I-9s Made Easy: New electronic completion and storage options save time and headaches

By Jennifer Arnold, October 2006
[From the SHRM Online HR Technology Focus Area]

It’s not often that a government regulation makes your job easier. But according to experts, Public Law 108-390, which allows businesses to complete, sign and store I-9 forms electronically, does just that.

These Department of Homeland Security (DHS) forms, intended to verify new hires’ eligibility to work in the United States, have been an administrative and storage nightmare for many employers since they were mandated in 1986. It’s easy to see why: immigration documentation laws are complex and ever-changing; retention rules mandate that employers keep completed I-9s for as long as three years, and fines for violations run as high as $1,100 per flawed or missing form.

Thanks to the 2005 law and a new interim rule issued by DHS in June 2006, employers can use technology to address some or all of these issues.

Electronic storage can alleviate storage challenges and allow for quick retrieval.

Employers can scan completed paper I-9s and store them as PDF files on their company server.

Acceptance of electronic signature technology allows the process to become entirely paperless. Now, new hires and the verifying staff member can “sign” their portion of the I-9 by electronic means. Options include electronic signature pads, biometrics, “click to accept” dialog boxes, and entry of personal identification numbers and/or passwords.

As the interim rule states, there is no single U.S. government-wide electronic recordkeeping standard. Instead, the rule tells employers to use electronic storage and signature technologies that are compliant with the Internal Revenue Service’s (IRS) electronic recordkeeping standards for taxpayers (outlined in IRS Rev. Proc. 97-22 and Rev. Proc. 98-25).

Most employers probably won’t need new equipment to take advantage of these new I-9 options. All that is required for electronic storage is a scanner, a PC with Adobe Acrobat and minimal server space (each completed I-9 PDF takes up less than 2 MB of RAM). Soon, electronic signature capability will be available for free: DHS says it is developing an I-9 PDF with electronic signature capability that will be available free online at www.uscis.gov/graphics/formsfee/forms/index.htm.

But some companies are choosing to take it one step further, contracting with an application service provider (ASP) to obtain a comprehensive web-based I-9 management system. Employers say these systems, offered by a small number of vendors, build on the new regulations.

In addition to electronic storage and signature capabilities, I-9 management systems have built-in edits that reduce errors. For example, drop-down menu box selections are based on previous choices: If the box for “U.S. Citizen” is checked in Section 1, the document list in Section 2 will show only applicable documents.

Experienced HR professionals say these edits make a big difference, particularly in multi-location environments. Diana Peirano, director of administration for Western Golf Properties, a Lake Forest, Calif.-based golf management firm, says her firm's paper-based I-9 system was hard to control. The company has nearly 1,000 employees scattered among 15 properties around the country.

“Consistency was really hard to achieve,” says Peirano.

In May 2005, Western began using a web-based system provided by Newport Beach, Calif.-based ASP Form I-9 Compliance. “[The system] is self-correcting,” says Peirano. “It will point out where you missed documentation or make sure you’re not over-documenting.”

I-9 systems can be stand-alone, or they can be incorporated into a larger system for new hires. At ATMI, a San Jose, Calif., semiconductor materials supplier, management chose to incorporate electronic I-9 processing into its new web-based onboarding site, provided by Hunt Valley, Md.-based ASP RealLife HR.

“There were all sorts of issues: How do we make sure [the I-9 is] collected and accurate? How do we know where it is, particularly if an employee is transferred to another location? We don’t have an internal audit team, and the expense of hiring an outside one is prohibitive,” says Laura McKay, PHR, former compensation and benefits analyst at ATMI and leader of implementation team for the new system. Now, I-9s can be transferred from one location to another with a few clicks, and built-in reporting and auditing features make tracking easy.

