Mary's Gone Crackers Inc., a California organic food company, will pay $1.5 million to the federal government following a settlement with the Department of Justice after Immigration and Customs Enforcement determined it had hired numerous individuals not authorized to work in the U.S.
Mary's makes gluten-free, all natural snacks. Its products are also nut free, vegan, dairy free and kosher. The company has an administrative office and bakery in Gridley, California, as well as a recently opened test kitchen in Chico, California. The government determined the company hired nearly 50 people who were not authorized for employment in the U.S., the DOJ announced. Mary's ended up signing a nonprosecution agreement with the department to avoid charges against it.
ICE began an audit of Mary's Form I-9s in 2012. When ICE concluded the review it informed the organic food company that 49 employees appeared to lack authorization to work in the U.S. After this, one employee provided the correct documents to verify employment authorization. Mary's informed the agency the other individuals had either been let go or quit. However, that wasn't entirely the case. Instead, the company rehired at least 13 of the former employees under new identities. One individual never even ceased to work for the company. The operations supervisor instead simply changed his name and received paychecks as an independent contractor to avoid being placed on the company payroll.
Search warrant leads government to unauthorized employees
In January 2013, a search warrant was executed and the rehired individuals were discovered. After this, Mary's began to make more effort to comply with federal hiring regulations. The natural foods provider began working with the government on its investigation, fired the unauthorized employees and let go of the outside counsel it had previously retained. In addition, the company integrated employment authorization verification services into its hiring process.
The company will also develop a corporate compliance program for both the Form I-9 and E-Verify. Any immigration violations will require reporting within 24 hours. For two years Mary's will file mandatory compliance reports with the U.S. Attorney's Office. All of this is in addition to one of the larger fines doled out this year for immigration violations.
"Protecting the integrity of the nation's immigration system is a top priority for Homeland Security Investigations," said Ryan Spradlin, special agent in charge for HSI San Francisco. "Our agents are determined to hold those who choose to defraud the system accountable in order to reduce the demand for illegal employment and protect employment opportunities for the nation's lawful workforce."
Mary's penalty could have been higher
Typically, compliance with the government during an investigation leads to some leniency in terms of the eventual penalty. However, the fact that Mary's rehired individuals ICE already identified as not authorized to work in the U.S. likely led to the relatively large fine.
The timing of the settlement worked out in Mary's favor. The civil penalties for Form I-9 violations and knowingly hiring unauthorized individuals were recently increased. The change officially went into effect on August 1. Fines for charges such as those levied against the food company will go up substantially. The penalty for Mary's, for example, likely would have surpassed $2 million and may have closed in on or rose above $3 million, depending on the exact penalty per infraction.
Avoiding these fines is more important than ever now that they're growing in size. This means complying with Form I-9 regulations and using supplemental services such as E-Verify to ensure new hires are authorized to work in the U.S.