Immigration Compliance for the
Restaurant and Foodservice Industry:
What to Do BEFORE (and After) the
Government Comes Knocking
March 4, 2012
Presented by Kristine A. Sova and Dismas N. Locaria of Venable LLP
Renewed Enforcement Focus on
Hiring of Undocumented Workers
Since 2009, the Obama Administration has been targeting employer compliance with I-9 paperwork
The result?
– Drastic increase in I-9 audits conducted by U.S. Immigration and Customs and Enforcement (ICE)
Renewed Enforcement Focus on
Hiring of Undocumented Workers
(cont’d)
• The figures?
FY 2009 FY 2010 FY 2011
Penalties $1.03 million $6.9 million $10.4 million
Criminal Charges 114 business owners and managers 187 business owners and managers 221 business owners and managers
Renewed Enforcement Focus on
Hiring of Undocumented Workers
(cont’d)
Who is being targeted?
– Large OR small companies
– Companies that are the subject of a tip or lead – Companies that are the subject of audit or
investigation by any other governmental agency – Specific industries, such as the restaurant industry
What is at stake with an I-9 audit?
At the ICE level:
– Knowingly hiring and continuing to employ
violations – $375 to $16,000, with repeat offenders receiving penalties at higher end
– Paperwork violations – $110 to $1,100 for each violation
– Debarment by ICE with respect to participation in future federal contracts and from receiving other
What is at stake with an I-9 audit?
(cont’d)
Other: – RICO claims – Discrimination complaints – Shareholder suitsDebarment
A lesser known, but potentially ruinous consequence of an Immigration and Nationality Act (“INA”) violation is debarment Debarment is neither a criminal nor civil action, it is an
administrative action
– Not to be imposed for punishment
• To ensure the public interest is protected from unscrupulous businesses and individuals
– Entities and individuals are judged on whether they are “presently responsible”
Debarment (cont’d)
INA Basis for Debarment
– A company or individual may be debarred if:
• It is a government contractor; and
• There exists a basis for debarment
– Pursuant to Executive Order 12989, an INA violation is a basis for at least a one-year debarment
– Conviction of an INA violation is sufficient evidence
– An indictment is adequate evidence for suspension (a temporary debarment)
Debarment (cont’d)
The real question is: Are you a “government contractor”?
The Federal Acquisition Regulation defines a
government contractor as an entity/individual that: “Directly or indirectly (e.g., through an affiliate), submits offers for or is awarded, or reasonably may be expected to submit offers for or be
awarded, a Government contract…” 48 C.F.R. §9.403 (emphasis added)
Debarment (cont’d)
ICE has taken a very expansive view of this definition – interpreting “reasonably may be expected,” to
include all companies/individuals located within the U.S.
Based on this definition, ICE:
– Issues notices of proposed debarment to U.S. companies and individuals as a matter of course for INA violations
– To date, ICE has issued hundreds of notices of proposed debarment to entities/individuals, many of which are not traditional government contractors
Debarment (cont’d)
Year Entity Debarments Individual Debarments
2011 97 115
2010 97 49
2009 30 53
Ramifications of Debarment
Ramifications of Debarment:
– Prohibits the awarding of new contracts or
subcontracts from the Federal government
– Listing on public websites:
• Excluded Parties List System (EPLS)
• Federal Awardee Performance and
Ramifications of Debarment
(cont’d)
Practical implications for entities that are not
traditional federal contractors?
– State/local governments inquire as to federal debarment status before awarding contracts
– Large private entities inquire as to debarment status • Government contractors cannot subcontract with
debarred entities
• Do not want to be associated with debarred entities – Reputational harm
Ramifications of Debarment
(cont’d)
Individual debarment
– In addition to above implications, ineligible to participate in federal subsidized programs –
federally backed home loans, federally subsidized student loans, etc.
– Remain eligible for public entitlements (e.g., social security benefits, etc.)
