Editors Note: John Lindsey is a member of the Research Triangle Park law firm of Daniels Daniels & Verdonik, P.A. TechLaw is a regular weekly feature in LTW.
_______________________________________________________________________________________Employers will soon be able to complete, sign and store electronically the Employment Eligibility Verification Form (I-9 Form).

The so-called “I-9 Electronic Storage and Signature Bill” has become law, and will become effective for all employers on the earlier to occur of the date that the Department of Homeland Security publishes implementing regulations or April 28, 2005. Once the law becomes effective, employers will also be able to convert existing paper I-9 Forms into electronic documents for record keeping purposes.

Until the effective date, employers will need to continue to sign manually the I-9 Form and to retain paper copies for record keeping.

So What’s an I-9 Form; Why Should Employers Care?

Under laws on the books since 1986, each employer is required to complete the I-9 Form to verify the employment eligibility and identity of all employees hired to work. It is amazing how many employers are either not aware of this requirement, or, if aware, do not complete and retain the I-9 Form as required.

Failure to complete the form, to complete it properly or to retain it for the proper amount of time can lead to fines. Employing persons who do not have the proper work authorization documents can lead to fines and criminal penalties. These fines and penalties increase with the number of violations.

To help employers avoid these issues, here is a short review of the I-9 rules.

What is Required?

All U.S. employers are required to verify through a specific process and document review the identity and work eligibility of all employees, whether U.S. citizens or not, and record this information on the I-9 Form. Some limited exceptions apply to these requirements.

The employer is required to retain the I-9 Form of each employee for the longer to occur of three years after the first day of paid work or one year after the date that employment ends. As noted, electronic signatures on, and storage of, these records will be permitted no later than April 28, 2005. (After that date, employers may continue to accept manual signatures and retain paper copies for record keeping purposes, but such practices will no longer be required.)

Although not filed with the government, the I-9 Forms are subject to review by the federal government agencies in charge of immigration and labor matters. For this reason, we recommend that I-9 Forms be kept separate from other employee records, whether in electronic or paper form and that access to such records (including electronic form) be limited only to authorized company personnel.

What’s the Process To Complete the I-9 Form?

On the first day of paid work, the employee should be asked to complete and sign Section 1 of the I-9 (name, address, birth date, work authorization status, and (if available) social security number). The employer is responsible for ensuring that each employee properly completes Section 1 of the I-9, but may not require the employee to produce documents to verify the information provided in Section 1 of the I-9.

Within three days after the first day of paid work, the employer must complete Section 2 of the I-9, which requires the employer to review documents produced by the employee verifying his identity and his employment eligibility in the United States. The form provides a list of three categories (A, B and C) of acceptable documents for this purpose. This list should be provided to the employee, and the employee may choose from any of the acceptable documents to provide the verification. If the employee can provide a document from category A, this is adequate to verify both identity and employment eligibility.

In the alternative, the employee may produce one document from category B to verify identify and one document from category C to verify work eligibility. All category A documents (with the exception of a U.S. passport) and all category C documents must not have expired when initially presented. Original documents must be provided by the employee, not copies, with the exception of certified copies of U.S. birth certificates.

Even though the I-9 Form may soon be signed and stored electronically, the law still requires the employer actually to view the original documents provided by the employee to verify identity and work eligibility. The employer is required to view and accept documents presented by the employee that reasonably appear to be genuine and related to the person presenting the documents. If the employer does not think the documents are genuine, they may be rejected and the employee given an opportunity to present other documentation from the A, B and C categories. If an employee is unable to present acceptable documents, or if the employer has questions about acceptable documentation, the employer should seek help from its legal counsel or from the U.S. Citizenship and Immigration Service. Continued employment of the employee without proper documentation exposes the employer to penalties for “knowingly” employing a person who is not authorized to work.

Are Copies of Viewed Documents Required To Be Kept?

An employer may keep copies of documents presented by the employee for verification of identity and work eligibility, but retention of copies is not required. If copies are kept, they must be kept with the I-9, and must be kept for all employees to avoid a discrimination claim.

What Happens in Corporate Reorganizations?

In the event of a corporate reorganization, merger, sale of stock or assets in which the predecessor’s employees will work for the successor company, the successor company is not required to complete new I-9s for those employees, and may rely on the I-9s completed by the predecessor employer.

In such a situation, however, the successor employer will be held responsible for all errors and omissions in the predecessor’s I-9s. For this reason, it is a good idea either to review the predecessor’s employee and I-9 files prior to closing of the transaction to determine if they are in order, and if not, to require that they be corrected, or, to complete a new I-9 for each employee. The successor company may also want the predecessor company to indemnify the successor company for any fines or penalties that relate to the old I-9s.

Don’t Discriminate!

When going through the I-9 verification process, employers are not allowed to discriminate against any person because of that person’s national origin or citizenship status, and the I-9 process may not be used to pre-screen employees for hiring. An employer may not demand more or different documents than an employee chooses to present, provided the documents are acceptable under the I-9 rules, and may not require different documents from different groups of employees. Further, an employer may not consider the fact that a work authorization document has a future expiration date as cause not to hire or to terminate employment.

What About Internal I-9 Audits?

Periodic, internal audits of I-9 files and verification procedures are recommended for employers to ensure compliance with the I-9 rules. Periodic audits minimize the employer’s exposure to fines and penalties by providing it with the opportunity to correct errors and omissions and to discover unauthorized workers on the payroll, showing its good faith efforts to comply with the rules prior to any government audit.

Where Can Employers Obtain the I-9 Form?

The I-9 Form and other helpful information about completion of the form may be obtained from the U.S. Citizenship and Immigration Service or downloaded from its web site at: uscis.gov/graphics/services/employerinfo/oblhome.htm.

Daniels Daniels & Verdonik, P.A. has been serving the legal needs of entrepreneurial and high technology clients for more than 20 years. John Lindsey concentrates his practice in the areas of copyright, trademark, immigration, international trade and corporate law. Questions or Comments can be sent to jlindsey@d2vlaw.com.