The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.
The Immigration Reform and Control Act of 1986 was established to control the employment of unauthorized aliens and to protect authorized workers from unfair immigration-related employment practices. Among other things, the Act requires employers to timely and properly complete I-9 forms for covered individuals. The purpose of the I-9 is to verify the identity of the individual providing services to an employer and that the individual is authorized to work in the United States.
Employers are required to complete an I-9 form for all individuals who receive “remuneration” in exchange for providing services. Accordingly, municipalities must have valid I-9s for both employees and volunteers who receive a nominal fee. The exception to this rule involves election judges and poll workers. Employers must have a completed I-9 on file for all current employees hired on or after November 6, 1986. Following termination however, employers can destroy I-9s for separated employees either one year after the date of termination or three years after the date of hire, whichever is longer.
Homeland Security Investigations (HSI) may conduct administrative inspections of employers’ compliance with the I-9 requirement. Typically, an inspection will begin with the service of a Notice of Inspection (NOI). The NOI provides employers with three business days to produce all I-9s along with additional documentation, including but not limited to, an employee roster and payroll information. Accordingly, while I-9s may be considered personnel file documents, many employers elect to maintain these forms separately from an employee’s official personnel file in a combined “active employee” binder, as well as a “terminated employee” binder, so that all forms are easily accessible in the event of an audit.
Employers can face fines for failure to maintain I-9s and/or for failing to have properly completed I-9s. Technical violations are minor, correctable errors in the I-9 completion that do not relate directly to an employee’s authorization to work. During the inspection process, an auditor may identify technical failures on the I-9s and afford the employer with the opportunity to make corrections.
However, substantive violations are serious, non-correctable errors in Form I-9 which directly relate to and question the employee’s authorization to work. Baseline penalties for substantive violations are up to $2,861, per I-9, prior to the application of aggravating and mitigating factors. Higher fines are also assessed in more serious circumstances, such as the knowing hiring of undocumented aliens. Criminal charges can also be brought against employees of the organization if there is reason to believe that the organization is harboring illegal aliens, trafficking in illegal aliens, or engaging in other criminal conduct. These penalties are generally assessed by U.S. Immigration and Customs Enforcement (ICE).
In March 2026, ICE issued new rules regarding substantive and technical violations of Form I-9. These changes were made to ICE’s “Form I-9 Inspection Under Immigration and Nationality Act § 274A,” a fact sheet that lays out the I-9 audit process. Below is a non-exhaustive list of the “new” substantive violations:
- Failures of electronic I-9 system’s audit trails, electronic signature protocols, or security documentation that falls short of specific DHS standards (particularly relevant if original paper Form I-9s are retained electronically);
- List A, B, or C data not fully recorded/incorrectly recorded in Section 2, such as name of document, number of document, issuing authority, or expiration date, regardless of whether a copy of an underlying document, such as green card or driver’s license, was retained;
- Failure to ensure an employee provides their date of birth, USCIS number, or signature in Section 1;
- Missing name and title of the employer representative; and
- Failure to provide the first day of employment in the Certification;
Prior to this update, it was not uncommon for employers to discover that up to 80% of their I-9s contained errors. Based upon this error rate, a town or city with 45 employees (including volunteers who receive a nominal stipend), faces a potential fine exceeding $100,000. By expanding the list of substantive violations, ICE has substantially reduced employers’ ability to avoid fines for routine administrative mistakes and reduced the errors that could be corrected in order to decrease fines.
The following are immediate action items for municipal employers:
- Invest in Training. Given that many of the newly reclassified substantive violations arise from simple errors and carelessness in filling out the form, municipalities should ensure that trained personnel handle I-9 completion and verification. If the individual completing your I-9s routinely makes a mistake that is now considered substantive, that one simple error could cost hundreds of thousands of dollars.
- Evaluate Use of Electronic I-9 Storage and Systems. If a municipality uses an electronic I-9 system or electronically stores copies of I-9s, it should ensure full compliance with federal regulatory requirements, including audit trails, indexing, and electronic signature standards.
- Conduct Internal I-9 Audits. Contact an immigration attorney and request an internal I-9 audit. Even if one has been done in the last few years, municipalities should review audit results to confirm whether previously identified technical errors, that are now substantive violations, were remediated after the audit. Employers that identify and address issues before any NOI will not eliminate all risk of penalties, but will likely be better positioned to leverage mitigating factors to seek reduced fines. And, internal audits help to show that the company is proactive in addressing potential problems.
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Legal Disclaimer: The information provided does not, and is not intended to, constitute legal advice; instead, all information and content is provided for general informational purposes only.