Part X: Managing I-9 in Mergers and Acquisitions

This is Part X of our I-9 blog series, which explains how employers can avoid audit by ICE.

Mergers and acquisitions (M&A) refers to handling and negotiating the buying, selling, dividing and combining of different companies that allows for the parent company to grow in its original division or new area, without a subsidiary company or supplemental assistance.

The risk for Forms I-9 audits is real and high: I-9 audits by ICE have soared since 2009, with more than 6,000 audits on US employers and $76 million in fines. This is also part of the Obama Administration initiative to step up enforcement against employers hiring unauthorized workers. As a result, the Department of Justice has increased its efforts in criminal investigations.

But what does this have to do with M&A? In M&A, the Buyer should certainly take care because the Buyer often acquires all of the Seller’s responsibilities, including I-9 non-compliances, if there are any.

What should the Buyer do before the merger? There are a few steps that should be taken:

1. Evaluate the Seller’s Forms I-9

Gain a full understanding of how the Seller completed and housed Forms I-9. Also determine if the Seller maintained Forms I-9 using an electronic I-9 software solution or kept paper copies, and if the Seller was in compliance with ICE rules and regulations.

2. Perform Soft Audits of Forms I-9

If the Seller uses an electronic I-9 software solution, then the Buyer should perform a full audit report in order to lighten the cost and time of organizing a soft audit. Also utilize an immigration attorney who is experienced in I-9 compliance and can help the Buyer compute future monetary fines or penalties, if there are any. Immigration attorneys can also aid in developing post-deal tactics.

3. Access Samples of Forms I-9

Another option to a soft audit is to administer a partial audit, which looks at an archetypal sample of the Seller’s Forms I-9 found on divisions, departments, regions or category that correctly represents the Seller’s organizational structure.

4. Assign Monetary Figures to I-9 Form Errors

I-9 audit experts can assist in assigning monetary costs to any errors the Seller has made. This will help determine what costs the Buyer will incur if the deal were to transpire.

5. Understand the Seller’s Compliance Culture

If an ICE audit occurs, the efforts of the Buyer to demonstrate I-9 compliance will not go in vain. In order to understand the Seller’s compliance culture, the Buyer should gain a full comprehension of the Seller’s I-9 compliance policies, and systems of training and internal enforcement.

If there is no compliance culture or system of self- or internal audit of Forms I-9, then apply the Seller’s rules to the Buyer’s forms and perform the soft audit.

What the Buyer should do post-deal if the Seller is incapable or reluctant to allow access to Forms I-9:

1. Transition I-9 Forms

The Buyer must determine whether to require the Seller’s employees to complete new I-9 forms or to preserve existing forms. Sometimes the sheer volume of Forms I-9 can be daunting. Often a good solution is to use an electronic I-9 software solution to aid in shifting I-9 form data.

2. Adopt a Compliance Culture

Establish a company-wide policy and guarantee compliance–this is a great way to reduce I-9 audit risk and noncompliance, and to facilitate a M&A.

Next Week : Part XI: Correcting I-9

Part XII: Storing/Retaining I-9

See you in my next blog.

Nalini S Mahadevan, JD, MBA

Immigration Attorney

Tara Mahadevan

Copyright 2012.  All rights reserved.

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