ICE Tightens Grip on I-9 Compliance, Exposing Companies to Significantly Increased Fines and Leaving No Room for Error

On March 16, the U.S. Immigration & Customs Enforcement (ICE) revised its Form I-9 inspection sheet. The changes largely went under the radar—there was no press release nor were they announced in the Federal Register. However, employers should be aware of these changes, as they represent significant updates in immigration-related compliance requirements, during an era when immigration compliance inspections are on the rise.

The second Trump administration has significantly intensified immigration enforcement, with Homeland Security Investigations (HSI) and ICE conducting high-profile inspections or workplace raids, such as those executed upon D.C. restaurants, construction sites, and a very public raid of a vehicle battery site, in which hundreds of workers were detained and returned to their home country. These actions target employers across industries, including manufacturing, raising the stakes for compliance with immigration laws. For businesses, the risks are substantial: costly fines, possible disruptions to business continuity of operations, and reputational damage.

Most notably, the updated Form I-9 inspection sheet converts what used to be minor curable technical violations into substantive violations, triggering significant fines for non-compliance. Substantive I‑9 violations carry immediate, significant monetary penalties, while technical or procedural violations historically could be corrected within a defined grace period without consequence. For nearly 30 years, the distinction between the two categories was guided by the 1997 Virtue Memorandum and subsequent ICE guidance, which treated many minor omissions as correctable if the employer acted in good faith. However, that has changed. 

For example, as of March 16, 2026, if an employee omits their passport number in Section 1 of the I-9, and the employer does not ask the employee to go back and correct the omission nearly immediately, ICE deems the I-9 substantively flawed. Even if the “missing” passport number is evident from the documents presented during the I-9 verification process (and even if maintained in the I-9 record), the employer faces the consequences for a substantive violation of the I-9 rules. This is true even where the omission does not impact employment eligibility, including the employee’s legal right to work in the U.S. 

Common Errors Now Treated as Substantive Violations

Based on a comparison with prior guidance, the following errors are now considered substantive (i.e. may not be corrected and trigger a fine):

Expanded Scrutiny of Electronic I‑9 Systems

For employers who have moved to an electronic system for the I-9 function, particularly where the system may assist with mitigating against certain errors (e.g. an employer can’t move to the next question on the I-9 if the previous question has not been completed), the electronic system may prove valuable for decreasing certain errors. However, the electronic system is no panacea for the new substantive errors. Based on the updated fact sheet, ICE now treats it as a substantive violation if an electronic system fails to comply with the regulatory standards governing electronic completion, retention, audit trails, security, document reproduction, or electronic signatures.

As a result, deficiencies in an I‑9 platform’s audit trail or electronic signature processes may be treated as the employer’s own violations, without any opportunity to cure.

Remote Verification Requirements Tightened

For employers using DHS’s alternative procedure for remote document examination, ICE now classifies (1) Failing to check the alternative procedure box in Section 2 or Supplement B and (2) using the alternative procedure without being an active E‑Verify participant as substantive violations.

Although the fact sheet references a potential DHS pilot program that would permit remote document examination for employers who have not enrolled in E‑Verify, that program has yet to be implemented.

How ICE Assesses Penalties

ICE calculates fines by determining the percentage of substantive violations and uncorrected technical failures relative to the total number of Forms I‑9 required. That violation rate establishes a base fine. ICE then adjusts the amount based on five statutory factors, including employer size, good faith, seriousness of the violations, involvement of unauthorized workers, and prior history. Current penalties range from $288 to $2861, adjusted annually for inflation, per violation. An employer with a 50% error rate (meaning that 50% of the I-9s are found to have substantive error(s), would expect fines to be calculated based on the higher end of the range. For example, even an employer with only 200 employees, with a 50% error rate could be facing up to more than $200,000 in fines, unless there are statutory factors (as mentioned above) that could reduce the liability of the employer. 

Recommended Next Steps for Employers

The changes to the Form I-9 inspection sheet indicate heightened audit risks and eliminate the safety net many employers previously relied upon. Prudent employers must audit their I-9 records to ensure they understand their potential exposure in the event a Notice of Inspection is received. 

Considerations include:

• Retraining personnel responsible for completing Forms I‑9 on the increased consequences of seemingly minor omissions. This is a must. If the person who completes your I-9s routinely makes a simple mistake that is now considered a substantive violation, the simple mistake could cost even mid-sized employers hundreds of thousands of dollars.
• The number of employers with several hundreds of thousands of dollars in potential fines, or more, related to substantive errors in their I-9s will increase based on this new guidance.
• Scheduling and completing proactive internal audits as soon as possible, and on an ongoing basis, to identify and correct errors classified as substantive and to uncover whether any training issues may exist.
• Reviewing electronic I‑9 systems to confirm they comply with federal audit trail, security, and signature requirements.
• Verifying strict compliance with remote verification requirements, including E‑Verify enrollment and proper form completion.
• Ensuring the team that manages the I-9 function knows who to go to if they have I-9 questions.
• Ensuring that acquisitions teams consider the risk in taking over Forms I-9 completed by predecessor employers.
• Enlisting the help of qualified legal counsel if the benefit of attorney-client privilege may be advisable. 

Errors that once could be corrected after the fact now carry immediate exposure. Employers that identify and address these issues before any Notice of Inspection is received will be better positioned to leverage certain statutory factors such as good faith to lower their fines. Since keeping fines and costs down is a common interest among employers of every size, across the country, and across industries, employers are encouraged to act. 

Womble Bond Dickinson stands ready to support employers navigating these changes. Please reach out to immigration@wbd-us.com or lynn.obrien@wbd-us.com for more information.