Getting a new hire onboard is more than introducing him to coworkers. You need to comply with all the regulations involved with the I-9 form. It is only one page, but the rules that go with it fill 69 pages.
Here is an overview showing how important is it to comply with the regulations, the difference between the W-9 and the I-9 forms, and what identification is acceptable to meet the I-9 rules.
Penalties for Non-Compliance
To you it looks like a lot of pencil pushing. To the government it is serious business. The minimum fine for errors filling out your I-9 paperwork is $110.
Do you have multiple employees? Consider what can happen if you make several mistakes on each form, times the number of employees you have. You’re soon looking at fines in the hundreds of thousands.
It happened to a major clothing seller after an audit in 2008. They ended up paying $1 million in fines to the Immigration and Customs Enforcement. With the additional cost of professional legal help, the company paid a huge amount for errors that can easily be avoided.
The most common errors include:
- Incorrect forms or missing forms for employees
- Not completing the form within 3 days of the first day of work for each new hire
- Not monitoring expiration dates for aliens who are authorized to work in the U.S.
- Not collecting the right types of documents
- Not maintaining the I-9 forms and documentation for the designated period of time
- Not using supporting documentation with E-Verify photo matching
The Difference Between W-9 and I-9
All the forms involved in hiring are confusing. But the most uncertainty is about the difference between a W-9 and I-9 form.
The W-9 is used for independent contractors, who are not considered employees. Its purpose is to provide the IRS with your social security number and the amount of money you make working as an independent contractor for a business. Though independent contractors often do the same type of work as an employee, they usually don’t get benefits. In effect, they are freelancers and working for themselves.
The I-9 is used for an employee, a worker who will receive benefits like health insurance and vacation days. Its purpose is to verify that the person is authorized to work in the U.S.
How to Verify Eligibility to Work in the U.S.
According to the IRS, you need to follow three steps when you hire a new employee.
#1. Fill out I-9. Each time you hire an employee, you need to have them fill out Form 1-9, Employment Eligibility Verification.
#2. Collect their Social Security Number. This means getting the worker’s name and social security number for use on annual W-2 forms. You cannot use an ITIN, which is short for Individual Taxpayer Identification Number.
#3. Fill out W-4. The W-4 form records how much income tax you need to withhold from the person’s wages.
That seems simple, but the tricky part is step 1, the I-9. What ID can you use to verify identity and authorization to work? There are two ways the new hire can prove identify and his/her eligibility to work in the U.S.
1. One form of ID for both. The worker can give you a single piece of ID that both proves he/she is authorized to work in the U.S. and that verifies identify. Eligible documents include:
- Valid U.S. passport
- Permanent resident card
- Foreign passport with I-551 stamp
- Employment authorization card
2. Two forms of ID, one for each requirement. Any new hire must provide one piece of ID that proves he/she is authorized to work in the U.S. and another one that verifies their identity.
Acceptable ID to provide identity includes:
- Driver’s license
- State ID card
- Military ID
Acceptable ID to prove authorization to work in the U.S. includes:
- Certification of report of birth
- Certification of birth abroad
- U.S. social security number