Consulting Services When to Accept or Reject I-9s in a Merger or Acquisition
 
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It’s easy to get lost when navigating what to do with I-9s during a merger or acquisition. Do you absorb the previous company’s forms? Do you start from scratch and create new forms? Like the answers to most complex questions, it depends. When a company is discussing a potential merger or acquisition, a team should be assembled with individuals from various departments, including HR, to conduct the necessary activities that are part of the due diligence process. For HR, reviewing the other company’s I-9s is critical.

Why Audit I-9s?

A qualified HR professional should audit the I-9s to determine if existing forms should be absorbed or new forms should be created before the sale or merger agreement is signed. If this step is completed, HR will be able to outline the necessary onboarding activities and provide proper communication before new employees arrive.

The Form I-9 is a legal document that is required by law to be completed properly. If done incorrectly and audited, the U.S. Immigration and Customs Enforcement (ICE) can issue substantive violation penalties ranging from $220 to $2,191 per form.

What Should You Look For?

During the review, HR should audit a sample of forms and evaluate all fields for any errors or omissions. For example:

  • Was the correct form used at the time the employee was hired?
  • Are all required fields completed properly?
  • Were Section 1 and Section 2 completed within the required timeframe?
  • Were supporting documents attached in accordance with company policy?

Making the Right Decision

At the end of due diligence, HR would generally make a business case to either absorb the I-9s or create new forms.

  • Absorb I-9s: If your company decides to absorb the I-9s, your company also absorbs the liability and risk exposure as well. Companies will typically transfer all I-9s in instances where the I-9 audit yielded a low percentage of errors. In this case, the company can save time and resources by 1) simply auditing the entire population and 2) having the merger employees correct their existing forms and reverify information as necessary. While there is still exposure for penalties, ICE will see that all errors and omissions were corrected in good faith and in an effort to achieve compliance.
  • Creating New Forms: The U.S. Customs and Immigration Services (USCIS) allows companies to create new I-9s instead of using the existing forms. Generally, a company will take this route to reduce the liability and ensure forms are error-free from day one. In addition to following USCIS guidelines for mergers and acquisitions, when executing new I-9 forms, it is essential that the HR team is fully trained on how complete the form in order to avoid unnecessary errors.

With over 50 years of combined human resource knowledge and experience, P&N can partner with your HR team to assist with completing the critical HR activities as part of the due diligence process. Our HR consultants can help you 1) assess I-9s using a sample set, 2) determine a game plan for handling I-9s, and 3) provide training to ensure your HR team understands how to complete I-9s properly to avoid fines and penalties.

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