Federal Employment of Illegal Aliens: Employer Sanctions.

Section 1324a(a)(1)(A) makes it unlawful for any person or entity to knowingly:

• Hire, recruit, or refer for a fee an alien who is unauthorized to work in the United States, or
• Benefit by hiring, recruiting, referring for a fee, or participating in contracting for an alien who is unauthorized to work in the United States.

Section 1324a(a)(2) makes it unlawful to knowingly continue the employment of an alien while knowing that he or she lacks authorization to work in the United States.

The scope of the statute is broad; both sections apply to all persons and entities (including employers, recruiters, contractors, and other entities) that engage in the hiring, contracting, or utilizing of unauthorized personnel.

With respect to the I-9 paperwork error, an employer that makes an error when completing its Form I-9 (Employee Eligibility Verification) may be liable under section 1324a(a)(1)(B), and this is liability that carries civil penalties (as discussed below). However, an I-9 paperwork error does not prove a “knowing” violation under section 1324a(a)(1).

An employer that completes Form I-9 improperly is not automatically known to be knowingly utilizing unauthorized personnel in violation of 1324a(a)(1). However, a “knowing” violation is a very serious allegation, which carries criminal penalties when certain thresholds are met.

Criminal liability for pattern or practice of violations: While section 1324a(a)(1) provides for civil penalties for individual violations, section 1324a(f)(1) provides for criminal penalties where the employer shows a “pattern or practice” of unauthorized employment violations. Specifically, a criminal pattern or practice violation under section 1324a(f)(1) involves establishing a pattern or practice of:

• engaging in conduct that is unlawful under section 1324a(a)(1)(A),
• engaging in conduct that is unlawful under section 1324a(a)(2), or
• engaging in conduct that is unlawful under section 1324a(a)(2).

The penalties for a pattern-or-practice criminal violation: If an individual or entity is convicted of a pattern-or-practice criminal violation under section 1324a(f)(1), the penalties can include:

• up to six months’ imprisonment, and/or,
• a fine of up to $3,000 per unauthorized worker (pursuant to 8 U.S.C. § 1324a(f)(1)).

As a result, when facing federal enforcement, an accused party must carefully differentiate between civil liability (e.g., for improper Form I-9 completion) and criminal liability (e.g., for pattern-or-practice violations).

How do Form I-9 documents and E-Verify establish work authorization?

Form I-9 and E-Verify

With respect to newly hired employees (specifically, “A person or entity that hires or recruits or refers for a fee an individual for employment must ensure that the individual properly: (A) Completes section 1-“Employee Information and Verification”-on the Form I-9 at the time of hire...; and (B) Presents to the employer or the recruiter or referrer for a fee documentation... establishing his or her identity and employment authorization...”), employers in the United States must:

• complete the Employee Eligibility Verification Form (Form I-9),
• verify a newly hired employee’s identity and work authorization, and,
• retain Form I-9 documentation for appropriate lengths of time.

E-Verify is an online system that employers utilize in addition to the Form I-9 process. It compares information reported on Form I-9 with records from U.S. Department of Homeland Security (DHS) and Social Security Administration (SSA). While E-Verify serves as a significant compliance tool (particularly for federal contractors), participation in E-Verify does not protect employers from criminal liability for unlawful hiring practices under the Immigration and Nationality Act.

Examples of Evidence of Employment Authorization

As employers establish employment eligibility under Form I-9, they look to evidence based on documentation provided by workers. The DHS designates “Lists” of eligible documents. Examples include:

• A valid U.S. Passport establishes both identity and work authorization under List A.
• A New York photo identification (as an example of List B documentation) establishes identity. For workers who present identity-establishing documentation under List B, they must also present documentation establishing work authorization under List C. An example of List C documentation is a Social Security card.

Immigration Status vs. Work Authorization

When defending employers accused of allowing unauthorized employment, it is also important to differentiate between two closely-related, but legally-distinct, concepts: an alien’s immigration status and that alien’s authorization to work. An alien may have lawful status in the United States, but not be authorized to work in the United States. Conversely, an alien may not have lawful status in the United States, but be authorized to work in the United States. While an alien’s immigration status can have implications with regard to work authorization, these are separate legal concepts.

What are the consequences of non-compliance?

