employees' initial dates of hire. The definition of “partially completed” here is unclear. ICE went on to fine the company $981.75 for each violation, stating that the restaurant’s failure to complete Section 2 in a timely manner constituted a substantive violation that could not be remedied.

OCAHO disagreed with the restaurant’s contention that its completion of Section 2 following the Notice of Inspection should reduce its liability, stating that failure to complete Section 2 in a timely manner does in fact constitute a substantive violation. OCAHO also took issue with the calculation of the fine itself and found that ICE had failed to appropriately base the fine calculation on the factors set forth in the regulations which include: 1) the size of the business of the employer, 2) the good faith of the employer, 3) the seriousness of the violation(s), 4) whether or not the individuals involved were unauthorized aliens, and 5) any history of previous violations by the employer. This case further draws into question the validity of the fine matrix released by ICE in November of 2009.

The restaurant is expected to appeal the decision, however, employers should remain vigilant in the proper completion and maintenance of their Form I-9s. It is our experience that good faith efforts by the employer to comply with the law are looked upon quite favorably by government auditors. Our compliance team is available to assist your company in the review and audit of your Form I-9s to determine your potential liability and how it may be reduced.