DHS Issues New I-9 Guidelines

The Department of Homeland Security (DHS) has authorized the use of electronic signature and storage of Form I-9 as well as proposing new guidelines for employers that receive no-match letters from the Social Security Administration (SSA). Both changes could impact pallet companies looking to update their worker eligibility verification procedures for new hires. This has become a hot topic due to increased enforcement by DHS and the IFCO raids earlier this year.  

Under the old procedures, employers were required to keep paper, microfilm or microfiche copies of the Forms I-9. The new policies allow for electronic signatures and electronic storage in common formats , such as the Portable Document Format (PDF).  Employers are now permitted to electronically scan and store existing Forms I-9 as long as certain standards are met. DHS is using the most widely applicable standards , those adopted by the Internal Revenue Service (IRS) for tax records.

Businesses will be permitted to adopt one or more of a number of different electronic recordkeeping, attestation, and retention systems that comply with IRS standards. Employers who already utilize electronic data recordkeeping as part of their accounting and tax functions may expand those functions to include the employment verification process. As long as the electronic records system remains IRS-compliant, the system will be compliant with Immigration & Customs Enforcement policies.

Many employers may experience cost savings by storing Forms I-9 electronically rather than using conventional filing and storage of paper copies or transferring the forms to microfilm or microfiche. Also, electronically stored forms are more easily searched .

For some employers, particularly small employers, retaining the paper Form I-9 may continue to be the most cost-effective and efficient storage method. This rule does not eliminate this option, change the process or discourage employers from using paper-based records.  

Another major concern that DHS has addressed is the process for reconciling data submitted to and verified by the SSA. It can be fairly common for employers to receive notification that there are errors with Social Security data provided on a particular employee. This can result from a simple clerical error, a name change, or employees presenting wrong or false information.

According to federal law, “It is unlawful for a person or other entity, after hiring an alien for employment, to continue to employ the alien in the United States knowing the alien is an unauthorized alien with respect to such employment.”

The term “knowing”   includes not only actual knowledge but also constructive knowledge which would lead a person to reasonably conclude that person is not authorized to work in the United States.  The question that everyone has wanted to know: Is a no-match letter grounds for constructive knowledge about the work authorization of an employee?

DHS has clarified the legal obligations of employers that receive a no-match letter from SSA or DHS. Basically, DHS has stated that employers who do not take any action after receiving a no-match letter may be found to have had constructive knowledge of the work status of the employee.

The proposed rule also states that whether DHS will actually find that an employer had constructive knowledge that an employee was an unauthorized alien in a situation will depend on the totality of relevant circumstances. This gives DHS wiggle room to interpret each situation as it sees fit. But if a company follows the procedures outlined in the new rules, the DHS would have a difficult time making a case in court that the employer or its management did anything wrong.

The proposed rule suggests that reasonable employers would take the following steps after receiving a no-match letter.

• Check its records within 14 days of receipt of a no-match letter to determine whether the discrepancy results from a typographical, transcribing, or clerical error.  
• If the discrepancy stills exists, the employer should promptly request the employee to confirm that the employer's records are correct. If they are not correct, the employer would take the actions needed to correct them and inform the relevant agencies, and re-verify the corrected records.  
• If the records are correct according to the employee, the employer should ask the employee to pursue the matter personally with the relevant agency, such as by visiting a local SSA office . ICE would consider a reasonable employer to have acted promptly if the employer took such steps within 14 days of receipt of the no-match letter.  
• If the discrepancy referred to in the no-match letter is not resolved at this point, and if the employee's identity and work authorization cannot be verified using a reasonable verification procedure, then the employer must choose between taking action to terminate the employee or face the risk that DHS may find that the employer had constructive knowledge that the employee was an unauthorized alien.  
• The proposed regulation considers a discrepancy to be resolved only if the employer verifies with SSA or DHS that the no-match has been corrected.  
• Employers should apply these procedures uniformly to all of their employees having unresolved no-match indicators. If they do not, they may violate applicable anti-discrimination laws. There are a number of nuances about the new rules. For more information about a specific aspect of DHS policy visit http://www.dhs.gov/dhspublic/interapp/editorial/editorial_0499.xml .    

Guidelines for Electronic Form I-9 Signature & Storage

• Employers utilizing electronic retention and signature technology for Form I-9 may find it helpful to review system requirements placed upon Federal agencies.  
• Electronically generated or retained forms must be legible.  
• Companies that choose electronic storage methods must take reasonable measures to safeguard the information from unauthorized access and protect the data from all hardware or software problems that could make it hard to retrieve the information.
• Electronically stored I-9 forms must be backed up and protected from any kind of computer or software malfunction.  
• Any system used to capture the electronic signature should include a method to acknowledge that the form/information to be signed has been read by the signatory.
• Establish procedures for electronic I-9 compliance and train employees on those procedures.  
• Periodic quality assurance checks can ensure that all electronic processes are working properly.
• The electronic generation and storage system must have an indexing system that allows for the efficient retrieval of all forms and I-9 data. The requirement to maintain an indexing system is be satisfied if the indexing system is functionally comparable to a reasonable hardcopy filing system.  
• The system must provide an audit trail that records the identity, the date and action taken whenever an electronic record is created, accessed, viewed, updated, or corrected.