No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe
No Result
View All Result
Corporate Compliance Insights

Homeland Security Wants to Know: How Did You Handle I-9s in an M&A?

by Michael Boshnaick
July 27, 2016
in Uncategorized
The cost of noncompliance with I9 regulations is growing

Civil monetary penalties for knowingly hiring and retaining unauthorized aliens, as well as for paperwork violations increase on August 1, 2016.

Assessing the potential liabilities and fines an acquiring company could face if it retains the I-9s of an acquired company is an important part of M&A due diligence.  However, this assessment is often overlooked and not done until after the deal closes.  As immigration attorneys, we see this firsthand, as we are often brought in after the due diligence period.

The Options

In the M&A context, an employer has two options for handling the I-9s of newly acquired employees.  The employer may treat the new employees as new hires and complete new I-9s for all of these employees, or, alternatively, the employer may elect to inherit the acquired company’s I-9s.  Of course, this means inheriting the prior employer’s potential liabilities for errors or omissions on the forms and even liabilities for continuing to employ individuals the employer knew or should have known were not authorized to work.  The immigration regulations allow the new employer to inherit acquired employees’ I-9s where the employees are continuing in their employment and have a reasonable expectation of employment at all times.[1]  The regulations further provide that employees continue in their employment with a related, successor or reorganized employer when the new employer continues to employ some or all of the previous employer’s workforce in cases involving a corporate reorganization, merger or sale of stock or assets.[2]

The Assessment

Ideally, an employer will conduct a full audit of the soon-to-be acquired company’s I-9s during the due diligence period.  Depending on the number of I-9s and other factors such as timing, a full audit may not be practicable.  In such circumstances, a partial or spot audit could still yield valuable information upon which a decision to retain or complete new I-9s could be made.

Employers should determine whether:

  • An I-9 exists for each employee
  • An inventory has been completed for all I-9s
  • Any internal I-9 audits have been recently completed
  • They will be able to have access to the I-9s prior to deal close

For predecessor companies that are registered for E-Verify, consider whether:

  • All employees hired after E-Verify registration have been successfully processed through E-Verify
  • All cases in process have been successfully resolved prior to the anticipated closure of the company’s E-Verify account
  • All E-Verify reports have been downloaded, particularly the Quick Audit Report
  • E-Verify has been notified to close the account on or about the date the deal closes

The information elicited through the above questions can help inform the decision on whether to inherit the company’s I-9s or complete new I-9s for acquired employees.  There is no one right answer, and the decision will depend on the particular facts of each M&A deal.

The Penalties

While there are criminal penalties for persons or entities engaged in a pattern or practice of hiring or continuing the employment of “unauthorized aliens,” it’s the two types of civil penalties companies should focus their attention on to assess exposure: paperwork violations and knowingly continuing to employ an individual who is not authorized to work.  Typically, in an M&A scenario, paperwork violations are the most prevalent.  Therefore, a full or partial audit of the I-9s to be acquired is essential.  However, even knowingly continuing to employ violations are possible, for example, in the situation whether the acquired company is sponsoring an employee for permanent residence and where the employee indicated on Form I-9 that he or she was a permanent resident.

The Departments of Justice and Homeland Security recently announced that they will adjust for inflation the civil monetary penalties for I-9 violations that occurred after November 2, 2015.  These new fines take effect on August 1, 2016.

Maximum fines for paperwork violations will increase from $1,100 to $2,156 per employee.  Maximum fines for knowingly hiring or continuing to employ an individual not authorized to work will increase from $3,200 to $4,313 per individual for a first offense, from $6,500 to $10,781 for a second offense, and from $16,000 to $21,563 for a third or subsequent offense.

The U.S. Department of Homeland Security’s Immigration and Customs Enforcement (ICE) is charged with enforcing the employment verification laws.  Although I-9 inspections by ICE have decreased in the last couple of years, it’s always possible that there will be an uptick in enforcement activity, as we saw in fiscal years 2011, 2012 and 2013.

Conclusion

Bring in immigration counsel early during the due diligence period to help assess potential I-9 liabilities.  Fines can quickly add up, even for paperwork violations, which include missing I-9s or mistakes on I-9 forms.  With the new increase in fines as of August 1, 2016, it’s even more important for employers to focus on I-9 liability during M&A due diligence.

[1] 8 C.F.R. § 274a.2(b)(1)(viii)

[2] 8 C.F.R. § 274a.2(b)(1)(viii)(A)(7)(ii)


Previous Post

Advancing Board Refreshment Through the Director Succession Planning Process

Next Post

Namely Launches Mid-Year Compliance Report, Announces Strategic Leadership Hires

Michael Boshnaick

Michael Boshnaick

Michael BoshnaickMichael Boshnaick, a partner with Fragomen Worldwide, partners with corporate clients to provide strategic counsel on all matters involving U.S. immigration and nationality law, as well as policy and compliance, to manage large immigration programs. He guides corporate clients on immigration aspects of mergers, acquisitions, divestitures, outsourcing and corporate restructuring, as well as I-9 employer sanctions matters.

Related Posts

parliament

Tracing Key Legal Developments in the UK’s AML Regime

by Prateek Swaika and Sagar Gupta
May 24, 2023

Prateek Swaika and Sagar Gupta of Boies Schiller Flexner discuss the regulatory framework of UK’s anti-money laundering regime and explore...

moby dick illustration

Whaling: When Business Leaders Become Cyber Weapons

by Aileen Allkins
May 24, 2023

The threat of cyber crime is nothing new for the average business. But new tools like AI mean fraudsters have...

improving compliance management systems

Regulatory and Economic Times Are Changing. Have You Re-evaluated Your Compliance Management System?

by Pamela Buckley
May 24, 2023

Financial institutions have enjoyed a fairly easygoing regulatory environment in recent years. Combined with strong economic performance, that’s meant a...

whats app signal gmail phone icons

Companies Are Cracking Down on Chat Apps, But It’s Still Too Hard to Find What They’re Looking For

by Stacey English
May 24, 2023

A hybrid communication environment has become the norm for most companies, from the use of messaging apps to communication systems....

Next Post
Namely Launches Mid-Year Compliance Report, Announces Strategic Leadership Hires

Namely Launches Mid-Year Compliance Report, Announces Strategic Leadership Hires

Compliance Job Interview Q&A

Jump to a Topic

AML Anti-Bribery Anti-Corruption Artificial Intelligence (AI) Automation Banking Board of Directors Board Risk Oversight Business Continuity Planning California Consumer Privacy Act (CCPA) Communications Management Corporate Culture COVID-19 Cryptocurrency Culture of Ethics Cybercrime Cyber Risk Data Analytics Data Breach Data Governance DOJ Download Due Diligence Enterprise Risk Management (ERM) ESG FCPA Enforcement Actions Financial Crime Financial Crimes Enforcement Network (FinCEN) GDPR HIPAA Know Your Customer (KYC) Machine Learning Monitoring RegTech Reputation Risk Risk Assessment Sanctions SEC Social Media Risk Supply Chain Technology Third Party Risk Management Tone at the Top Training Whistleblowing
No Result
View All Result

Privacy Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2022 Corporate Compliance Insights

No Result
View All Result
  • Home
  • About
    • About CCI
    • Writing for CCI
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Career Connection
  • Events
    • Calendar
    • Submit an Event
  • Library
    • Whitepapers & Reports
    • eBooks
    • CCI Press & Compliance Bookshelf
  • Podcasts
  • Videos
  • Subscribe

© 2022 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT