**34510 Federal Register** / Vol. 71, No. 115 / Thursday, June 15, 2006
/ Rules and Regulations

**DEPARTMENT OF HOMELAND SECURITY**

**Bureau of Immigration and Customs Enforcement**

**8 CFR Part 274a**

**\[BICE 2345--05; DHS--2005--0046\]**

**RIN 1653--AA47**

**Electronic Signature and Storage of Form I--9, Employment Eligibility
Verification**

**AGENCY:** Bureau of Immigration and Customs Enforcement, DHS.

**ACTION:** Interim rule with request for comments.

**SUMMARY:** This interim 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 Forms I--9, Employment
Eligibility Verification, may sign and retain these forms
electronically. This interim rule implements statutory changes to the
Form I--9 retention requirements by establishing standards for
electronic signatures and the electronic retention of the Form I--9.

**DATES:** *Effective Date:* This interim rule is effective June 15,
2006.

*Comment Date:* Written comments must be submitted on or before August
14, 2006.

**ADDRESSES:** You may submit comments, identified by *docket number,*
by *one* of the following methods:

Federal eRulemaking Portal: *http://www.regulations.gov.* Follow the
instructions for submitting comments.

Mail: Jim Knapp, Associate Legal Advisor, Bureau of Immigration and
Customs Enforcement, Room 6100, 425

I. St., NW., Washington, DC 20536.

**FOR FURTHER INFORMATION CONTACT:** Jim Knapp, Associate Legal Advisor,
Bureau of Immigration and Customs

Enforcement, Room 6100, 425 I St., NW., Washington, DC 20536. Telephone
(202) 514--8138 (not a toll-free number).

**SUPPLEMENTARY INFORMATION**

**I. Background**

*A. Employment Eligibility Verification Requirement*

Section 274A of the Immigration and Nationality Act (Act), 8 U.S.C.
1324a, requires all United States employers, agricultural associations,
agricultural employers, farm labor contractors, or persons or other
entities who recruit or refer persons for employment for a fee, to
verify the employment eligibility 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 an Employment Eligibility Verification form (Form
I--9) for all employees, including United States citizens. 8 CFR 274a.2.

Completed Forms I--9 are not filed with the Federal Government; instead,
the completed I--9 form is retained by the employer. Employers are
required to retain Forms 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 the Forms I--9
for three years after the date of hire. *Id.* at (d)(2). The failure to
properly complete and retain the Forms I--9 subjects the employer to
civil money penalties. Section 274A of the Act, 8 U.S.C. 1324a(e)(5).

If an employee and an employer complete a Form I-9 prior to the
employee's first day of work and then the employee decides not to report
for work with the employer, is the employer required to retain the Form
I-9? Since the employee never worked for or received compensation from
the employer, the employer should not be required to retain the Form
I-9. The term "date of hire" should mean the employee's first day of
work.

*B. Format of the Form I--9*

Form I--9 has been made available to the public in numerous paper and
electronic means since 1986. The Form I--9 is currently available online
at the U.S. Citizenship and Immigration Services (USCIS) Web site at
(*http://www.uscis.gov*) as a Portable Document Format (.pdf)
fillable---printable form
*http://uscis.gov/graphics/formsfee/forms/files/i-9.pdf.* In short, an
employer or employee can retrieve the form, type the required
information into it for a prospective employee, and print it. The form
may then be retained in paper, microfilm, or microfiche form. In
conjunction with this interim rule, the Department of Homeland Security
(DHS) is upgrading the downloadable PDF version of Form I--9 to enable
employers and employees to electronically sign and save the filled Form
I--9. This provides employers an additional option for convenience and
savings. This PDF version of Form I--9 complies with the electronic form
requirements of this rule. However, existing DHS regulations do not
permit the form to be completed and stored electronically as an original
record. On October 30, 2004, Public Law 108--390, 11 Stat. 2242,
authorized employers to retain Forms I--9 in electronic format,
effective April 29, 2005, or the effective date of implementing
regulations, whichever occurred first. The legislation also allows
employers and employees to manifest attestations using electronic
signature technology. This interim rule conforms the regulations to the
requirements of Public Law 108--390 and permits employers to complete,
sign, and store Forms I--9 electronically, as long as certain
performance standards set forth in this interim rule for the electronic
filing system are met. This interim rule also permits employers to
electronically scan and store existing Forms I--9, as long as standards
set forth in this interim rule for the electronic storage system are
met. The interim rule adopts performance standards that have been proven
by other agencies in the past and provides flexibility for employers to
choose a method of retention that is the most economically feasible for
their specific business. Utilizing the most widely applicable standards,
those adopted by the Internal Revenue Service (IRS) for tax records,
provides the widest possible cost savings within the business community
because of existing compliance with those standards.

