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

Last week, ICE announced an additional 1,000 I-9 Notices of Inspection (NOIs) of U.S. employers to review compliance with immigration-related laws. This round of inspections brings the number of I-9 inspections for fiscal year 2011 to more than 2,300 — more than the total number of audits conducted in the entire fiscal year 2010.

NOIs typically include ICE scrutiny of employee I-9 Forms, payroll records, immigration filings, and Social Security No-Match Letters. The latest round of NOIs targets businesses with a role in protecting national security and public safety. Affected sectors include:

• agriculture and food
• financial services
• commercial nuclear reactors
• drinking water and water treatment
• postal and shipping
• health care
• transportation

By law, employers have three days to produce the requested documents; however, ICE is generally amenable to reasonable extensions.

Employers who hire or continue to employ unauthorized employees can end up paying hefty fines and serving lengthy criminal sentences. If you receive an NOI, you should immediately contact counsel. The window for response is short and it is critical that employers carefully review documents prior to production.

For those of you new to this blog, it is important to understand what an NOI is and what it means for your business. ICE considers the NOI an important tool in its enforcement strategy and employers should treat the NOI accordingly. For more information about NOIs, see previous posts here, here, and here.  If you have not yet received an NOI, you should use this time to conduct an internal audit.

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.

In a well written piece from this summer, Julia Preston with the New York Times discussed ICE's new strategy of conducting “silent raids.”  The raids involve audits of employer records by federal agents and typically result in the firing of undocumented workers, but not deportation.  However, the “silent raids” preferred by the Obama administration pose just as many dangers to employers as the not so silent raids of the Bush administration, and have led to record civil fines against employers this year. 

Additionally, another round of notices of inspection (NOIs) is underway.  Late last week, ICE confirmed to the American Immigration Lawyers Association (AILA) that it was serving more than 500 NOIs to companies throughout the U.S. that week.  The mistake some employers make is to treat an NOI as an administrative request.  In fact, many employers continue to refer to NOIs as Form I-9 audits or inspections.  But ICE is using NOIs as part of broader investigations and employers should treat them accordingly.  NOIs often flow from leads about employers allegedly engaged in hiring unauthorized workers.

Because NOIs signal investigations, rather than running an NOI through the standard response channels for administrative requests, employers should consult with counsel immediately in order to

1. ensure the appropriate compliance program is in place;
2. confirm an internal audit of the I-9 Forms has been conducted recently or is conducted prior to producing them; and
3. determine whether producing all records requested by the NOI is required or in the employer's best interest. 

NOIs typically request documents in addition to I-9 Forms such as payroll reports, employee rosters and monthly wage statements.  However, ICE can compel production, via an NOI, of only the I-9 Forms.

Oh the tangled web our government weaves.  One might assume that the Department of Homeland Security’s Immigration and Customs Enforcement (ICE) agency is the only entity that will appear on the doorstep asking to inspect Form I-9s and conducting an immigration-related investigation.  However, immigration enforcement actions can start through inspections by a number of different entities including:

• USCIS (Fraud Detection and National Security (FDNS))
  • Risk Assessment Program Fraud Study
  • Targeted site visits
  • Administrative site visits
• USCIS E-Verify inspections (Compliance Tracking and Management System (CTMS))
• DOJ (Office of Special Counsel for Immigration Related Unfair Employment Practices (OSC)) 
• DOL (Employment Standards Administration or Wage and Hour Division)
• IRS 
• SSA
• State and Local Police

Inspections by any of these entities can result in immigration enforcement actions.  Employers need to be wary of viewing an inspection by any of these entities in a vacuum, because even though one agency is at the door, it doesn’t mean another isn’t very far away