Earlier this month, an Administrative Law Judge (ALJ) for OCAHO ordered Hartmann Studios, Inc., an event design and production company based in Richmond, California to pay civil money penalties totaling $605,250 based on 808 I-9 paperwork violations.  The vast majority of violations involved the company’s failure to sign section 2 of the I-9 forms.  The Conclusion noted, “OCAHO case law has emphasized that penalties should have a deterrent effect on an employer’s behavior and not merely be the cost of doing business.”

The 808 violations were broken down into five counts which included:

• Count 1: failure to prepare and/or present I-9 forms
• Count 2: failure to timely prepare and/or present I-9 forms
• Count 3: failure to ensure employees signed section 1 of the I-9 form
• Count 4: failure to properly complete section 2 of the I-9 form
• Count 5: failure to properly complete section 3 of the I-9 form

Out of 718 employees, approximately 400 were hired through the Collective Bargaining Agreement (CBA), Local 16, which Hartmann Studios identified as “on-call workers”.  As part of the on-call process, Local 16 developed a three-in-one form which was comprised of a W-4 form, part of sections 1 and 2 of the I-9 form, and a check-off authorization that allowed a portion of the individual’s wages to be deducted for union dues. Although this modified I-9 was not an acceptable substitute for the actual I-9 form, the government did not charge these as violations as failure to prepare Form I-9 and instead pursued the lesser charges in the completion of these documents. Initially the government set a baseline fine of $935 per violation noting the employer’s error rate exceeded 50%; however, this rate was later dropped to a range of $550-700 with an additional $200 for each unauthorized alien.

This case is a critical reminder that employers should ensure their I-9 records are prepared and maintained properly. In addition, the employer should understand how to maintain I-9 records for those individuals who may be employed on a project, intermittent basis.  Finally, employers should ensure that regular self-audits of their I-9 records are conducted and those company representatives who are responsible for the I-9 process receive I-9 training on an ongoing basis.