*C. Electronic Recordkeeping Standards*

There is no single United States Government-wide electronic
recordkeeping standard for recordkeeping by private individuals and
entities. However, some United States Government agencies provide
electronic recordkeeping standards for use in transactions with that
agency. These standards provide a baseline for proven practices. To the
extent that these standards are applicable to the electronic storage of
Form I--9, DHS attempts to use the requirements and language of existing
standards. At the same time, DHS recognizes that systems for electronic
recordkeeping develop rapidly with the creation of new storage
mechanisms, mediums, and methods. Accordingly, the standards adopted in
this rule are ''product neutral'' and will guide the application of new
products to meet minimum performance standards, rather than establishing
specific requirements. The Internal Revenue Service's Rev. Proc. 97--22,
1997--1 C.B. 652, 1997--13 I.R.B. 9 (March 31, 1997), and Rev. Proc.
98--25, 1998--1 C.B. 689, 1998--11 I.R.B. 7 (March 16, 1998), specify
electronic recordkeeping standards for taxpayers. This regulation
closely follows the widely accepted electronic storage standards and
requirements set forth in the IRS Rulings previously published. The
derivation of the substantive standards of this interim rule is set
forth below.

DERIVATION OF SUBSTANTIVE STANDARDS FOR ELECTRONIC RETENTION OF FORM
I--9

Provision of this rule Source of provision Description of provision

8 CFR 274a.2(e)(1) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(2) \...\...\... Requirements for the electronic generation or
storage system.

8 CFR 274a.2(e)(2) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(3) \...\...\... Requires reproduced documents to exhibit a high
degree of legibility and readability.

8 CFR 274a.2(e)(3) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(7) ...\...\... Requires that any electronic storage system must not
be subject to any agreement that would limit or restrict the relevant
Government personnel's access or use on the premises.

8 CFR 274a.2(e)(4) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(9) \...\...\... Allows use of multiple electronic systems so long
as each meets the relevant standards.

8 CFR 274a.2(e)(5) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(5) ...\...\... Requires that descriptions of the system, including
procedures for use and indexing systems, be maintained and made
available upon request.

8 CFR 274a.2(e)(6) \...\...\...\...\....Rev. Proc. 97--22, section
4.02(1) ...\...\... Defines indexing system that complies with
requirements.

8 CFR 274a.2(e)(7) \...\...\...\...\....Rev. Proc. 97--22, section
4.01(10) ...\.... Permits reasonable data compression and formatting
technologies.

