OCAHO Substantially Reduces Penalties for Two Small Businesses; Fact Sheet Updated

In U.S. v. Red Bowl of Cary, LLC, the Executive Office for Immigration Review’s (EOIR) Office of the Chief Administrative Hearing Officer (OCAHO) reduced fines for Red Bowl of Cary, doing business as Red Bowl Asian Bistro in North Carolina, for Form I-9 violations. OCAHO also reduced fines for a small family business in a similar case, U.S. v. Kobe Sapporo Japanese, Inc. EOIR also recently updated its fact sheet on OCAHO.

Red Bowl case. U.S. Immigration and Customs Enforcement (ICE) investigated Red Bowl, which had 23 active employees, in 2011. The restaurant manager advised ICE that its I-9 employment authorization forms were filled out after ICE issued its Notice of Inspection and that he and Red Bowl’s president were unaware of the requirement to use the form. ICE sought penalties totaling $21,505. Red Bowl argued that the penalty was both inappropriate and excessive.

OCAHO noted that the minimum penalty for paperwork violations is $110 and the maximum is $1,100. In assessing an appropriate penalty, OCAHO noted, the following factors are considered: (1) the size of the employer’s business, (2) the good faith of the employer, (3) the seriousness of the violations, (4) whether the individual was an unauthorized alien, and (5) the history of previous violations. OCAHO observed that the law neither requires that equal weight be given to each factor nor rules out consideration of additional factors.

Potential penalties for the 23 violations in this case ranged from $23,509 to $25,300, OCAHO noted. Instead of focusing on the completion of its I-9 forms, Red Bowl noted that it exercised reasonable care to refrain from hiring unauthorized aliens and had never done so. Red Bowl said that its conduct may have been negligent but that its violations were less serious than, for example, an intentional falsification of forms or a refusal to fill them out. Red Bowl argued that the fines were unduly punitive in light of a statutory analysis showing no aggravating factors. The restaurant noted that even in a worst-case scenario, where a large company willfully disregarded its obligations, falsified I-9 forms, employed unauthorized workers, and had a history of previous violations, the penalty would still be only $3,794.45 more than what the government sought here. Red Bowl also noted that the proposed penalty represented 16% of its income for the tax year 2011 and would create undue hardship. Red Bowl argued that a more appropriate penalty would be $110 for each violation, or a total of $2,530. The restaurant also requested a schedule permitting payment over a six-month period.

OCAHO noted that Red Bowl had not employed any unauthorized aliens and had no history of previous violations, so the only negative factor was the seriousness of the violations. OCAHO said that an employer’s failure to prepare a timely I-9 form for an employee is a serious violation because it may permit an unauthorized individual to maintain unlawful employment. OCAHO acknowledged that 16% of the restaurant’s income appeared excessive in light of the record, noting that a penalty “needs to be sufficiently meaningful to accomplish the purpose of deterring future violations” but “should not be unduly punitive in light of the respondent’s resources.” OCAHO said that penalties very close to the maximum permissible “should be reserved for the most egregious violations,” noting a “general public policy of leniency toward small entities.” OCAHO adjusted the penalty amount to “an amount closer to the midrange,” for a total penalty of $10,350. OCAHO said that a payment schedule could be established “to minimize the impact of the penalty on the operations of the restaurant.”

Kobe Sapporo Japanese case. In a similar case, U.S. v. Kobe Sapporo Japanese, Inc., ICE alleged that the company, a small family-owned restaurant in North Carolina, failed to ensure that its 26 workers properly completed various sections of the I-9 form. The complaint sought penalties totaling $29,452.50. OCAHO noted that an employer’s financial health, the economy, the employer’s ability to pay the fine, and the potential effect of the fine on the company are all appropriate additional factors to be considered. Penalties are not intended to cause employees to lose their jobs or to force employers out of business, but rather to enhance the probability of future compliance, OCAHO said, reducing the total amount of the penalties to $15,400.

Both cases were decided on October 18, 2013. The Red Bowl decision is available at http://www.justice.gov/eoir/OcahoMain/publisheddecisions/Looseleaf/Volume10/1206.pdf. The Kobe Sapporo Japanese decision is available at http://www.justice.gov/eoir/OcahoMain/publisheddecisions/Looseleaf/Volume10/1204.pdf.

Fact sheet updated. EOIR also updated its OCAHO fact sheet on October 1, 2013. The fact sheet explains what OCAHO does; the types of cases it hears; and how it receives cases related to employer sanctions, document fraud, and unfair immigration-related employment practices, including the typical steps in how a case proceeds. The fact sheet notes that OCAHO decisions are available at http://www.justice.gov/eoir/OcahoMain/ocahosibpage.htm. The fact sheet is available at http://www.justice.gov/eoir/press/2012/OCAHOFactSheet05292012.pdf.