These applications can help employers track the expiration of non-citizen documentation. At Plano, Texas-based industrial waste management services provider Safety-Kleen, a “significant portion” of the company’s 4,500 employees are non-citizens, according to senior director of HR Christian Camp. That reality, coupled with the company’s 200-plus locations across the country, made expired documentation a major administrative challenge. In January 2005, Safety-Kleen began using a web-based system provided by West Covina, Calif.-based i9check. Now, the system administrator receives e-mail alerts listing documents set to expire in 30, 60 and 90 days.

“The follow-up on expired documents is one of the biggest advantages,” says Camp.

Vendors offer a variety of pricing models, with sliding scales based on the size of the company. On a transaction basis, the service may cost roughly $13 per I-9; an annual flat fee may run close to $1,000 or more. Vendors and experienced employers say employers can realize a net savings over the labor hours, paper and storage costs required by a paper-based system.

“Sure, it’s a monthly bill we didn’t used to pay,” says Regina Partain, SPHR, president of Innovative Staffing Solutions LLC, a Perryton, Texas-based staffing company that places 500 people per year. “But when you look at risks associated with [I-9 compliance], to me it’s a no-brainer.” In March 2006, Innovative began using Form I-9 Compliance’s system.

Although not addressed in the new regulations, electronic I-9 management systems are linked with another growing trend: automatic verification of new hire documentation through the federal government’s Employment Verification Pilot Program, commonly known as Basic Pilot. This free program, now available to employers in all 50 states and the District of Columbia, allows employers to verify the validity of a new hire’s documentation immediately against the DHS and Social Security Administration (SSA) databases.

Employers can choose to use Basic Pilot on their own at no charge; after registering at www.vis-dhs.com/EmployerRegistration, users are guided through a web-based tutorial and then given access instructions. The only prerequisites are an Internet-enabled PC with Internet Explorer 5.5 or Netscape 4.7 or higher. However, the Basic Pilot program has been controversial, in part because of its relatively high error rate.

Some ASPs are registered with the federal government as “designated agents,” meaning that they can build a seamless Basic Pilot interface into their I-9 systems. Western Golf Properties, Innovative Staffing Solutions and Safety-Kleen all use a Basic Pilot interface in their systems. Experts expect that the Basic Pilot interface will soon become a required step in the employment verification process; recent proposed immigration legislation in the House and the Senate included automatic interface provisions.

In addition, experts predict increased enforcement of basic I-9 regulations in the years to come. New technology tools can help employers tighten their control of the I-9 process. “We know that the world is tightening; we know that we will be audited at some point,” says Partain. “It helps me sleep at night knowing that no one is falling through the cracks.”

Jennifer Arnold is a Baltimore, Md.-based technology writer.

Prepare Now for Stepped-Up Immigration Enforcement

By Elise A. Healy, Texas Lawyer
October 23, 2006

For the past 20 years, government investigations of immigration compliance in the nation's workplaces were relatively rare, and fines for noncompliance were low. Say goodbye to all that.

The U.S. Department of Homeland Security last November announced the Secure Border Initiative, which it vows will include a robust worksite enforcement element. From October 2005 to May 2006, Immigration & Customs Enforcement (ICE), part of DHS, conducted 592 on-site investigations of workplaces and 219 criminal investigations of employers, according to a June 16 ICE fact sheet. As a result, the government has indicted employers on criminal felony charges, including money laundering, fraud and harboring and transporting unauthorized aliens, and also is threatening forfeiture of company assets and fines in the tens of millions on serial offenders that it dubs "egregious employers."

Corporate counsel should plan now for how their organizations will respond to these developments to avoid such negative scrutiny. Three crucial elements of their response should be:


ensuring full compliance with an eventual government-mandated Employment Eligibility Verification Service (EEVS);


taking steps to address Social Security mismatch letters and avoid the egregious-employer stigma; and


considering participation in the new ICE Mutual Agreement Between Government and Employers (IMAGE) self-policing program.

