Staffing company’s $226K fine for not properly reviewing I-9 Forms vacated
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Monday, August 15, 2016

Staffing company’s $226K fine for not properly reviewing I-9 Forms vacated

By Kathleen Kapusta, J.D. Because corporate attestation was permissible under the applicable I-9 Form at issue, a staffing company did not violate the Immigration and Nationality Act when one corporate representative in Texas examined original documents in the presence of a hired employee and another corporate representative in Minnesota inspected photocopies of those documents and completed Section 2 of the I-9 Form, the Fifth Circuit ruled. Granting the company’s petition for review, the appeals court vacated in large part an administrative law judge’s order imposing a $226,270 fine for its failure to properly review the employment verification forms for 242 employees (Employer Solutions Staffing Group II, LLC, August 11, 2016, Southwick, L.). Employer Solutions Staffing Group (ESSG) agreed to provide staff for Larsen Manufacturing’s El Paso, Texas, facility and subcontracted with Flexicorps to hire the employees. Flexicorps employees completed part of the I-9 Form for each employee hired, examined the employees’ original identifying documents, and ensured the hired employees completed Section I of the I-9 Form. Flexicorps then sent color photocopies of the original documents along with the I-9 Form to ESSG in Minnesota where ESSG employees would inspect the photocopies and complete Section 2 of the I-9 Form, which required a description of the identifying documents and a signed attestation that the employer examined the documents and believed them to be genuine. ALJ decision. Asserting that ESSG failed to ensure that 242 employees completed properly Section 1 or failed to complete properly Section 2 of the Form, Immigration and Customs Enforcement accused it of violating INA and ordered it to pay fines totally $237,162. After a hearing, an ALJ found that ESSG failed to properly complete Section 2 because the ESSG employee who signed the I-9 Form did not examine the original employee documents personally and in the presence of that newly hired employee. Finding that the Form’s attestation was false, the ALJ fined ESSG $226,270. What type of attestation? The issue on appeal was whether the INA’s verification procedures require personal, not corporate, attestation. Observing that the question was whether the person who signs the Section 2 attestation must also have examined the original documents in the presence of the employee or whether the tasks may properly be performed by different people, the appeals court turned first to the language of the INA, which provides that a "person or entity must attest . . . on a form [established by the appropriate agency] by regulation, that it has verified that the individual is not an unauthorized alien by examining" employee documents. Noting that the Department of Homeland Security conceded that the INA itself does not address whether the attester must be the same person who physically examines the documents in the presence of the hired employee, the court turned to the relevant regulations and prior adjudications interpreting the INA. Finding no guidance there, it examined two other sources allegedly supporting DHS’s view that corporate attestation is prohibited. First, in a Rule 28(j) letter filed days before oral argument here, DHS argued for the first time that Auer deference was owed to language appearing on the I-9 Form itself. Assuming without deciding that the I-9 Form qualifies as DHS’s interpretation of its own ambiguous regulation, the court turned to the ALJ’s decision in this action, to which DHS claimed the court owed Chevron deference. Here, the court noted that because the ALJ’s decision was published and appeared to be precedential, it could warrant Chevron deference. Fair notice. Nonetheless, the court found that ESSG lacked fair notice that corporate attestation was prohibited. Turning first to the I-9 Form, the court observed that Section 2, entitled "Employer Review and Verification," stated that it was "[t]o be completed and signed by employer" and concluded with: "I attest, under penalty of perjury, that I have examined the document(s) presented . . . and that to the best of my knowledge the employee is authorized to work in the United States." Beneath this attestation, there was a signature block for the "Employer or Authorized Representative." Further, in the instructions to the I-9, the term "employer" was defined broadly. The Form provided minimal support for DHS’s interpretation, said the court, observing that the attestation includes language that appears personal: "I attest" and "I have examined." Yet, the court noted, if attestation by the entity is permissible, this language could be interpreted to allow the individual who attests to verify all the actions performed by the entity as a whole. Further, the court pointed out, subsequent to fining ESSG, DHS clarified the I-9 instructions to read: "The person who examines the documents must be the same person who signs Section 2." Because the Form did not fairly address whether corporate attestation was prohibited, the court turned to the ALJ’s decision, noting that the law judge suggested, without expressly holding, that corporate attestation was prohibited. However, the ALJ did not cite to any statute, regulation, or prior adjudication. "Apparently," said the court, "neither Congress nor DHS had ever declared a bar to corporate attestation prior to this enforcement action. For one person in an entity to attest to all the company did is not clearly barred." Moreover, the court reasoned, the statute and regulations suggest that corporate attestation is permitted. Observing that either a "person or entity" may attest, the court noted that an "entity" includes a company and corporate attestation would permit the company as a whole to perform the examination of original documents, in the presence of the hired employee, and the attestation, even if the same corporate representative did not perform all the required acts. Because ESSG lacked fair notice, this altered the deference owed. The I-9 Form did not clearly address corporate attestations, and the ALJ’s new interpretation did not flow clearly from any authority in existence prior to this action, said the court, finding that Auer and Chevron were inapplicable. Skidmore deference. Applying Skidmore deference, the court found that neither the I-9 Form nor the ALJ’s opinion provided support for DHS’s view that corporate attestation was prohibited. The I-9 Form was essentially silent on the issue and the ALJ’s interpretation, while not silent, was unpersuasive. Although the ALJ’s conclusion may have been logical, it did not exhibit the "hallmarks of thorough consideration," said the court. Likewise, the ALJ’s "novel" interpretation had not been subject to public comment, addressed an issue the agency had never previously explicitly addressed, and relied strictly on common sense rather than any legal authority. Textual interpretation. Noting that ESSG did not deny that an in-person examination had to be conducted but simply argued that its Minnesota employee could properly rely on the report of the in-person examination conducted by its Texas representative, the court concluded that the most reasonable interpretation permitted corporate attestation. "The most basic reason is that the statute permits entity attestation, and nothing in the materials which ESSG had to consider prior to this enforcement action fairly informed the company its procedures were invalid," the court reasoned, holding that under the I-9 Form applicable here, corporate attestation was permissible. The court stressed, however, that its holding did not address whether DHS can lawfully prohibit corporate attestation or whether the precedential decision the ALJ entered in this case could be the support for any subsequent enforcement actions. Finally, it agreed that deciding the proper manner of attestation is a matter for the agency’s discretion within the limits of the statute. "We are simply holding that even if it is proper for DHS to prohibit corporate attestation, neither the applicable I-9 Form nor any other authoritative source clearly so stated prior to the ALJ’s decision in this case," it explained.

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