Exploring Form I-9 Fines and Procedures: Your 2026 Guide

Beyond Fines: The Hidden Costs of I-9 Penalties

I-9 penalties aren't just about expensive fines—they can cost your business far more than you think. While fines can reach thousands of dollars, the real damage comes from lost productivity, employee turnover, and potential legal headaches. In this blog, we’ll dive into the hidden costs of I-9 violations, from fines and legal fees to operational disruptions. If you’re not careful, an I-9 mistake can ripple through your entire business. Let’s break down what’s at risk and how to avoid these costly pitfalls.

What is the monetary cost of I-9 penalties?

I-9 Fines, Civil Penalties, and Potential Legal Fees

I-9 fines depend on several factors and can range from hundreds to even thousands of dollars per incident. Currently the fine ranges from $288-2,861 for technical errors as announced by the Department of Homeland Security (DHS). The civil penalty fine amounts can add up exponentially depending on if your organization is in violation of substantive errors, knowingly hired ineligible workers or if there are any uncorrected technical procedural failures. The U.S. government also takes into consideration if this is a first, second, or third infraction when determining the fine amounts.

It’s not hard to find numerous cited cases in the news with astronomical fines and legal fees as a result of I-9 violations like the one highlighted below. Since this company was hiring seasonal employees, they had over 1.5 million dollars in penalties with only 50 permanent full time employees.

How did the costs get so high? Following a Form I-9 Audit by an Immigration and Customs Enforcement (ICE) agent, the inspectors will determine your company’s base fine amount and then use these five factors to calculate the final fine a company pays: the size of the business, how serious the infraction is, the good faith of the employer,how many unauthorized workers are employed, and the company’s history of infractions. As you can see, these fines can add up quickly.

What are the other costs of I-9 infractions?

I-9 infractions can cost more than just monetary fines. This flowchart is from the U.S. Immigrations and Customs Enforcement. It outlines the entire process from the initial audit to the hearing process and everything in between. As you can see, this can be a very extensive process, which will require a lot of resources from your organization.

Loss of productivity

If your company undergoes an I-9 audit and is found to be non-compliant, there are several steps in the process. You may be given 10 days to fix any technical or procedural failures. If you have several failures, think of how much time and energy your employees will spend making those changes. This will divert their attention away from other important HR tasks, like onboarding and hiring new employees.

Termination of employees

If your company unknowingly or even knowingly is employing workers that are not authorized to work in the United States, you may have to terminate them if they cannot provide the necessary documentation proving they are eligible to work. Think about the loss your company will suffer. Not only will you lose an employee, but you’ll also be losing valuable industry knowledge. Not to mention, this will put a strain on the other employees. Your HR department will also likely have to scramble to fill the vacant position.

Common I-9 infractions 

The Section 1 and Section 2 "clock"

One of the most common reasons for "technical" fines is a failure to respect the calendar. ICE agents look at these two deadlines first:

• Section 1: Must be completed by the employee no later than their first day of work.
• Section 2: The employer must review documents and sign off within three business days of the employee’s first day of employment. Even a four-day delay is a "substantive" error that can lead to a fine, even if the employee is legally authorized to work. 

Section 3: Reverification

If an employee’s work authorization expires, you must use Section 3 of the Form I-9 to reverify their eligibility before the expiration date. Failing to track these dates is one of the most common ways companies "accidentally" employ unauthorized workers, leading to the highest tier of fine amounts.

How long must you keep Form I-9?

Compliance doesn't end when an employee leaves. The "Retention Clock" is a specific legal requirement that many businesses miscalculate. You must store a Form I-9 for:

• Three years after the date of hire, OR
• One year after the date employment is terminated, whichever is later.

If an ICE audit occurs and you have already purged a form that should have been retained—or if you are holding onto 20-year-old forms that should have been shredded—you are increasing your liability.

With so many common opportunities for errors, compliance and prevention is an absolute necessity for employers.

How can you prevent I-9 Penalties? 

1. Streamline your I-9 Process

This is one of the best ways you can be proactive against I-9 audit penalties. When your procedures are clear, simple, and easily understood, everyone benefits. Your company’s processes should be clear not only for employees working to onboard new hires but also for the new hires themselves. It can be helpful to provide hires with a document that lets them know exactly what they need to have ready before completing their paperwork, or use an easy onboarding software to simplify the entire process. Sometimes new hires can be confused by what forms of documentation to provide to complete their I-9 forms, so be sure to review the information with them. Remember, your company cannot tell them which type of documentation they need to provide. The new hire must make that decision based on the documents listed on the I-9 form.

2. Avoid “over-compliance” fine risks with adequate training 

Any employee that is involved in the new hire onboarding process should have ample training regarding the I-9 compliance penalties and your company’s processes. When all employees are on the same page, it can help with streamlining your processes and avoiding errors.

Many employers believe that asking for extra documents—like a Green Card and a Social Security Card—is a "safe" way to ensure compliance. In reality, this is a fast track to a lawsuit. The Immigrant and Employee Rights Section (IER) of the Department of Justice penalizes employers for "document abuse." You cannot:

1. Request more or different documents than what is required.
2. Reject reasonably genuine-looking documents.
3. Specify which documents an employee must present.