8 CFR 274a.2(e)(8) \...\...\...\...\... Rev. Proc. 97--22, section
4.01(6) \...\...\... Requirements for inspection.

The widespread application of these IRS standards by the business
community is the critical reason for adoption of these standards. This
adoption of existing standards should reduce any potential burden on the
portion of the business community that decides to utilize electronic
retention. In 17 CFR 240.17a4, the Securities and Exchange Commission
(SEC) specifies electronic recordkeeping standards for certain exchange
members, brokers and dealers. DHS did not incorporate specific language
from the SEC provisions; however, it did find them instructive on how to
establish electronic systems. In particular, 8 CFR 240.17a4(f) provides
instruction on audit and indexing systems that employers could find
helpful when complying with the similar provisions set forth in this
regulation. Also instructive are the regulations of the National
Archives and Records Administration found in 36 CFR part 1234, which set
standards for federal agencies to use in order to enhance the
trustworthiness of an agency's own electronic records and their
admissibility as evidence in court proceedings. Employers utilizing
electronic retention and signature technology for Form I--9 may find it
helpful to review system requirements placed upon Federal agencies.
These standards define terms of art related to the requirements of this
regulation and provide information that could help guide businesses
establish security and maintenance procedures for electronic records.
Using precedents set by 36 CFR part 1234 and other United States
Government agencies, this interim rule provides a reasonable set of
standards for creating a trustworthy system for Form I--9 completion and
storage. The standards are technology neutral, and allow businesses the
flexibility to keep records in a manner consistent with other business
processes. They also provide DHS investigators with a framework for
inspecting the records and assessing their trustworthiness. DHS is
working with the IRS to develop audit protocols to minimize requirements
on businesses to provide information from Forms I--9 when the DHS Bureau
of Immigration and Customs Enforcement (ICE) determines that audit and
review is necessary.

*D. Development of the Rule*

After the President signed Public Law 108--390, a working group was
established within DHS, consisting of representatives from ICE and
USCIS. This regulation was developed, drawing upon work begun under the
legacy Immigration and Naturalization Service, as well as relying on
standards developed by other Federal agencies utilizing electronic
retention and signature methods. On December 10, 2004, at the request of
the United States Chamber of Commerce, DHS representatives met with the
Electronic I--9 Coalition. This Coalition consisted of representatives
from a wide array of business interests. The Chamber of Commerce
facilitated the meeting so the Coalition members could express views to
DHS regarding the importance of the statute and to offer insight on
methods of storage and attestation being contemplated by the business
community. DHS representatives listened to the views presented, but
could not offer any guidance on specific aspects of the regulation. DHS
has carefully considered the views expressed and, to the extent
practical and in the public interest, incorporated those suggestions.
There are a number of potential advantages that employers may gain
through use of electronic Forms I--9. Many employers may experience cost
savings by storing Forms I--9 electronically rather than using
conventional filing and storage of paper copies or transferring the
forms to microfilm or microfiche. Electronic forms may allow employers
to better ensure that each Form I--9 is properly completed and retained.
Some employers may find that electronic completion and storage renders
the process less prone to error. Electronically retained Forms I--9 are
more easily searchable, which is important for re-verification, quality
assurance and inspection purposes. This will be especially helpful and
costeffective for large employers that have job sites across the country
or that have high employee turnover rates. On April 26, 2005, a fact
sheet was published on the ICE Web site to provide information on the
development of the regulation based on IRS Revenue Procedure 97--22. The
fact sheet included suggested standards established by IRS, and
advantages for using electronic signature and retention of Form I--9.

*E. Employer Compliance*

An employer that is currently complying with the recordkeeping and
retention requirements of current 8 CFR 274.2 is not required to take
any additional or different action to comply with the revised rules. The
revised rules offer an additional option. Businesses will be permitted
to adopt one or more of a number of different electronic recordkeeping,
attestation, and retention systems that are compliant with the existing
IRS standards. For example, a small business may wish to download and
retain .pdf versions of the employment verification record. DHS made
this system available on the USCIS Web site. Employers who already
utilize electronic data recordkeeping as part of their accounting and
tax functions may expand those functions to include the employment
verification process. As long as the electronic records system remains
IRS-compliant, the system will be ICE-compliant.

*F. Public Participation*

Interested persons are invited to participate in this rulemaking by
submitting written data, views, or arguments on all aspects of the
proposed rule. DHS also invites comments that relate to the economic,
environmental, or federalism affects that might result from this
proposed rule. Comments that will provide the most assistance to DHS in
developing these procedures will reference a specific portion of the
proposed rule, explain the reason for any recommended change, and
include data, information, or authority that support such recommended
change.

*Instructions:* All submissions received must include the agency name
and docket number for this rulemaking. All comments received will be
posted without change to *http://www.regulations.gov,* including any
personal information provided.

*Docket:* For access to the docket to read background documents or
comments received, go to *http://www.regulations.gov.* Submitted
comments may also be inspected at the street at the address noted above
by making an appointment with the individual listed as the individual to
contact for further information.

