The Office of Chief Administrative Hearing Officer (OCAHO), which issued three decisions involving restaurants in March 2013 severely reduced ICE’s proposed penalties that is of interest for our clients in the Retail and NRA verticals. A summary of the cases are provided below and is courtesy of ILW and is authored by Bruce E. Buchanan, an Attorney at the Nashville Office of Siskind Susser, P.C.
Black & Blue Steak & Crab – Fine reduced from $44,165 to $32,850
Black & Blue Steak & Crab, a restaurant located in Williamsville, New York, was served with a Notice of Inspection by Immigration & Customs Enforcement (ICE) on July 1, 2009. After ICE conducted an audit, it issued a Notice of Intent to Fine in July 2011 seeking $44,165.
The alleged violations were as follows: 10 instances of failure to ensure the full completion of Section 1 of the I-9 Form; and 63 instances of failure to complete Section2 of the I-9 Form or sign the attestation. ICE sought $605 per violation based upon a 31% error rate. ICE aggravated by 5% for the large size of the employer and 5% for seriousness of the violations while it mitigated the baseline fine by 5% each for absence of bad faith and the absence of unauthorized workers. Thus, the aggravating factors and mitigating factors cancelled each other out.
Although ICE claimed the restaurant was a large employer (an aggravating factor) because the number of I-9 forms (234). OCAHO disagreed. The employer defended that at any given time, it employed 77 workers and the large number of I-9 forms was a result of high turnover. Instead, OCAHO found a 5% mitigating factor in favor of the small employer. OCAHO also found the restaurant was entitled to three other mitigating factors: 1) acting in good faith, 2) not employing unauthorized workers, and 3) no past history of immigration violations.
Next, the restaurant argued equity favored a lower fine, especially because the penalty would create an undue hardship on the business and was disproportionally too large. Without any further analysis, OCAHO reduced the penalties to $450 per violation for total fine of $32,850.
United States v. El Azteca Dunkirk – Fine Reduced from $11,000 to $2,200
El Azteca is a small Mexican restaurant in Dunkirk, New York employing about 10 people. Within a year of opening, the restaurant faced an ICE inspection. It supplied 20 Form I-9s, each of which was deficient in some manner.
For reasons that do not appear in the record, ICE did not rely upon its current guidelines; rather, it used 1991 guidelines which set the baseline fine at $110 per violation. It aggravated the penalties by $190 per violation based upon the size of the employer and $250 for the employer’s lack of good faith. Thus, it sought $550 per violation or $11,000.
The restaurant asserted the fine was grossly excessive and should be $110 per violation. OCHAO disagreed with ICE’S determination of bad faith and was incredulous that it would aggravate a fine based upon size when the restaurant only currently employed 10 employees. Thus, OCAHO found El Azteca should be fined $110 per violation for a total of $2200, an 800% reduction.
United v. Siam Thai Sushi Restaurant - Fine Reduced from $16,308 to $8,350
Siam Thai Sushi is a restaurant in Glen Falls, New York with approximately 10 employees, including the owner, his wife and son. After being served a Notice of Inspection (NOI), Siam Thai provided 18 Form I-9s, all of which were prepared after the NOI. ICE set the baseline penalty at the maximum of $935, based upon a 100% error rate. ICE aggravated the penalties by 5% each for lack of good faith and the seriousness of the violations but mitigated by 5% each for the small size of the restaurant and the absence of any unauthorized workers.
Thus, ICE sought $16,308, based on 18 violations at $935 each. Siam Thai denies it lacked good faith; rather, it stated it was simply unaware of the I-9 requirement. Established case law states, “A failure of compliance based on ignorance of the law is insufficient to establish bad faith.” However, the failure to complete any I-9 forms prior to the NOI is clearly a serious violation.
OCAHO stated the proposed penalty of $935 per violation is too high, especially when the S corporation has lost money for each of the past three years. Thus, OCAHO reduced the penalties to between $400 and $500 each for a total penalty of $8350, an approximate 50% reduction.
It appears that employers are taking heed of suggestions to consider appealing to OCAHO. In fact, OCAHO’s docket is on pace to review three to four times as many cases in 2013 as it had in 2012. If employers are finally realizing that they can severely reduce the penalties by litigating and challenging the fine amounts, it’s certainly a worthwhile endeavor.