U.S. Alert- Ninth Circuit Rules Against Good Faith Exception for Unauthorized Worker Employment and I-9 Violations

In a recent decision, the U.S. Court of Appeals for the Ninth Circuit found, among other things, that an employer could not make a good faith defense to a charge of continuing to employ unauthorized workers or failing to properly complete, retain, or produce I-9 employment verification forms.

DLS Precision Fab LLC, a Phoenix, Arizona-based custom sheet metal fabrication company doing business as Di-Matrix Precision Manufacturing, had dealt with the sudden growth of its workforce due to an expansion of a Department of Defense program by hiring a well-credentialed human resources director to ensure compliance with applicable state and federal employment laws. Instead of doing so, however, the HR director shirked his responsibilities to the point of “literally stuffing the government’s correspondence in a drawer and never responding,” according to DLS. U.S. Immigration and Customs Enforcement subsequently inspected DLS’s I-9 forms and other relevant business information and served DLS with notices of suspect documents and intent to fine.

The court noted that the good faith defense, as argued by DLS, did not apply here. DLS conceded that its violations were substantive but contended that the “peculiar facts of this case” justified extending the good faith defense to the substantive violations because DLS had made a good faith effort to comply with the law’s employment requirements by hiring an HR director, but the HR director exhibited bad faith by neglecting his duty to keep DLS compliant. The court was not persuaded. Among other things, the court pointed out that under the law, such a defense might apply to technical or procedural, but not substantive, violations. Also, the court said, “DLS is not the first employer to hire an employee with the expectation that he or she will comply with the law only to be disappointed, nor is it likely to be the last. More broadly, DLS asks us to disregard the company’s responsibility for hiring and supervising its own employees. The HR director was acting as DLS’s agent, and his failure to perform his responsibility may properly be imputed to DLS.”

The full text of the opinion, DLS Precision Fab LLC v. U.S. Immigration & Customs Enforcement, 2017 S.O.S. 14-71980 (Aug. 7, 2017), is at http://cdn.ca9.uscourts.gov/datastore/opinions/2017/08/07/14-71980.pdf.