The U.S. Court of Appeals for the Ninth Circuit ruled that ability to pay is not a factor to consider when setting a penalty for employment verification violations.

With this ruling, the Ninth Circuit becomes one of the first federal courts appeals to rule on the issue.

The Immigration Reform and Control Act was passed in 1986 to verify the employment eligibility of employees in the U.S. Employers verify their employees’ work eligibility by having them fill out the Employment Eligibility Verification Form I-9. U.S. Immigration and Customs Enforcement (ICE) conduct audits and inspections for compliance. Employers who knowingly hire and continue to employ persons and fail to comply with the requirements of Form I-9 are subject to monetary penalties. These penalties can range from $375 to $16,000 per violation.

To determine penalty amounts, ICE considers five factors: size of the business, good faith effort to comply, seriousness of violation, whether the violation involved unauthorized workers, and history of previous violations. The Ninth Circuit case, DLS Precision Fab LLC v. U.S. Immigration & Customs Enforcement, examined whether ability to pay is, or should be, an additional factor.

At the time of the litigation, Arizona-based sheet metal manufacturer DLS Precision Fab LLC was going through bankruptcy proceedings. In the midst of these proceedings, the company was slapped with a $300,000 fine for employment verification violations. In its defense, the company argued: 1) that it had acted in good faith and 2) that it could not pay the fine. The Ninth Circuit rejected both arguments and affirmed the fine.

DLS stated it had acted in good faith by hiring a human resources director. The court decided, however, that the company was responsible for hiring and supervising its own employees, and the hiring of a credentialed HR rep was irrelevant. To DLS’ second point, its inability to pay was also deemed irrelevant. The court agreed that inability to pay is not one of the five factors that must be considered.

Employers should familiarize themselves and their employees with the most current version of the I-9 Form as soon as possible. You can find the form here: For help with the I-9 Form, contact a Sioux City lawyer, Sioux Falls lawyer, or Omaha lawyer today!


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