If your company found itself in the midst of an I-9 audit, how well do you think it would fare?

According to Eric Ledbetter, an attorney in the Labor & Employment group at Quarles & Brady, now is a very good time to review your company’s I-9 policies and procedures.

“The federal government has been very active in the past six months with several high-profile initiatives to curb the employment of undocumented workers and promote good I-9 and E-Verify practices for employers,” he says.

E-Verify is the federal electronic system available to all employers that can be used to verify the identity and work eligibility of newly hired employees.  E-Verify supplements the I-9 procedure but does not replace it.

“With the increase in federal enforcement efforts, a lot of companies are taking a second look at their employment policies and procedures to make sure they are in compliance and can survive an audit,” he adds. Although E-Verify is optional for most employers, it is now required for companies with qualifying federal contracts and subcontracts awarded after Sept. 8, 2009. Contracts awarded before Sept. 8, 2009 are not subject to the E-Verify requirement.

Some contractors/subcontractors may be exempted from the E-Verify contractor rule if the contract is for a small amount or a short duration or if the contract is for a commercially off-the-shelf item. If a federal contractor does not qualify for an exemption, the federal contracting agency will notify the contractor of the E-Verify requirement. Contractors have 30 days to register for E-Verify from the awarded date of a contract with the E-Verify clause.

“When it comes to E-Verify, most employers first want to know whether or not they have to use it,” he says. “If they don’t have to use it, their second question is usually whether it makes sense to go ahead and sign up voluntarily.”

According to the Department of Homeland Security (DHS), more than 175,000 employers are enrolled in the program, with over 8.5 million queries run through the system in fiscal year 2009.

This may be the time to re-think enrollment, if your company hasn’t done so already.

“Under the Obama administration, the DHS has shifted enforcement away from large workplace raids and toward electronic verifications of employees’ work status, surprise paperwork audits and undercover investigations designed to identify subtle and perhaps more widespread immigration violations,” notes Ledbetter.

According to Ledbetter, federal authorities initiated nationwide I-9 audits of more than 650 employers in July 2009 and another 1,000 in November. So far, companies are being targeted on the basis of tips, leads and investigations or because of their connection to national security and/or critical infrastructure.

Should your company be the target of an I-9 audit, federal agents will examine your employees’ I-9 forms and supporting documents as well as general business documentation, including wage and hour reports, federal and state tax filings, business licenses, your written I-9 compliance policy and any evidence of compliance training for your HR staff, says Ledbetter.

A critical point to underscore the need to have this documentation in place: A company typically has only 72 hours to respond to an I-9 notice.

“Companies can face civil or even criminal penalties for non-compliance,” adds Ledbetter.

So what should you do? First of all, proper documentation of each employee's work eligibility is critical. But companies need to be judicious in how they obtain this information as well. According to Ledbetter, compliance with I-9 requirements means that employers need to take care to treat all employees alike without reference to national origin and citizenship status. Employers must not request more or different documentation from certain employees nor can they specify which documents they will or will not accept from new hires from the list of acceptable documentation. Employers also must not reject apparently genuine I-9 documents. I-9 forms must be filled out on all workers, both citizens and non-citizens, authorized to work in the United States.

By Laurie Arendt

Laurie Arendt is editor of CRW. She can be reached at crweditor@crwmag.com