When one company decides to purchase or merge with another company, there are a lot of issues to consider, not the least of which is how to handle the retention of employees for whom Forms I-9 are already on file with the acquired company. First, a decision must be made as to whether the employee had the reasonable expectation of employment for the entirety of the acquisition, and thereafter. If the answer to this question is “yes” there are essentially two ways with which to move forward with those retained employees: (1) either adopt, review, and edit for compliance as necessary, the previously completed Forms I-9, or (2) complete new Forms I-9 for all of the retained employees. As with everything relating to Forms I-9 compliance, the employer must ensure that it is not engaging in any practice that could be deemed to be discriminatory, and it must treat employees equally.
Adopting the acquired companies’ Forms I-9
If a company wants to adopt the purchased companies’ Forms I-9, a determination will first need to be made as to whether the employee from the acquired company had a reasonable expectation of employment throughout the merger/acquisition. Pursuant to 8 CFR § 274a.2 – Verification of identity and employment authorization:
(viii) An employer will not be deemed to have hired an individual for employment if the individual is continuing in his or her employment and has a reasonable expectation of employment at all times.
(A) An individual is continuing in his or her employment in one of the following situations:
(7) An individual continues his or her employment with a related, successor, or reorganized employer, provided that the employer obtains and maintains from the previous employer records and Forms I-9 where applicable. For this purpose, a related, successor, or reorganized employer includes:
(ii) An employer who continues to employ some or all of a previous employer’s workforce in cases involving a corporate reorganization, merger, or sale of stock or assets;
Let’s imagine a scenario where Company A purchases Company B, and Company A elects to adopt Company B’s Forms I-9 for all current employees. Incumbent upon Company A, even prior to the merger, will be to negotiate language in the contract stating that Company B will indemnify and hold harmless Company A for any fines that occur as a result of Forms I-9 defects or errors or omissions that Company B is responsible for. Irrespective of which path chosen regarding the retention of Forms I-9 though, Company A will always be required to ensure Forms I-9 compliance. Company A should also consider performing an internal audit for either all Forms I-9 of Company B’s employees, or, at the very least, for a reasonable amount of Company B’s Forms I-9. If, during that audit, Company A finds significant errors and omissions, it should consider expanding the audit.
Requiring new Forms I-9 for all employees retained subsequent to the merger
Building upon the Company A, and Company B scenario described above, let’s now consider a situation where Company A decides to require that all employees retained subsequent to the merger complete new Forms I-9. In this scenario, Company A is required to comply with all regulations regarding the hiring of new employees and the completion of their Forms I-9, in a timely and complete manner. Therefore, retained Company B employees must complete page one of the Form I-9 on their first day of work for Company A. Page three of the Form I-9 must then be completed no later than the third date of employment for all employees retained from Company B.
The information included in this blog post is not legal advice and is meant for informational purposes only. If you have questions regarding I-9 compliance, make sure you call an experienced immigration attorney for advice.
At Khanna Law, we successfully help our clients navigate the complicated and vast immigration rules and laws pertaining to I-9 compliance. We pride ourselves in guiding you, protecting your rights, and providing dedicated, intelligent, and reliable representation.
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