Electronic Form I-9 Process: Signatures and Storage

In the wake of the government’s crackdown on worksite enforcement, companies are looking to technology to be proactive in showing their compliance of employing a lawful workforce.

Now technology has been developed for the I-9 process, in an electronic form of storage, as a way of helping some companies keep track of the required I-9 form, which is the form required for employers to document for all employees, both identity and work authorization, since 1986 under the Immigration Reform and Control Act.

Several recent changes in the immigration world have caught the attention of U.S. employers nationwide.

• An unprecedented number of immigration laws regarding employment have affected states nationwide. In the first quarter of this year, at least 1,106 immigration-related bills have been introduced in forty-four states, according to the April 24, 2008, report by the National Conference of State Legislatures.  Around 198 immigration bills were introduced related to law enforcement, followed by 192 identification and driver’s license bills, and 179 employment bills.
• A new Employment Eligibility Verification Form (I-9) became effective December 26, 2007, which is required for all new-hires. The list of documents have changed to meet the eligibility requirements for work authorization and identity for I-9 compliance. Some documents have been deleted and keeping up with these changes and training their human resources departments and hiring staff is a challenge for companies.
• Increased Immigration and Customs Enforcement (ICE) worksite enforcement and investigation in 2006 and 2007 have branded a new look of enforcement and punishment resulting in increased criminal investigations since ICE was established in 2003. In 2007, ICE worksite raids resulted in 4,000 arrests, the highest number ever, and fines and judgments of $30 million against employers and 850 criminal arrests involving business owners, managers and human resources. The top three industries for violations were manufacturing, construction and the meat industry.

In response, some employers are looking to increase emphasis in record-keeping and retention of immigration documents.

Employment verification violations, whether intentional or not, range from issues regarding incomplete I-9s, incorrect retention or failure to make forms available for inspection which can result in civil penalties and fines from $100 to $1,100 for each individual violation. For knowingly hiring or continued employment of an unauthorized worker, penalties range from $250 to $11,000 per violation. For advanced “pattern or practice” violations of knowingly hiring or continued employment of unauthorized workers, criminal penalties can escalate to as much as $3000 per unauthorized worker and/or six months of prison.

Five factors are considered in evaluating the penalized:

1. The size of the business
2. The employer’s good faith
3. The violation’s seriousness
4. If the employee is unauthorized
5. History of the employer’s violations.

The use of an internal I-9 auditing program can support a good faith defense against sanctions unless the government can show an employer had knowledge of an employee’s unauthorized status.

When used as one method to develop a company’s immigration compliance program, the electronic form I-9 process can be a key system to reduce costs, improve efficiency and show good faith efforts to employ a legal workforce. More companies are turning to an electronic form I-9 process, including retention and electronic signatures.

Congress passed a law in October 2004 to allow employers to use electronic signature technology and retention for the I-9. Although it became effective in April 2005, actual guidance was provided June 16, 2006, with standards based on IRS standards for electronic recordkeeping to satisfy ICE standards.

Electronic Retention Systems

Programs that use electronic I-9 storage have strict standards including access, protection of data and quick access to documentation records.  Scanning forms into PDF format will not be sufficient to satisfy the high standards of electronic retention systems. Such standards include the following requirements:

Electronic Signatures- Under 8 C.F.R 274a.2(e), any employer who stores I-9 forms electronically or any employer who applies an electronic signature to the I-9, must demonstrate that the electronic signature can be authenticated. 

Storage of Electronic I-9 Forms- Any employer who stores I-9 forms electronically must establish eligibility verification procedure, security controls, inspection requirements and quality assurance documentation:

• Integrity, accuracy, reliability controls- The electronic I-9 system must have reasonable controls designed to ensure the integrity, accuracy and reliability of the electronic generation or storage system. The system must not alter the employment eligibility procedure or change the I-9 name, content, data elements or instructions.
• Prevention of unauthorized or accidental use- The electronic I-9  system must have reasonable controls designed to prevent and detect the unauthorized or accidental creation of, addition to, alteration of, deletion of or deterioration of an electronically completed or stored I-9. The rule requires employees using the system undergo training to minimize the risk of unauthorized or accidental creation, alteration or deletion of record information. An audit trail must show a record of access to each record to show the time and type of action performed.
• Quality assurance checks- The electronic I-9 system must include an inspection and quality assurance program evidenced by regular evaluations of the electronic generation or storage system, including periodic checks of the electronically stored I-9. It must have a backup and recovery program.

Indexing and search requirements- The electronic I-9 system must facilitate searches of the database and inspection of I-9s by the government agencies. In the case of electronically retained I-9 forms, a retrieval system that includes an indexing system that permits searches by any data element.

In addition,  all documents reproduced by the electronic retention system must exhibit a high degree of legibility and readability when displayed on electronically or in hard-copy format, when printed on paper, microfilm or microfiche.

One possible negative drawback of an electronic I-9 system that companies may need to consider is that the government will be able to review their I-9s and may ask for documents, such as an I-9 audit, as they are currently able to subpoena to compel production of any documentation. The access to a company’s I-9s will be facilitated by the electronic search capabilities.

However, this is becoming a reality for companies, since recent policy statements from the Department of Justice and the Department of Homeland Security indicates an expectation that American businesses will work together with the government to curb illegal immigration or face severe sanctions. 

The Pros and Cons of an Electronic I-9  Process:

Pros:

1. Reduction of errors – An advantage for employers is that an electronic process for Form I-9 Completion can minimize the possibility of errors. The use of prompts can prevent the user from completing the form until acceptable responses are given. For example, only the five legal documents allowed for a U.S. citizen are prompted to the user to choose from. The system can act as a training tool for evaluating the appropriate documents for the I-9 form.
2. Cost savings of electronic storage – Storing forms I-9 electronically rather than on paper can result in less labor costs and logistical costs for companies, especially those that have locations throughout the country or high employee turnover rates.
3. Reverification/Retention – Employers can create a reliable system to re-verify an employee’s employment authorization when it is about to expire and run reports on future expirations. Retention of I-9s can be electronically more organized, since employers are required to retain the I-9 forms for each employee either for three years after the date of hire or for one year after termination, which ever is later.
4. Scanned Documents – Under IRCA, an employer may elect to retain copies of identification, work authorization documents, which if elected, must then be done on a consistent basis for all employees. An employer may scan supporting documents and retain electronically with the electronic I-9 form.
5. E-verify- As many states nationwide continue to pass laws requiring use of verification procedures, an electronic form I-9 process program can also interface with E-verify to better assist companies with retention and electronic signatures and good faith efforts for immigration compliance.

Cons:

1. Set-up costs- Initial costs of setup can be a factor for small businesses that will only choose electronic signature if they will save costs or overall burden.
2. Improves government’s ability to search- Government’s ability to search companies’ I-9 forms for audits may be easier and possibly more targeted for some companies in certain industries, with respect to DHS’ enforcement efforts.

Construction Business Owner, June 2008