A Business Sparked by the Online I-9

They say change breeds opportunity. For a good example, consider the opportunities brought on by a change in the federal government form that companies must fill out when they hire a new employee.

    As of December 2007, all U.S. companies have to use an updated version of the U.S. Citizenship and Immigration Services Employment Eligibility Verification Form I-9 to prove a new employee is in the country legally and eligible to work.

    Along with other changes, the revised form can now be completed and stored electronically—and that’s where the opportunity kicks in.

    Since the beginning of 2008, at least eight vendors have begun selling Web-based paperless I-9 compliance services, which they maintain can help companies fill out and store the forms more accurately, efficiently and safely than they could by themselves.

    In addition to helping with I-9 forms, some of the vendors can also submit information to the government on behalf of customers participating in E-Verify, a separate voluntary federal program that allows companies to instantly match new employees’ documentation against databases at the Social Security Administration and Department of Homeland Security to confirm they’re cleared to work. Some states, notably Arizona, also have made the use of E-Verify mandatory for some employers.

    In the short time Web-based I-9 compliance services have been out, vendors claim to have signed up companies of all sizes in all types of industries. An estimated 56,000 U.S. companies have signed up for E-Verify. Another 1,000 are joining each week, according to Citizenship and Immigration Services, which is part of the Department of Homeland Security,

    Vendors that are marketing I-9 compliance software include established background checking and hiring management firms such as Kroll, Acxiom Information Security Services, Accurate Background and First Advantage. They also include a smattering of startups, including Form I-9 Compliance, I9Advantage, Verified Person and Verify I-9.

    There’s so much competition that vendors are reluctant to share details about customers they’ve signed or what they charge. However, industry sources say standard rates run $5 to $10 a form, though volume discounts are common.

    Most I-9 compliance software is sold as a Web-based application, so a company doesn’t install anything on its own computer servers, but just logs on to a Web site to fill out forms and access stored information. Vendors keep records on servers at their own data centers, using multiple layers of encryption and security technology so clients’ data isn’t hacked into or stolen.

    Getting paperwork finished quickly and accurately and storing it safely are important because Citizenship and Immigration Services gives companies three days from an employee’s hire date to complete an I-9 form and requires them to store records for three years after someone is hired or a year after they leave, whichever is longer.

    Fines for companies that fail government employment eligibility audits are steep—up to $1,000 per form.

    That’s the main reason a company should use an outside party: If an issue comes up, someone else handles it, says Dave Dickerson, president of Accurate Background in Lake Forest, California. “In an extreme case, there could be 57 steps involved,” including checking documents with the multiple federal agencies, Dickerson says. “The employer doesn’t want to become an I-9 specialist. It’s easier to outsource it.”

    Another selling point: Some software can be integrated into a company’s HR software. To differentiate themselves from competitors, some vendors paired up with partner companies that Citizenship and Immigration Services has approved as E-Verify designated agents.

    Kroll does both. The background check company’s I-9 service can be integrated into a client’s applicant tracking or HR IT systems. Kroll also partnered with Form I-9 Compliance, a Newport Beach, California-based startup and E-Verify designated agent, to offer E-Verify services. Barry Nadell, a senior vice president with Kroll’s background screening division, won’t disclose how many clients the company has signed, though they range in size from very small to several hundred thousand employees, he says.

    More often than not, Kroll’s contact is a client’s HR manager, though at larger companies the general counsel’s office gets involved too, Nadell says.

    The service can help large companies that previously had to depend on branch office employees to get I-9 forms filled out for new hires, says Chas Patterson, a Form I-9 Compliance vice president. “You have people at a store whose job is retail, not HR,” Patterson says. “This application makes it so you don’t have to be an expert. It removes the worry.”

    Sales pitches aside, it is possible for even large companies to handle I-9 forms on their own, says Grace Hoppin, an immigration attorney with Jackson-Hertogs in San Francisco. In early April, Hoppin helped with an I-9 compliance training workshop at a client with more than 5,000 employees, “and they still do paper copies,” she says.

    Also, it might not make sense to invest in I-9 software if the federal government changes employment verification requirements again, a distinct possibility in light of pending immigration reform bills, Hoppin says.

    Some of those bills call for electronic verification of all employees, not just new hires, and different forms of electronic verification have been proposed, Hoppin says.

    In the end, a company’s main concern should be doing everything possible to check out potential employees, especially if companies are in food service, construction, manufacturing or other industries that have had chronic issues with unauthorized workers, Hoppin says.

    In those cases, companies need to have rigorous processes to show they’re complying with the law. If that means using an outside service, “that could be a really convenient tool to show they’re doing everything they can, that they’re checking people out,” she says.