[Editor’s Note: today’s post is brought to you by guest blogger Bruce Buchanan, an immigration attorney in the Nashville, TN office of Siskind Susser PC.]
Recent decisions of the Office of the Chief Administrative Hearing Officer (OCAHO) continue to demonstrate Immigration and Customs Enforcement (ICE) and OCAHO strongly disagree on the appropriate level of penalties for small employers committing I-9 violations. Three recent OCAHO decisions demonstrate that ICE continues to seek large penalties against small employers committing numerous I-9 violations while OCAHO continues to use its discretion to reduce the penalties by 50% or more.
In the most recent OCAHO decision, United States v. Pegasus Restaurant, 10 OCAHO No. 1143 (2012), OCAHO reduced ICE’s proposed penalty of $131,554.50 to $49,427, a reduction of about 62%. In this matter, the restaurant failed to fill out any I-9′s for 134 hired employees over a three year period. Of the 134 employees, four were not authorized to work. ICE sought a penalty of $981.75 per violation. ICE did not seek to aggravate or mitigate the proposed penalty based upon the five designated factors – size of business, good faith, history of violations, seriousness of the violations, and presence of unauthorized employees.
OCAHO accepted the restaurant’s argument that the proposed penalties were disproportionate in light of the size and resources of the business. OCAHO cited precedent which states a penalty should be sufficiently meaningful to accomplish the purpose of deterring future violations without being “unduly punitive” in light of the respondent’s resources; thus, proportionality is the key. See United States v. Jonel, 8 OCAHO No. 1008 (1998), and United States v. Minaco Fashions, Inc., 3 OCAHO No. 587 (1993).
Therefore, OCAHO reduced 130 violations from $981.75 per violation to $350 each while refusing to reduce the penalty involving the four unauthorized employees. OCAHO found a penalty of $47,427 to be “sufficiently substantial” to have a significant deterrent effect going forward.
Similarly, in United States v. Ice Castles Daycare Too, Inc., 10 OCAHO No. 1142 (2011), OCAHO substantially reduced the employer’s penalty from $55,352 to $18,500. In Ice Castles Daycare, the evidence established over a three-year period of time the daycare center failed to prepare I-9s for 74 employees although it did examine appropriate documents to verify employment eligibility.
ICE sought a penalty of $748 for each of the 74 violations. This amount was a reduction of the baseline penalty of $935 per violation based on 5% mitigation for each of these factors – small size of business (it averaged 30 employees), good faith of employer, no unauthorized employees and no history of violations.
The daycare asserted a fine of $55,000 could put them out of business since its ordinary business income from 2006 to 2009 was $21,000, ($4,000), $5,500, and $38,000, respectively. Based upon Ice Castles Daycare’s ability to pay, its small size, and its efforts to verify employment authorization, OCAHO reduced the 74 violations to $250 for a total of $18,500. Thus, the penalties were reduced by about 66%.
Previously, in United States v. Snack Attack Deli, Inc., 10 OCAHO No. 1137 (2010) (Subway case), OCAHO reduced the restaurant’s penalty from $111,000 to $27,150, a reduction of about 75%. In doing so, OCAHO cited the company’s inability to pay and relatively small size.
Two recent decisions where the penalties were not reduced by over 50% are United States v. Alyn Industries, 10 OCAHO No. 1141 (2011), and United States v. Ketchihan Drywall Services, 10 OCAHO No. 1139 (2011). However, in both of these cases, the employers were not small employers and had the ability to pay substantial fines.
My advice to small employers, who are facing substantial ICE penalties and cannot afford to pay them, is to hire an immigration attorney with experience in ICE audits and litigation (hopefully you have already done so) and litigate your case before OCHAHO. If successful, the reduction in the penalty should be greater than the cost of legal fees for the litigation, especially since the litigation involves a motion for summary judgment based upon the record evidence, not a hearing with witnesses.
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.