Every legitimate U.S. business must complete a Form I-9 for each and every employee. Those that don’t do it timely or accurately could face:
- fines ranging from $252 to $25,076
- lost profits from correcting erroneous filings
- a federal audit
In certain cases, egregious I-9 problems can force an employer to suspend or even end its operations.
With so much at stake, organizations should conduct their own Form I-9 audit to help avoid facing steep — and preventable — penalties. But when I-9 compliance isn’t always straightforward, how does a company ensure its HR team considers every possible blind spot?
It’s easier than you might think. By building an I-9 audit checklist, HR gains a priceless resource to lean on and integrate into any compliance strategy. Let’s explore:
- why Form I-9 audits matter
- what to do before your internal audit
- how to ace I-9 compliance in seven simple steps
What is an internal Form I-9 audit?
Businesses conduct form I-9 audits to find:
- errors
- missing information
- potential liability
While no authority mandates these reviews, they still help businesses get ahead of potential costly fines by identifying where their I-9 process — or lack thereof — fails.
Why conducting an internal Form I-9 audit is important
Beyond how they strengthen compliance, internal I-9 audits give employers a jump on issues that HR would have to rush to fix later. Additionally, these audits help businesses spot missing I-9s and crucial employee legal information like:
- names
- addresses
- work authorizations
Because I-9s contain so much personal data, audits help employers spot errors in employee records.
How employers can prepare to conduct an internal Form I-9 audit
Before building a checklist, companies need to consider why an internal audit is necessary. This could be because of:
- a fine the business received
- an upcoming acquisition or reorganization
- a recent wave of growth and new hires
Solid compliance demands agility, but it’s not always prioritized. Smaller companies might focus on operations that drive revenue, especially if their workforce is relatively small. Even enterprises and larger organizations may have a harder time justifying conducting a self-audit if they haven’t encountered issues in the past. (Of course, that doesn’t mean they’re immune to faulty I-9s.)
Here’s the hard truth: While important, those factors don’t outweigh compliance. For example, an overlooked or missing batch of I-9s could be enough to shut down some companies. Executives and HR alike should be prepared to escalate and champion the need for an internal audit, in hopes of avoiding a government one.
After all, in curbing regulatory problems, too much urgency doesn’t exist. Certain situations may merit an immediate internal audit, including:
- a merger
- a push to secure startup funds
- an anonymous tip about unauthorized labor
- working in an industry specifically targeted by DHS
- and more, depending on a business’s needs
Before starting a self-audit, an employer should ask:
- Is the employee roster up to date?
- Do we have I-9s for every current employee?
- Do we have I-9s for former employees since we must retain them for up to three years?
- Are we aware of the most recent version of the I-9?
- Do we have the bandwidth to conduct an immediate audit?
- How often should we conduct this audit?
- Who will take part in and oversee the audit?
Other employer to-dos before conducting an internal I-9 audit
To avoid missing data and duplicate work, it’s crucial to brainstorm with HR about everything the I-9 covers. This could include:
- basic employee info (names, addresses, dates of birth, etc.)
- forms of identification like passports and driver’s licenses
- employment authorizations like green cards and work permits
- new hire start dates
- former employees’ end dates
Remember, no piece of data is too miniscule to exclude. Something as seemingly minor as an incorrect digit in an employee’s house number can trigger a rejected filing.
In general, it’s not wise to announce an internal audit to your workforce. At the same time, communication will be vital in addressing outstanding issues. Consult with HR about the best way to address problematic I-9s with affected employees.
Above all, don’t assume an employee is lying about their identity. Like other tax forms, mistakes happen. Go over the questionable I-9 in detail so it’s abundantly clear where the issue lies.
7 steps for conducting an internal Form I-9 audit
Once everyone understands the need for an audit, it’s time to put it into motion. But where to start? Use these seven steps to help you conduct the most successful Form I-9 audit possible.
1. Gather employee information
Ensure every employee has completed or received a Form I-9. You should also make note of all former employees hired after Nov. 6, 1986 (when the Immigration and Nationality Act was signed). Keep in mind employers have to retain I-9s only from whichever is later:
- three years from when the I-9 was completed
- one year after an employee’s termination date
2. Collect I-9s
Ensure you collect all digital and physical I-9s. Depending on a company’s size and history, these may be stored in separate locations. Wherever they are, gather them and set up a consistent way of storing them moving forward. A single HR software with a convenient tool for storing documents makes this process exponentially easier.
3. Verify completed I-9s
Determine which employees have and have not completed I-9s. If HR has the bandwidth, it further helps to identify which employees have received a Form I-9 but haven’t returned it.
Afterward, make a code to quickly identify employees who don’t require additional action. This helps HR focus its efforts on workers who actually need assistance.
4. Audit and review I-9s
Perhaps needless to say, this step is the heart of your internal audit. HR should review each Form I-9 section by section to avoid making mistakes. For larger businesses, it could help to incorporate secondary reviewers to step in after a first glance. (Think of their role as an editor or proofreader.)
Keep the following details in mind for each of the three sections.
Section 1
Ensure accuracy and completeness of:
- names, addresses and dates of birth
- Social Security numbers (mandatory for employers using E-Verify)
- the citizen/immigration status box
- Alien Registration Numbers (A-Numbers or A#s) or USCIS numbers
- a signature dated no later than the employee’s start date
- the preparer section if they received help completing the form
Section 2
Verify employees have:
- entered their name as it appears in Section 1
- listed a Social Security, Alien Registration or USCIS number that correlates with the citizenship/immigration status box
- provided and correctly entered one document from List A (or one document from List B and another from List C)
- noted the right start date
- completed the certification section
- obtained their employer’s (or an authorized representative’s) signature, name and full address
Supplement B (formerly Section 3)
Supplement B is relevant only if the employee’s:
- work authorization expired
- name legally changed
- Form I-9 was completed over three years ago (applies only to rehired workers)
5. Correct errors
Make any necessary changes after reviewing each employee’s form. HR should note these adjustments and document any recurring issues, as this could reveal a deeper, systemic issue with I-9 processing.
Most importantly, remember an employer can’t correct the employee portion of the I-9 directly. The recommendations must be returned to the relevant individual, who must do it themselves.
6. Complete the audit
Once HR addresses all I-9 errors, reorganize and store every form in a way that’s clear and accessible. Be sure to memorialize the storage process; it’ll help HR easily retrieve the forms for future audits.
7. Document processes and regular audits
In the post-audit phase, consider what was most effective, as well as areas needing improvement. If this is an inaugural audit, set a standard operating procedure for everyone in HR to reference. This should also include the timing of the audit, which will vary based on company needs.
Finally, schedule an annual training to educate employees on:
- the importance of I-9s
- how to complete them
- understanding acceptable documents and deadlines
- anything else they should know about the audit procedure
How Paycom helps with the Form I-9
Paycom’s single software simplifies Form I-9 audits by automating employment identification and verification. Our E-Verify® tool allows HR to quickly confirm a new hire’s eligibility and prepopulate new cases.
Plus, employees need to enter their data once and only once; from there, it automatically and seamlessly flows throughout Paycom’s tools. HR can store completed I-9s alongside employees’ other important documents. Employers can receive notifications for expiring documents to:
- easily complete the rehire and reverification supplement
- verify and file I-9s early
- strengthen your I-9 self-audit with easy-to-use reporting tools
Watch our I-9 compliance webinar to learn more about I-9 compliance and troubleshooting. And explore Paycom’s E-Verify tool along with our powerful tech for employee document storage, Documents and Checklists.
DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.
