When it comes to Form I-9 violations, not even going out of business can save some employers from the large fines they face, as the ongoing, and apparently recently mishandled, case against Quickstuff LLC illustrates.
The company, based in Vineland, New Jersey, was served a Notice of Intent to Fine by Immigration and Customs Enforcement, and the proposed penalty was big. Citing 4,964 violations of employment eligibility verification regulations, the agency set a fine of over $5 million against Quickstuff LLC, as well as co-defendants Maria Castillo and A&C Staffing LLC. The defendants seemed to assume that going out of business absolved them of any proposed fines. This assumption was proven false though, by Administrative Law Judge Ellen Thomas' decision to uphold ICE's NIF.
Judge decides attorney did not act with due diligence
ICE filed a complaint with the Office of the Chief Administrative Hearing Officer on July 9, noting that the defendants failed to properly verify employment eligibility for a number of employees. The deadline for Quickstuff, Castillo and A&C to respond was August 12. The three defendants failed to respond to the agency by that date, though, prompting Thomas to issue a notice on September 1 requiring the defendants to disclose why they had failed to respond within 15 days.
"ICE set a fine of over $5 million against Quickstuff."
Over the course of September, the judge received two letters from an attorney, Jeremiah Atkins, representing the company in bankruptcy proceedings. Through each of those documents it became clear that the defendants were operating under the assumption the fact that Quickstuff had filed for bankruptcy absolved it from ICE's proposed fines. In the first letter, delivered to the judge on September 9, the attorney explained he had already called OCAHO and informed the agency of Quickstuff's bankruptcy proceedings. The next, which Thomas received on September 16, contained an explanation as to why the defendants did not respond to the NIF. The attorney had mistakenly believed the fine would be automatically stayed under federal bankruptcy laws. However, that was ultimately not the case. Though the attorney believed that he and the defendants had acted diligently, Thomas disagreed.
She noted that while the attorney had believed the bankruptcy proceedings stayed any fines proposed by ICE, if he had looked further into the matter - and as a result, displayed due diligence - he would have found that was not true. Instead, the fines remained in place. Thomas decided to take the letters as motion for extension of time, which she ultimately denied. The judge stated that ICE's Notice of Intent to Fine was final.
While the fine may change, it definitely did not go away
Alvin Philips, a spokesman for ICE New Jersey, told Law360 that he was unsure if the proposed fine would remain at $5 million due to Quickstuff's bankruptcy proceedings. Atkins told the media outlet that he was taken aback by Thomas' decision given the fact that Quickstuff was bankrupt.
"Both my adversary and I were surprised by the judge's decision as we were under the impression that we would be afforded additional time to file an answer given the fact that both companies are in bankruptcy and have very limited assets," he told Law360. "We expect the matter to be addressed further in the near future by the bankruptcy trustee and we will be reviewing all options with our clients."
As it turns out, not even bankruptcy proceedings can stay a proposed fine from ICE. The defendants now face a fine that could be up to $5 million, depending on whether the bankruptcy proceedings affect the penalty total.