Employer Compliance in an Era of Increased Audits and Site Visits

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In this current climate of increased audits and administrative site visits, it is crucial for businesses to remain compliant with all I-9, H-1B, PERM and EB-5 regulations. In this article, we provide an overview of the relevant compliance requirements, as well as an explanation of the government players during site visits and audits and what to expect from each.

Form I-9 Employment Eligibility Verification

Form I-9 is used for verifying the identity and employment authorization of individuals hired for employment in the United States. Every employee on the payroll, whether a U.S. citizen or noncitizen, must complete an I-9 and provide the required documentation. Companies must retain the I-9 for three years after the date of hire or one year after the date of termination, whichever is later.

I-9 audits are performed by Immigration and Customs Enforcement (ICE) and can result in the issuance of hefty civil fines and criminal penalties. Criminal penalties can include $3,000 for each unauthorized employee and imprisonment for up to six months for the entire pattern or practice of unauthorized employment. Effective April 2, 2018, employers can also be charged the following civil penalties for violations that occur after November 2, 2015 per unauthorized worker for knowingly hiring unauthorized workers: $559 to $4,473 for the first offense, $4,473 to $11,181 for the second offense, and $6,709 to $22,363 for the third and subsequent offenses. Fines for I-9 paperwork violations have increased and can range from $224 to $2,236 per violation.

H-1B Compliance

Employers must create a Public Access File (PAF) for each H-1B employee. The PAF must be immediately available for public viewing, coded and anonymous, and must be purged one year from the end of the period covered by the Form ETA 9035, Labor Condition Application (LCA), or an LCA withdrawal. Companies should develop, document and maintain consistent practices around wage collection, postings, and other documentation across the institution.

Failure to maintain PAFs can result in increased scrutiny of a company’s H-1B petitions, monetary fines, and the inability to sponsor future employees.

Wage and Hour Division Site Visits

The DOL’s Wage and Hour Division (WHD) ensures compliance with the LCA. WHD audits can be triggered in several ways:

  1. Complaints from an aggrieved person or organization;
  2. Credible information on LCA violations from a reliable source;
  3. A pattern or practice of violations;
  4. The employer has willfully failed to meet a condition specified in the LCA or willfully misrepresented a material fact; or
  5. WHD has reasonable cause to believe the employer is not in compliance.

The WHD will send a letter to the employer providing notice of an investigation and a request for documentation. Once the employer produces documentation, a meeting will be held at the employer’s worksite with a WHD investigator. After the meeting, WHD will issue a determination on the investigation.

When violations are found, WHD may assess civil penalties for each violation. The amount of the penalties depend on the type and severity of the violation. Employers found to have committed certain violations may also be precluded from future access to the H-1B program and other immigrant programs for a period of at least one year.

Fraud Detection and National Security Site Visits

U.S. Citizenship and Immigration Services’ (USCIS) Fraud Detection and National Security (FDNS) unit has the authority to conduct worksite inspections and verify the accuracy of information and documentation provided in an H-1B or L-1 petition. Other site visits are done for religious worker visas. Site visits are unannounced – the FDNS does not give any advance notice – and an investigator turns up at the worksite. There are some triggers for site visits as well as a sample of petitions randomly selected. During the visit FDNS will check whether the employer has complied with the H-1B petition. Specifically, FDNS will confirm whether the employer listed in the petition actually exists and whether the employee’s wages, hours, terms of employment, and worksite location reflect what is listed in the H-1B petition. During the visit, FDNS will take photographs, review documentation and interview the employee.

PERM Compliance

Employers are required to maintain a compliance file for each PERM Labor Certification Application filed with the Department of Labor. The compliance file should contain documentation to back up all statements made in the Form ETA-9089, including recruitment activities and summaries, prevailing wage determination, and a business necessity statement if applicable. The DOL can audit a PERM application during processing or up to five years after it is certified.
Providing false information during and after the PERM process can also result in the issuance of a fine, imprisonment for up to five years, or both.

Compliance Inspections at EB-5 Project Sites

In February 2017, we reported that the FDNS launched its first wave of compliance inspections at EB-5 project sites across the country, a trend that continues to this day. FDNS conducts inspections at locations where USCIS expects to observe “direct” employment of U.S. workers as a result of EB-5 capital investment in U.S. enterprises, and also at locations where EB-5 capital has been directed into job-creating business activities (such as construction). The inspections have generally been associated with adjudication of individual investors’ I-829 petitions.

During these unannounced visits at EB-5 project sites, FDNS asks questions about on-site employees, even at locations where construction has been completed and most if not all the jobs for EB-5 eligibility purposes may have been based on construction phase job creation. FDNS site inspectors appear to be familiar with the project record and also raise questions about job creation, the amount of raised EB-5 capital, and how the EB-5 funds are being put to use. Questions may be asked of tenants, contractors, and other on-site personnel.

These site visits will likely continue to complicate and perhaps delay adjudications of individual EB-5 investor petitions. Adverse determinations could be the basis for denials or even revocation of already-approved petitions or applications. Given the responsibilities imposed on regional centers, site visits may also place regional center designations in jeopardy for evidence of egregious violations at EB-5 worksites. For more information on EB-5 site visits and how to prepare, please click here.

With so much at stake, and an understanding that site visits occur without advance notice, it is critical for employers and EB-5 project managers and enterprises to remain compliant with immigration regulations at all times.

SGG’s experienced attorneys in the Business Immigration and Investors & Entrepreneurs Practice Groups work with a variety of clients including publicly and privately held companies, nonprofit institutions and investors to provide guidance on all compliance issues. For more information, please contact us.

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