DHS Publishes Final Rule On Electronic Signature and Storage Of Form I-9

Printer-friendly versionPDF version

[Federal Register: July 22, 2010 (Volume 75, Number 140)]
[Rules and Regulations]              
[Page 42575-42579]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22jy10-2]                        

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

8 CFR Part 274a

[ICE 2345-05; DHS-2005-0046]
RIN 1653-AA47

Electronic Signature and Storage of Form I-9, Employment
Eligibility Verification

AGENCY: U.S. Immigration and Customs Enforcement, DHS.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule amends Department of Homeland Security
regulations to provide that employers and recruiters or referrers for a
fee who are required to complete and retain the Form I-9, Employment
Eligibility Verification, may sign this form electronically and retain
this form in an electronic format. This final rule makes minor changes
to an interim final rule promulgated in 2006.

DATES: This final rule is effective August 23, 2010.

FOR FURTHER INFORMATION CONTACT: Allen Vanscoy, Office of
Investigations, U.S. Immigration and Customs Enforcement, 500 12th St.,
SW., Washington, DC 20024. Telephone (202) 732-5798 (not a toll-free
number).

SUPPLEMENTARY INFORMATION:

I. Background

A. Employment Eligibility Verification Requirement

    Section 274A of the Immigration and Nationality Act, as amended
(INA), 8 U.S.C. 1324a, requires all U.S. employers, agricultural
associations, agricultural employers, farm labor contractors, or
persons or other entities that recruit or refer persons for employment
for a fee, to verify the employment authorization and identity of all
employees hired to work in the United States after November 6, 1986. To
comply with the law, an employer, or a recruiter or referrer for a fee,
is responsible for the completion of a Form I-9, Employment Eligibility
Verification (Form I-9), for each new employee, including United States
citizens. 8 CFR 274a.2.
    The completed Form I-9 is not filed with the Department of Homeland
Security (DHS). Rather, the Form I-9 is retained by the employer who
must make it available for inspection upon a request by Immigration and
Customs Enforcement (ICE) investigators or other authorized federal
officials. Employers are required to retain a Form I-9 in their own
files for three years after the date of hire of the employee or one
year after the date that employment is terminated, whichever is later.
8 CFR 274a.2(c)(2). Recruiters or referrers for a fee are required to
retain each Form I-9 for three years after the date of hire. Id. at
(d)(2). Failure to properly complete and retain each Form I-9 may
subject the employer or recruiter or referrer for a fee to civil money
penalties. INA section 274A(e)(5), 8 U.S.C. 1324a(e)(5).

B. Format of the Form I-9

    The Form I-9 has been available to the public in numerous paper and
electronic means since 1986. The Form I-9 is available online at the
U.S. Citizenship and Immigration Services (USCIS) Web site as a
Portable Document Format (.pdf) fillable and printable form. http://
uscis.gov/files/form/i-9.pdf
.
    This final rule permits employers to complete, sign, scan, and
store the Form I-9 electronically (including an existing Form I-9), as
long as certain performance standards set forth in this final rule for
the electronic filing system are met. DHS has separately revised the
substantive documentary requirements for employment verification that
form the basis for the Form I-9. Documents Acceptable for Employment
Eligibility Verification, 73 FR 76505 (Dec. 17, 2008).

C. Regulatory History

    In June 2006, DHS published an interim final rule to permit
electronic signature and storage of the Form I-9. 71 FR 34510 (June 15,
2006). The interim rule implemented Public Law 108-390, 118 Stat. 2242
(Oct. 30, 2004), and INA section 274A, 8 U.S.C. 1324a. The interim rule
amended DHS regulations to permit employers to complete, sign, scan,
and store the Form I-9 electronically (including an existing Form I-9),
as long as certain performance standards set forth in this final rule
for the electronic filing system are met. See 8 CFR 274a.2. This final
rule responds to public comments received on the interim final rule and
adopts the interim final rule with changes noted below.

II. Changes Made by This Final Rule

    In this final rule, DHS makes minor modifications to 8 CFR 274a.2
to clarify certain provisions that:
    Employers must complete a Form I-9 within three business
(not calendar) days;
    Employers may use paper, electronic systems, or a
combination of paper and electronic systems;
    Employers may change electronic storage systems as long as
the systems meet the performance requirements of the regulations;
    Employers need not retain audit trails of each time a Form
I-9 is electronically viewed, but only when the Form I-9 is created,
completed, updated, modified, altered, or corrected; and
    Employers may provide or transmit a confirmation of a Form
I-9 transaction, but are not required to do so unless the employee
requests a copy.

