Is the SBA’s 8(a) Minority Business Development Program Constitutional?

By Lee-Ann C. Brown on Posted in Government Contracts

Is the SBA’s 8(a) Minority Business Development Program Constitutional?

The constitutionality of small business programs has been a significant topic of debate over the past few years. The U. S. Court of Appeals for the D.C. Circuit recently upheld the constitutionality of the Small Business Administration’s 8(a) Program finding that the challenged provisions do not, on their face, classify individuals by race.

Section 8(a) of the Small Business Act authorizes the SBA to acquire procurement contracts from other government agencies and to award or arrange for performance of those contracts by small businesses whenever the agency determines such action is necessary. The current Section 8(a) Program was developed with the express purpose of helping small business owners who are socially and economically disadvantaged compete on an equal basis in the American economy. The Program provides qualifying small businesses with technological, financial, and practical assistance through preferential awards of government contracts. To receive the benefits conferred under the Program, applicants must: (1) be small businesses; (2) demonstrate their businesses’ potential to succeed; and (3) be owned by U.S. citizens of good character that are “socially and economically disadvantaged.”

The question regarding the constitutionality of the Section 8(a) Program arose in the most recent case, Rothe Development, Inc. v. U.S. Dept. of Defense et al., out of the Act’s race-conscious definition of “socially disadvantaged individuals.” In 2012, Rothe Development Corporation, a woman-owned small business, filed suit against the Department of Defense and the SBA. Rothe claimed that the statute’s definition of “socially disadvantaged” small business owners is a racial classification that violates its right to equal protection under the Due Process Clause of the Fifth Amendment. According to Rothe, the government, under the 8(a) Program, has increasingly set aside contracts for minority-owned/controlled businesses, which unfairly prevents Rothe from competing for those contracts on equal footing with minority-owned contractors.

Rothe argued that the racial classification stems from three provisions: (1) the statutory definition of socially disadvantaged individuals; (2) a government-wide goal of awarding 5 percent of federal contracts to small businesses owned by socially disadvantaged individuals; and (3) the findings section of the statute, which Rothe claimed assumes that all individuals who are members of certain groups (Black Americans, Hispanic Americans, Native Americans, Asian Pacific Americans, Native Hawaiian Organizations, and other minorities) are socially disadvantaged. The district court upheld the constitutionality of the 8(a) Program, and Rothe immediately appealed. On September 9, 2016 the U.S. Court of Appeals for the D.C. Circuit affirmed the district court’s decision.

The court held that the statute does not contain an unconstitutional racial classification for the following reasons: (1) the definition of “socially disadvantaged individuals” does not distribute burdens or benefits on the basis of individual racial classifications and that while the statute does reference specific groups, it does not do so as a floor for participation; (2) the program’s goal is not a racial classification as it refers to socially and economically disadvantaged individuals and does not define the relevant business owners by their race; and (3) that in implementing the program, the SBA requires an individualized showing of a social disadvantage. As the statute lacks a racial classification, the court applied rational basis review, under which it concluded that the statutory scheme was rationally related to the legitimate government interest of counteracting discrimination.

Judge Karen Lecraft Henderson disagreed with the majority, stating that she would hold that the challenged portions of the Small Business Act include a racial classification and therefore are subject to strict scrutiny. Judge Henderson parts from the majority’s analysis which she explained is “fundamentally flawed” because it assumes that a statute that “does not classify exclusively on the basis of race must necessarily be ‘facially race-neutral.’” In her dissenting opinion, Judge Henderson explains that the inquiry as to whether Section 8(a) is race neutral boils down to whether the Act provides members of certain racial groups an advantage in qualifying for contract preference by virtue of their race. She points out that it is membership in a class that has suffered racial/ethnic prejudice or cultural bias, not an inquiry into each applicant’s unique experience of discrimination that determines whether an individual is socially disadvantaged. She also commented on the SBA’s implementing regulations, which she interpreted as presuming that members of certain racial groups are automatically categorized as socially disadvantaged but that individuals who do not belong to any of the designated groups must establish their individual social disadvantage by a preponderance of the evidence.

Accordingly, Judge Henderson reasoned that “Section 8(a) contains a paradigmatic racial classification” because Congress has distributed a benefit to members of statutorily designated racial groups because of their membership in one of them. These designated racial groups are not required to meet the same standard in establishing their eligibility to participate in the Program that members of non-minority races must satisfy.

