Enter to open, tab to navigate, enter to select
DHS Finalizes Immigration-Related Penalties, Effective January 27, 2017
Practical Law Legal Update w-005-6437 (Approx. 6 pages)
DHS Finalizes Immigration-Related Penalties, Effective January 27, 2017
by Practical Law Labor & Employment
| Law stated as of 31 Jan 2017 • USA (National/Federal) |
The Department of Homeland Security (DHS) issued final regulations that include the agency's 2017 annual inflation adjustments to civil money penalties assessed in its regulations, effective January 27, 2017. The adjustments are required under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act). The final regulations address penalties imposed under the Immigration and Nationality Act (INA), including those assessed under the Immigration Reform and Control Act of 1986 (IRCA).
On January 27, 2017, the Department of Homeland Security (DHS) issued final regulations adjusting for inflation the civil monetary penalties assessed under the Immigration and Nationality Act (INA), including those assessed under the Immigration Reform and Control Act of 1986 (IRCA). The adjustments are required under the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Inflation Adjustment Act). The Inflation Adjustment Act significantly revised the method for calculating inflation adjustments for penalty increases, including by:
- Providing an initial "catch-up" adjustment for civil money penalties.
- Requiring the DHS to annually adjust the penalties for inflation (under a cost-of-living formula), by January 15 of each year.
Last July, the DHS issued interim final regulations establishing an initial catch-up for civil money penalties that the agencies administer (see Legal Update, Immigration-Related Penalties Adjusted Up for Inflation). This included penalties imposed under the INA, including those assessed under the IRCA.
The changes affected penalties enforced by U.S. Immigration and Customs Enforcement (ICE). The final regulations include the DHS's 2017 annual inflation adjustment to its civil money penalties. Under the Inflation Adjustment Act, this adjustment was required to be published by January 15, 2017.
Effective Date of 2017 Annual Adjustments
The final regulations were effective January 27, 2017. As provided by the Inflation Adjustment Act, the increased penalty levels apply to any penalties assessed after this date. This means that the final regulations' higher penalty amounts apply for penalties assessed after January 27, 2017, whose associated violations occurred after November 2, 2015.
The following table illustrates which penalty level applies, keyed to when the underlying violation occurred and when the resulting penalty was assessed.
Violations Occurring: | Penalty Assessed: | Applicable Penalty Level: |
On or before November 2, 2015 | On or before August 1, 2016 | Pre-August 1, 2016 levels |
On or before November 2, 2015 | After August 1, 2016 | Pre-August 1, 2016 levels |
After November 2, 2015 | After August 1, 2016, but on or before January 27, 2017 | August 1, 2016 levels |
After November 2, 2015 | After January 27, 2017 | January 27, 2017 levels |
Adjustment Process and Calculation
The annual adjustment is based on the Consumer Price Index for all Urban Consumers (CPI-U). In general, an adjustment is calculated using the percent change between the:
- October CPI-U preceding the date of the adjustment (here, the October 2016 CPI-U).
- Prior year's October CPI-U (here, the October 2015 CPI-U).
The cost-of-living adjustment multiplier for 2017, based on the CPI-U for October 2016, not seasonally adjusted, is 1.01636. To calculate the 2017 annual adjustment, the DHS multiplied the most recent penalty amount for each applicable penalty by the multiplier, 1.01636, and rounded to the nearest dollar.
Table of Adjusted Penalties for Violations of Select INA Requirements
The below table reflects the DHS's 2017 annual inflation adjustments to the civil money penalties for violations of certain requirements under the INA, effective January 27, 2017.
INA Provision | Description of Violation | 2017 Penalty (As Adjusted) |
INA § 274C(a)(1)-(a)(4) | Document fraud, first offense | $452-$3,621 |
INA § 274C(a)(1)-(a)(4) | Document fraud, subsequent offenses | $3,621-$9,054 |
INA § 274C(a)(1)-(a)(4) | Document fraud, with knowledge or in reckless disregard for falsity, first offense | $382-$3,054 |
INA § 274C(a)(1)-(a)(4) | Document fraud, with knowledge or in reckless disregard for falsity, subsequent offenses | $3,054-$7,635 |
Violation/prohibition of indemnity bonds | $2,191 | |
Knowingly hiring, recruiting, referring, or retaining unauthorized foreign worker, first offense | $548-$4,384 per unauthorized worker | |
Knowingly hiring, recruiting, referring, or retaining unauthorized foreign worker, second offense | $4,384-$10,957 per unauthorized worker | |
Knowingly hiring, recruiting, referring, or retaining unauthorized foreign workers, third or subsequent offenses | $6,575-$21,916 per unauthorized worker | |
I-9 paperwork violations | $220-$2,191 per violation |
Practical Implications
The DHS's 2017 inflation adjustment is the first of what will be an annual adjustment, to be published by the DHS by January 15 of each year. (As noted, the DHS published the required catch-up adjustment late last summer.)
As with the earlier catch-up adjustments, practitioners must be aware of the increased penalties under the final regulations to properly advise clients on their potential liability for violations of the statutes or regulations impacted by the Inflation Adjustment Act. For at least some of the affected provisions, the 2017 adjustment amount, when coupled with last summer's catch-up adjustment, represents a fairly significant increase in the overall penalty, which raises the stakes for noncompliance.