The fines for "Unfair Immigration-Related Employment Practices" can often exceed the fines for paperwork errors. Your software or internal training must ensure that HR is not "over-verifying."

3. Keep employees up-to-date to the evolving compliance landscape

It’s important to note that training your employees once simply won’t be enough. There are often changes in regulations they will need to be aware of to keep compliant. Consider re-training your employees at least once a year, and each time new regulations are issued. Having a place for employees to reference their training, providing an I-9 audit checklist, and updating it each time there are any changes, can help everyone to remain in compliance with I-9 regulations.

The rules for Form I-9 changed significantly in post-2023. If your business is still operating on "pre-pandemic" logic, you are likely sitting on a mountain of non-compliance. Since the sunsetting of COVID-19 flexibilities, the Department of Homeland Security (DHS) introduced a permanent Alternative Procedure for document examination. However, there is a catch: This is only available to employers in good standing who are enrolled in E-Verify.

If you are verifying remote employees via video call without being enrolled in E-Verify, you are technically in violation. To use the remote "Alternative Procedure," you must:

• Be an active participant in E-Verify software.
• Examine clear copies of all documents.
• Conduct a live video interaction with the employee.
• Retain clear copies of all documents presented.

4. Use I-9 Software to help you

There are a handful of I-9 software choices available to help simplify and maintain compliance based on your company’s individual needs. It’s important to make your selection based on how much time and productivity it will improve, but also how easy it is for you and your employees to use.

When you’re evaluating your options, ask yourself the following questions. 

• How much will this increase my company’s productivity?
• How much time will this save for my onboarding process?
• Will it mitigate errors with built-in guardrails to ensure my compliance?
• Will it guide my HR team through the documentation process preventing mistakes, such as completing Section 2 after 3 days of work? 
• Is this easy to use for both employees and new hires?
• Can all new hires easily complete from their mobile device?
• Will it work well for off-site or remote new hires?  
• Do they offer internal audit services and support to ensure compliance? 

What happens if the "Notice of Inspection" (NOI) arrives

If ICE decides to audit you, they will issue a Notice of Inspection (NOI). By law, you typically have three business days to produce your Forms I-9.

What to expect during an audit

1. The Subpoena: ICE has the right to review your forms, but they generally must give you that 72-hour window.
2. The "Notice of Technical Failures": If they find minor errors, you may be given 10 days to correct them.
3. Criminal Liability: While most penalties are civil (monetary), DHS can pursue criminal charges if they find a "pattern or practice" of knowingly hiring unauthorized workers. This can lead to debarment from government contracts and even jail time for company leadership.

So, what are the next steps?

Audit your current processes

This is a great opportunity to be proactive in identifying areas of improvement for your organization. You want to determine if there are any risks involved with your current I-9 procedures and create solutions that mitigate these risks.

You can start by asking yourself the following questions: 

• Is my I-9 process the same for each new hire?
• Does my company provide adequate training on the I-9 process?
• Are my employees aware of the monetary and non-monetary costs associated with I-9 infractions?
• How does my company handle remote hire I-9 forms?
• How many I-9 mistakes does my company currently have? How will we resolve these issues?

Read more: How to conduct an internal audit.

Schedule an I-9 demo with WorkBright

Auditing your organization can be an undertaking in and of itself, not to mention when it involves the stress of potentially costly consequences. Ensuring your I-9 compliance processes are adequate is overwhelming, but extremely important.

Our HR compliance services will help you assess your current Form I-9 workflow to identify vulnerabilities. Schedule a demo with one of our I-9 experts to get the conversation started.

Frequently Asked Questions: 

Q: What is the "3-Day Rule" for Form I-9?

A: The "3-day rule" requires that Section 2 of the Form I-9 must be completed and signed by the employer within three business days of the employee's first day of work. If the employee starts on a Monday, the employer must complete the form by Thursday.

Q: Can I verify documents via video call for remote employees?

A: Yes, but only if your company is enrolled in E-Verify and follows the "Alternative Procedure." This process requires examining copies of the documents, conducting a live video call with the employee, and retaining copies of the documents. If you are not in E-Verify, you must perform a physical, in-person inspection.

Q: How long do I need to keep I-9 forms for terminated employees?

A: You must retain a former employee's Form I-9 for three years after their hire date or one year after their termination date, whichever is later. Keeping forms beyond this period or purging them too early can both result in penalties.

Q: What is the difference between a "technical" and a "substantive" error?

A: A technical error is a minor oversight, like a missing address or a small typo, which you are usually given 10 days to correct after an audit notice. A substantive error is more serious, such as a missing signature or failure to complete the form on time. Substantive errors cannot be "fixed" retroactively and often result in immediate fines.

Q: Can I tell a new hire which documents to bring?

A: No. To avoid discrimination and document abuse penalties from the Department of Justice, you must provide the "List of Acceptable Documents" and let the employee choose which ones to present. Requesting specific documents (like "just bring your Green Card") is illegal.