This is not the first lawsuit challenging the constitutionality of small business programs over the past few years, let alone the first suit filed by Rothe. Parties challenging the constitutionality of such programs have been successful in some cases. It remains to be seen whether these challenges will change the SBA’s 8(a) Program and other small business set aside programs. If Rothe had been successful in its challenge, it would have been a damaging blow to race-conscious small business programs and ultimately may have significantly affected the way government contracts are awarded.

Read the United States Court of Appeals for the D.C. Circuit’s full opinion at: https://www.cadc.uscourts.gov/internet/opinions.nsf

 

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FAR Council and DOL Issue Final Rule Implementing Fair Pay & Safe Workplaces Executive Order

By Aron C. Beezley on Posted in Federal Contractors, Labor & Employment

InspectionsThe Federal Acquisition Regulatory Council and the Department of Labor published a final rule, implementing the Fair Pay and Safe Workplaces Executive Order (also known as the “blacklisting” Executive Order), on August 24, 2016.  The Executive Order, implemented by the final rule, requires federal prime contractors and subcontractors – including federal construction contractors – under covered procurements (i.e., ones where the estimated value exceeds $500,000) to disclose to the government certain labor violations.

Among the labor laws listed in the Executive Order and the final rule, violations of which must be reported, are: (1) the Davis-Bacon Act; (2) the Service Contract Act; (3) the Fair Labor Standards Act; (4) the Occupational Safety and Health Act of 1970; (5) the Migrant and Seasonal Agricultural Worker Protection Act; and (6) the National Labor Relations Act.  While prime contractors are to disclose labor law violations in their bids or proposals, the final rule provides that subcontractors generally are to “disclose details regarding labor law decisions rendered against them . . . directly to [the Department of Labor] for review and assessment instead of to the prime contractor.”

The final rule – which is over 500 pages long including comments – contains an effective date of October 25, 2016, but also includes various “phase-in process[es]” for certain prime contractors and subcontractors.  For instance, the “reporting disclosure period” for prime contractors initially is limited to one year and will gradually increase to three years by October 25, 2018.

The penalties for non-compliance are not entirely clear, but they may range from being found “nonresponsible,” to losing a bid protest, and/or to being accused of failing to comply with various federal laws requiring truthful statements to the government. Given the fast-approaching effective date, federal prime contractors and subcontractors would be well-advised to familiarize themselves with the content of the new rule and to do so promptly.

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GAO Sustains Bid Protest Where, Among Other Things, the Agency Improperly Considered Cost Risk under Its Technical Evaluation

By Aron C. Beezley on Posted in Bid Protests, Government Contracts

GAO Sustains Bid Protest Where, Among Other Things, the Agency Improperly Considered Cost Risk under Its Technical EvaluationRecently, the Government Accountability Office (GAO) sustained a bid protest involving the U.S. Army Corps of Engineers’ (USACE) evaluation of proposals for remedial action and surface support assistance at the Gilt Edge Mine Superfund Site near Lead, South Dakota.  See Arcadis U.S., Inc., B-412828 (2016). While the GAO sustained the protest on approximately ten different grounds, the GAO’s holding with respect to the USACE’s consideration of cost implications during its evaluation of the protester’s technical proposal is particularly noteworthy.

The USACE assigned the protester’s technical proposal various “weaknesses” because the USACE believed that the protester’s technical approach posed a cost risk to the USACE. The protester argued that the USACE’s focus on cost in its evaluation of the protester’s technical approach was unreasonable because the cost of the technical features was included in the protester’s fixed-price proposal, and thus posed no independent cost risk to the government. The GAO sided with the protester on this issue (as well as several others), finding that the USACE’s “focus on cost in the context of making assessments under the technical approach factor – particularly where the approach is otherwise viewed as offering a benefit to the government – was not reasonable.”

Importantly, the GAO’s holding in this regard is applicable far beyond the context of remediation services contacts, such as the one at issue in the protest. Instead, the GAO’s holding applies to fixed-price federal contracts across all industries – including construction and beyond.

*Note:  This author, along with Douglas L. Patin and Lisa A. Markman of Bradley, represented the protester in this case.

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Broad “Assumption of Liability” Clause in Subcontract Likely Trumps “Waiver of Subrogation” Clause in Prime Contract

By Eric A. Frechtel on Posted in Bonds and Insurance, Contract Interpretation

Broad “Assumption of Liability” Clause in Subcontract Likely Trumps “Waiver of Subrogation” Clause in Prime ContractIn a recent case handled by Bradley, a federal court in Maryland issued a decision attempting to reconcile inconsistent contract provisions.

