Subject to Inquiry: White Collar, Congressional, SEC, Energy Enforcement & Other Government Inquiries

ICE Director John Morton and DHS Secretary Janet Napolitano announced staggering enforcement statistics for the past year.  In addition to a record number of illegal alien removals for fiscal year 2010, since January 2009, ICE has

• conducted 3,200 audits of employers suspected of employing unauthorized immigrants;
• debarred 225 companies and individuals; and
• imposed $50 million in financial sanctions against employers.

Secretary Napolitano reiterated the Administration’s heightened focus on employers, noting the agencies’ approach “has yielded historic results . . . issuing more financial sanctions on employers who knowingly and repeatedly violate immigration law than during the entire previous administration.”

I hesitate to belabor the point, but ICE keeps providing additional opportunity to do so – the current enforcement focus is on employers – the “immigration magnet.”  Gone are the days when employers can get away with an “ah shucks, we just haven’t focused our compliance efforts on immigration” response to a Form I-9 audit.  Immigration compliance ought to be at the top of every employer’s radar screen.     

On September 28, 2010, ICE announced a settlement with clothing retailer Abercrombie & Fitch requiring the Company to pay a $1,047,110 fine.  The settlement is the result of a Form I-9 Notice of Inspection (“NOI”) issued in November 2008 to Abercrombie’s retail stores in Michigan.  The inspection revealed “technology-related deficiencies” in Abercrombie’s employment authorization verification system.  Even though ICE uncovered no knowing hires of unauthorized aliens, Abercrombie cooperated with ICE, and Abercrombie implemented corrective measures, the Company still must suffer a $1 million fine. 

The Abercrombie fine highlights the fact (as discussed in previous blogs) that what begins as an NOI can end with significant penalties.  In addition to the significant loss of productivity an immigration-related investigation may bring, employers face the following potential penalties for immigration-related violations (all of which may be the result of an investigation that begins with an NOI):

• Fines of up to $1,100 for each I-9 Form violation;
• Fines of up to $16,000 for each unauthorized employee or for each unfair practice offense, including the refusal to accept documents listed on the I-9 Form;
• Fines of up to $6,500 for various prohibited activities related to document fraud;
• Prison sentences of up to 10 years for criminal violations;
• Forfeiture of illegally obtained assets; and
• Debarment

Given the potential for significant penalties, employers must implement an effective compliance system.  According to Brian M. Moskowitz, special agent in charge of ICE HSI for Ohio and Michigan, “We are pleased to see Abercrombie working diligently to complete the implementation of an effective compliance system; however, we know that there are other companies who are not doing so. This settlement should serve as a warning to other companies that may not yet take the employment verification process seriously or provide it the attention it warrants.”

The Abercrombie fine should serve as a warning to employers: NOIs are an enforcement, not an administrative tool.