Indiana Employment Law and Indiana Corporate LawCorporation Mergers and Acquisitions May Subject Companies to I-9 Sanctions By: Jeremy L. Fetty

During a corporate merger or acquisition, companies should inspect the I-9 Employment Eligibility Verification Form policies of the soon-to-be merged or acquired company, as failure to do so may expose the company to fines and penalties from Immigration and Customs Enforcement (ICE). Since November 6, 1986, employers have been required to use the I-9 form in order to verify that each employee hired is authorized to work in the United States.

The complicating process of a merger or acquisition is increased when I-9 compliance is at issue, as an entity that desires to merge with or acquire another company inherits the other company’s I-9 violations. Such violations include both technical and substantive violations. Technical violations are less severe and usually involve the employee’s failure to enter a birth date or the employer’s failure to provide its business address. This violation could result in fines from $110 to $1100 per violation. On the other hand, substantive violations are more severe and include the employee’s failure to sign the I-9 form or failure to indicate immigration status. This violation may result in criminal prosecution and/or fines of $375 to $14,000 per hire.

To ensure that merging or acquiring another entity does not result in fines or criminal prosecution, due diligence should include examining the other company’s workforce and current systems and practices for I-9 verification compliance.

Jeremy Fetty is a partner in the law firm of Parr Richey Frandsen Patterson Kruse with offices in Lebanon and Indianapolis. He often advises businesses and utilities (for profit, non-profit and cooperative) on organizational, human resources, and transactional matters and drafts and reviews commercial contracts.

The statements contained herein are matters of opinion and general information only and are not to be considered legal advice and should not be construed to form an attorney-client relationship. If you have any questions regarding this article, please contact an attorney.

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