OCAHO Issues Another Major Penalty Fine for I-9 Violations

On March 11, 2014, the Office of the Chief Administrative Hearing Officer (OCAHO) laid down yet another hefty fine for I-9 violations. OCAHO found that M&D Masonry, Inc., a Georgia construction contractor, was liable for $228,000 in I-9 penalty fines. The case discusses several notable points that U.S. employers should be aware of.

(1) ICE can initiate an investigation after reading a disparaging newspaper article about the employer.

ICE served a Notice of Inspection after reading in the Atlanta Journal Constitution an article entitled “Illegal Hiring for Airport Construction,” which quotes an M&D foreman saying that M&D employs undocumented workers. M&D argued that ICE cannot serve a Notice of Inspection based on hearsay in an article without first investigating the article itself. The OCAHO rejected M&D’s argument because M&D presented no legal authority and stated that it does not have the authority to direct ICE’s choices of businesses to inspect.

(2) ICE can work in connection with state entities.

During its investigation, ICE worked in connection with the Georgia Department of Labor, which provided the social security numbers and first three letters of the last names of all M&D employees. This allowed ICE to identify more substantive violations, namely employees who did not have any Form I-9 completed.

(3) ICE does not need to provide the full names of employees with I-9s in question.

M&D argued that because ICE could only produce the social security numbers and the first three letters of the last names of certain employees, it cannot be held liable for the failure to complete Forms I-9 for those employees. However, OCAHO held that M&D clearly knew the identities of each of the employees in question and therefore is responsible for all violations stemming from those Forms I-9 or lack thereof.

(4) Failure to provide the issuing authority for a driver’s license is a substantive violation.

ICE alleged that M&D committed nine substantive violations for omitting the name of the issuing authority of a driver’s license in Section 2. M&D argued that the Virtue Memorandum does not classify the failure to enter the issuing authority for a driver’s license as a substantive violation. However, OCAHO found that the Memorandum does not list it as a technical violation either and it reads that the enumerated violations are not exhaustive. Supported by extensive case law, OCAHO agreed with ICE that such omission is a substantive violation.

(5) ICE is not required to consider the employer’s ability to pay the penalty fine.

The regulations provide for five factors to be considered in determining the penalty fine. The employer’s ability to pay is not one of those five. Nonetheless, in some case law, ability to pay has been considered. OCAHO held that because there is no legal authority requiring it to consider ability to pay, it can at its own discretion but is not required to do so. Significantly, OCAHO noted that its case law suggests that because an employer’s ability to pay is a matter of equity, the factor can be raised only by a party with clean hands.

(6) An employer cannot use a rubber stamp as a Section 2 signature prior to completion of the Form.

ICE found that M&D used a rubber stamped signature in Section 2 for a large number of Forms at a time the rest of the Form was entirely blank. OCAHO found that this practice fails to reflect a reasonable attempt by M&D to comply with its I-9 obligations and constitutes “false attestation.”

For more information about this case please see the OCAHO decision.