Thread: NC: Judge Order Subway Restaurant to Pay $27,000 for I-9 Vio

Case Study: Judge orders Subway Restaurant to pay $27,000 for I-9 Violations

by John Fay
February 3, 2011
Enforcement, I-9

The Department of Justice, Office of the Chief Administrative Hearing Officer (OCAHO) has published a precedent decision regarding an employer’s liability for Form I-9 violations and the proper weight of various factors used to assess the amount of civil fines.

The case, United States of America v. Snack Attack Deli, Inc. d/b/a "Subway Restaurant #3718", tells the familiar story of a small restaurant in North Carolina that neglected its employment eligibility verification responsibilities for several years and failed to complete I-9s for its employees.

Faced with a potentially crippling fine of $111,078 for 108 distinct I-9 violations, the restaurant requested a hearing with OCAHO to dispute both its liability and the assessed fines. In ruling on the government’s motion for summary judgment, the Administrative Law Judge, Ellen Thomas, agreed with Immigration and Customs Enforcement (ICE) that the violations were serious and that the employer lacked good faith (as defined in more detail below).

On balance though, the Judge considered the company’s small size and the general state of the economy to be more important considerations that weighed in favor of a reduced penalty.

While the $27,000 fine is still substantial for this lone Subway restaurant, there are several important lessons to be learned for all employers with I-9 skeletons in the closet. But first, let’s take a closer look at the facts.

The ICE Snack Attack

Snack Attack is a Subway franchise restaurant located in Fayetteville, North Carolina, which had the misfortune of receiving a Notice of Inspection (NOI) from ICE in early 2009.

According to the case record, the ICE Forensic Auditor visited Snack Attack on January 30, 2009, and requested all Form I-9s for current and former employees between the years of 2006 through 2009.

The Auditor also provided a copy of a sample I-9 form along with a copy of the Handbook for Employers (M-274) and expressly told one of Snack Attack’s employees that if new forms were prepared, they should not be backdated.

When the I-9s were delivered for inspection however, ICE immediately noticed two big problems: (1) Snack Attack had produced only 11 Forms I-9 for the 108 employees (current and mostly past employees); and (2) Snack Attack had only partially completed the 11 forms that were produced (section 2 was blank on all of them), and 7 of the forms had been backdated in section 1, including the I-9 of the restaurant owner!

Not surprisingly, ICE then issued a Notice of Intent to Fine (NIF) on July 29, 2009, alleging that Snack Attack committed 108 I-9 violations, including improper completion for the 11 named individuals and failure to complete for the remaining 97 individuals.

Penalties were sought in the amount of $1,028.50 for each violation, for a total of $111,078.00.

Issue of Liability

In its answer and brief before OCAHO, Snack Attack alleged and asserted all manner of defenses to the issue of liability, even going so far as to claim that the backdating on the 7 forms was not their fault because it occurred in section 1 (that argument didn’t go very far by the way). Snack Attack’s owner also claimed that it had sold the business to another individual, even though there was nothing in the record to support it.

In the end, Judge Thomas ruled that there was no genuine issue of material fact regarding liability, and so she moved on to the issue of civil penalties.

How are I-9 paperwork fines calculated?

The Immigration statute and regulations set the minimum and maximum range for civil money penalties for I-9 violations. Employers who fail to properly complete, retain, and/or present Forms I-9 for inspection may be subject to a civil penalty for violations occurring on or after September 29, 1999 from $110 to $1,100 per affected employee.

In practice, ICE agents and auditors will consult the “Guide to Administrative Form I-9 Inspections and Civil Money Penalties,â€

Half of companies audited by Immigration and Customs Enforcement (ICE) get fined $110,000 or more.
If you're like most employers, 30-50% of your I-9 forms may have issues that put you at risk.

http://everifyandi9news.com/

If they want to solve the immigration problem they need to hit the employers where it hurts.

My best friend lives there! I'm going to have to pick his brain about this! Hahaha, serves 'ya right. Hiring illegals in a town full of soldiers and soldier's families!!!