Clothing Manufacturer Lays Off 1,600, One Quarter of Workers, In I-9 Audit

Clothing maker American Apparel Inc. announced it will lay off more than a quarter of its factory work force in Los Angeles amid a probe by U.S. immigration authorities -- an early indication of how the Obama administration crackdown on employers of illegal immigrants could play out.

In early July, the company announced that it had been notified by U.S. Immigration and Customs Enforcement, or ICE, that 1,600 of it is 5,600 factory employees, who are largely Hispanic immigrants, might be in the U.S. illegally. An American Apparel spokeswoman said that about 1,500 workers would be terminated in coming weeks.

American Apparel is likely to face thousands of dollars in penalties for hiring workers who weren't eligible to be employed. The government has said fines may exceed $800 per employee ($1.28 million).DHS/ICE enforcement of I-9 and employer sanctions laws now targets employers through on-site investigations and administrative or "desktop" audits.

Employer failure to verify employment eligibility and properly complete and retain I-9 Forms subjects the company to stiff criminal and civil liabilities, including imprisonment, asset forfeiture, and treble damages in RICO (Racketeer Influenced and Corrupt Organization) lawsuits by competitors. Executives, officers, managers, supervisors and key employees, as well as accountants are personally liable for civil and criminal penalties for I-9 related errors and unlawful employment eligibility verification (EEV) practices.

I-9 compliance (and E-verify for registered employers) require that employers verify all workers’ employment eligibility, or work authorization. Persons not authorized for employment, whether documented foreign nationals (or "illegal immigrants") generally do not have work authorization. The I-9 laws and the employment eligibility verification process restrict employment of illegal or undocumented immigrants and employment of persons who are not "employment authorized".

Employer liability extends to circumstantial evidence and “constructive knowledge”.
  It is unlawful to knowingly hire or continue to employ unauthorized workers. This I-9 process mandates accurate and timely completion of the Form I-9 by all U.S. employers and their employees.

"Knowingly hire" includes "constructive knowledge". The requisite employer's knowledge may be constructive knowledge when it may be fairly inferred through notice of certain facts which through exercise of reasonable care would lead a person to know about; or the employer deliberately fails to investigate such facts.

Employer constructive knowledge extends to its subcontractors' and independent contractors' I-9 compliance.

Goulder Immigration Law Firm assists employers with Form I-9 consulting, including I-9 and employer sanctions compliance training, developing a company I-9 and employer sanctions compliance manual, and employment eligibility compliance auditing services.  Written I-9 compliance policies and a Form I-9 and employer sanctions law internal audit will help protect employers from government fines and criminal penalties and help ensure that all I-9 Forms comply with I-9 and employer sanctions laws. 

Gerald Goulder is a North Carolina immigration lawyer who practices exclusively immigration law for North Carolina clients and for clients throughout the United States, and the world.  Immigration law is a federal law practice not limited attorneys in a particular state.