**II. Regulatory Requirements**

*A. Administrative Procedure Act (Good Cause Exception)*

Implementation of this rule as an interim rule effective on June 15,
2006, with a request for public comment after the effective date of the
rule is based upon the ''good cause'' exceptions found under the
Administrative Procedure Act (APA), 5 U.S.C. 553(b)(B) and (d)(3). DHS
has determined that delaying implementation of this rule until after a
period for public notice and comment, analysis of the public comments
(if any), preparation of a final rule, and providing a delayed
postpublication effective date of at least 30 days, are impracticable
and contrary to the public interest for the following reasons:

This regulation adopts existing, widely-utilized standards for
electronic recordkeeping to permit any employer who is required to
retain Form I--9, to retain that form in an electronic format. Because
of the widespread application of the same rules required to establish
taxable income and other matters within the jurisdiction of the IRS in
the larger accounting context, it is impractical to adopt differing
rules for a specific set of employment forms. Accordingly, providing an
opportunity for notice and comment on whether to adopt such widely
accepted standards is impractical and unnecessary. Also, the rule
provides additional optional methods for complying with an existing
requirement. The methods may be utilized or not utilized, in the
discretion of the employer. Therefore, a delayed effective date is not
necessary. DHS recognizes that the effective date of the underlying
statute authorizing electronic retention of Form I--9 was April 28,
2005. DHS will not require that forms created between that date and the
effective date of the rule must comply with this rule. If an audit of
such records is required, DHS will permit the employer to provide the
forms in paper form; this rule does not require that any employer use an
electronic record keeping system. Moreover, as far as DHS can determine
at this time, ''off the shelf'' computer programs and commercial
automated data processing systems in use comply with the standards
required by this rule. DHS is not aware of systems that would not
immediately be useable under the regulations. Accordingly, DHS finds
that no employer required to retain Form I--9 would be adversely
affected by the adoption of this rule without prepromulgation notice and
comment or a delayed effective date. DHS nevertheless invites comments
on this interim rule and will consider all timely comments in the
preparation of a final rule. In particular, DHS is interested in
identifying whether any existing systems for electronic record keeping
do not comply with these standards in order to adjust the standards or
provide a means to resolving any discrepancies.

*B. Regulatory Flexibility Act*

The Regulatory Flexibility Act (RFA) mandates that DHS conduct an RFA
analysis when an agency is ''required by section 553, or any other law,
to publish general notice of proposed rulemaking for any proposed
rule.'' 5 U.S.C. 603(a). RFA analysis is not required when a rule is
exempt from notice and comment rulemaking under 5 U.S.C. 553(b). DHS has
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 is required for this rule.

*C. Unfunded Mandates Reform Act of 1995*

This interim rule will not result in an expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of \$100
million 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.

*D. Small Business Regulatory Enforcement Fairness Act of 1996*

This interim rule is not a major rule as defined by section 804 of the
Small Business Regulatory Enforcement Fairness Act of 1996. This interim
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 foreignbased companies in domestic and export markets.
Since utilizing electronic signature and storage technologies are
optional, DHS expects that small businesses will only choose electronic
methods if they will save costs and/or lessen overall burden. Providing
this option should, therefore, have a net cost-saving effect to small
businesses.

