HR News
The Cost of Non-Compliance
Do the Math -- You can pay now or pay later
The day Thomas Jordan started his construction company in 2002; he envisioned a booming business that soon became an expensive reality. The Burlington, NC business owner and CEO managed 80 employees, 50 percent who were illegal immigrants, to build and construct homes in the Southeast. In 2006, Jordan’s company received a $20,000 fine, which put his reputation at risk and his company near Bankruptcy due to the fact that the company did not verify the employees, and maintained poor or sloppy record keeping related to retaining the (form I-9).
As a potential future ICE audit target, Mr. Jordan’s construction business still has exposure, for example, the fines for second and third offenders can increase up to $7,500 per repeat violation. Further, the recent announcements in August of 2007 by the Bush Administration that the Department of Homeland Security would step up the enforcement action on employers that hire illegal immigrants many businesses in certain industries have exposure. Also, the government is proposing to increase the fines on employers that did not verify employees to as high as $12,500 per occurrence. It is smart business to be in compliance to avoid the embarrassment and the expensive civil penalties.
Many business owners are unaware of the financial risks of non-verification and the impact on their respective businesses. Mr. Jordan stated that “I never thought to calculate the high cost of not verifying my employees, the amount of money I paid to the government in fines was outrageous”. Now that turnover rates for many small businesses are increasing with the influx of illegal immigrants, it is suggested that employers use a verification resource system that can eliminate exposure to the Immigration and Customs Enforcement (ICE) and Department of Homeland Security (DHS) Audits. One recommendation for small business employers is to use services such as I-9 Direct.com to avoid the following expenses:
The Civil Penalties
80 employees
50% turnover rate= 40 employees
$500 fine per person not verified
$500 x 40 employees= $20,000
Cost of I-9 Direct
$18.95 per employee to be in compliance
$18.95 to verify all 80 employees= $1,516
$1516 VS $20,000
Do the Math
With the purchase of the i9 direct services Mr. Jordan would not have experienced the reputational risks, financial penalties, and business uncertainties associated with hiring illegal workers. In compliance with the Government regulations, Mr. Jordan would have paid approximately $1500 vs. a $20,000 fine. Do the Math, You can pay now or pay later.