The final rule makes technical and conforming amendments to the
regulations.

III. Comments and Responses

    This final rule responds to the nine comments received from trade
associations and agencies and

organizations involved in human resource management and modifies the
interim final rule as explained above. DHS has carefully considered the
views expressed and, to the extent practical and appropriate,
incorporated those suggestions in the final regulation. The interim
final rule merely provided an additional option for employers to sign
and store the Form I-9 and supporting documents electronically rather
than by retaining paper, microfilm or microfiche copies of the Form I-
9. This final rule makes modest adjustments to the interim final rule.

A. Time To Complete Form I-9

    Several commenters expressed concern regarding the timeframes
involved in completing the Form I-9. A commenter questioned the meaning
of the term ``at the time of hire.'' The commenters were concerned with
the language that required the employer to complete the verification
section of a Form I-9 within three (3) days and suggested that the
final rule specifically state three (3) ``business days.'' This
question is clarified on the revised Form I-9 (rev. 06/05/07) that
states: ``Employers must complete Section 2 by examining evidence of
identity and employment eligibility within three (3) business days of
the date employment begins.'' The interim rule inadvertently omitted
the word ``business.'' In this final rule DHS has revised 8 CFR
274a.2(b)(1)(ii)(B) to state three ``business'' days instead of the
implied three calendar days.

B. Electronic Storage Options

    Several commenters raised concerns about the employers' ability to
implement new systems as technology changes and improves. Commenters
suggested that to specify processes and systems in this final rule
would likely inhibit the use of future developments and the resulting
cost savings and improved efficiencies. The interim final rule and this
final rule do not specify any technology based system, but provide only
for a performance-based system that ensures accessibility.
    One commenter asked if an employer could use a combination of
electronic and paper storage systems for storing a Form I-9. In
response, DHS has revised 8 CFR 274a.2(b)(2)(i) to provide that
employers may use paper, electronic systems, or a combination of the
two.
    One commenter asked if electronic storage systems that permit the
storage of all data but do not produce a facsimile of the Form I-9
could be used. DHS believes the existing regulations establish that an
employer must be able to produce a reasonable facsimile or copy of the
Form I-9. 8 CFR 274a.2(a)(2), (e)(7) (authorizing use of ``reasonable
data compression or formatting technologies'').
    Several commenters requested guidance on the storage of ancillary
documents used to verify an employee's identity and eligibility to work
in the United States. Employers may, but are not required to, copy or
make an electronic image of a document used to comply with the
requirements of INA section 274A(b), 8 U.S.C. 1324a(b). 8 CFR
274a.2(b)(3). Employers should be cautious, however, to apply
consistent policies and procedures for all employees to avoid a
potential of discrimination.
    A commenter asked if the Form I-9 could be stored with the
employee's other employment records. Similarly, several commenters were
concerned about storage of documents they use to verify an employee's
identity and employment authorization. The Form I-9 and verification
documentation may be stored in a separate Form I-9 file or as part of
the employee's other employment records. 8 CFR 274a.2(b)(3). Further,
DHS has added language in 8 CFR 274a.2(e)(4) to make clear that
employers may change electronic storage systems as long as such systems
meet the requirements of this rule.
    Two commenters asked whether the entire Form I-9 must be retained
or only the pages on which the employer and employee enter data. Only
the pages of the Form I-9 containing employer and employee-entered data
need be retained. 8 CFR 274a.2(e)(1). Other pages of the current form
are instructions for completing the Form I-9 and need not be retained
by the employer.
    Several commenters inquired if DHS would provide additional
guidance concerning the use of contract services for the electronic
storage of the Form I-9. DHS does not intend to provide any additional
guidance or requirements for employers choosing to use contract
electronic storage and generation systems. DHS intends that the
regulation allow for flexibility.

C. Audit Trail Requirements

    Several commenters suggested that the audit trail requirements of 8
CFR 274a.2(g)(1)(iv) would be burdensome, particularly for small
businesses, but could pose issues for all businesses. Commenters stated
that the audit trail requirement would significantly diminish any cost
savings over the more traditional paper-based systems, particularly if
the audit trail must include every accession of the record. DHS agrees
with comments that suggested that it is unnecessary to require an audit
trail to record every time a Form I-9 is simply viewed or accessed but
not modified. An audit trail is important, however, whenever a record
is created, completed, altered, updated, or otherwise modified.
Accordingly, 8 CFR 274a.2(g)(1)(iv) has been modified to ensure that
whenever the electronic record is created, completed, updated,
modified, altered, or corrected, a secure and permanent record is
created that establishes the date of access, the identity of the
individual who accessed the electronic record, and the particular
action taken. Additionally, DHS revised 8 CFR 274a.2(e)(1)(iv) to
delete the requirement that the electronic storage system be searchable
by any data element and has inserted language that requires
searchability to be consistent with 8 CFR 274a.2(e)(6).
    A commenter stated the word ``documents'' should be used instead of
the term ``books'' in 8 CFR 274a.2(e)(6). DHS agrees and has adopted
the recommendation.