*E. Executive Order 12866 (Regulatory Planning and Review)*

This interim 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 has assessed both the cost
and benefits of this interim rule as required by Executive Order 12866
section 1(b)(6), and has made a reasoned determination that the benefits
of this interim rule justify its costs to the public and Government. In
fact, DHS anticipates that both the public and Government will
experience a net cost savings as a result of this rule. Whether to store
Forms I--9 in an electronic format will be within the discretion of the
employer or the recruiter or referrer for a fee---those that are already
required under 8 CFR 274a.2 to retain the Forms I--9. The number of
Forms I--9 maintained throughout the country is extremely large. Storage
of Forms I--9 to meet the statutory retention requirement may require
the employer to make a significant investment in personnel and storage
space. Currently, storage costs for the paper Form I--9 vary, depending
on the storage facility used and the number of Forms I--9 that must be
stored. DHS believes that Form I--9 storage costs are highest with large
employers or those who have a high employee attrition rate. At an
estimated employer total labor cost of \$20 per hour, employer burden
savings are estimated to be \$13,000,000 annually. DHS considers this a
conservative estimate, which is based on agency experience since the
Form I--9 requirement was implemented. Further, we expect that some
employers will have capital costs at the outset, depending on the size
and complexity of the system chosen. DHS is unable to estimate possible
capital costs as these could vary widely as employers implement a range
of electronic options, from simply using a scanner to electronically
retain a completed Form I--9 to a complex database that facilitates
electronic completion, attestation, retention, production, etc.
Employers utilizing electronic Forms I--9 will bear additional costs
associated with the documentation that this rule requires to establish
the integrity of the electronic Form I--9 process chosen. This is an
initial cost to the employer and will vary depending on the
sophistication and capacity of each system deployed. The documentation
necessary should accompany the software and hardware being used by the
employer to implement the electronic Form I--9. For employers
responsible for a significant number of Forms I--9, these costs are
expected to be lower than the costs associated with retaining Forms I--9
in paper format. For employers who do not have a large number of Forms
I--9 to retain, utilizing an electronic Form I--9 may not be economical.
However, the benefits of using an electronic Form I--9 extend beyond
storage space. DHS believes that employers using electronic Forms I--9
will improve their accuracy rate. By completing and/or storing Forms
I--9 electronically, employers will be better able to self-audit Forms
I--9 in order to detect and correct errors. Employers could create an
electronic process for Form I--9 completion that minimizes the
possibility of errors. The process could include prompts that preclude
the user from completing the rest of the form until an acceptable
response is provided. Employers would also be better able to create a
reliable system to re-verify an employee's employment authorization when
it is about to expire. The forms could be stored on a computer
maintained onsite rather than in boxes off-site or other
difficult-to-access locations, which DHS has observed when conducting
past Form I--9 audits. Electronically stored forms could be presented
for review in a matter of minutes rather than the lengthy period
required to access paper or microfiche archives. While employers
converting to an electronic Form I--9 format may incur initial costs,
DHS anticipates that employers who use an electronic Form I--9 system
tailored to their needs will generally achieve a net cost-savings in
both the short term and long term. In addition, DHS anticipates that its
Form I--9 audits will reveal a lower error rate. This should translate
into a more efficient employment eligibility verification process for
employers and, therefore, a lower incidence of unauthorized workers in
the workplace. In recent years, DHS has received many queries from the
employer community regarding the possibility of using electronic Forms
I--9, with electronic attestation, and storing the forms electronically.
Employers have expressed their frustration with the requirement to keep
paper forms or maintain the forms on microfilm or microfiche when all
other aspects of their businesses have been automated. For some
employers, particularly small employers, retaining the paper Form I--9
may continue to be the most cost-effective and efficient storage method.
This rule does not eliminate this option or discourage employers from
using it. The paper Form I--9 has the advantage of recording the unique
signature of the employee and of the employer representative. This
interim rule does not make any change to the current paper Form I--9
process. Additionally, employers can utilize a combination of paper and
electronic methods for fulfilling the Form I--9 requirements. For
example, an employer can complete the paper Form I--9 and use a scanner
to retain electronically. Conversely, an employer can choose to complete
the Form I--9 electronically and retain the printed form. For the
Government, amending the regulations to permit the electronic signatures
and retention of Form I--9 has many advantages, particularly with
respect to DHS's enforcement efforts. When conducting audits, DHS will
be able to receive Forms I--9 electronically, rather than using staff
resources to physically appear at a worksite.

How does DHS envision it will securely receive Forms I-9 electronically
rather than using staff resources to physically appear at a worksite?
Will this be through e-mail, CD, file transfer, and/or remote access to
the storage system? Will encryption technology be used? If so, what
encryption technologies are supported? There may be security concerns
with various options that need to be addressed given the personally
identifiable information on the Form I-9.

