I-9 Audit Forces Company into Layoffs
Posted Sep 18, 2009
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American Apparel, Inc., a publically traded, U.S. clothing manufacturer and retailer, recently announced layoffs of up to 1,500 employees following receipt of a Notice of Inspection (NOI) from U.S. Immigration and Customs Enforcement (ICE). The L.A. Times reported on September 3, 2009 that the company's layoffs will occur at its Los Angeles, California manufacturing facility. The layoffs are estimated to impact approximately 25 percent of the factory workforce. This matter is reported to alert employers, once again, to importance of addressing immigration compliance within their workforces.
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Dramatic Increase in I-9 Investigations
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As regular MurthyDotCom and MurthyBulletin readers will recall from our July 10, 2009 NewsBrief, ICE to Audit 652 Companies for I-9 Compliance, ICE issued more I-9 NOIs in July 2009 than in all of the previous fiscal year. This dramatic escalation of I-9 audits is one example of the federal government's immigration law compliance enforcement efforts directed at employers. Based on the reported timing of the NOI, it appears that American Apparel is one of the 652 companies initially targeted.
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ICE Identifies 1,600 Workers
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In the case of American Apparel, Inc., ICE identified 1,600 out of a total of 5,600 factory employees that may be undocumented or not authorized to work in the United States. The Wall Street Journal covered this on September 4, 2009. American Apparel stated that it would like to rehire the individuals once they are able to collect or obtain the documentation needed to properly complete the Form I-9. Of course, as anyone familiar with immigration requirements is aware, many people are not eligible to obtain the documentation needed to work in the United States.
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Employers Must Clean Up Files to Comply with I-9 and Other Laws
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Employers can no longer ignore the I-9 requirements. Generally, such government probes target industries that historically have had problems in hiring undocumented workers. This appears to be the case with American Apparel. From an enforcement perspective, the strategy appears to have worked. Thus, it stands to reason that, if government audits yield fruit, ICE will continue along this path.
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Employers who may not have been diligent about I-9 issues need to conduct an internal audit of their files to identify and address issues proactively, rather than have ICE locate any serious infractions in records. The Murthy Law Firm assists employers of all sizes in independent, internal I-9 audits. We also help employers to establish proper procedures and policies for ongoing compliance with I-9 requirements.
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Fines for I-9 Violations
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As explained in our September 16, 2008 MurthyDotCom article, Form I-9 Compliance and Working with ICE, fines for I-9 violations vary from $110 for single, minor or technical violations up to $3,200 for a serious first offense. A third offense can lead to a fine of up to $16,000. As the example of American Apparel demonstrates, a company with 1,000 or more employees that may not be authorized to work in the United States could lead to fines reaching into the hundreds of thousands, or even into millions of dollars. Employers who can demonstrate good-faith efforts to comply with the law are more likely to be assessed the lower fine levels, if violations are uncovered.
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Criminal Law Violations Possible
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ICE also uses I-9 audits to search for counterfeit documents and instances of fraud. As noted in our August 28, 2009 NewsBrief, I-9 Audits on the Rise, I-9 investigations have led to criminal prosecution of those in management responsible for I-9 completion or those who have condoned or assisted in the use of fraudulent documents in the hiring process. ICE has charged employers with knowingly hiring, retaining, and harboring workers who are not authorized for employment in the United States. If ICE finds a pattern of fraudulent, stolen or counterfeit documents at an employer's facility, it may lead to charges of conspiracy in addition to the violations discussed above.
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Conclusion
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The current climate for companies, regarding their immigration-related hiring practices is that compliance is imperative. Otherwise company CEOs and other officers may find that they face investigations and, in egregious cases, criminal prosecution for noncompliance. Employers must educate themselves on the requirements of the Form I-9, and any other applicable immigration-related employment matters. It is necessary to make this investment in one's business to avoid problems faced by companies such as American Apparel, Inc. The Murthy Law Firm will continue to track changes in ICE's enforcement of I-9s and will update MurthyDotCom and MurthyBulletin readers.