Form I-9 Employment Verification with Mergers & Acquisitions
For I-9 purposes, when an employer acquires new employees through a merger or acquisition, the employer has two options for employees who will be continuing with the new organization.
Treatment as “New Hires”
The acquiring employer may treat them as new hires and complete new Forms I-9 for all new employees.
If the employer decides to treat employees who will be continuing with the new organization as “new hires,” new Forms I-9 must be completed for all acquired employees, without regard to citizenship or national origin status.
In addition to completing new I-9 forms for all acquired employees, employers who are enrolled in and use E-Verify voluntarily or are required to by state law must also run all acquired employees through E-Verify.
Treatment as “Continuing Their Employment”
Alternatively, the acquiring employer may treat them as employees continuing their employment with the related, successor, or reorganized organization, and keep the previous employer’s completed forms.
The Immigration and Nationality Act provides that an employer will not be treated as having hired a new employee if that individual is continuing in his or her employment and has a “reasonable expectation” of continuing such employment, including with a related, successor, or reorganized employer, provided the employer obtains and maintains from the previous employer records and Forms I-9 where applicable. Federal regulations define a “related, successor, or reorganized employer” to include “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.”
If the employer decides to treat the acquired employees as continuing their employment, then the new employer will assume responsibility for any mistakes or omissions on the previously completed I-9 forms. Therefore, the acquiring company should review the acquired company’s I-9 for accuracy and proper completion. As the acquiring company will be liable for any errors or omissions found on the acquired business’s I-9 forms, correcting the few errors will help reduce potential civil penalties for paperwork violations that may be discovered later. A memo should be prepared and placed in the personnel files describing the corporate transaction, the effective date of the transaction, and the number of I-9 forms adopted because of the transaction.
If the acquiring employer determines that many of the acquired company’s I-9 forms had errors or needs many corrections, it is recommended that the acquiring company proceeds to complete new I-9 forms for all the acquired employees.
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