How to Prepare for an I-9 Audit: Creating a Plan to Stay Compliant and Avoid Costly Penalties
With tens of thousands of I-9 audits expected to occur under the second Trump presidency, many businesses are understandably concerned about unintentional I-9 violations. Even small mistakes on an I-9 form, like missing information or outdated documents, can result in thousands of dollars in fines, lengthy workplace disruptions, and irreparable damage to your company’s reputation. In order to avoid these risks, businesses need a clear plan for managing I-9 forms and responding to audits before they happen. Creating an effective plan starts with understanding what I-9 forms are, which documents are required to prove employee work eligibility, and what to expect from different types of audits.
What is an I-9 Form?
According to the U.S. Citizenship and Immigration Service (USCIS), Form I-9 is an employment eligibility verification document that confirms whether a person is legally permitted to work in the United States. By law, employers must have all personnel (whether they are citizens or noncitizens) complete these forms when hired.
New hires need to provide a variety of information to fill out an I-9 Form, including their full name, date of birth, current address, and citizenship or immigration status. Along with these details, they must produce documentation that proves their authorization to work. This includes either one List A document (which establishes both identity and employment authorization) or a combination of one List B (which establishes identity) and one List C document (which establishes employment authorization).
A full list of acceptable documents is provided by the USCIS here.
What is an I-9 Audit?
In the simplest terms, an I-9 audit is a review of a business’s I-9 forms. These audits check both the validity of the documents listed above and the accuracy of the I-9 forms themselves. I-9 audits typically occur in one of two forms: as an internal audit conducted by the company or as a federal audit carried out by immigration authorities.
What is an Internal I-9 Audit?
Internal I-9 audits are voluntary reviews of employee I-9 forms and supporting documents to confirm that a business meets the employment verification provisions outlined in the Immigration and Nationality Act (INA). These reviews usually involve checking that each employee has a valid I-9, all forms are error-free, and all eligibility documents are present and up-to-date. While not legally required, internal audits can have a number of benefits, including preparing a business in the event of a federal I-9 audit.
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What is a Federal I-9 Audit?
Federal I-9 audits, or Form I-9 inspections, are official reviews of an employer’s I-9 forms by a federal agency or division, such as the Department of Homeland Security (DHS), Immigration and Customs Enforcement (ICE), and Homeland Security Investigations (HSI). Businesses will typically receive a written notice 72 hours before the audit informing them which agency will be involved and what documents they will inspect. After that, a Form I-9 audit will occur. This can result in several outcomes:
Compliance: If a company is found to have no suspect documents, discrepancies, or violations, ICE will issue them a Notice of Inspection (NOI) that shows they are in compliance.
Notice of Discrepancies Issued: If the agency conducting the audit is unable to determine an employee’s eligibility to work in the U.S., the employer may receive a Notice of Discrepancies.
Notice of Suspect Documents Issued: If the auditing agency determines that the documentation presented by an employee is not valid, the employer may receive a Notice of Suspect Documents.
Notice of Technical or Procedural Failures: If the agency identifies technical or procedural failures during the inspection, this notice gives the employer 10 days to correct their forms, after which they will be subject to substantive violations.
For substantive violations, a warning or Notice of Intent to Fine can be issued. Depending on the nature of their violations, a company may need to pay penalties, negotiate a settlement, or attend an OCAHO hearing.
How Many Federal I-9 Audits Occur Annually?
While ICE may not regularly release its audit numbers, the agency reported delivering more than 5,200 I-9 audit notices to U.S. businesses in 2018. Other sources suggest these numbers have grown over the years, with 15,000 audits planned in 2020 before being interrupted by the COVID-19 pandemic. With audits expected to rise again, businesses need to take proactive steps to prepare. One of the best ways to do so is by conducting an internal I-9 audit.
Why Do An Internal I-9 Audit?
While internal I-9 audits are not required by law, they can help your business avoid the potential repercussions of a federal audit, including monetary penalties. Penalties can vary depending on what type of violation occurs. For example, paperwork violations (issues or discrepancies with the I-9 forms themselves) can cost as high as $2,789 per violation, while knowingly employing an unauthorized noncitizen can cost anywhere from $5,579 for a first offense to $27,894 for a third offense.
Employers who fail an audit and violate the law can be subject to other consequences as well, such as court orders requiring backpay, debarment from government contracts, and increased scrutiny from government agencies. Once you get into trouble with ICE, they may be more likely to return for additional audits. Even if you commit no further violations, federal I-9 audits can slow down productivity, negatively affect morale, and further damage your company’s reputation. The best way to steer clear of these and other I-9 violation consequences is to conduct your own internal I-9 audits ahead of time.
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How to Conduct an I-9 Audit
The U.S. Immigration and Customs Enforcement agency (ICE) provides guidance for employers conducting I-9 audits that include the steps listed below. While the exact procedures may vary for your specific business and industry, these steps can provide an effective starting point to structure your own internal audits.
