Form I-9 Fines

The Cost of the I-9 Form

I know some of you believe that much of what I warn you about only happens to large companies… and “that” will never happen to you. Wouldn’t it be great if I was wrong and you were right? But, alas, we’re in California where scary things jump out of courtrooms.

Here are just the highlights of a case against a small drywall company who had 4 full-time and 20 part-time employees. The company had a policy of hiring workers for projects and then laying them off when each project was done, which resulted in a higher number of total employees in any given year.

In 2000, the government conducted an audit of this drywall company’s I-9 forms and issued a warning based on the poor audit results. In 2008, the company’s I-9 forms were audited again for employees who had worked between 1/1/2005 to 3/25/2008.

Since the second audit also had poor results, the government wasn’t as forgiving. The company was fined:

• $45,581.25 for failing to prepare I-9 forms for 43 employees,
• $69,377.00 for failing to make sure 65 employees properly completed Section 1,
• $115,192.00 for failing to properly complete Section 2 for 110 employees, and
• $56,474.00 for failing to complete both Sections 1 and 2 on 53 employees.

The total was $286,624.25. The good news is that the company appealed and the government didn’t get that money. But the appeals court did uphold fines of $172,000 in 2011. Although I don’t know what the company paid in total legal fees for this fight, I’d almost guarantee that the legal fees were even higher than the fines they paid.

So the next time you roll your eyes over completing all the little spaces in some government form, realize that the government is serious about their forms… and you should be, too.