I-9 Compliance: OCAHO Rules “Liability Not Extinguished By Change in Ownership”

Maggio Kattar
I-9 Skeletons in the Closet

Does your business have I-9 compliance skeletons in its closet?

A recent OCAHO ruling in USA v. Durable, Inc., reminds employers that changes in ownership or leadership have no bearing on the impact of prior agreements with the government, no matter how long ago they occurred. When ICE audited Durable Inc. in 2011, they found a number of issues with their I-9 Forms, ranging from failure to ensure Section 1 was completed properly and/or timely, to failure to complete Section 2 as well as some suspected modifications to hire dates to make the forms “appear” timely. There were also a number of employees who, it was revealed, provided fraudulent documentation ( however, if such documentation had appeared valid on its face and the I-9 had been completed timely and accurately, this would not result in penalties for the employer). However, Durable found their fines aggravated by a prior audit and agreement with ICE to cease non-compliant practices that was over two decades old. During that time, the owners and leadership of the company had changed, however, the agreement OCAHO upheld, is with the business, and not the individuals signing on behalf of the business at the time. Therefore, changes in management had no bearing on the business’ obligation to uphold the terms of the 1989 agreement.

This ruling underscores the necessity for businesses to do their due diligence with agreements and settlements with the government whenever businesses change hands, whether through merger, acquisition or other leadership transition. These transactions often focus a great deal on the financial aspects of the deal as well as intellectual and physical property and too often neglect review of employee documentation requirements and compliance matters.

What should employers do?

For employers considering a merger or acquisition, a complete review of any and all settlements and agreements between the seller and the government should be performed. It is possible that current staff of the acquired business may have even “forgotten” about some settlements as institutional knowledge is lost over time through employee turnover, therefore, consideration should be included in any acquisition agreement to protect the buyer of any such agreement intentionally or unintentionally not disclosed during the due diligence process.

Should the buyer find such and agreement in place, they must then determine if the seller has abided by the agreement, and ensure either continued compliance or implement mitigating steps, such as:

  • The complete audit of the seller’s Form I-9 ( and E-Verify if applicable) compliance
  • Identification of individual or department responsible for ongoing compliance
  • Development of written policy and procedure to support compliance
  • Implementation and documentation of regularly scheduled audits and training in support of compliance

An audit of a seller’s current I-9 ( and E-Verify, if applicable) practices should always be performed during the due diligence phase of a merger or acquisition to properly identify liability in this area.

For assistance with I-9 and E-Verify compliance review as part of a merger or acquisition, please contact your Maggio Kattar attorney.