Are You Ready to File I-9 Electronically?

Truths and myths revealed.

April 17, 2008
by Sukanya Mitra

Wouldn't it be great if you could go paperless with I-9 verifications? No more paperwork. No missing files. Just a matter of clicking the "Send" button and that's it! Well, guess what? I-9 e-verifications are now a reality. Are you up to speed?

The Immigration & Nationality Law of 1986 governs the Form I-9 verification process. As most recruiters and HR managers already know, Form I-9 verification is usually conducted during the new hire orientation and in many firms during the "onboarding" process. The law basically stipulates that U.S. employees cannot hire or continue to employ persons who are unauthorized to work in the U.S. If your company unintentionally or unwittingly hires unauthorized workers, your firm is liable for the same judgments as if it had conducted fraud. The rules governing the I-9 e-verification process, the use of designated agents and the latest developments in the process was the subject of discussion at a recent hr.com Webcast presented by Hudson Tree, Director of Talent Management Platforms at Sacramento, Calif.-based Abso.

Frauds and Penalties

Penalties for improper completion of forms can range from $250 to $3,000 depending on the type of "fraud" committed. Here's the breakdown:

  • For improperly completing Form I-9, retaining it or making it available for inspection, the fine ranges from $100 to $1,100 for each I-9.
  • For knowingly hiring or continuing to employ unauthorized workers, the fine ranges from $250 up to a whopping $11,000 per violation.
  • For firms who show a set pattern of hiring unauthorized personnel, the companies are liable for criminal penalties of as much as $3,000 per employee and may be subject to six months in prison. Depending on the state in which firms are operating, this penalty can also include the suspension of license to practice within the state.

E-Verification Process Overview

Established in 1987, originally known as the Basic Pilot/Employment Verification Program, E-Verify is an Internet-based program that is overseen by the Department of Homeland Security (DHS). It is now partnered with the Social Security Administration and it's the body through which eligibility of newly-hired employees are verified. While this process is voluntary for employers in most states, there are some states that partially require conducting the verification process. As of January 2008, these states include all practicing businesses in the state of Arizona; state contractors and government organizations in Colorado, Georgia, Minnesota, North Carolina and Oklahoma; and local government organizations in Mission Viejo, California. In Tennessee, while e-verifications are not mandated, should an employer use the e-verification program and have received an approval and later through an audit, the employee is designated as unauthorized, the employer is not penalized.

According to a poll of Webcast participants, more than three out of four (86.4%) are still using the paper formula, while only 10 percent are currently using the e-verification format. However, according to a 2008 U.S. Citizenship and Immigration Services (USCIS) fact sheet, as of February 2008 more than 52,000 employers currently use the e-verify program and the DHS has over 100 million records in their database. Of those 100 million, 93 percent of employer's queries are instantly verified as "work authorized." Tree noted that the remaining seven percent did not make up unauthorized workers, but in fact were mostly made up of data entry errors or name discrepancies, such as employees who applied for a job under their maiden name and filled out the I-9 form using their married name. Tree emphasized that it is worth double-checking application forms against I-9s before electronic submissions.

"Something to note about the electronic process is that both the employer and the employee completes the I-9 verification process online," said Tree. "They also sign with an electronic signature," he added. This file is then stored in an electronic storage system, which Tree noted many firms are doing currently on their own as well.

Using Designated Agents

There are various methods by which employers can use the e-verification process. Employers can choose designated agents to conduct the process for them. In such cases, the designated agents have their own software applications and "often those agents support many types of business models, but of course the main ones are electronic and the paper process," said Tree. "An employer can also choose a government sponsor and use the interface that they built accordingly," Tree added.

Why Use E-Verification Process?

The main and most obvious reason to use the electronic process is to receive instant verifications of eligibility of new employees. Tree also pointed out that through the electronic verification process, all your I-9 forms are electronically archived providing easier retrieval of the records whenever necessary. And, finally, it "demonstrates best efforts towards compliance with employment eligibility verification requirements," pointed out Tree.

E-Verification Program Participation Rules

There are several rules that must be followed in order for a firm to be properly compliant. These include the following:

  1. Rule #1: The employee must be newly hired, i.e., the employee must have "accepted" the position and Form I-9 must be completed before the employer initiates the verification inquiry.
  2. Rule #2: Employers are required to complete the verification query within three days of the new employee's start date. This rule remains the same whether you conduct the verification process via paper or electronically.
  3. Rule #3: Employers are not allowed to use the e-verify process for pre-screened applicants. The DHS only allows employers to use this process after an individual has been offered and has accepted a position.
  4. Rule #4: Employers can only verify employees who have been hired after the Memorandum of Understanding (MOU) has been executed. MOU is a document that has been generated by the Department of Homeland Security in conjunction with the e-verify program that all designated agents or even if you work directly with DHS, must sign an agreement adhering to the policies of the e-verification process. Tree pointed out that the "key here is that you cannot use this as an audit tool and cannot use the e-verification tool for their existing workforce."
  5. Rule #5: Employers cannot selectively use the e-verification process. "Once you have run one employee through the e-verification process, you must run all subsequent new hires through the e-verification process," said Tree, until you choose to inactivate your e-verification account altogether or choose to withdraw from the program completely. DHS applies this by site. Tree explained that it is possible for a subsidiary or a branch of a parent company to use the site and not the parent company itself and thus when the e-verification is sent out by the DHS, it will be sent to the site of that organization that is using the procedure and not necessarily the entire organization.
  6. Rule #6: Employers cannot use E-Verify to re-validate employment, i.e., if your firm has already verified John Doe as an eligible and authorized worker, six months later, you cannot check his file and re-validate his eligibility. The only exception to this rule is when an employee has been officially terminated and then re-hired at a later date and is treated as a new hire.
  7. Rule #7: This is somewhat new in that employers are allowed to only accept List B identity documents that contain a photograph. This is only valid for e-verifiers. The paper format stipulates that employers cannot specify what documents new hires use for employment eligibility.
  8. Rule #8: Employers are disallowed to change a job status based on a response received via e-verification. Employers must allow employees the opportunity to provide additional documentation. Should either the Social Security Administration (SSA) or the DHS provide employers with a "Tentative Nonconfirmation," which usually happens when there are name discrepancies (maiden vs. married), the employer must give the employee sufficient time to come up with the additional documentation that match up. Employers are not allowed to terminate employees while a case is being resolved.

So why e-verify? The electronic process gives you instant verification even though the SSA requests you allow 48 hours. Tree says oftentimes you don't need to refresh your computer and you already have verification. It's that quick. There is also the automated system, so you can check on the status of all the I-9s you have submitted electronically. Should an audit take place, you can go to the archived system and pull any files needed.

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Sukanya Mitra is Managing Editor of the AICPA Insider™ e-newsletter group.