ICE Rewrites the Rules on Form I-9 Violations

US Immigration and Customs Enforcement (ICE) has significantly revised its enforcement approach to Form I-9 violations, reclassifying numerous common errors as substantive violations subject to immediate penalties. These changes eliminate the long-standing 10-day cure period for many mistakes and materially increase employer risk in inspections. This LawFlash outlines what has changed and how employers should respond.

KEY TAKEAWAYS

• On March 16, 2026, ICE updated its Form I-9 Inspection fact sheet, effectively superseding key provisions of the 1997 Virtue Memorandum that had governed I-9 enforcement for nearly three decades.
• More than 10 error categories previously treated as correctable technical violations—eligible for the statutory 10-day cure period—are now reclassified as substantive violations subject to immediate fines of $288 to $2,861 per form.
• ICE issued no Federal Register notice, no proposed rulemaking, and no public announcement in connection with these changes.
• The reclassification eliminates the inspection-time cure window for the affected errors. The good faith exception that authorizes the 10-day cure period has always applied only to technical violations; these errors have now been moved permanently into the substantive category.
• Proactive remediation before a Notice of Inspection stops the continuing nature of each violation and starts the five-year limitations clock—and is the only remaining mechanism for addressing these errors without penalty exposure.
• Employers that identify violations through an internal audit but fail to remediate them may be worse off than those that never audited. Any audit should be undertaken with commitment to correction and under the guidance of qualified immigration counsel.

THE VIRTUE MEMORANDUM AND THE TECHNICAL/SUBSTANTIVE DISTINCTION

The Immigration Reform and Control Act of 1986 requires all US employers to verify the identity and work authorization of every employee hired after November 6, 1986, by completing Form I-9.[1] The US Congress built a limited good-faith exception into the statute: an employer that has committed only “technical or procedural” violations may avoid civil penalties if it corrects those violations within ten business days of written notice from the government. Substantive violations—those that go to the heart of the verification obligation—have never been eligible for this cure period.

For nearly three decades, the line between the two categories was drawn primarily by the Virtue Memorandum, issued in March 1997 by the Immigration and Naturalization Service acting executive commissioner of programs.[2] Although the memorandum was never promulgated as a regulation, it was consistently followed by ICE and the Office of the Chief Administrative Hearing Officer (OCAHO) as the authoritative statement of agency policy. OCAHO has held that by disseminating the guidance to the public, the government invited reliance on it and is bound by its terms.[3] Additional agency guidance issued in 2008 and 2009 reinforced the same framework.[4] Together, these materials formed a stable compliance baseline that I-9 practitioners and employers relied upon across all industries.

THE MARCH 2026 FACT SHEET: WHAT HAS CHANGED

On March 16, 2026, ICE updated its longstanding fact sheet titled Form I-9 Inspection Under Immigration and Nationality Act § 274A (the March 2026 Fact Sheet). The updated fact sheet lists 28 categories of substantive violations on page four. The agency did not distinguish between newly reclassified violations and those already established under prior guidance, creating immediate interpretive uncertainty for employers and practitioners.

Based on a comparison of the March 2026 Fact Sheet against the Virtue Memo and prior ICE guidance, the following errors—previously treated as technical—are now classified as substantive violations subject to immediate fines:

Separately, the March 2026 Fact Sheet codifies the following errors as technical violations, retaining the 10-day cure window. Many of these were already widely understood to be correctable:

The Document Copy Rule Is No Longer a Safe Harbor

Of particular significance to employers who have historically retained document copies: the agency has eliminated the prior rule that allowed retained copies to cure missing Section 2 data. Under the Virtue Memo and the 2008 ICE guidance, an employer who failed to record a document title, number, or expiration date in Section 2 but had retained a legible copy of the relevant document could treat the omission as a technical error, with 10 days to transcribe the missing data from the copy onto the form. Under the March 2026 Fact Sheet, missing or incorrect List A, B, or C data in Section 2 is a substantive violation regardless of whether copies were retained.

Remote Verification Failures Are Substantive

Following the August 2023 update to Form I-9 that created explicit fields for the remote document inspection procedure, the March 2026 Fact Sheet makes clear that procedural failures in connection with remote verification are substantive. Failing to check the alternative procedure box in Section 2 or Supplement B and using the alternative procedure without being an active E-Verify participant at the time of verification both constitute immediately fineable offenses.