The general contractor said that its fire sprinkler subcontractor was responsible for the burst sprinkler pipe and the resulting property damage based on the “Assumption of Liability” provision in the subcontract, which stated that the subcontractor “assumes the entire responsibility for any and all actual or potential damage…” and “agrees to indemnify and save harmless [the general contractor]… from and against any and all loss.” The subcontractor said that the general contractor waived its right to hold the subcontractor responsible based on a provision in the form contract between the general contractor and the project owner. Under the boilerplate “Waiver of Subrogation” in the American Institute of Architects (AIA) A201-2007 General Conditions, the owner and general contractor “waive all rights against … each other and any of their subcontractors” for “causes of loss to the extent covered by property insurance obtained pursuant to … Section 11.3 or other property insurance applicable to the Work.” (emphasis added)

Finding “sufficient ambiguity for consideration of extrinsic evidence” as to whether the parties actually intended the Waiver of Subrogation clause to control, the Court denied the parties’ cross-motions for summary judgment.

The Court determined that the subcontractor could invoke the Waiver of Subrogation provision even though that clause resided in a contract to which it was not a party. After all, the subcontract incorporated the general contract by reference, and the phrase “and any of their subcontractors” in the subrogation waiver clause supported the subcontractor’s contention that it was an intended third-party beneficiary of that provision. Moreover, the Court observed that courts in other jurisdictions have permitted subcontractors to invoke prime-contract subrogation waivers.

Next, the Court took up the conflict between the subrogation waiver provision and the Assumption of Liability clause in the subcontract concluding that the general contractor had the better argument.

First, the Court invoked the “well-established canon of contract interpretation” that a “specific” provision takes precedence over a “general” provision holding that the specific Assumption of Liability provision in the subcontract should prevail over the Waiver of Subrogation clause in the general contract, which was merely incorporated into the subcontract by reference.

Next, the Court identified another subcontract provision that favored the general contractor’s interpretation. The subcontract required the subcontractor to maintain commercial general liability insurance and to list both the project owner and the general contractor as additional insureds. The subcontract also stated: “It is expressly agreed … that all insurance … afforded the additional insureds shall be primary insurance … and that any other insurance carried by the additional insureds shall be excess of all other insurance carried by the Subcontractor and shall not contribute with Subcontractor’s insurance.” The Court found it “difficult to square” that provision with a Waiver of Subrogation clause that purported to make the project owner’s property insurance primary.

Third, the Court found yet another subcontract provision in support of the general contractor’s interpretation which said “[i]f … any provision … irreconcilably conflicts with a provision of the General Contract … the provision imposing the greater duty or obligation on the Subcontractor shall govern.” Here, the Assumption of Liability provision imposed the greater obligation on the subcontractor.

Characterizing the Assumption of Liability clause as “breathtaking in scope,” the Court begrudgingly found that the Assumption of Liability clause should prevail over the Waiver of Subrogation provision stating: “The Court thus suspects that this case may be an outlier – a rare case in which the obvious public-policy benefit of orderly and predictable insurance planning at the outset of a venture must yield to the explicit arrangements between a general contractor and the subcontractors with which it chooses to transact.”

This case offers important lessons concerning insurance and indemnification provisions and reinforces familiar rules of contract interpretation. It also serves as a reminder that prime contract language incorporated by reference into subcontracts should be reviewed for consistency with the intent of the subcontract provisions.

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The “Rule of Two” Rules the Day in Supreme Court’s Decision Against the VA

By Abigail B. Harris on Posted in Government Contracts

The “Rule of Two” Rules the Day in Supreme Court’s Decision Against the VAThe recently decided case of Kingdomware Technologies, Inc. v. United States marks a big win for small business-owning veterans. The Supreme Court unanimously decided that the Department of Veterans Affairs (VA) misinterpreted the language of the Veterans Benefits, Health Care, and Information Technology Act of 2006 (codified in 38 U.S.C. § 8127) by applying it to only its small business contracting goals. According to the Court, the Act requires the VA to award contracts to a restricted pool of competition—namely, small businesses owned and controlled by veterans if at least two such businesses submit offers (the “Rule of Two”)—and it applies to all contracts entered into by the VA.