The consequences for violating federal employment laws can range from civil to criminal. Employers and executives facing federal investigations involving these issues are encouraged to engage experienced counsel promptly.

“I am a straight shooter,” Todd Spodek says of his own practice. “I tell clients exactly where their case stands.”

What happens after ICE serves a Notice of Inspection?

When ICE serves a Notice of Inspection to an employer (such as an LLC), it will typically require the employer to produce all Form I-9 documentation it is required to maintain within three business days. If an employer has historically been compliant with the federal government’s paperwork requirements, it may be able to assert a statutory “good faith” defense to a knowing-hiring violation under section 1324a(a)(1)(A). However, if an employer is not compliant on a substantial basis, federal agents will likely use this to justify heightened scrutiny going forward.

When the DHS identifies a paperwork deficiency (either in an employer’s records or because an employee fails to present a valid employment-authorization document within the time permitted by the regulations), the employer will generally have at least ten business days to remedy the deficiency.

It is also important to keep in mind that ICE is not the only federal agency that can become involved. In many cases, ICE, DHS, the DOJ, and Homeland Security Investigations can work in tandem to seek various forms of sanctions. While this usually requires additional grounds beyond a violation of section 1324a, it is a real possibility that must be taken into account when determining a proper defensive strategy.

Furthermore, this is one area where paperwork errors can expose an employer to liability for sanctions even when the employees in question are properly authorized to work in the United States. As a result, employers must realize that merely employing only authorized workers is not enough to mitigate the risk of penalties when the employees’ I-9 paperwork is improperly completed.

Finally, while good-faith compliance with the Form I-9 paperwork requirements is a valid defense for certain types of violations under section 1324a, it is not a valid excuse for “knowing” violations. That is, good-faith compliance with the paperwork requirements will not protect an employer from sanctions if it is found to have knowingly continued to employ one or more individuals who were not authorized to work in the United States.

When do employer-sanctions penalties expand into tax or fraud exposure?

Civil Liability for I-9 Violations and Unauthorized Employment

Even when federal prosecutors cannot prove a criminal violation due to the lack of a “pattern or practice,” civil liability is still a real concern. Sections 1324a(e)(4) and 1324a(e)(5) impose civil penalties for both intentional (knowing) violations and unintentional violations related to improper employment documentation. Depending on the number and nature of the offenses in question, civil penalties can range from:

• First offense civil penalties: $716 to $5,724 per unauthorized individual for knowing employment, and $288 to $2,861 per individual for a paperwork violation.
• Second offense civil penalties: $5,724 to $14,308 per unauthorized individual for knowing employment, and $288 to $2,861 per individual for a paperwork violation.
• Later civil penalties: $8,586 to $28,619 per unauthorized individual for knowing employment, and $288 to $2,861 per individual for a paperwork violation.

Federal Tax Exposure from Off-the-Books Employment

As a result of the potential liability under section 1324a, many employers who knowingly utilize unauthorized aliens choose to engage in off-the-books employment compensation practices. As a result, when knowingly utilizing unauthorized personnel triggers federal employer sanctions, it can lead to federal tax liability exposure as well. While the penalties for tax fraud are a serious matter, in many cases employers are unaware of the risks associated with off-the-books employment in the context of federal employer sanctions.

Overlap with Document-Fraud and Identity-Theft Prosecutions

In addition to the potential for tax liability exposure, it is also possible for an employer sanctions investigation to overlap with other federal criminal prosecutions involving document-fraud and identity-theft. As an employer’s knowledge and willful intent can potentially rise to the level of participating in criminal conduct, it is imperative to defend against these charges vigorously and protect your business against civil and criminal penalties.

Immigration Status and Work Authorization Defense

When defending employers accused of allowing unauthorized employment or other violations of the Immigration and Nationality Act or other federal immigration laws, our immigration defense team also analyzes all relevant facts and circumstances. This includes analyzing the alien’s immigration status and work authorization status. These are related but legally-distinct concepts, and demonstrating compliance in one area will not necessarily protect you or your business against sanctions under section 1324a or similar federal provisions.

Talk It Through With a Lawyer

Every case turns on its own facts. Todd Spodek is the managing partner of Spodek Law Group, a second generation firm his father opened in 1976, and the firm takes federal criminal and white collar matters nationwide. Call 888 348 8028 to talk it through.