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In the past week, Immigration and Customs Enforcement (ICE) has significantly increased the number of Notices of Inspection issued to employers nationwide, leading to a dramatic spike in I-9 audits. Unlike the enforcement initiative rolled out by federal authorities in February of this year, the latest sweep is no longer concentrated in Southern California but appears to be nationwide in scope.
There appears to be somewhat of a pattern with regard to which employers are targeted by this effort. ICE seems to be focusing on businesses operating in states, counties, and cities that have designated “sanctuary” status, and has also ramped up efforts to follow up with employers who have been subject to an I-9 audit in the past.
Regardless of whether you fall into either of these two categories, you are at increased risk of a visit from federal immigration authorities. What should you do today to prepare for a possible knock on the door from federal officials tomorrow?
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Failure to thoroughly complete I-9 paperwork has left an event-planning company with a fine of $605,250 (the largest amount ever ordered) serving as a reminder that employers need to be taking I-9 compliance very seriously.
On July 8, 2015, the Office of the Chief Administrative Hearing Officer (OCAHO), which has jurisdiction to review civil penalties for I-9 violations, ordered Hartmann Studios to pay the fine for more than 800 I-9 paperwork violations.
Immigration and Customs Enforcement (ICE) audited the company in March 2011.
The bulk of the violations charged against Hartmann were due to a repeated failure to sign section 2 of the I-9 form. Employers are required to complete and sign section 2 within three business days of a hire, attesting under penalty of perjury that the appropriate verification and employment authorization documents have been reviewed.
ICE found 797 I-9s where section 2 was incomplete. About half of these incomplete forms related to individuals from the International Alliance of Theatrical Stage Employees Union Local 16A, who worked for Hartmann on a project-by-project basis during the term of a collective bargaining agreement. Even though the union workers worked on a project-by-project basis, they were not terminated upon completion of a project and remained “on-call.” The union created a “three-in-one” form that combined a portion of a W-4 form, parts of sections 1 and 2 of an I-9 form, and a withholding authorization for union dues. No separate I-9 form was completed for these workers nor did Hartmann sign section 2 of the union form.
Hartmann could have been charged with the more-substantive offense of having failed to prepare any I-9 form at all for the 399 union members, because the union’s form is not compliant, but OCAHO declined to do so.
Hartmann told OCAHO it believed that the union form was sufficient to confirm that the workers had proper employment authorization, and that nothing further needed to be done to confirm their eligibility for employment. The company also said that it did not know signing section 2 of the form was a legal requirement.
In addition to failing to sign section 2, Hartmann was also cited for:
This case demonstrates the need for employers to conduct routine self-audits of their I-9 inventories to ensure that the forms have been properly completed and retained and are ready for inspection.
Employers should also ensure that acceptable proof of audits and training is kept so that it may be used as evidence of good faith in court proceedings.
The deadline for submitting the required information and scheduling the requirement payment, which must be done through www.pay.gov is November 15, 2014.
The Affordable Care Act (ACA) provides for a transitional reinsurance program to help stabilize premiums for coverage in the individual health insurance marketplace during the first 3 years of operation (2014-2016). The program is designed to primarily transfer funds from the group market to the individual market, where high risk individuals are more likely to be covered.
Payments under the reinsurance program are funded by “contributions” (aka fees) payable by health insurance carriers for fully funded groups and third party administrators on behalf of self-insured group health plans. However, under ACA regulations, the self insured group is ultimately responsible for the payment.
The transitional reinsurance fee requirement applies on a per capita basis with respect to each individual covered by a plan that is subject to the fee. The total amount of the fee for 2014 is $63 per covered life and will decrease to $44 per covered life in 2015. The amount of the fee in 2016 has not yet been established by CMS, but will be lower than the 2015 amount. The fee applies to major medical coverage, retiree medical coverage, and COBRA coverage. Plans that are not subject to the reinsurance fee include FSAs, HSAs, Dental & Vision coverage, coverage that fails to provide minimum value, and EAP programs to name a few.
The transitional reinsurance fee is imposed on the “contributing entity”, defined as an insurer/carrier for fully-insured coverage or the group for self insured coverage. Third -party administrators (TPAs), administrative service only entities (ASO) and others may submit on behalf of the contributing entity, though CMS has specified that the TPA or ASO is not required by law to do so.
Because the fee is imposed on the self insured plan and not the plan sponsor, plan assets may be used to pay the assessment/fee. The IRS has also noted that plan sponsors can treat the fee as an ordinary and necessary business expense for tax purposes.
The term covered lives includes everyone under the plan, including spouses, dependents, and retirees. CMS has named several options for counting covered lives, depending on if the plan is fully insured or self funded. The methods of counting covered lives for the reinsurance fee are similar to, but not exactly the same, as the Patient Centered Outcomes Research Institute (PCORI) count methods. A full description of each counting method can be found on the CMS website here.
Regardless of the counting method chosen, plans must maintain documentation of the count, including all materials provided by TPAs in arriving at the figure, for at least 10 years. CMS may audit a plan to assess its compliance with the program requirements and it will be crucial to be able to produce this information.