Notably, the Supreme Court opined that “all contracts” includes Federal Supply Schedules (FSS) orders. In doing so, the Court rejected the VA’s interpretation of an “order” as something other than a legally binding contract to which the Rule of Two does not apply, opening up a whole new category of contracts to veteran-owned (or controlled) small businesses.  While this decision may raise new issues as the VA seeks to implement the Rule of Two to FSS orders, it definitely sets veterans back on track to receive the broad competitive bidding opportunities that the legislature intended them to have.

Bradley is a proud supporter of our nation’s veterans, representing veteran-owned construction companies and other businesses, as well as employing more than 30 attorneys and staff who have served in a branch of the United States military.

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OSHA Penalties Are About to Get A Lot More Expensive

By Anne R. Yuengert on Posted in Labor & Employment

OSHA Penalties Are About to Get A Lot More ExpensiveThe Occupational Safety and Health Administration (OSHA) published an interim final rule on July 1, 2016, that increases the maximum penalties for citations by more than 75 percent. This is the first increase in OSHA penalties since 1990. Why now, you ask? Well, in November 2015 the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (a pithily titled portion of the budget bill) eliminated a long-standing exemption for OSHA that permitted it to not increase fines to keep pace with inflation. Under the act, federal agencies must adjust penalties based on the Consumer Price Index (CPI). Because the difference between the 1990 CPI and the current CPI is 78 percent and change, all of OSHA’s penalties will increase by 78 percent and change effective no later than August 1, 2016. If you have facilities in Puerto Rico, the Virgin Islands, or one of the 25 states that have OSHA-approved State Plans, expect increases in those fines as well because a State Plan’s penalties must be at least as effective as federal OSHA penalties.

Although OSHA will be taking public comments on this final rule until August 15, 2016, the new levels are effective August 1, 2016. The DOL has posted a helpful chart comparing the new penalties:

Type of Violation Current Maximum Penalty New Maximum Penalty
Serious

Other-Than-Serious

Posting Requirements

 $7,000 per violation $12,471 per violation
Failure to Abate $7,000 per day beyond abatement date $12,471 per day beyond abatement date
Willful or Repeated $70,000 per violation $124,709 per violation

Do these effect ongoing investigations? Yes. According to the DOL website, if the violations occurred after November 2, 2015, and the citation is issued on or after August 1, 2016, the new penalties apply.

So get your safety audits done before August 1 and make sure you keep them up to date.

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SBA Expands Mentor-Protégé Program and Eliminates Populated JVs

By Aron C. Beezley on Posted in Federal Contractors, Government Contracts

SBA Expands Mentor-Protégé Program and Eliminates Populated JVs

The U.S. Small Business Administration (SBA) recently published its much-anticipated final rule establishing a mentor-protégé program available to all small businesses, not just certain SBA-approved 8(a) contractors as is the case under the current program. The SBA’s new “universal” mentor-protégé program will be separate from, but very similar to, the SBA’s current 8(a) mentor-protégé program.

The primary benefit of the new universal mentor-protégé program is that “[a] protégé and mentor may joint venture as a small business for any government prime contract or subcontract, provided the protégé qualifies as small for the procurement.” Moreover, the new regulations state that “[s]uch a joint venture may seek any type of small business contract (i.e., small business set-aside, 8(a), HUBZone, SDVO, or WOSB) for which the protégé firm qualifies (e.g., a protégé firm that qualifies as a WOSB could seek a WOSB set-aside as a joint venture with its SBA-approved mentor).”

In addition to implementing the new program, the SBA’s final rule eliminates populated joint ventures – both in the mentor-protégé context, specifically, and in the small business context in general. Under the current regulations, a joint venture can be either populated or unpopulated. A populated joint venture is a joint venture that employs its own workers and performs a contract using its own employees, whereas, in an unpopulated joint venture, the venturing members provide employees as subcontractors to the joint venture. While the new regulations eliminate populated joint ventures, the regulations state that a joint venture “may be in the form of a formal or informal partnership or exist as a separate limited liability company or other separate legal entity . . . .”

The SBA’s new regulations have an effective date of August 24, 2016. If you want assistance with exploring or, better, complying with the new regulations, we will be happy to help if your regular lawyer is not familiar with the nuances (and pitfalls) of small business contracting with the Federal government.

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Maximizing Cost Recovery in a Termination for Convenience

By Elizabeth A. Ferrell on Posted in Government Contracts

Maximizing Cost Recovery in a Termination for ConvenienceWith constant budget pressures, federal procurement contracts are always at risk of a termination for convenience. If a termination for the government’s convenience is forecasted by the federal government, there are steps that a contractor can take before and after the termination to attempt to maximize its recovery.