A mandatory EEVS program, which would require employers to verify Social Security numbers of new hires, has strong support in Congress and seems almost certain to become law in the near future. The pending House version (H.R. 4437) applies not only to employers but also to for-profit and nonprofit recruiters, temporary agencies, labor contractors, day labor sites, job search Web sites and job placement or referral organizations.

The pending House bill would require organizations to verify Social Security numbers of new hires beginning two years after the bill's enactment. Three years after enactment, verification of all current employees will become mandatory for all federal, state and local government employees, and all workers on military bases, nuclear energy sites, weapons sites, airports and other critical infrastructure. Six years after enactment, EEVS will be mandatory for all employees nationwide.

The voluntary EEVS available today is known as Basic Pilot, and it is an Internet-based system used by about 10,000 employers. DHS hopes to expand this system to accommodate all 7 million U.S. employers. About 80 percent of Basic Pilot inquiries are accurately handled within three minutes, said DHS Verification Division Chief Gerri Ratliff at an August briefing.

But the system is not perfect: In June, the Society for Human Resource Management pegged Basic Pilot's success rate at 85 percent. "False negatives" under Basic Pilot or other verification systems damage productivity and morale as new hires spend weeks untangling errors in government databases.

Mandatory EEVS will clearly affect large employers and those with high turnover the most, as they will need to hire staff to handle verification. Training on the proper use of EEVS to avoid discrimination in hiring will also add significant costs for employers. Imposter fraud will likely increase, although DHS wants to incorporate photos or other biometrics into its databases to combat it.

SAFE HARBOR

The next action item for corporate counsel involves Social Security mismatch letters and the proposed safe harbor rule.

The Social Security Administration sends mismatch letters to employers that report employee name and Social Security number combinations that do not match SSA records. Two developments in this area deserve in-house lawyers' attention.

First, employers must establish and enforce protocols for logging in mismatch letters and responding to them in a timely fashion. Following the April arrest of seven managers and more than 1,100 employees at one manufacturer, a top DHS official announced in June that her agency regards large numbers of Social Security mismatches as a sign of an "egregious violator" -- an employer that violates immigration compliance as a cost of doing business. ICE targets such employers for audits and criminal investigation. Corporate counsel should take steps now to require that managers at all locations take documented steps to respond to SSA mismatch letters.

Second, corporate counsel must be aware that ICE has proposed a safe harbor rule on SSA mismatch letters that reflects the advice DHS has been giving employers for years.

The rule requires employers to check their records for clerical mistakes within 14 days of receiving a mismatch letter to correct the error and verify the resolution with SSA. If the mistake is not in the employer's records, the employee must be told to resolve the discrepancy within 60 days. If the employee does not resolve the matter, the employer has three more days to complete new paperwork using only documents issued with a photo and not containing the questioned Social Security number, or to terminate the employment. Even if the employee turns out to be an unauthorized worker, the government will not deem employers that follow this procedure to have "constructive knowledge" of that fact.

ICE also wants to convince employers to police themselves. In July, ICE announced the "ICE Mutual Agreement Between Government and Employers" program, or IMAGE.

Employers that sign up for IMAGE agree to an ICE audit and to implement a series of best practices. These include using Basic Pilot for all hires; establishing training programs and using only trained staff to conduct verifications; engaging an outside auditor to test the integrity of the verifications system semiannually; developing protocols for handling SSA mismatch letters and avoiding discrimination; establishing a tip line for employees to report unauthorized hiring; and self-reporting violations to ICE.

The government's new immigration compliance programs targeting workplaces are not yet finished. Employers with robust audit and training programs may not want to participate in the Basic Pilot program yet; the IMAGE program could also use some polishing. Nonetheless, the government has become increasingly serious about workplace immigration enforcement, and so too should corporate counsel.

Elise A. Healy is an immigration partner in Epstein Becker Green Wickliff & Hall in Dallas. She represents employers and investors in immigration matters and is board certified in immigration law by the Texas Board of Legal Specialization.