– Listed on the EPLS and FAPIIS
– Cannot hold a principal, board, executive or managerial position with an entity that receives federal contracts or subcontracts
ICE Audit: What to Expect and
How to Respond
Inspection process begins with service of Notice of
Inspection (NOI) on employer – notice compels production of I-9 forms
NOI will also often request supporting documentation – i.e., payroll, current list of employees, Articles of Incorporation, and business licenses, as well as no-match letters issued by Social Security Administration (SSA)
ICE Audit: What to Expect and
How to Respond (cont’d)
Employer Response to NOI:
– Insist on 3 business days’ notice before inspection of I-9 forms (this is minimum amount of notice the federal agency must provide)
– Document any communications with government – Keep a copy of all documents provided to
government
ICE Audit: What to Expect and
How to Respond (cont’d)
Government will notify audited employer of results of inspection, in writing, once completed
Types of Notices:
– Notice of Inspection Results – Notice of Suspect Documents – Notice of Discrepancies
– Notice of Technical or Procedural Failures – Warning Notice
ICE Audit: What to Expect and
How to Respond (cont’d)
Notice of Intent to Fine (NIF)
– Charging documents will be provided specifying the violations committed by the employer
– Employer can either negotiate a settlement or request a hearing before the Office of the Chief Administrative Hearing Officer (OCAHO) within 30 days of receipt of the NIF
– If employer takes no action after receiving a NIF, ICE will issue a Final Order
– If hearing is requested, OCAHO assigns case to an
Administrative Law Judge, and sends all parties a copy of a Notice of Hearing and government’s complaint, putting the adjudicative process in motion
ICE Audit: What to Expect and
How to Respond (cont’d)
Determination of Recommended Fines in NIF is based on a formula involving:
– Percentage relating to violations and number of employees
– Tiered fine schedule
ICE Audit: What to Expect and
How to Respond (cont’d)
Challenging Debarments
– Administrative process
• Respond to notice in writing
• In-person meeting with ICE debarment official – Adverse final decisions
• Seek reconsideration
I-9 and Employment Eligibility
“Best” Practices
Properly Completing an I-9 Form Self-Audit of I-9 Forms
Compliance Plan
Properly Completing the Form I-9,
Employment Eligibility
Verification Form
Employers must complete an I-9 form each time they hire any person to perform labor or services in the U.S. in return for wages or other renumeration (e.g., food and lodging).
The form requires that the employee present his/her employer an original document or documents showing his/her identity and employment authorization within 3 business days of the date employment begins.
Properly Completing the Form I-9,
Employment Eligibility
Verification Form (cont’d)
The I-9 form identifies proper forms of documentation that an employer may accept. (Note: Some aliens have and present an Individual Taxpayer Identification Number (ITIN) from the Internal Revenue Service to employers. An ITIN is
never acceptable for employment eligibility verification purposes.)
Employer must re-verify an employee’s employment if the employee indicates that he/she is only authorized to work in
Guidelines for Self-Audits of I-9
Forms
Confirm there is an I-9 form on file for: – Every current employee,
– Every employee hired within the last three years, whether or not still employed, and
– Every former employee who left employment within the previous year
Discard any I-9 forms you are no longer required to maintain
Confirm there is a consistent practice on photocopying supporting documents
Confirm all I-9 forms are filled out completely and correctly – Be transparent about any corrections that are made – Complete new form for any required forms that are
Guidelines for Compliance Plans
• Plan should include:
– Description of roles/accountability of various departments and/or positions in your restaurant/organization
– Time-frames in which actions should occur – Mechanisms to address:
• Allegations that your restaurant’s workers are unauthorized • Discrepancies in payroll and identity information regarding
your employees
– Description of how and when certain issues should be escalated to upper management, in-house counsel, and outside counsel
– Union relations/obligations
• Conduct staff training on plan and ensure employees have the necessary tools to implement the plan
E-Verify / IMAGE Program / I-9
Compliance Software
E-Verify / IMAGE Program
– Pros: Mitigating factor
– Cons: Government access to employer information;
invitation/agreement to government audit; no safe harbor
I-9 Compliance Software
– Pros: Some programs assist with quality control; some programs store data online
– Cons: Not all programs comply with law/regulation, creating liability
Additional Resources
For updates, go to: www.uscis.gov (select “Resources” and then “Get Email Updates”)
Revised “Handbook for Employers (M-274)” from USCIS (revised June 1, 2011), available at:
www.uscis.gov/files/form/m-274.pdf
I-9 Central (launched by USCIS in mid-May 2011) is a new online resource center that contains resources, tips, and guidance to properly complete the Form I-9, available at: