Just how much money did Immigration and Customs Enforcement (ICE) fine US companies last year? While we don’t have an exact number confirmed by the government, we do know the fine amounts skyrocketed to over $10 million according to data released by ICE in response to a request from the Associated Press. What’s more important is the fact that ICE issued over 3,000 Notices of Inspection (NOI) in FY 2012. An NOI initiates a government administrative inspection of a company’s Form I-9s. NOIs are considered administrative tools which are used to assist in criminal investigations. We also know that 238 company managers were arrested last year in light of these investigations. Under the Obama administration, civil administrative audits are just one of many tools ICE is using to reduce the demand for unauthorized unemployment and protect opportunities for U.S. workers. This enforcement strategy also includes the expanded use of civil penalties, employer audits, and debarment. While ICE has told stakeholders it no longer tracks the conclusion of an investigation or whether a matter is being pursued before the Office of the Chief Administrative Hearing Officer (OCAHO), we know the Agency does track how many Notices of Inspection (NOIs), Notices of Fines, Final Orders, and Debarments it issues. The scope of this Alert does not cover debarments for federal contractors, but it should be noted that ICE has rapidly expanded the program and continues to refine the suspension and debarment process.

With comprehensive immigration reform on the horizon and President Obama’s proposal calling for “cracking down on employers hiring undocumented workers,” we can expect at least another 3,000 audits in 2013 (bets anyone?). ICE is fairly predictable and consistent in its approach to worksite enforcement. In fact, it is likely we will see the first round of audits by mid-March. While the days of “worksite enforcement actions” (AKA raids) are gone, there are many in the government that still agree with the words of Julie Myers Wood, a current proponent for comprehensive immigration reform and former Department of Homeland Security Assistant Secretary for ICE who said, “We want to send the message that your cost of business just went up because you risk your livelihood, your corporate reputation and your personal freedom." Wood was also quoted as saying that ICE was prosecuting "individuals who have profited from hiring illegal aliens...we’re going after their houses, their Mercedes and any money that they have, as well."

For certain, NOIs and administrative audits are something every employer needs to take very seriously. These inspections are clearly serving as examples and being used as deterrents. Again, as immigration reform heats up and the Administration focuses on effectuating a new policy, the fines are likely to increase and enforcement efforts will be stepped up. The inequities that plague the worksite program in terms of how some employers are treated verses other employers will likely be addressed during the reform process. We can also expect that once reform is effectuated there will be serious consequences embedded in the legislation, not only for employers, but also for employees that work without authorization. That said, in order toemployers to the government, and provide employers with adequate tools and discernible guidance to determine who is authorized to work and who is not.

In the meantime, the fine amounts listed below, coupled with ensuing bad P.R., legal expenses and other drains on a company involved in a worksite investigation should be high enough to catch the attention of “mom & pop” employers and the Board of Directors of public companies alike.

Specifics from four states

In numbers that were just released today, February 5th, ICE noted it fined 10 businesses in San Diego and Imperial counties more than $173,800 for hiring “unlawful” employees. In addition to listing the names of the businesses and the amounts fined the agency noted in a news release, "In fiscal year 2012, HSI conducted 151 worksite audits in San Diego and Imperial counties, compared to 86 audits the previous year and 63 audits in fiscal year 2010.”

In Massachusetts, ICE issued a total of thirty-five NOIs and ultimately fined seventeen employers for a total of $349,620. The fines hit Northern Pelagic Group (NORPEL) particularly hard with the highest amount fined in Massachusetts, $151,200. Special agent in charge (SAC) of Homeland Security Investigations (HSI) Boston Bruce M. Foucart disclosed that ICE’s investigation of NORPEL discovered 351 suspect documents, which according to Foucart “for the most part…means the employee[s] [were] illegal.”

Companies in Connecticut were fined a total of $132,584. Out of the eighteen inspections ICE conducted, ICE issued twelve fines to Connecticut companies ranging from $45,000 to $1,386. Calabro Cheese Corporation of East Haven received the highest fine of $45,000. Foucart, who has jurisdiction over this area as well, announced that the company had a “significant amount” of workers with suspect documents, along with “supporting documents that were not real or were from someone else.” Calabro’s general manager Rich Kaminski noted that ICE “led all of the people who were illegal out of [the company] on the same day.”

Rounding third on the list of fines was Maine with a grand total of $78,967. Out of the twenty-two inspections ICE conducted, eight resulted in fines ranging from $13,900 to $1,777. While substantial, these numbers represent a significant drop from ICE’s total fines of $150,000 for only six Maine companies in 2011. SAC Foucart of Boston who oversees HSI throughout New England noted that these settlements will “serve as a reminder to employers that HSI will continue to hold them accountable for hiring and maintaining a legal and compliant workforce.” Foucart expanded that employers should “take the employment verification process seriously” because ICE is expanding the number of audits it is conducting each year, focusing on employers that are “knowingly employing illegal workers.” According to Foucart, ICE will continue to target specific industries and businesses known or alleged to hire illegal workers. ICE has continued its trend of ramping up worksite enforcement efforts in the criminal arenas, as well. Last October, three individuals were arrested for unlawful employment and for conspiracy to induce illegal aliens to reside in the United States. The indictment alleges that the three owners of the Bamboo Village restaurant in Rosenberg, Texas, hired employees without completing Form I-9s or viewing identification and work authorization documents. If convicted of the conspiracy charge, the owners could face up to ten years in prison and a $250,000 fine.

In September, Micro Solutions Enterprises (MSE) and its owner both pled guilty to criminal charges resulting from a HSI investigation in 2007. As part of its plea bargain, MSE pled guiltyto one misdemeanor count of continuing to employ unauthorized workers, admitted to hiring fifty-five unauthorized workers and continuing to employ them, will pay $267,000 in civil and criminal fines, and is on a three-year probation term with implementation of “stringent measures” to ensure it is complying with hiring laws. MSE’s owner pled guilty to one felony count of false representation of a Social Security number and faces up to five years in prison and up to a $250,000 fine.

There is good news to add in at this point. A review of recent OCAHO decisions, illustrates that for the majority of those employers challenging the fine assessments ICE in 2012, the court reduced the amounts of the fines/penalties sought by the government.

The Takeaway

What is the bottom line? Take NOIs seriously. Consider while some companies get lucky with new/inexperienced auditors and agents who may not have the time or interest to pursue an investigation, other special agents remain aggressive. Also consider that in many instances neither ICE nor the U.S. Attorney’s office will forgive companies who they consider to be “willfully blind”. Ignoring a “problematic” work force, identity theft issues, and error-ridden Form I-9s can lead to the knowing hiring or continued employment of unauthorized workers. At the same time, if you have received a fine notice from ICE after trying to negotiate a reasonable settlement, don’t rule out a hearing before OCAHO, if the economics warrant, and the company has the appetite to challenge the fine assessment.

The message remains the same: Be proactive; review your Form I-9-related compliance; conduct internal audits supervised by experienced counsel and act on the results; do not ignore unconventional Social Security no-match notifications (such as unemployment claims of employees not working at your company) and potential identity theft issues; provide ongoing training to those individuals completing Form I-9s; seriously consider the use of E-Verify, and finally, above all else, institute a written compliance plan and establish workable policies.