[Federal Register Volume 75, Number 140 (Thursday, July 22, 2010)]
[Rules and Regulations]
[Pages 42575-42579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-17806]


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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.

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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

[[Page 42576]]

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

[[Page 42577]]

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

[[Page 42578]]

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) * * *

[[Page 42579]]

    (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]
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