Once the Form I--9 data is received electronically, DHS will have
increased flexibility in how it reviews and analyzes them. DHS will be
able to more easily compare data among multiple audits to locate
unauthorized workers, and store audit records for easy access. When
investigating the presence of unauthorized workers in the workplace,
employers violating the immigration laws, or national security risks,
DHS will have this information immediately available and with less risk
of human error. Additionally, there are circumstances in which the
Department of Labor and the Department of Justice, Office of Special
Counsel for Immigration-Related Unfair Employment Practices, access
Forms I--9 in order to exercise their responsibilities. DHS anticipates
that its own additional costs will be minimal. DHS currently inputs Form
I--9 information manually into a database. If an employer chooses to
electronically retain Form I--9, then the rule's requirement that Form
I--9 information be presented in a particular electronic format will
enable the electronic transfer of information from employer to DHS to be
nearly instantaneous.

Where does the rule state a requirement that Form I-9 information be
presented in a particular electronic format? Where is the particular
electronic format defined? Most if not all any electronic Form I-9
systems will likely create a PDF or other image of the Form I-9 to
comply with the requirement to print a copy of the Form I-9. Receiving
PDFs (secure or not secure) of Forms I-9 is not a very efficient or
effective implementation of electronic transfer of information from
employer Forms I-9 to DHS. Securely transferring an electronic data file
of the information in a specified format would be much better for DHS.
Security is the key component of this process since the Form I-9 does
contain personally identifiable information that could be used to steal
an individual's identity.

Therefore, rather than invest DHS investigator time in data entry,
investigators will be free to conduct more-thorough investigations. Once
employers begin to utilize electronic Forms I--9 and the various
electronic Form I--9 storage options, DHS will be able to better gauge
what additional or alternative database and storage options would
further increase the efficiency of its investigations.

DHS should consider working with firms offering outsourced electronic
Form I-9 services to determine how to increase the efficiency of its
investigations.

At present, DHS will utilize current systems to implement this rule.
This rule does not limit employers to using one system for the storage
of Forms I--9 electronically, nor does it identify one method for
acceptable electronic signatures. Instead, this rule seeks to set
acceptable standards for employers. Electronic signatures can be
accomplished using various technologies including, but not limited to,
electronic signature pads, Personal Identification Numbers (PIN),
biometrics, and ''click to accept'' dialog boxes. DHS considered
specifying acceptable technologies, but rejected this alternative as
being too inflexible for employers' needs and economic means. Moreover,
to specify a particular technology would require continuous amendments
to the regulations reflecting the rapid changes in technology. DHS
concluded that this approach would be impractical and detrimental to
employers since it would require continuous and potentially costly
changes to employers' business practices.

*F. Executive Order 13132 (Federalism)*

This interim 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 interim rule does not
have sufficient federalism implications to warrant the preparation of a
federalism summary impact statement.

*G. Executive Order 12988 (Civil Justice Reform)*

This interim rule meets the applicable standards set forth in sections
3(a) and 3(b)(2) of Executive Order 12988.