D. Employee Receipt

    Several commenters objected to the requirement in 8 CFR
274a.2(h)(1)(iii) that a printed transaction record be given to the
employee. Commenters argued it is contrary to the goals of a paperless
system, and that the requirements before this rule did not require the
employer to provide an employee with a printed transaction record. One
commenter noted that some companies process thousands of new employees
annually and another noted that, in the modern work environment, many
employees work off-site. Overall, these commenters expressed concern
that requiring paper receipts could be a significant burden to
businesses both large and small. Commenters noted that the employer,
not the employee, must demonstrate compliance.
    DHS disagrees. DHS believes this requirement is feasible and not,
in most cases, unduly burdensome. DHS believes that providing a
transaction receipt, such as a printed copy of the electronic record,
may be an important protective step for the employee if errors are
later discovered. The employee may not be the person inputting the
information into the electronic record. In response to comments,
however, DHS has amended this final rule to require employers to
provide or transmit a confirmation of the transaction only if an
employee requests it. In addition, DHS removed the language requiring
the employer to provide the confirmation at the time of the
transaction. DHS understands that in certain situations it

may be impracticable for employers to transmit or print a confirmation
of the transaction because the employee may not have access to a
computer or the employer may not have the capability to print a paper
copy of the electronic record at the time the document is completed
electronically. If, however, the employee requests confirmation, it is
reasonable for the employer to be required to give the employee a copy
of the information provided within a reasonable period of time.
Providing the option of electronic preparation and storage does not in
any way alter the requirement that the employer physically examine any
documentation provided by the employee in the presence of the employee
prior to completing the Form I-9. Though not required when preparing a
paper Form I-9, DHS believes requiring an employer to provide a receipt
upon employee request when completing an electronic record allows
employers and employees to confirm the accuracy of the information
provided.

E. U.S. Government Access to Employer Electronic Systems

    One commenter objected to the requirement in 8 CFR 274a.2(e)(3)
that electronic generation or storage systems not be subject to license
or contract restrictions that would inhibit access by U.S. Government
agencies to those Form I-9 preparation and storage systems. The
commenter also objected to the requirement that an employer give the
government unlimited access to the employer's electronic generation and
storage system. DHS declines to alter 8 CFR 274a.2(e)(3). The provision
does not require unlimited government access; it prevents contract and
license restrictions from denying government access to electronically
stored Form I-9.

F. Improvements to Form I-9

    A number of comments suggested improvements to the Form I-9,
including revisions to the ancillary documents list used for
verification and to improve the readability of the Form I-9. This
rulemaking concerns only the storage of the Form I-9, not its content.
Those issues, therefore, are beyond the scope of this rulemaking. DHS
has separately amended the regulatory requirements for documentation of
employment eligibility and this rule makes minor technical corrections
to comport with that rulemaking. Documents Acceptable for Employment
Eligibility Verification, 73 FR 76505 (Dec. 17, 2008); Documents
Acceptable for Employment Eligibility Verification, 74 FR 2838 (Jan.
16, 2009) (correction); Documents Acceptable for Employment Eligibility
Verification, 74 FR 5899 (Feb. 3, 2009) (delayed effective date);
Documents Acceptable for Employment Eligibility Verification, 74 FR
10455 (March 11, 2009) (correction). See also Handbook for Employers,
Instructions for Completing the Form I-9 (M-274), available at http://
www.uscis.gov/USCIS/Controlled%20Vocabulary/Native%20Documents/m-
274.pdf
.
    Finally, one commenter suggested that requiring an employer to
download the Form I-9 electronically poses a burden on small businesses
that do not use a computer or the internet in their business
operations. The interim rule and this final rule do not require that
Form I-9 be downloaded electronically from any source. Form I-9
continues to be available in the paper format that can be obtained,
upon request, from USCIS, at (800) 870-3676 or (800) 375-5283. The
interim rule and this final rule simply provide an option for an
employer to electronically store the Form I-9.

