A thoroughbred racehorse training business, with several U.S. locations, can agree with Immigration and Customs Enforcement on one thing: They failed to comply with Form I-9 requirements. Although the business is not large, it isn't exactly small either. Previously, it also had a clean Form I-9 slate. The extent of their infractions was an entirely different argument, and one that the company eventually lost.
Following the hearing, Kenneth McPeek Racing Stables, Inc. was ordered to pay a large fine due to Form I-9 violations. Though the penalty levied against the business could have been much larger, the lengthy process that began with a Form I-9 audit still resulted in substantial damages.
The initial audit and violations
According to the court case, the business received a Notice of Inspection from ICE at its Kentucky location in 2011, which was followed by a 2013 Notice of Intent to Fine. The agency alleged a substantive amount of Form I-9 violations following the inspection, and while Kenneth McPeek, the owner of the business and a horse trainer himself, agreed that the company wasn't as diligent as it could have been with its I-9 forms, he explained that the violations were not as damaging as ICE claimed. Despite his belief that the allegations were severe, McPeek didn't catch a break in terms of the number of violations ultimately counted against his stables.
"There were two counts, comprised of 99 violations, against McPeek."
Ultimately, Kenneth McPeek Racing Stables was cited for 99 Form I-9 violations, divided into two categories, each of which carried a different fine. Count 1 cited that the business failed to either prepare I-9 forms in a timely manner, or provide the 62 employees' I-9 forms upon the government’s request. Count 2 provided that the horse training company failed to have employees properly complete Section 1, or that hiring managers didn't complete Sections 2 or 3 for 37 of the I-9 forms presented.
Breaking down the penalties
The fines were assessed at $400 each for the 62 Count 1 violations and $300 each for the 37 Count 2 infractions, the case document noted. The Count 1 total was $24,800, and the full penalty for Count 2 violations was $11,100, bringing the total penalties levied against the business to $35,900. While this is a fairly large fine, McPeek was facing a substantially larger fine prior to making his case. ICE intended to levy a $64,795.50 penalty against Kenneth McPeek Racing Stables, at $654.50 per infraction for all 99 forms.
Ultimately, the penalty was reduced because of the size of McPeek's business, as well as his clean history in terms of previous I-9 form violations. Taking into account the ability of the horse training business to pay the fine, as well as its lack of prior infractions, the court lowered the fine, though the relief was described as "modest." If McPeek's company was smaller, there is a likelihood that the mitigation of damages would have been greater.
Businesses should not rely on penalty reductions to escape Form I-9 violations. Though McPeek saw the fine lowered, his business still owes over $35,000 in government fines. The most effective way to avoid Form I-9 infractions is to remain diligent about how they are completed and stored.
Learn more about how fines add up here, or schedule a demo with I-9 Advantage to learn how a web-based I-9 solution can help reduce your risk of excessive fines and penalties incurred from a failed Form I-9 audit.