When there are rumors that a termination is imminent, prior to termination the contractor should engage in a dialogue with the Contracting Officer to resolve any open contract issues such as pending requests for equitable adjustment and undefinitized contract changes. Contractors should also determine the status of contract funding (because termination recovery usually is limited to the amount of available funding on the contract), and the status of invoicing and payment to assess the cash position of the contractor. All appropriate invoices should be timely submitted, and payment deadlines monitored. Where the contract is fixed-price, the contractor should start an analysis of its profit/loss position.  If it appears that the contractor is in a loss position (and termination recovery may be reduced by application of a loss adjustment, depending on the wording of the termination for convenience provisions), then the contractor should begin assessing the reason for the loss position and explore possible government causes that can be asserted as a request for equitable adjustment to increase the contract price and thereby avoid imposition of a loss adjustment. And contractors should review their contracts for any provisions that become operative in a termination for convenience, such as a special termination costs provision (used in some DoD contracts) that places limitations on recovery of certain costs (like severance) in a termination.

In assessing its cash position, the contractor must consider the “pipeline.” Usually the contractor is obligated to subcontractors and vendors for some 60 or more days of costs not yet billed. It has its own overhead and self-performance costs that have also not been billed. Moreover, the termination will lead to yet more costs. All of these considerations impact the assessment of the contractor’s exit strategy and pricing under the termination for convenience clause.

Contractors should also review subcontracts for the applicable clauses. We believe promptly informing the subcontractors and vendors of the possible termination for convenience is usually advisable. The contractor must evaluate any and all open issues, including pending REAs, notices of possible change orders, and unresolved subcontractor performance issues.

After a termination for convenience, the contractor should establish a continuing dialogue with the contracting officer (CO) and the termination contracting officer (TCO), if one is appointed to administer the termination. Having the TCO review and approve procedures for the winding down of the contract can prevent later disputes regarding the reasonableness of the contractor’s actions (and amount of termination costs incurred). One particular area for coordination is the settlement of subcontracts, because it is critical for the contractor to have a clear understanding of the scope of the audit/accounting review of subcontractor settlement proposals that the TCO (or CO) expects the contractor to perform.

Contract terminations also generally give rise to the incurrence of costs or the need for special treatment of costs that would not have arisen had the contract not been terminated. These costs include items such as loss of useful value, rental under expired leases, and severance pay. In order to ensure maximum recovery, a contractor should identify unusual expenses that will continue to accrue after termination and make an assessment of allowability in consultation with legal and accounting experts. Notably, in a termination for convenience, legal, accounting and similar costs necessary for the preparation and presentation of the termination settlement proposal and the termination and settlement of subcontracts are generally allowable costs. Legal counsel should be consulted as early as possible in the termination process to guide the termination effort and to position the contractor for the largest possible dollar recovery.

This summary focuses on the federal termination for convenience provisions. Similar considerations arise in state and local public contracts as well as private contracts where a termination for convenience is anticipated.

If you are in the Orlando area, I will present a more detailed analysis of these considerations on July 28 from 11:15 am to 12:30 pm (EDT) at the NCMA World Congress.

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New OFCCP Revised Scheduling Letter: Your Secret’s Not Safe with the OFCCP

By Jennifer F. Brinkley on Posted in Federal Contractors

New OFCCP Revised Scheduling Letter: Your Secret’s Not Safe with the OFCCPYou are officially on notice—the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) is going to share your data with other federal agencies. What data, you ask? The OFCCP annually selects numerous federal contractors to evaluate their compliance with affirmative action regulations. It gets the data by sending a Scheduling Letter and Itemized Listing to federal contractors and subcontractors to initiate an audit of compliance with Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans Readjustment Assistance Act of 1974.

The Scheduling Letter starts the evaluation process by notifying the contractor it has been scheduled for a compliance evaluation and requesting submission of its affirmative action programs and supporting data. The Itemized Listing, which is used with the Scheduling Letter, identifies the documents and information that government contractors must provide during a compliance evaluation.

The OFCCP recently announced that the Office of Management and Budget (OMB) has renewed the Scheduling Letter and Itemized Listing for three years. The OFCCP began using revised Scheduling Letter and Itemized Listing documents to initiate compliance evaluations on July 1, 2016; it last released a revised Scheduling Letter and Itemized Listing in October of 2014.

