Small Business and I-9 Compliance

Businesses nationwide have been expected to complete a Form I-9 for employees to ensure their eligibility to work in the U.S. since the Immigration Reform and Control Act of 1986 has been in place. While this can be a bigger undertaking for larger businesses of one hundred or more employees, federal law still requires that small businesses follow the same rules to be I-9 compliant. In reality, the stakes can be even higher for small businesses found to be non-compliant. For this reason, more small businesses are turning to digital I-9 compliance software to help make the process more effective and reliable, from start to finish. Businesses with a defined process and ownership and who regularly track and proactively review their I-9s are best positioned to steer clear of penalties and fines during an I-9 audit.

Common I-9 Compliance Roadblocks for Small Businesses

The Form I-9 can appear unassuming, after all it is just a form. However, the amount of data required, combined with the varied guidelines and deadlines for each section, especially Section 2 of the form, can make it complicated and sometimes confusing. And some complications can yield mistakes that can negatively impact a business, and the need to avoid common I-9 compliance roadblocks like these becomes critical. Here are some of the most common mistakes small businesses often make:

Innocent mistakes.

Through the eyes of an ICE Auditor, a mistake is a mistake, whether it is innocent or not. An error can range from accidentally transposing a couple of numbers to unintentionally leaving a field blank to forgetting to add a signature where designated.

Missed deadlines.

All three sections of a Form I-9 have distinct deadlines for completion. Should a section not be finished within the assigned window of time, it may be considered a violation, which could result in a penalty.

Incomplete recording of the Identification & Work Authorization documents.

If an employer is not diligent in collecting and recording all of the appropriate documents required on the Form I-9, it will affect compliance and be considered a violation.

Not Tracking of Expired Document.

Some of the work authorization documents expire and require follow up from time to time to collect new valid information. For example, an employee who is authorized to work under an temporary status such as a H-1b, L-1a/b visa or one who holds an Employment Authorization Document (EAD) all have expiring work authorization dates. It is the employer’s responsibility to be aware of upcoming documents set to expire and to contact the employee well in advance of the expiration date so to obtain updated proof of eligibility to work before those documents expire.

Retention Management.

Employers are required by law to maintain for inspection the original Forms I-9 for all current employees. In the case of former employees, retention of Forms I-9 are required for a period of at least three years from the date of hire or for one year after the employee is no longer employed, whichever is longer.

How I-9 Violations Can Spell Big Problems for Small Businesses

The consequences of being found non-compliant during an audit on one or more counts may spell big problems for small businesses. Violations are normally categorized into one of these two categories:

  1. Civil. This is typically due to not being compliant via employment verification, document fraud or abuse, discrimination, etc.
  2. Criminal. These violations can be more serious and are generally due to documented patterns of hiring, referring, or conducting fee-based recruiting of individuals unauthorized to work in the United States.

Fines and penalties can be crippling to the bottom line. Auditors typically apply a fine per violation. That can potentially mean multiple violations for just one employee. If those violations appear in more than one employee Form I-9, the hefty fines and penalties associated can add up quickly. For example, penalties for substantive violations, which includes failing to produce a Form I-9, range from $230 to $2,292 per violation. Where as monetary penalties for an employer who knowingly employs and continues to employ unauthorized workers could face violations range up to $20k per violation. ICE considers five factors: the size of the business, good faith effort to comply, seriousness of violation, whether the violation involved unauthorized workers, and history of previous violations. In a worse case scenario a company can lose their license to operate temporarily or indefinitely if found non-compliant.

If a company receives a Notice of Inspection (NOI) from U.S. Immigrations and Customs Enforcement “ICE” employers they should contact their legal counsel immediately for advice. ICE will provide the company with at least three business days to produce the Forms I-9. Often, ICE will also request other supporting documentation, such as a copy of the payroll, list of current employees, Articles of Incorporation, and business licenses.

Why Small Businesses Can Benefit from Using Digital I-9 Compliance Software

Because a small business often has less management positions to assist with new hires and handling the employment on-boarding process and paperwork, additional resources such as digital I-9 compliance software is extremely helpful. Some of the ways that compliance software can be beneficial to a small business include:

  • Minimization of common mistakes due to errors such as blank fields or missing signatures, reducing a companies risks for violations
  • Assistance with tracking the hiring process progression with notifications for upcoming deadlines
  • Provides additional oversight of the employment verification, reverification, and document retention stages
  • Notifications sent regarding upcoming document expiration dates
  • Integration between the electronic Form I-9 and the government’s E-Verify web services saves time, costs and further reduces opportunity for error and non-compliance liabilities
  • Centralized management reports to track omissions, actions and overall program’s compliance

When it comes to small businesses and I-9 compliance, there is no leniency in federal laws regarding ensuring that employees are eligible to work in the United States. Do not carry this weight on your shoulders alone or unnecessarily risk your company’s compliance. Enlist the help of a vendor who can implement a digital I-9 compliance software today and bask in the peace of mind it can offer.

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