Step #1: Define the Audit’s Scope
ICE recommends that employers start by determining why they want to conduct an audit and what they will be focusing on. For example, you may choose to review all I-9s or restrict your audit to a specific group, such as those from employees who have been hired in the last 12 months. However, one important aspect to keep in mind is that audits cannot be discriminatory. Make sure to avoid targeting employees based on their nationality, citizenship status, or perceived work authorization status, as this can violate anti-discrimination laws.
Step #2: Communicate with Employees
Next, you’ll want to clearly communicate with employees what an I-9 audit is, why it is happening, and when it will occur. This is typically done by providing written notice (much in the same way as ICE or the DHS will for a federal audit.) Give employees enough time to voice any questions or concerns they have, make sure they are well aware of their rights, and establish a timeline for how long the audit will take. Provide plain and direct instructions on how to complete different parts of the audit (such as correcting errors on I-9 forms). If applicable, these instructions should be communicated in an employee’s preferred language to avoid miscommunication.
Step #3: Review I-9 Forms
Carefully review your selected I-9 forms for errors and omissions. ICE emphasizes that employers can only personally correct Sections 2 and 3 of this form, not Section 1. If there is an error in Section 1, the employee (or a designated preparer or translator) must fix it themselves. Mistakes should not be hidden by attempting to erase, backdate, or use correction fluids like white-out. Instead, ICE requires employers to follow these three steps:
Draw a line through the incorrect information.
Enter the correct or omitted information.
Initial and date the correction or omitted information.
In some cases, an employee may have filled out an outdated version of Form I-9. If the I-9 form was acceptable at the time of hire, the employer can staple the outdated version to a signed (but otherwise blank) current version along with an explanation of what occurred.
Step #4: Review Employment Authorization Documents
Employers will want to make sure that all work authorization documents are current and valid. This can involve checking that the employee has a verified document from List A, or a verified document from both List B and List C. If invalid or expired documents were used, employees must provide new documentation immediately. If work authorization has expired, the employees must also update Section 3.
Step #5: Establish Record-Keeping Protocols
Businesses should have a structured approach to record-keeping in order to comply with ICE standards. I-9s for current employees must be stored for the duration of their employment, while I-9s for terminated employees must be retained for three years from the date of hire or one year from the date of termination (whichever is later.) ICE recommends keeping these forms separate from other personnel files and organizing them by hire date, as that can help expedite future federal audits.
Step #6: Conduct Regular Audits
Internal audits should be an ongoing part of a company’s compliance strategy. By conducting an I-9 audit on an annual or biannual basis, businesses can make sure they meet current ICE and DHS standards. Part of this strategy should also include an Immigration Enforcement Response Plan, which can be invaluable in the event of a federal audit. Because these audits can occur with as little as 3 days notice, companies without a plan in place can face significant workflow disruption and a higher risk of errors during an inspection.
What is an Immigration Enforcement Response Plan?
An Immigration Enforcement Response Plan (IERP) can simplify these steps and distill I-9 compliance down into one central document. While conducting regular I-9 audits can be beneficial, it’s only one aspect of preparing for an immigration agency inspection. An effective IERP establishes protocols to address all issues and eventualities that can occur as a result of immigration enforcement. This includes:
Defining inspection roles for management and staff
Clarifying how to communicate with enforcement officers
Creating a training program to prepare employees for ICE inspections
Establishing procedures to satisfy federal guidelines
Coordinating legal counsel to handle notices and warrants
Implementing proper recordkeeping procedures
Minimizing operational disruptions during an audit
Without a plan, these tasks can take weeks or months to complete. In most cases, the process requires the cooperation of multiple departments and may require hiring expensive outside consultants. An IERP can save time and money by incorporating all of these elements into a single structured plan. Instead of thousands in consulting fees or tens of thousands in penalties, IERPs typically cost less than $1000 and take only a few hours to complete.
Having a plan in place may also reduce fines if violations do occur. ICE lists several factors that can increase or decrease fines, including whether a company is acting in good faith or has a history of past violations. Companies with an IERP can show they are making proactive efforts to stay compliant, which could result in lower fines. Having a plan can also influence how immigration enforcement agencies handle their audits. If a company shows they are doing everything in their power to comply, they may face less scrutiny and a more straightforward audit process.
Takeaway
As federal I-9 audits increase and become a tangible threat to businesses, preparation is key. The foundation of this preparation is the proper handling of I-9 forms, which verify an employee's ability to legally work in the U.S. An I-9 audit will check whether these forms are present, accurate, and up-to-date. If they aren’t, your business may be subject to significant penalties, legal issues, and a variety of other consequences.
To avoid this, it can be helpful to conduct regular internal I-9 audits and set up an Immigration Enforcement Response Plan (IERP). These proactive measures can simplify immigration compliance and protect businesses from legal and financial repercussions.