IV. Regulatory Requirements

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) analysis is not required when
a rule is exempt from notice and comment rulemaking under 5 U.S.C.
553(b). DHS previously determined that good cause exists under 5 U.S.C.
553(b)(B) to exempt this rule from the notice and comment requirements
of 5 U.S.C. 553(b). Therefore, no RFA analysis under 5 U.S.C. 603 or
604 is required for this rule. DHS notes, however, that because
electronic signature and storage technologies are optional, DHS expects
that small entities will choose electronic methods only if those
methods will save costs, lessen overall burden, or otherwise improve
efficiency.

B. Unfunded Mandates Reform Act of 1995

    This final rule will not result in any expenditure by State, local,
and tribal governments, in the aggregate, or by the private sector, of
$100 million (adjusted for inflation) or more in any one year, and it
will not significantly or uniquely affect small governments. Therefore,
no actions were deemed necessary under the provisions of the Unfunded
Mandates Reform Act of 1995.

C. Small Business Regulatory Enforcement Fairness Act of 1996

    This final rule is not a major rule as defined by section 804 of
the Small Business Regulatory Enforcement Act of 1996, Public Law 104-
121, tit. II, 110 Stat. 847, 857 (March 29, 1996), 5 U.S.C. 601 note.
This final rule will not result in an annual effect of $100 million or
more on the economy; a major increase in costs or prices; or
significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
companies to compete with foreign-based companies in domestic and
export markets.

D. Executive Order 12866 (Regulatory Planning and Review)

    This final rule is considered by DHS to be a ``significant
regulatory action'' under Executive Order 12866, section 3(f),
Regulatory Planning and Review. Accordingly, the rule has been
submitted to the Office of Management and Budget (OMB) for review.
    DHS analyzed the cost and benefits of this final rule as required
by Executive Order 12866 section 1(b)(6), and made a reasoned
determination that the benefits of this final rule justify its costs to
the public and Government. Whether to create and store the Form I-9 in
an electronic or traditional paper format will be within the discretion
of employers or recruiters or referrers for a fee, who are already
required under 8 CFR 274a.2 to retain the Form I-9. This final rule
permits the employers to continue using their current Form I-9 policies
and practices to prepare and store the Form I-9 in the paper format;
electing to prepare and store the Form I-9 electronically is voluntary.
The regulation does not require any additional actions or expenses, it
merely provides employers with an additional option that may result in
improved efficiency and cost-savings.

E. Executive Order 13132 (Federalism)

    This final rule will not have a substantial direct effect on the
States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of Government. Therefore, in accordance with section 6
of Executive Order 13132, it is determined that this final rule does
not have sufficient federalism implications to warrant the preparation
of a federalism summary impact statement.

F. Executive Order 12988 (Civil Justice Reform)

    This final rule meets the applicable standards set forth in
sections 3(a) and 3(b)(2) of Executive Order 12988.

G. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq,
agencies are required to submit any reporting or

recordkeeping requirements inherent in a rule to the OMB for review and
approval. This final rule makes minor adjustments to an interim final
rule affecting electronic completion of Form I-9, which has been
approved for use by OMB under Control Number 1615-0047. The final rule
permits the employer also to continue to retain Form I-9 in paper,
microfiche, or microfilm, and allows a new option: to retain Form I-9
electronically. DHS estimated that the interim final rule permitting
storage of the Form I-9 electronically reduced the burden on businesses
by 650,000 hours. 71 FR at 34514. Accordingly, DHS submitted the
required Paperwork Reduction Change Worksheet (OMB-83C) to OMB
reflecting the reduction in burden hours for Form I-9, and OMB approved
the changes. The amendments made by this final rule to clarify storage
options do not alter in any significant quantifiable way the
recordkeeping hours or burdens from those associated with the interim
final rule. Accordingly, no Paperwork Reduction Change Worksheet (Form
OMB 83-C) was required to be submitted to OMB.

List of Subjects in 8 CFR Part 274a

    Administrative practice and procedure, Aliens, Employment,
Penalties, Reporting and recordkeeping requirements.

0
Accordingly, part 274a of chapter I of title 8 of the Code of Federal
Regulations is amended as follows:

PART 274a--CONTROL OF EMPLOYMENT OF ALIENS

0
1. The authority citation for part 274a continues to read as follows:

    Authority:  8 U.S.C. 1101, 1103, 1324a; 8 CFR part 2.