*H. Paperwork Reduction Act*

Under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 et seq., all
Departments are required to submit any reporting or recordkeeping
requirements inherent in a rule to the Office of Management and Budget
(OMB) for review and approval. This interim rule requires employers to
complete the Form I--9 which has been approved for use by OMB (OMB
Control Number 1615--0047); it also permits the employer to continue to
retain the Form I--9 in paper, microfiche, or microfilm, and allows a
new option: to retain the Form I--9 electronically. The DHS believes
that storing the I--9 electronically will reduce the burden on
businesses by 650,000 hours (see discussion below). Accordingly, DHS
submitted the required Paperwork Reduction Change Worksheet (OMB--83C)
to the Office of Management and Budget (OMB) reflecting the reduction in
burden hours for Form I--9, and the OMB has approved the changes. DHS
estimates that there will be a total of 78,000,000 respondents annually
who will complete the required Form I--9 in either paper or electronic
format. DHS has estimated that it takes 9 minutes to gather the required
evidence to complete the paper Form I--9 and an additional 4 minutes for
employer verification, filing and storage. Because this regulation is
technology neutral, it is difficult for DHS to estimate the average time
required to complete a Form I--9 electronically, as completion methods
may vary widely depending upon the range of systems implemented by
employers. However, DHS does not believe the time per respondent will
change significantly as the documentation required is unchanged. Many
businesses could reduce the time burden by using an electronic Form
I--9, as the documentation could be collected from an employee in
conjunction with other types of personnel forms (*i.e.*, tax withholding
forms, insurance and other benefit forms) that require similar personal
information. For employers who choose electronic retention methods for
the Form I--9, DHS does expect a burden reduction. DHS previously
estimated that employers spend four minutes per form to verify and file.
We project that half of the estimated 78,000,000 Forms I--9 completed
annually will involve some method of electronic generation or retention.
Employers utilizing at least a partial electronic process for retention
of the Form I--9 should save a minimum of one minute of burden time per
form based on the previous estimate of 4 minutes per form for
verification and filing. Based on 39,000,000 Forms I--9, the total labor
hours saved would be 650,000 hours annually. Under 8 CFR 274a.2(e)
through (i), any employer who stores Form I--9 electronically or any
employer that applies an electronic signature to the Form I--9 must
demonstrate that its electronic storage system is properly maintained
and protected against tampering, and that any electronic signature can
be authenticated. In addition, an employer or entity who chooses to
complete and/or retain Forms I--9 electronically must maintain, and make
available to the Department upon request, documentation of the business
process that:

\(1\) Creates the retained Forms I--9;

\(2\) Modifies and maintains the retained Forms I--9; and

\(3\) Establishes the authenticity and integrity of the Forms I--9, such
as audit trails.

These additional requirements are considered information collections
under the Paperwork Reduction Act. These requirements are reflected in
the Paperwork Reduction Change Worksheet (Form OMB 83--C) that has been
submitted to OMB and that specifies the estimated net reduction in
burden hours that will result from this rule.

**List of Subjects in 8 CFR Part 274a**

Administrative practice and procedure, Aliens, Employment, Penalties,
Reporting and recordkeeping requirements.

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**

\_ 1. The authority citation for part 274a continues to read as follows:
**Authority:** 8 U.S.C. 1101, 1103, 1324a; 8 CFR part 2.

\_ 2. Section 274a.2 is amended:

\_ a. By revising paragraph (a);

\_ b. By revising paragraph (b)(1)(i)(A);

\_ c. By revising paragraph (b)(1)(ii)(B);

\_ d. By revising the last sentence in paragraph (b)(1)(iv);

\_ e. By revising the last sentence of paragraph (b)(1)(vii);

\_ f. By revising paragraph (b)(2)(i) introductory text;

\_ g. By revising paragraph (b)(2)(ii);

\_ h. By adding paragraph (b)(2)(iv);

\_ i. By revising paragraph (b)(3);

\_ j. By adding the term ''or electronic images'' immediately after
''copies'' in paragraph (b)(4); and

\_ k. By adding new paragraphs (e), (f), (g), (h), and (i).

The revisions and additions read as follows:

**§ 274a.2 Verification of employment eligibility.**

\(a\) *General.* This section establishes requirements and procedures
for compliance by persons or entities when hiring, or when recruiting or
referring for a fee, or when continuing to employ individuals in the
United States.

\(1\) *Recruiters and referrers for a fee.*

For purposes of complying with section 274A(b) of the Act and this
section, all references to recruiters and referrers for a fee are
limited to a person or entity who is either an agricultural association,
agricultural employer, or farm labor contractor (as defined in section 3
of the Migrant and Seasonal Agricultural Worker Protection Act, Pub. L.
97--470 (29 U.S.C. 1802)).

