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Timelines For Verifying Forms I-9 For Employees Acquired Through A Merger or Acquisition

How does HR manage Forms I-9 for employees during a merger or acquisition? Before plunging into an answer professionals must distinguish whether you are a private employer and which State laws mandate your continuing employer Form I-9 responsibilities or an employer with Federal contracts (prime) or subcontracts.   



In a previous article, E-Verify | What Employers, HR, And New Hires Need To Know,  https://www.i2ihires.com/post/e-verify-what-employers-hr-new-hires-need-to-know State laws mandate an employer's E-Verify responsibilities. E-Verify is an internet-based system used to verify a newly hired employee's identity and work authorization presented in Form I-9. Prime contractors and subcontractors are reminded to review their contracts for the FAR E-Verify clause. However, ALL employers regardless of contractor designation State mandates, or privately held, are required under IRCA to complete and retain a Form I-9 for each employee hired after 1986. 



In cases where a business is kicking off or nearing the completion of a merger or acquisition, the acquiring HR department will need to perform its due diligence. Typically, the acquiring company's HR department will assume the responsibilities of Forms I-9. As per USCIS,  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. An individual is continuing in 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 (i) The same employer at another location; (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.



Employers who have acquired or merged with another company have two options for satisfying Form I-9 requirements for acquired employees:


Forms I-9 Employment Hires Verifications
Timelines For Verifying Forms I-9 For Employees Acquired Through A Merger or Acquisition



Option A: Treat all acquired individuals as new hires and complete a new Form I-9 for each individual regardless of the employee’s original hire date. If you choose this option, you must complete new Forms I-9 for all of your acquired employees, without regard to actual or perceived citizenship status or national origin in order to ensure that you do not discriminate against new or existing employees. In addition, when completing new Forms I-9, you must allow all employees to choose one document from List A or a combination of one document from List B (containing a photo) plus one document from List C. You must enter the effective date of the acquisition or merger as the date the employee began employment in Section 2 of the new Form I-9.


Option B: Treat acquired individuals as employees who are continuing uninterrupted in their employment status with a reasonable expectation of employment at all times, as those concepts are defined in 8 Code of Federal Regulations (CFR) 274a.2(b)(1)(viii), and retain the previous owner’s Forms I‑9 for each employee. You are liable for any errors or omissions on the previously completed Forms I-9; therefore, you should review each Form I-9 with the employee and update or re-verify the employee’s information, as necessary. See note below for employees hired on or before November 6, 1986.



Regardless of whether you choose Option A or B, if you are a federal contractor with the Federal Acquisition Regulation (FAR) E-Verify clause and the merger or acquisition took place prior to the federal contract award date, your acquired employees are considered existing employees. Federal contractors with the FAR E-Verify clause have special rules relating to the verification of existing employees.



Timelines for verifying Forms I-9 for employees acquired through a merger or acquisition


Employers who are already using E-Verify as required by the FAR E-Verify clause, which then merge with or acquire another company, must comply with the timelines listed below for verifying employees gained through merger or acquisition.


  • If you have chosen to verify your entire workforce, you will have 180 days from the effective date of the merger or acquisition to create an E-Verify case for each of the non-exempt employees acquired through a merger with or acquisition of the other company.

OR

  • If you are not verifying your entire workforce, you will have 90 days from the effective date of the merger or acquisition to create an E‑Verify case for each of the non-exempt employees assigned to the contract who joined the company due to a merger with or acquisition of the other company.

Regardless of the timeline for creating cases for acquired employees, you must create cases for each newly hired employee who joins the company outside of the merger or acquisition process no later than the third business day after the employee begins work for pay.




Mergers and acquisitions are complicated processes.  Employers may find it difficult to determine whether employees acquired during a merger or acquisition are continuing in their employment or whether they are considered a new hire for Form I-9 purposes. For that reason, the U.S. Department of Homeland Security (DHS) strongly recommends that any business confronted with this question consult with its legal counsel.




For more information about how to avoid discrimination during the Form I-9 process, contact the Department of Justice, Civil Rights Division, Immigrant and Employee Rights Section (IER) at 1-800-255-8155, or visit the IER website at www.justic.gov/ier.

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