The important thing to know about the revised Scheduling Letter and Itemized Listing is the change in the confidentiality of the collected data. The previous Scheduling Letter assured contractors that information they provided in response to a Scheduling Letter would be treated as “sensitive and confidential,” and disclosed only as required by the Freedom of Information Act. No more—the revised Letter alerts contractors that the OFCCP may share information with other enforcement agencies:

“Please also be aware that OFCCP may use the information you provide during a compliance evaluation in an enforcement action. We may also share that information with other enforcement agencies within [the U.S. Department of Labor], as well as other federal civil rights enforcement agencies with which we have information sharing agreements.”

Although the OFCCP has existing cooperative agreements with the Equal Employment Opportunity Commission and Department of Justice, these changes to the Scheduling Letter should alert contractors that more frequent information sharing may be in the works. As well, the timing of this revision seems more than coincidental given the National Labor Relations Board’s recent announcement that it would buttress federal contractor compliance under the Fair Pay and Safe Workplaces Executive Order by requiring employers to report information related to all unfair labor practice complaints filed on or after July 1, 2016.

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Form I-9 Compliance: Tips for Employers to Avoid Liability

By Keith Covington on Posted in Labor & Employment

Form I-9 Compliance: Tips for Employers to Avoid LiabilityEmployers are required under federal immigration law to verify the employment eligibility of new employees by reviewing acceptable documents provided by the employee—to establish the employee’s identity and work authorization—and then completing an Employment Eligibility Verification, commonly known as Form I-9.

The employer must first provide the Form I-9, which consists of three sections, to the new employee and ensure that the employee correctly fills out and signs the employee section of the form. Then, after inspecting the employee’s documents, an employer representative must complete and sign the employer section. By regulation, this Form I-9 process must be completed by no later than the third business day of employment. The third section of the form must be completed later if the employee is rehired or must be re-verified because his or her work authorization is expiring.

An employer’s failure to ensure that its Form I-9s are properly completed and retained can lead to costly fines in the event of an inspection by U.S. Immigration and Customs Enforcement (ICE).  Just in the past few months, hefty fines have been levied against a number of employers for violations, including a Minnesota-based temporary help company that was slapped with a civil penalty of $209,600 in April. ICE inspections sometimes result from complaints made by employees, former employees, labor unions, and competitors, but employers also can be randomly selected for inspection.

To avoid penalties from ICE, employers should be vigilant about their Form I-9 compliance. Here are some tips to keep in mind:

  • Make sure that Form I-9s are completed on all new hires. The work eligibility of every new employee, regardless of citizenship or immigration status, must be verified. In addition, depending on the documents presented, some employees have temporary work authorization and must be re-verified through the Form I-9 process when their temporary work authorization expires.
  • Take steps to ensure that the company representatives responsible for Form I-9 compliance understand the importance of completing the Form I-9s correctly and have a full grasp of the process. The Form I-9 is only two pages long, but it can be confusing, and completion errors are common. Unfortunately, ICE investigators do not tend to be very forgiving. It is essential that the representatives who handle the company’s Form I-9 function be properly trained.
  • Stay on top of Form I-9 compliance at remote worksites. Construction contractors and other employers who hire workers at project sites or remote locations face unique challenges. By regulation, a new employee’s original documents must be inspected in person by the company representative who signs the Form I-9. Employers are not allowed to complete Form I-9s by inspecting faxed or emailed employee documents or by reviewing those documents via Skype, webcam, or other such method. Because the Form I-9 must be completed within three business days, employers are often forced to rely on one or more individuals at the remote site to get the Form I-9s completed. Employers should monitor these situations carefully to make sure that the Form I-9 process is not neglected.
  • Consider doing an internal Form I-9 audit. Having a trained human resources professional or independent third-party review the Form I-9s already on file can greatly improve an employer’s position in the event of an ICE inspection. An internal audit gives the employer an opportunity to identify and correct errors in its Form I-9s and to get missing Form I-9s completed before it’s staring down the barrel of ICE’s gun. The employer’s proactive efforts to get its Form I-9s in better shape will be viewed favorably if ICE does come calling.
  • Be prepared in the event of an ICE inspection. Typically, the employer will receive only three days advance notice of an inspection, so having a response plan in place is essential. Identify ahead of time the personnel who will communicate with ICE and coordinate the effort to respond to ICE’s inquiries. Being unprepared for an ICE inspection can lead to critical mistakes early and have a serious negative effect on the employer’s effort to avoid or reduce its Form I-9 liability.

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