The recent court filing by LexisNexis Screening Solutions Inc. against US Verify Inc., in Fulton County, Ga., highlights the peril of employers who put their I-9 compliance destiny in the hands of vendors who resell or sub-contract the actual operations to others. LexisNexis contracted with US Verify Inc to perform the electronic I-9 function and serve as the electronic depository of records, all in conformity with the applicable CFR, which service LexisNexis resold to employers. Relations between LexisNexis and US Verify changed and US Verify Inc.'s contract was not renewed by LexisNexis. Problem is, however, that US Verify possesses and controls all the systems and data for all the enrolled employers, and, allegedly, is not sharing it. In its Verified Complaint for Injunctive Relief and Damages, LexisNexis alleges that US Verify Inc. is holding the employer's I-9 data hostage to extra-contractual fees and demands, and has refused an employer's direct demand for access to its data. The object of the suit, amongst other orders and damages sought, is to force release of and regain access to the employer's data allegedly wrongfully withheld.
The breach of contract/non-performance of an I-9 electronic vendor is no defense to penalties imposed on an employer who has fails to respond to a Notice of Inspection (NOI) of its I-9 files- the applicable rule expressly addresses the issue of employer responsibility for its own records, placing it squarely on the employer. 8 C.F.R. Sec. 274a.2(e)(3). Employers contract out electronic I-9 compliance at their peril. Employers using - and considering using- an outside service for their electronic I-9 compliance should scrutinize their contracts and verify with counsel their ownership of the data, access to immediate backup without exorbitant costs or charges, and sufficient and regular back up so that in the event of vendor failure the employer is not exposed to sanctions for non-compliance. Where contracts and vendors come up short action on the contracts should be considered. Indeed, employers should review their whole electronic I-9 process with counsel to ensure that it complies with regulatory requirements. Even an inadequate electronic I-9 system can be costly- employers will recall the $1m fine imposed on Abercrombie and Fitch (which had no unauthorized hires!) in 2010 for inadequacies in its electronic I-9 system.
However the LexisNexis/US Verify Inc. dispute concludes, the case forces consideration of the terrible risk of employer inability to respond to an NOI due to lack of access to its data due to vendor failure, whatever the reason. In today's enforcement climate the risk of ICE audit for vendor-users is real and experience teaches that technical non-compliance can be extremely expensive. The LexisNexis case also proves that the risk of vendors holding data hostage for money is not limited to off-shore legal service providers and records processors.