Good morning. It's easy to assume an I-9 problem is a hiring problem — that you're only exposed if someone on the crew turns out not to be authorized to work. The federal paperwork penalty doesn't work that way. It is charged per worker whose form is deficient, and whether that worker was unauthorized is only one factor in how big it is. And according to two law firms, a March update to ICE's audit guidance means more of those mistakes can be fined without the chance to fix them once an inspection starts.
Top story — ICE can fine the paperwork, not just the hire
How an audit runs. An ICE audit starts with a Notice of Inspection. ICE's fact sheet says employers get at least three business days to produce the I-9s it requests, and it generally also asks for payroll and a list of active and terminated employees. Investigators then go through the forms. For technical or procedural failures, the employer gets at least 10 business days to make corrections. Per ICE, an employer "may receive a monetary fine for all substantive violations and uncorrected technical or procedural failures." A Warning Notice can be issued instead where ICE expects future compliance, but not in several cases, including where there is evidence of backdating.
What the fine attaches to. The paperwork penalty is assessed "for each individual with respect to whom such violation occurred" (8 CFR 274a.10). The rule lists whether the individual was unauthorized as one of five factors in setting the amount, not as a condition for charging it. So a crew that is fully authorized can still draw a paperwork bill.
What changed in March. Morgan Lewis reports that on March 16, 2026, ICE updated its inspection fact sheet and moved more than 10 error categories from technical to substantive. Among them: a missing employee date of birth, a missing date next to the employee's Section 1 signature, and incomplete document details in Section 2. The firm also reports that ICE eliminated the old practice that let a retained copy of an employee's documents cure missing Section 2 details, and that the change came with no Federal Register notice or rulemaking. Sheppard's analysis of the same update describes it as expanding the substantive categories and narrowing the correctable technical ones. Morgan Lewis adds two caveats: ICE did not mark which categories were new, and whether the change can be made this way has not been litigated.
What didn't move. Both firms list using an out-of-date version of the form, and a missing employee address in Section 1, as technical. Those still get the 10-business-day window.
Quick hits
The dollar ranges. Paperwork violations: $288 to $2,861 per worker whose form is deficient. Knowingly hiring or keeping an unauthorized worker: $716 to $5,724 per worker for a first offense, $5,724 to $14,308 for a second, and $8,586 to $28,619 for a third or later (8 CFR 274a.10, as adjusted in a DHS rule published January 2, 2025). Those are still the amounts for 2026: the White House budget office cancelled all 2026 federal penalty inflation adjustments because the government shutdown left no October 2025 CPI data (OMB M-26-11). For scale, Morgan Lewis's own example puts 200 forms carrying formerly technical errors at roughly $57,600 to $572,200 in paperwork penalties.
Fix before the notice, not after. Morgan Lewis: correcting forms after a Notice of Inspection "does not reduce liability for substantive violations." Correcting them before, the firm says, stops the violation from continuing, starts a five-year limitations clock, and, when documented through an internal audit, is the strongest good-faith evidence an employer can offer. It does not cancel liability for an error already made, but it can bear on the size of the fine. Good faith is one of five factors ICE uses to adjust a fine, each by up to 5% either way (ICE).
Florida: E-Verify at 25 or more. E-Verify is a free federal service that compares a new hire's Form I-9 information with Homeland Security and Social Security records (e-verify.gov). Since July 1, 2023, Florida has required private employers with 25 or more employees to run new hires through it. The state gives 30 days to cure after a notice of noncompliance; three failures in any 24-month period bring a $1,000-a-day fine until cured, and noncompliance is grounds for suspending state-issued licenses. Florida public contracts must also require the contractor and every subcontractor to use E-Verify (Fla. Stat. §448.095). Other states set their own rules.
The Tip — if you audit, finish the job
Start with Morgan Lewis's warning: an employer that audits, finds violations and then doesn't fix them "may be worse off than an employer that never audited at all." The firm recommends doing any audit with a commitment to correct what it finds, and with immigration counsel. The timing, who-to-include and correction checks come from USCIS's Handbook for Employers (M-274); the edition check from USCIS's form notice:
Timing. Section 1 completed by the employee at the time of hire (the first day of employment). Section 2 completed within three business days of the start date. If the job lasts less than three business days, both are due on day one.
