I-9 Noncompliance Horror Story: $6M Risk for Fairfax Co., VA Schools

Here’s another I-9 compliance “horror story” about an employer who actually has been utilizing an electronic I-9 software solution since 2006. (As an aside, I-9 software is a great answer to the I-9 compliance equation…..assuming your provider is legit – something Abercrombie recently found out the hard way, to the tune of $1M).

We like to learn from the misery of others when it comes to I-9 non-compliance. Something good must come from all the suffering. This case, involving the Fairfax County, VA public schools, exposes another danger of incorrectly implementing I-9 software. As covered by the Washington Post, an estimated 5,600 employee files were shredded by the employer in 2006.

One can only imagine what may have led this to happen……..

1) Under-trained HR personnel?

2) Lack of automated cross-checks for safety? (built into the best I-9 software solutions)

3) Over-enthusiasm about “starting fresh” with the new I-9 software?

4) Multitasking, sleep deprivation, over or under-caffeination….?

All could very well have been factors, but my money is on a misinterpretation of the principal tenet of compliant I-9 record retention, specifically:

“Once the individual’s employment ends, the employer must retain [the form I-9] for either 3 years after the date of hire, OR 1 year after the date employment ended, whichever is later.” (USCIS.gov Form I-9 instructions, page 6)

That means that all of Fairfax’s 5,600 incorrectly destroyed Forms I-9 had been completed by:

1) Employees still (then) currently employed by Fairfax County public schools, OR

2) Former employees, who (at time of shredding) were either:

    • employed for more than 3 years and separated less than 12 months from shred date, OR
    • were hired fewer than 3 years prior to separation and the 3 year period had not yet passed at time of shredding.
The form I-9 retention period has been a frequent point of confusion for employers, who often question whether they can destroy I-9s for all employees (current and former) after a period of three years.

Lesson Learned: Review Your Record Retention System

One of the key takeaways from this is how important it is to review your record retention system. The Post’s article quotes Kimberly Adams, president of the Fairfax Education Association, who says in part, “It is stunning what can be found when the microscope is applied.”

That could be said of compliance with most laws, but where I-9 audits are a factor, there is also a heightened audit environment, frightening costs, potential interference with day-to-day business operations, and the ability to spread in scope across locations, jurisdictions, and even agencies (see Chipotle’s new SEC investigation following their ICE audit). That’s why its critical for employers to conduct self-audits – just as the Fairfax schools did – in order to uncover such problems and correct whatever they can in order to mitigate their financial exposure.

It seems the Fairfax schools have been able to get new I-9 forms completed for about 3,800 of the 5,600 destroyed forms. Even so, that doesn’t mean they aren’t potentially liable for each violation. Immigration and Customs Enforcement, ICE, has not decided if they will charge Fairfax schools and only learned of the violations through the Post, but with fines -per form- ranging from $110 to $1,000, Fairfax faces a potential fine of anywhere between $600,000 to over $6 million dollars.

It’s interesting to note that while (according to the Post) Fairfax school district officials have apologized to their employees (and have employed an upgraded I-9 software solution to manage sensitive I-9 records since 2006), the elephant in the room is how a potential ICE fine of up to $6 million dollars in a public school system would ultimately be carried by local taxpayers. Perhaps the district officials should have been apologizing to all of them…. I’ll be curious to see how ICE handles this one.

Next Steps for I-9 Compliance

With all of the daily responsibilities on an HR professional’s plate, it may seem impossible to make the time for an I-9 audit project. However, when it comes to I-9 record-keeping, whether you know you have a problem, think you may have a problem, are sure you don’t have a problem, or can’t speak to what your predecessor and/or other employees may have done….no matter what, you need to audit your I-9s! (If you’re in doubt of that, I encourage you to read more of our I-9 blogs).

Fired up about I-9 compliance? Get a head start on your self-audit with ETS’ recently-updated comprehensive guide to I-9 and E-Verify, including checklists and tips for getting started. (If you’d rather speak directly with one of our I-9 compliance professionals, you can do so by contacting us here).

Emptech Essential Guide to I-9 Compliance for Employers

Disclaimer: This article is general in nature and is not intended to replace the guidance of an employment tax expert and/or legal professional with regards to an appropriate course of action in your particular circumstances. Please consult with a professional for appropriate advice in your case. Pursuant to IRS “Circular 230” rules, any information included herewithin is not intended or written to be used for the purpose of avoiding penalties under the federal Internal Revenue Code.

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