0
2. Section 274a.2 is amended:
0
a. By revising paragraph (b)(1)(ii)(B);
0
b. By revising paragraph (b)(2)(i) introductory text;
0
c. By revising the first and last sentences of paragraph (b)(2)(ii);
0
d. By revising the second sentence of paragraph (b)(3);
0
e. By revising paragraph (e)(1) introductory text;
0
f. By revising paragraph (e)(1)(iv);
0
g. By revising paragraph (e)(4);
0
h. By revising the first and last sentences of paragraph (e)(6);
0
i. By revising the last sentence of paragraph (e)(8)(i);
0
j. By revising paragraph (e)(8)(ii);
0
k. By revising the last sentence of paragraph (f)(3);
0
l. By revising paragraph (g)(1)(iv); and
0
m. By revising paragraph (h)(1)(iii).
    The revisions and additions read as follows:

Sec.  274a.2  Verification of identity and employment authorization.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (B) Complete section 2--``Employer Review and Verification''--on
the Form I-9 within three business days of the hire and sign the
attestation with a handwritten signature or electronic signature in
accordance with paragraph (i) of this section.
* * * * *
    (2) * * *
    (i) A paper (with original handwritten signatures), electronic
(with acceptable electronic signatures that meet the requirements of
paragraphs (h) and (i) of this section or original paper scanned into
an electronic format, or a combination of paper and electronic formats
that meet the requirements of paragraphs (e), (f), and (g) of this
section), or microfilm or microfiche copy of the original signed
version of Form I-9 must be retained by an employer or a recruiter or
referrer for a fee for the following time periods:
* * * * *
    (ii) Any person or entity required to retain Forms I-9 in
accordance with this section shall be provided with at least three
business days notice prior to an inspection of Forms I-9 by officers of
an authorized agency of the United States. * * *. Nothing in this
section is intended to limit the subpoena power under section 235(d)(4)
of the Act.
* * * * *
    (3) Copying of documentation. * * * If such a copy or electronic
image is made, it must either be retained with the Form I-9 or stored
with the employee's records and be retrievable consistent with
paragraphs (e), (f), (g), (h), and (i) of this section. * * *
* * * * *
    (e) * * * (1) Any person or entity who is required by this section
to complete and retain Forms I-9 may complete or retain electronically
only those pages of the Form I-9 on which employers and employees enter
data in an electronic generation or storage system that includes:
* * * * *
    (iv) In the case of electronically retained Forms I-9, a retrieval
system that includes an indexing system that permits searches
consistent with the requirements of paragraph (e)(6) of this section;
and
* * * * *
    (4) A person or entity who chooses to complete or retain Forms I-9
electronically may use one or more electronic generation or storage
systems. Each electronic generation or storage system must meet the
requirements of this paragraph, and remain available as long as
required by the Act and these regulations. Employers may implement new
electronic storage systems provided:
    (i) All systems meet the requirements of paragraphs (e), (f), (g),
(h) and (i) of this section; and
    (ii) Existing Forms I-9 are retained in a system that remains fully
accessible.
* * * * *
    (6) An ``indexing system'' for the purposes of paragraphs
(e)(1)(iv) and (e)(5) of this section is a system that permits the
identification and retrieval for viewing or reproducing of relevant
documents and records maintained in an electronic storage system. * * *
The requirement to maintain an indexing system does not require that a
separate electronically stored documents and records description
database be maintained if comparable results can be achieved without a
separate description database.
* * * * *
    (8) * * *
    (i) * * *. Generally, an audit trail is a record showing who has
accessed a computer system and the actions performed within or on the
computer system during a given period of time;
    (ii) Provide a requesting agency of the United States with the
resources (e.g., appropriate hardware and software, personnel and
documentation) necessary to locate, retrieve, read, and reproduce
(including paper copies) any electronically stored Forms I-9, any
supporting documents, and their associated audit trails, reports, and
other data used to maintain the authenticity, integrity, and
reliability of the records; and
* * * * *
    (f) * * *
    (3) * * *. Nothing in this section is intended to limit the
subpoena power of an agency of the United States under section
235(d)(4) of the Act.
* * * * *
    (g) * * *
    (1) * * *
    (iv) Ensure that whenever the electronic record is created,
completed, updated, modified, altered, or corrected, a secure and
permanent record is created that establishes the date of access, the
identity of the individual who accessed the electronic record, and the
particular action taken.
* * * * *
    (h) * * *
    (1) * * *

    (iii) Upon request of the employee, provide a printed confirmation
of the transaction to the person providing the signature.
* * * * *

Janet Napolitano,
Secretary.
[FR Doc. 2010-17806 Filed 7-21-10; 8:45 am]
BILLING CODE 9111-28-P

Agency: 
Immigration Law :