I-9s Made Easy: New electronic completion and storage options save time and headaches

By Jennifer Arnold, October 2006
[From the SHRM Online HR Technology Focus Area]

It’s not often that a government regulation makes your job easier. But according to experts, Public Law 108-390, which allows businesses to complete, sign and store I-9 forms electronically, does just that.

These Department of Homeland Security (DHS) forms, intended to verify new hires’ eligibility to work in the United States, have been an administrative and storage nightmare for many employers since they were mandated in 1986. It’s easy to see why: immigration documentation laws are complex and ever-changing; retention rules mandate that employers keep completed I-9s for as long as three years, and fines for violations run as high as $1,100 per flawed or missing form.

Thanks to the 2005 law and a new interim rule issued by DHS in June 2006, employers can use technology to address some or all of these issues.

Electronic storage can alleviate storage challenges and allow for quick retrieval.

Employers can scan completed paper I-9s and store them as PDF files on their company server.

Acceptance of electronic signature technology allows the process to become entirely paperless. Now, new hires and the verifying staff member can “sign” their portion of the I-9 by electronic means. Options include electronic signature pads, biometrics, “click to accept” dialog boxes, and entry of personal identification numbers and/or passwords.

As the interim rule states, there is no single U.S. government-wide electronic recordkeeping standard. Instead, the rule tells employers to use electronic storage and signature technologies that are compliant with the Internal Revenue Service’s (IRS) electronic recordkeeping standards for taxpayers (outlined in IRS Rev. Proc. 97-22 and Rev. Proc. 98-25).

Most employers probably won’t need new equipment to take advantage of these new I-9 options. All that is required for electronic storage is a scanner, a PC with Adobe Acrobat and minimal server space (each completed I-9 PDF takes up less than 2 MB of RAM). Soon, electronic signature capability will be available for free: DHS says it is developing an I-9 PDF with electronic signature capability that will be available free online at www.uscis.gov/graphics/formsfee/forms/index.htm.

But some companies are choosing to take it one step further, contracting with an application service provider (ASP) to obtain a comprehensive web-based I-9 management system. Employers say these systems, offered by a small number of vendors, build on the new regulations.

In addition to electronic storage and signature capabilities, I-9 management systems have built-in edits that reduce errors. For example, drop-down menu box selections are based on previous choices: If the box for “U.S. Citizen” is checked in Section 1, the document list in Section 2 will show only applicable documents.

Experienced HR professionals say these edits make a big difference, particularly in multi-location environments. Diana Peirano, director of administration for Western Golf Properties, a Lake Forest, Calif.-based golf management firm, says her firm's paper-based I-9 system was hard to control. The company has nearly 1,000 employees scattered among 15 properties around the country.

“Consistency was really hard to achieve,” says Peirano.

In May 2005, Western began using a web-based system provided by Newport Beach, Calif.-based ASP Form I-9 Compliance. “[The system] is self-correcting,” says Peirano. “It will point out where you missed documentation or make sure you’re not over-documenting.”

I-9 systems can be stand-alone, or they can be incorporated into a larger system for new hires. At ATMI, a San Jose, Calif., semiconductor materials supplier, management chose to incorporate electronic I-9 processing into its new web-based onboarding site, provided by Hunt Valley, Md.-based ASP RealLife HR.

“There were all sorts of issues: How do we make sure [the I-9 is] collected and accurate? How do we know where it is, particularly if an employee is transferred to another location? We don’t have an internal audit team, and the expense of hiring an outside one is prohibitive,” says Laura McKay, PHR, former compensation and benefits analyst at ATMI and leader of implementation team for the new system. Now, I-9s can be transferred from one location to another with a few clicks, and built-in reporting and auditing features make tracking easy.

These applications can help employers track the expiration of non-citizen documentation. At Plano, Texas-based industrial waste management services provider Safety-Kleen, a “significant portion” of the company’s 4,500 employees are non-citizens, according to senior director of HR Christian Camp. That reality, coupled with the company’s 200-plus locations across the country, made expired documentation a major administrative challenge. In January 2005, Safety-Kleen began using a web-based system provided by West Covina, Calif.-based i9check. Now, the system administrator receives e-mail alerts listing documents set to expire in 30, 60 and 90 days.

“The follow-up on expired documents is one of the biggest advantages,” says Camp.

Vendors offer a variety of pricing models, with sliding scales based on the size of the company. On a transaction basis, the service may cost roughly $13 per I-9; an annual flat fee may run close to $1,000 or more. Vendors and experienced employers say employers can realize a net savings over the labor hours, paper and storage costs required by a paper-based system.

“Sure, it’s a monthly bill we didn’t used to pay,” says Regina Partain, SPHR, president of Innovative Staffing Solutions LLC, a Perryton, Texas-based staffing company that places 500 people per year. “But when you look at risks associated with [I-9 compliance], to me it’s a no-brainer.” In March 2006, Innovative began using Form I-9 Compliance’s system.

Although not addressed in the new regulations, electronic I-9 management systems are linked with another growing trend: automatic verification of new hire documentation through the federal government’s Employment Verification Pilot Program, commonly known as Basic Pilot. This free program, now available to employers in all 50 states and the District of Columbia, allows employers to verify the validity of a new hire’s documentation immediately against the DHS and Social Security Administration (SSA) databases.

Employers can choose to use Basic Pilot on their own at no charge; after registering at www.vis-dhs.com/EmployerRegistration, users are guided through a web-based tutorial and then given access instructions. The only prerequisites are an Internet-enabled PC with Internet Explorer 5.5 or Netscape 4.7 or higher. However, the Basic Pilot program has been controversial, in part because of its relatively high error rate.

Some ASPs are registered with the federal government as “designated agents,” meaning that they can build a seamless Basic Pilot interface into their I-9 systems. Western Golf Properties, Innovative Staffing Solutions and Safety-Kleen all use a Basic Pilot interface in their systems. Experts expect that the Basic Pilot interface will soon become a required step in the employment verification process; recent proposed immigration legislation in the House and the Senate included automatic interface provisions.

In addition, experts predict increased enforcement of basic I-9 regulations in the years to come. New technology tools can help employers tighten their control of the I-9 process. “We know that the world is tightening; we know that we will be audited at some point,” says Partain. “It helps me sleep at night knowing that no one is falling through the cracks.”

Jennifer Arnold is a Baltimore, Md.-based technology writer.