Reclassification of Substantive Errors by ICE: Implications for Employers

The legislative and policy history behind the Form I-9 employment eligibility verification process is complicated, to say the least. Too complicated, apparently, for U.S. Immigration and Customs Enforcement (“ICE”), which eschewed a formal announcement of significant policy changes in favor of something more streamlined (and discreet): updating a fact sheet posted to the agency’s website entitled, “Form I-9 Inspection Under Immigration and Nationality Act §274A,” on March 16, 2026, without notice or fanfare.

These purported policy changes include reclassifying several categories of I-9 errors as “substantive” (read: subject to fines), such as failing to write the title of an identity or employment eligibility document in Section 2…when a copy of the document is attached to the Form I-9. For nearly three decades, employers have been able to correct this error by referring to the attached copy and adding the missing information to Section 2, thereby avoiding a fine for an otherwise compliant Form I-9. Thanks to the agency’s March 16 website update, employers have lost this option—or so ICE would have you believe.

This alert examines the legal weight of ICE’s unannounced changes to its online I-9 inspection fact sheet and the strategic considerations employers will face if the agency attempts to leverage these changes during an I-9 audit.

What Changed?

In the context of Form I-9 compliance, there are two types of errors an employer can make: (1) “substantive” errors, which cannot be corrected, for which an employer may be fined; or (2) “technical or procedural” errors, which can be corrected by an employer to avoid a fine. Importantly, an employer may be fined for technical or procedural errors, but only if it is first notified of the errors by ICE and provided ten (10) days to correct them. Any technical or procedural errors not corrected by the employer during the ten-day period can then serve as the basis for a fine.

These two categories of errors, and their differing treatment, were established in a March 6, 1997 policy memorandum issued by the legacy INS, generally referred to as the “Virtue” memorandum.[1] The first paragraph of the Virtue memorandum states, “[u]ntil implementing regulations are in place, the following interim guidelines shall apply…to employer sanctions cases.” While proposed regulations were published by the INS for public comment in 1998[2], they were never codified, leaving the Virtue memorandum as the controlling guidance regarding I-9 errors for more than 29 years.

On March 16, 2026, ICE updated a fact sheet hosted on the agency’s website that describes the Form I-9 inspection (“audit”) process. This update lists all I-9 errors the agency considers substantive; and those it considers technical or procedural. The problem is that these new lists on ICE’s website do not match the lists in the 1997 Virtue memorandum. In fact, the website lists multiple errors as substantive, which the Virtue memorandum identifies as technical or procedural. This has led many to speculate that ICE will stop allowing employers to correct those errors and instead use them as the basis for additional fines.

There are several reasons to expect that this change will be successfully challenged in court. However, such legal challenges take time and ICE is unlikely to curb their enforcement activities in the meantime. Because of this, employers undergoing ICE audits may face two issues:

• Notices of Technical or Procedural Failures that omit certain errors considered technical under the Virtue memorandum, potentially depriving them of the ability to make corrections within the 10-day timeframe.

• Notices of Intent to Fine (“NIF”) with civil penalty amounts that include fines for errors considered technical under the Virtue memorandum, potentially subjecting them to financial liability for errors that are not properly considered substantive.

Employers that are aware of these issues will be better equipped to spot and challenge them in the course of an I-9 audit, whether or not this policy change is ultimately rejected by the courts.

Is That Legal?

All administrative federal agencies are governed by the Administrative Procedure Act (“APA”, 5 USC §551 et seq.), a law that, among other things, sets out the procedures an agency must follow when it makes rules. Most importantly, the APA requires the agency to provide advance notice of and an opportunity for the public to comment on any substantive rule, before that rule can go into effect.

This sort of notice-and-comment rulemaking is required for any substantive rules the agency wants to enact. That is, rules that create new legal obligations for, or change the legal consequences of, conduct by private parties. But the APA exempts other types of rules from notice-and-comment, such as: rules interpreting existing laws (“interpretive rules”); general statements of policy; and rules regarding the agency’s internal procedures. 5 USC §553.

Here, the agency in question (ICE) announced a rule that changes the legal consequences of certain I-9 errors, by recategorizing them as substantive (fineable, not correctable); and did so without providing advance notice or the opportunity for the public to comment on the change. A party challenging this action under the APA notice-and-comment requirement would have to establish that the rule change was substantive for ICE’s failure to provide notice-and-comment to be considered a violation of the APA. ICE, on the other hand, would almost certainly assert that the reclassification of I-9 errors was not a substantive rule, but rather a reinterpretation of the applicable laws or a statement of policy that did not require notice-and-comment.  

There is a mountain of case law examining and interpreting agency rulemaking through the lens of the APA, including the recent Supreme Court decision in Loper Bright Enterprises v. Raimondo.[3] In Loper Bright, the Supreme Court eliminated the deference courts previously afforded to agencies’ interpretations of relevant laws, holding that court must exercise their independent judgment when deciding whether an agency exceeded its authority. So, if this action were to be challenged, it would ultimately fall to the court to decide whether or not ICE should have engaged in notice-and-comment rulemaking before recategorizing these I-9 errors.

How Can My Company Prepare for this Change?

There is never a bad time for an employer to conduct an internal audit of its completed Forms I-9, and its associated policies and procedures for employment eligibility verification. In the current enforcement environment, proactive compliance measures are essential. Many employers, for example, are unaware that in-person, physical inspection of I-9 documents remains mandatory for any company not enrolled in E-Verify as well as for any hiring sites an E-Verify employer chooses not to enroll in the program—a common scenario for employers with operations in multiple states.

Whether or not ICE’s recategorization of certain technical errors as substantive stands up to the scrutiny of the courts, it is clear that the agency is angling to assess more, and larger, fines against employers during I-9 audits. The best way for an employer to reduce its exposure, then, is to conduct an internal audit to proactively identify and address past I-9 errors; to develop and implement uniform, compliant I-9 policies and procedures for its hiring sites; and, crucially, to provide training and support to the employees responsible for administering those policies and procedures.

[1] Paul W. Virtue, Immigr. & Naturalization Serv., HQIRT 50/5.12, Interim Guidelines: Section 274A(b)(6) of the Immigration & Nationality Act Added by Section 411 of the Illegal Immigration Reform & Immigrant Responsibility Act of 1996 (Mar. 6, 1997).

[2] Limiting Liability for Certain Technical and Procedural Violations of Paperwork Requirements, 63 Fed. Reg. 16909 (Apr. 7, 1998).

[3] 603 US __ (2024), 144 S. Ct. 2244 (2024).

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