Electronic I-9 System Requirements

Deficiencies in an employer’s electronic I-9 system—including failures related to audit trails, electronic signature protocols, and security documentation under DHS standards—are now classified as substantive violations.

FINANCIAL EXPOSURE UNDER THE NEW FRAMEWORK

Substantive violations carry per-form civil penalties. The current inflation-adjusted range is $288 to $2,861 per Form I-9, as published in the Federal Register on January 2, 2025. Because fines are assessed form by form, the cumulative exposure for large employers can be severe.

As a practical illustration: an employer with 200 Forms I-9 containing errors previously flagged as technical—and therefore not necessarily remediated after a prior audit—could now face paperwork penalties of approximately $57,600 to $572,200 if those forms are reviewed under the new framework. This figure does not include any knowing-hire or continuing-to-employ violations, which carry substantially higher penalties.

PROCEDURAL AND LEGAL CONSIDERATIONS

No Rulemaking, No Notice

ICE implemented these changes through a quiet website update, with no Federal Register notice, no proposed rulemaking, and no public announcement. Whether the reclassification is consistent with the Administrative Procedure Act is a question that has not yet been litigated under the March 2026 Fact Sheet. A separate question is whether OCAHO will hold the agency bound by its prior guidance—as it has done in the past—for employers who relied on the Virtue Memo framework when completing forms that predate the change. Employers should not assume that either line of argument eliminates compliance risk; ICE may begin assessing fines under the new framework immediately.

The Enforcement Environment

The reclassification arrives against a backdrop of sharply elevated worksite enforcement activity. The rate of Notices of Inspection in 2025 was reported to be substantially higher than in prior years, and ICE has levied significant penalties across construction, staffing, hospitality, manufacturing, and retail. The combination of an aggressive enforcement posture and an expanded substantive-violation category substantially increases employer risk in any future inspection.

THE VALUE – AND LIMITS – OF PROACTIVE REMEDIATION

The central practical consequence of the March 2026 reclassification is the elimination of the inspection-time cure window for the errors now designated as substantive. Under prior guidance, when ICE discovered one of these errors during an audit, it was required to issue a Notice of Technical or Procedural Failures and give the employer at least ten business days to correct the form before assessing any fine. Now that these errors are substantive, that obligation no longer applies—fines may be assessed immediately upon inspection. The question becomes, is there value in identifying and correcting these errors before any government contact? The answer is yes, but the benefits operate through specific and distinct legal mechanisms.

Remediation Stops the Continuing Nature of the Violation

An I-9 paperwork violation is not a one-time event fixed at the moment of the original error. Courts and administrative tribunals have consistently held that a paperwork violation continues until it is corrected or until the employer’s legal obligation to retain the form expires.[5] The five-year general statute of limitations does not begin to run until one of those two events occurs.

For current employees, a deficient Form I-9 is a live, ongoing violation for as long as the employment relationship continues. A Notice of Inspection served at any point before the error is corrected can reach back to the original omission. For former employees, the retention obligation—and the live violation—persists until the later of three years after the hire date or one year after the date employment ended.[6] Proactive remediation stops that exposure by starting the limitations clock. Once a form is corrected and five years elapse, civil liability for that form is extinguished.

What the Reclassification Has Eliminated: The Inspection-Time Cure

The good faith exception in INA § 274A(b)(6)—the provision that authorizes the 10-day cure window—has always applied exclusively to technical or procedural violations. It has never been available for substantive violations; that distinction is definitional. What the March 2026 reclassification has done is move a set of previously technical errors into the substantive category, stripping the cure mechanism from them permanently.

The practical effect is immediate. Under prior guidance, an auditor who found a missing date of birth or an incomplete document entry was required to notify the employer and allow at least ten business days for correction before any fine could be assessed. Employers and their compliance programs were structured around that expectation. Administrative tribunals have confirmed that the good faith exception is simply unavailable for substantive violations—it provides no defense to liability for errors in that category.[7] Proactive remediation before an inspection is the only remaining mechanism for addressing these errors without penalty exposure.

