[Editor’s Note: today’s post was written by guest blogger Bruce Buchanan, partner-in-charge of Immigration Practice, King & Ballow, LLP.]
A recent Office of Chief Administrative Hearing Officer (OCAHO) decision, U.S. v. Alyn Industries d/b/a Electronic Source Company, 10 OCAHO No. 1141 (2011), demonstrates continuing evidence of differences between Immigration & Customs Enforcement (ICE) and OCAHO in the calculation of fines from ICE audits.
In Alyn Industries, the company disputed ICE’s calculation of fines due. The company conceded it violated the Immigration Reform and Control Act of 1986 by: (1) hiring two employees without preparing an I-9 form; (2) hiring 59 employees without properly completing Section 2 of the I-9 form; and (3) hiring one employee without ensuring the employee properly completed Section 1 of the I-9 form.
ICE sought a total of $63,767 for the 62 violations. ICE calculated the fine by determining 100% of the I-9s contained substantive errors. Thus, under ICE’s Guide to Civil Monetary Penalties, Alyn was assessed the highest amount for a first offense – $935 per violation. The Guide has the following sliding scale:
Percentage of Substantive Violations Fine
0 – 9% $110
10 -19% $275
20 – 29% $440
30 – 39% $605
40 – 49% $770
50% and Over $935
[Editor's note: for more details on fines, see ICE's Form I-9 Inspection Overview.]
Additionally, there are five aggravating or mitigating factors, each worth 5%. The five factors are: size of business, good faith, seriousness of violations, whether any employees were unauthorized, and history of previous violations.
ICE determined 10% should be added to $935 due to the company’s lack of good faith and seriousness of the violations. Thus, $935 + 10% = $1,028.50 x 62 violations = $63,767. Alyn challenged ICE’s determination of aggravating and mitigating factors, asserting it was a small business that acted in good faith and had no previous violations. Thus, it asserted the fine per violation should be reduced by 15%.
Alyn asserted it was a small business because it employed 62 employees in July 2009, the time of the I-9 audit, and was down to 50 employees in December 2010. Moreover, it had a net loss of about $271,000 in 2010 and net income of only about $78,000 in 2009. ICE argued Alyn was a moderate sized business, which should not be the basis of an aggravating or mitigating factor.
OCAHO found Alyn was a small business since prior case law defined companies with less than 100 employees to be a small business. However, OCAHO declined to use the size as a mitigating factor, because it was not a “failing ‘mom and pop’ operation.”
ICE argued Alyn’s tenure as a business for over 10 years with revenue in the millions demonstrated it should have been able to train its management on verifying employment eligibility and its 100% failure rate showed its lack of good faith. Alyn asserted the errors were based on carelessness and after the I-9 audit, it enrolled in E-Verify and “instituted stringent compliance checks.” OCAHO was not persuaded by either party that good faith or lack thereof was an aggravating or mitigating factor.
Concerning the seriousness of the violations, OCAHO found all but two of the 62 violations were serious. However, OCAHO declined to use such as an aggravating factor.
Alyn argued because it did not have a history of previous violations, it should receive a mitigating factor. OCAHO found “never having violated the law does not necessarily warrant” leniency. Thus, this factor did not change the amount of the fine.
Despite not finding Alyn should receive any reduction in the amount of fines due to any mitigating factors, OCAHO concluded… [A]s a matter of discretion, a penalty nearer the mid-range are found more appropriate… and the penalties are accordingly set at $700 each for the 60 most serious violations and $500 each for the other two violations, for a total penalty of $43,000.
Although OCAHO denied this was a similar case to U.S. v. Snack Attack Deli (Subway), 10 OCAHO No. 1137 (2010), where OCAHO determined the company could not afford the fine sought by ICE, the result is eerily similar. In Snack Attack, OCAHO lowered the fines from $110,000 to $27,150 without any reasoned analysis.
The Alyn decision demonstrates OCAHO will continue to assert its discretion in determining the penalties and will not feel bound by ICE’s Guide in this determination.
Disclaimer: The content of this post does not constitute direct legal advice and is designed for informational purposes only. Information provided through this website should never replace the need for involving informed counsel on your employment and immigration issues.