In United States v. Stanford Sign & Awning, Inc., 10 OCAHO No. 1152 (2012), the Office of the  Chief Administrative Hearing Officer (OCAHO) reduced a small construction company’s fine from $12,523.50 to $9600 for 18 violations.  

ICE established Stanford failed to ensure that 17 employees properly completed section 1, and/or failed itself to properly complete sections 2 or 3 of the I-9 form plus committed one additional violation. ICE found the percentage of violations was 37%; thus, the base fine was $605.00 per violation. ICE aggravated the proposed penalties by a total of 15% - 5% based on lack of good faith, 5% for the seriousness of the violations, and 5% for the involvement of unauthorized aliens. Thus, ICE sought approximately $696 per violation for each of the 18 violations for a total of $12,523.50. 

In support of its assertion that Stanford did not act in good faith, ICE said Stanford failed to follow directions on making corrections to technical errors found on 25 of its I-9 forms. However, it is well established that paperwork violations standing alone are insufficient to support a finding of lack of good faith; thus, a poor rate of compliance is not in itself necessarily evidence of bad faith.

With respect to seriousness, ICE asserted two points - “the percentage of violations is extremely high", and the failure to present an I-9 form is always a serious violation. OCAHO stated only one of the violations involved a failure to prepare an I-9. Any aggravation of a penalty for the seriousness of other violations must be based on the seriousness of the specific violation reflected on the particular individual’s I-9.

As to the involvement of unauthorized aliens, ICE said there were three employees without proper
documentation in December 2010 and after a Letter of Suspect Documents was issued, two of them were terminated. ICE enhanced the fine by 5% based only upon the hiring of two unauthorized aliens.  OCAHO found, “Absent any allegation or evidence that Stanford had knowledge that the
two individuals ICE identified were unauthorized for employment, the company’s state of mind could hardly have been affected one way or another by the presence of these individuals in the workforce.”

OCAHO held: “The seriousness factor is, moreover, best evaluated on a continuum because not all
violations are necessarily equally serious. OCAHO case law has acknowledged that while failure to enter either a List A or a List C document showing employment authorization in section 2 is serious, it is not as serious a violation as is an employer’s failure to complete an I-9 at all or to sign the attestation in section 2.”

OCAHO disagreed with ICE’s argument that an overall enhancement based on seriousness is warranted because the percentage of violations, 37%, is “extremely high.”  OCAHO stated, “The template for the initial assessment provides an escalating scale of base penalties as the percentage of violations itself increases. Because the percentage of violations was the sole criterion used to determine the baseline fine, it ought not to be used again as an aggravating factor.”

Thus, OCAHO found enhancement based on the seriousness of the violation was appropriate for six violations - failing to prepare one I-9, for backdating two I-9 forms, and for Stanford’s failure to sign the attestation in section 2 on three employees’ I-9s. OCAHO determined these violations should be calculated at $600 each while the remaining 12 violations should be calculated at $500 each.

Although Stanford successfully reduced the proposed fine by 25%, the cost in attorney's fees surely was well beyond the savings in the fine. Thus, many times employers need to keep the overall cost in mind when deciding whether to litigate a case before OCAHO.