Remediation Improves the Penalty Profile

While remediation does not defeat liability for an error already made, it is directly relevant to the size of the penalty. Federal law requires both ICE and OCAHO to consider five factors when setting a civil penalty: the size of the business, the employer’s good or bad faith, the seriousness of the violations, whether unauthorized workers were employed, and the employer’s prior violation history.[8] Good faith in this context is a penalty factor, not a liability defense, and it is assessed based on the employer’s overall compliance conduct.

This factor is genuinely consequential in practice. OCAHO has found good faith to be neutral—rather than an aggravating factor—even where an employer had a very poor compliance rate, on the reasoning that cooperative conduct during the inspection and the absence of any concerning behavior can offset a high violation count.[9] An employer who demonstrates affirmative, documented remediation efforts before any inspection presents a considerably stronger profile.

It bears emphasis that OCAHO has consistently held that a high violation rate, standing alone, is not evidence of bad faith.[10] ICE nevertheless routinely seeks to use violation rates as an aggravating factor in its penalty calculations. A documented history of proactive internal auditing and remediation is the most effective rebuttal to that argument.

Timing Matters: Pre-NOI Remediation Is Categorically More Valuable

Correction of forms after service of a Notice of Inspection does not reduce liability. OCAHO has held that post-NOI corrections do not diminish the existence or seriousness of substantive violations and are unlikely to receive meaningful treatment as a mitigating factor in ICE’s penalty assessment.[11]

Pre-NOI remediation, by contrast, stops the statute of limitations, removes corrected forms from the chargeable universe at the time of inspection, and—when documented through a structured internal audit process—creates the strongest available evidence of good faith for penalty purposes. The practical directive is straightforward: act before any Notice of Inspection is served. Once the government initiates an inspection, the window for maximum benefit from remediation closes.

The Risk of an Incomplete Audit

One caution warrants particular emphasis. An employer that conducts an internal audit, identifies violations, and then fails to remediate them may be worse off than an employer that never audited at all. Documentation of known, uncorrected deficiencies—particularly errors that have since been reclassified as substantive under the March 2026 Fact Sheet—could support an inference that the employer was aware of the problems and chose not to address them.

That inference carries weight in the good faith penalty analysis and, in more serious cases, could bear on constructive knowledge arguments regarding unauthorized workers. Any internal audit should be undertaken with a firm commitment to remediation, under the supervision of qualified immigration compliance counsel.

RECOMMENDED ACTION STEPS

In light of the March 2026 Fact Sheet, we recommend that employers take the following steps as promptly as practicable:

• Commission an immediate internal I-9 audit: Even if an audit was conducted recently, errors previously flagged as technical and not remediated may now constitute substantive violations. Prior audit findings should be re-examined in light of the new reclassifications.
• Stop relying on document copies to cure Section 2 data gaps: This previously accepted practice is no longer a recognized safe harbor. Missing or incorrect document information in Section 2 must be corrected on the face of the Form I-9 and properly documented.
• Verify compliance of electronic I-9 systems: Employers using electronic I-9 systems should confirm that audit trails, electronic signature functions, and security documentation satisfy applicable DHS regulatory standards.
• Audit use of the alternative procedure: Employers that have used remote document inspection should confirm that (1) the alternative procedure box was checked in Section 2 or Supplement B for each affected employee and (2) the employer was an active E-Verify participant at the time each remote verification was conducted.
• Retrain I-9 administrators: Authorized representatives responsible for I-9 completion should receive updated training on the completeness requirements for Sections 1 and 2 and Supplement B, with attention to the fields now reclassified as substantive.
• Evaluate E-Verify enrollment: For employers not currently enrolled in E-Verify, the March 2026 Fact Sheet provides additional reasons to assess whether enrollment is appropriate, particularly given that the alternative procedure requires active enrollment.
• Consult immigration compliance counsel before any government contact: If your organization receives a Notice of Inspection from ICE, the production deadline and the structure of any response should be managed with the assistance of experienced immigration counsel.

HOW WE CAN HELP

Our lawyers stand ready to assist with internal I-9 audits, compliance training, electronic system reviews, and representation in connection with government inspections.

If you have questions about this alert or wish to discuss how these developments affect your organization’s I-9 compliance program, please contact your Morgan Lewis relationship partner or a member of our immigration compliance team.