The entire reinsurance fee process takes place on www.pay.gov. This process is separate from the Health Insurance Oversight System (HIOS) which is used, for example, to obtain a Health Plan Identifier (HPID). The applicable form became available on October 24, 2014. While this leaves somewhat limited time for plan sponsors to submit the applicable form and schedule the fee by the November 15, 2014 deadline, CMS has yet to issue guidance that the submission date will be delayed.
In order to successfully complete the reinsurance fee submission, plan sponsors (or their representatives) need to:
After registering on Pay.gov, the submitter will select the Transitional Reinsurance program Annual Enrollment and Contribution Submission Form. The form requires basic company and contact info, payment type, benefit year, and the annual enrollment count. After the information is entered on the form, plan sponsors will need to upload their supporting documentation CSV file. After the enrollment and supporting documentation is submitted, the form will auto-calculate the amount owed. Plans then need to schedule payment(s) for this amount . The form cannot be submitted without payment information. Plans can choose to remit payment for the entire benefit year once (the full $63 per covered life) or plans can submit two separate payments for the year. If the separate payment method is used, the first payment ($52.50 per covered life) is due by January 15, 2015 and the second payment ($10.50 per covered life) is due by November 15, 2015. Regardless of the option chose, all payments MUST be scheduled by November 15, 2014.
The Immigration Customs and Enforcement division (ICE) of the Department of Homeland Security, continues to issue Form I-9 Notices of Inspection to businesses of all sizes across the nation. In fiscal year 2012, ICE served over 3,000 Notices to businesses, resulting in over $12 million in fines. Additionally, ICE made 520 criminal arrests tied to worksite enforcement investigations. These criminal arrests involved 240 individuals who were owners, managers, supervisors, or human resources employees.
The Notices of Inspection allow ICE to inspect employers I-9 forms to determine compliance with employment eligibility-verification laws. Once the Notice of Inspection has been issued, the targeted employer has three days to provide ICE with the company’s I-9 forms to be reviewed. In addition to I-9 forms for current and recently terminated employees, employers will be asked to turn over payroll records, list of current employees, and information about the company’s ownership.
Civil penalties for errors on the I-9 form can range from $110 to $1,100 per violation. Civil penalties for knowingly hiring and continuing to employ unauthorized workers range from $375 to $3,200 per violation for first time violations. In determining penalty amounts, ICE considers five factors:
1) The size of the business;
2) Good-faith efforts to comply;
3) The seriousness of the violation;
4) Whether the violation involved unauthorized workers
5) Any history of previous violations.
Here are 12 tips to help protect your company and limit exposure for I-9 violations:
1. Make sure you are using the correct I-9 form. U.S. Citizenship and Immigration Services recently released a new version of the I-9 form. Beginning May 7, 2013 only the 03/08/13 version of the I-9 form will be accepted.
2. Have employees complete the form in a timely manner. For a new hire, the employee must complete Section 1 before starting work on the first day. You must complete Section 2 and the Certification by the end of the third business day.
3. Ensure that the Preparer/Translator Section is completed if the employee received assistance completing Section 1 of the I-9 form.
4. Don’t accept any expired documents.
5. Avoid discrimination or document abuse. When completing the I-9 process, do not require the employee to provide specific documents or more documents than minimally required.
6. Don’t play detective. If a document presented by the employee is on the List of Acceptable Documents, reasonably appears to be genuine, and relates to the person presenting it, you may accept that document to complete Section 2 of the I-9 form.
7. Re-verify expiring work-authorization documents before they expire and do not allow any employee to continue to work after a work-authorization document expires.
8.Don’t re-verify U.S. passports or passport cards, Permanent Resident Cards, or List B Identity documents.
9. Keep I-9 forms in a separate binder for current employees and another for terminated employees. Do not keep I-9 forms in employee personnel files.
10. Train the individuals in your company who complete the I-9 process.
11. Conduct self-audits. Correctable errors on the I-9 form should be fixed, the change should be initialed and dated, and the words “Per Self Audit” should be placed beside the correction.
12. Know your rights. If ICE appears to review your I-9 forms and conduct an audit, insist on a written Notice of Inspection and your right to have three business days before you turn over your original I-9 forms.
It’s clear from recent events that ICE will continue auditing employers’ I-9 forms to ensure that all employers are complying with immigration laws. Creating a culture of compliance and auditing your company’s forms is the best way to prepare your company for an ICE I-9 audit.
Please contact our office regarding any questions that you may have on performing an I-9s or how to perform an I-9 audit.
Wage and Hour suits hit a record high of 7064 in the recent fiscal year.Our monthly topic focuses on a Wage & Hour Audit. It covers understanding the steps to take in the event of an investigation by the Wage & Hour Division.
Do you know what areas you should you review prior to a Wage & Hour investigation to ensure you are in compliance?
What options are available to you when the Department of Labor shows up for an audit?
Contact us today for more information on this topic.