Edition. Morgan Lewis frames the error as not using the version that was current when the form was first completed, and both firms list an outdated version as a technical error. For new hires now, USCIS says to use the 08/01/2023 edition, which downloads showing an expiration of 05/31/2027.
Who's in the pile. Former employees count until their retention period ends: three years from the first day of work or one year after employment ended, whichever is later (ICE). The handbook also lists people you don't complete an I-9 for, including independent contractors and workers supplied by a staffing or leasing agency.
How corrections are made. Only the employee, or their preparer or translator, corrects Section 1; the employer corrects Section 2. Draw a line through the wrong entry, enter the correct one, initial it and date it with the current date, and attach a written explanation. Don't backdate, and don't erase or use correction fluid — ICE lists backdating as evidence of fraud.
Tool watch — [Not sponsored]
USCIS's Handbook for Employers (M-274), free on uscis.gov, covers who completes Form I-9, when, and how to correct it, and it is the main source for today's Tip. E-Verify (e-verify.gov) is free to use. One thing to know before enrolling: ICE says employers that use E-Verify must make and keep copies of the List A documents employees present. No vendor or paid I-9 software is named here.
That's the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today's Tool watch is our own read — no one paid for it, and both services named are free government services. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime. Nothing in The Callout is legal advice. I-9 and immigration-compliance rules carry real penalties and vary by state — confirm your obligations with USCIS or an immigration-compliance attorney before acting.
Sources
ICE — "Form I-9 Inspection" fact sheet (Notice of Inspection; at least three business days to produce; at least 10 business days to correct technical failures; fines for substantive and uncorrected technical failures; Warning Notice exclusions incl. backdating; five penalty factors at ±5% each; retention period; E-Verify List A copies). https://www.ice.gov/factsheets/i9-inspection
Morgan Lewis — "ICE Rewrites the Rules on Form I-9 Violations," April 14, 2026, updated April 16, 2026 (March 16, 2026 fact-sheet update; more than 10 categories reclassified; retained-copy cure eliminated; no Federal Register notice; post-notice corrections don't reduce liability; pre-notice remediation; audit-without-remediation warning; 200-form example). https://www.morganlewis.com/pubs/2026/04/ice-rewrites-the-rules-on-form-i-9-violations
Sheppard — "What Employers Need to Know: ICE's Expanded List of I-9 Substantive Errors and Penalties," June 2, 2026 (substantive vs technical lists; outdated form version and missing address listed as technical). https://www.sheppard.com/insights/blogs/what-employers-need-to-know-ices-expanded-list-of-i-9-substantive-errors-and-penalties
8 CFR 274a.10, Penalties (paperwork penalty "for each individual"; five factors; knowing-hire tiers). https://www.law.cornell.edu/cfr/text/8/274a.10
DHS — "Civil Monetary Penalty Adjustments for Inflation," FR Doc 2024-31204, January 2, 2025, Table 2 (ICE penalty amounts). https://www.federalregister.gov/documents/2025/01/02/2024-31204/civil-monetary-penalty-adjustments-for-inflation
OMB — M-26-11, "Cancellation of Penalty Inflation Adjustments for 2026," April 17, 2026. https://www.whitehouse.gov/wp-content/uploads/2026/04/M-26-11-Cancellation-of-Penalty-Inflation-Adjustments-for-2026-Regarding-the-Federal-Civil-Penalties-Inflation-Adjustment-Act-Improvements-Act-of-2015.pdf
USCIS / E-Verify — "USCIS Extends Form I-9 Expiration Date" (08/01/2023 edition; 07/31/2026 or 05/31/2027 expiration, each usable until its date). https://www.e-verify.gov/about-e-verify/whats-new/uscis-extends-form-i-9-expiration-date
USCIS — Handbook for Employers M-274, §2.0 "Who Must Complete Form I-9" and §9.0 "Correcting Errors or Missing Information on Form I-9." https://www.uscis.gov/i-9-central/form-i-9-resources/handbook-for-employers-m-274/90-correcting-errors-or-missing-information-on-form-i-9
E-Verify — "What is E-Verify." https://www.e-verify.gov/about-e-verify/what-is-e-verify
Florida Statutes — §448.095, Employment eligibility (2025). https://www.flsenate.gov/Laws/Statutes/2025/448.095
All read 24 September 2026 (NZ) / 23 September 2026 (US).