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New York Restaurant Hit with I-9 Penalties

Some of our more regular readers may recall our article on one of the largest I-9 compliance busts ever late last year. It looks like I-9 compliance issues have made its way into the news again, but this time to a small restaurant in New York.

In Rochester, New York, the Black and Blue Restaurant was assessed with an $88,700 fine by the Department of Justice’s Office of the Chief Administrative Hearing Officer (OCAHO). This was a reduction from the $264,605 fine the Immigrations and Customs Enforcement (ICE) was seeking initially. Last year, however, its Buffalo, New York location was assessed with a $32,850 fine.

The restaurant lost on a number of their arguments. One argument they made was that one person was not an employee but a “partner” instead. A partner is not required to file an I-9 form, but an employee is. However, despite their argument they had no evidence to support it and thus a fine was assessed for that individual.

A perhaps more troubling point is how the restaurant lost in its next argument. The restaurant argued that the ICE auditor provided them with a memo with instructions only to produce I-9 forms for those employees employed between January 1, 2008 and April 7, 2010. However, the Immigration Reform and Control Act of 1986 (IRCA), which is the controlling law in this case, states that the employer must retain former employees’ I-9 forms for three years from the date of hire, or one year after the employee’s termination, whichever is later. The starting date for the restaurant’s inspection was January 1, 2008. Thus, the restaurant had to produce the I-9 forms of former employees hired after January 1, 2005 or terminated after January 1, 2007, or else be punished by fine. Despite what the ICE auditor said or wrote in the memo, IRCA trumped the auditor’s misinterpretations even though there was no fault by the restaurant.

Despite the number of violations and OCAHO ultimately finding against the restaurant, OCAHO found that the $264,605 that ICE was initially seeking was excessive, and amounted to about half of the restaurant’s 2011 income. Instead, OCAHO assessed a fine of $500 per violation, rather than $935, for the failure to prepare Form I-9s for 19 employees. Also, it assessed a fine of $300 each, instead of $935 each, for the restaurant’s failure to properly complete both pages of the Form I-9 for 264 employees.

Form I-9 violations can have serious consequences for businesses both large and small. If you have questions about I-9 compliance or any other immigration issues, contact our office today.

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Intermittent Employees and I-9 Issues

Occasionally, a company requires an intermittent employee to complete a certain project or goal. A foreign national on an H-1B or L-1 visa may be employed in the US for a short period of time. . Regardless of how long a particular employee stays or how often they come in and out of the United States, an employee in the United States must comply with I-9 requirements, , even if they are paid by a foreign employer. More details on the I-9 process can be found here

An employer must ensure, at a minimum, that Section 2 of Form I-9 is completed within three days of the employee commencing employment. Sometimes an overseas employee may enter the US for the limited duration of a project and leave US without completing the I-9 Form. In such a situation, the employee must complete the Form I-9 upon their next arrival in the United States. However, this does not always cure the violation; the employer may find themselves in trouble with E-Verify standards.

A common misconception by employers is that rules/laws regarding worksite compliance do not apply to foreign employees. This is not true. Although for an employee on a foreign payroll the missing Form I-9 may not come up in an I-9 audit, the Immigration and Customs Enforcement may find it in their own audit; or if company tax records are scrutinized.

On a separate note, complying with the IRS tax requirements for both the employer and employee can be a very complicated process, requiring an analysis of the employee’s primary residence, the days spent in the United States, current income tax guidelines, the employee’s income, and other factors. It is imperative to check with a CPA.

Having a foreign employee work in the US requires the assistance of an expert immigration attorney, irrespective of the duration of employment in the US. Contact our office if you need assistance with hiring a foreign employee, I-9 compliance, or any other immigration issues.

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