\(2\) *Verification form.* Form I--9,

Employment Eligibility Verification Form, is used in complying with the
requirements of this 8 CFR 274a.1---274a.11. Form I--9 can be in paper
or electronic format. In paper format, the Form I--9 may be obtained in
limited quantities at USCIS district offices, or ordered from the
Superintendent of Documents, Washington, DC 20402. In electronic format,
a fillable electronic Form I--9 may be downloaded from
*http://www.uscis.gov*. Alternatively, Form I--9 can be electronically
generated or retained, provided that the resulting form is legible;
there is no change to the name, content, or sequence of the data
elements and instructions; no additional data elements or language are
inserted; and the standards specified under 8 CFR 274a.2(e), (f), (g),
(h), and (i), as applicable, are met.

A Form I-9 stored electronically must only consist of page 2 of the PDF
of Form I-9 as available on the http://uscis.gov site. To reduce the
amount of required storage space by 66%, neither the Form I-9
instructions (page 1) nor the list of acceptable documents (page 3)
should be required to be stored with an electronic Form I-9. These two
pages contain static information and would be redundant for every Form
I-9. It is reasonable for the electronic generation and storage system
to produce a copy of the Form I-9 instructions since they need to be
provided to the employee upon request. It is also reasonable for the
electronic generation and storage system to produce a copy of the
acceptable documents, provided the list of documents is current. It is
not reasonable to produce a copy of the acceptable documents if the list
is not current as this will be confusing for the employee and the
employer since the electronic generation and storage system may only
allow acceptable documents to be input in to an electronic Form I-9.

When copying or printing the paper Form I--9, the text of the two-sided
form may be reproduced by making either double-sided or singlesided
copies.

The list of acceptable documents must be kept up to date. It is not
possible to implement the current position regarding acceptable
documents in an electronic generation and storage system for Forms I-9.
Today, the list of acceptable documents on Form I-9 contains documents
that are no longer acceptable. The current position is that if a
document is listed on Form I-9, the employer should accept it even if it
has been determined to be unacceptable. An electronic generation and
storage system for Forms I-9 must only allow acceptable documents to be
presented. This leads to an inconsistent process between employers
utilizing a paper Form I-9 process and those using an electronic I-9
process. The list of acceptable documents must be kept up to date on the
Form I-9.

\(3\) *Attestation Under Penalty and Perjury*

In conjunction with completing the Form I--9, an employer or recruiter
or referrer for a fee must examine documents that evidence the identity
and employment eligibility of the individual. The employer or recruiter
or referrer for a fee and the individual must each complete an
attestation on the Form I--9 under penalty of perjury.

\(b\) \* \* \*

\(1\) \* \* \*

\(i\) \* \* \*

\(A\) Completes section 1---''Employee Information and
Verification''---on the Form I--9 at the time of hire and signs the
attestation with a handwritten or electronic signature in accordance
with paragraph (h) of this section; or if an individual is unable to
complete the Form I--9 or needs it translated, someone may assist him or
her. The preparer or translator must read the Form I--9 to the
individual, assist him or her in completing Section 1---''Employee
Information and Verification,'' and have the individual sign or mark the
Form I--9 by a handwritten signature, or an electronic signature in
accordance with paragraph (h) of this section, in the appropriate place;
and

The language in this section should indicate that the preparer or
translator must also sign or mark the Form I-9 by a handwritten
signature, or an electronic signature in accordance with paragraph (h)
of this section, in the appropriate place.

The employee can complete and sign section 1 on the Form I-9 at or
before the time of hire provided all employees complete section 1 of the
Form I-9 at the same point in the hiring process.

Time of hire should be defined as when the section 1 and section 2 of
the Form I-9 are completed and signed by the employee and the employer
with a handwritten or electronic signature. It is not uncommon for an
employer to provide employment documents to a new hire to complete prior
to the first day of work. The new hire should be allowed to complete
section 1 prior to the first day of work as long as the Form I-9 is
completed at the same point in the employment process for all employees.
The employer should be required to complete section 2 of the Form I-9 no
later than three days after the new hire's first day of work.

\* \* \* \* \*

\(ii\) \* \* \*

\(B\) Complete section 2---''Employer Review and Verification''---on the
Form I--9 within three days of the hire and sign the attestation with a
handwritten signature or electronic signature in accordance with
paragraph (i) of this section.

When a new employee completes the Form I-9 prior to the first day of
work, section 2 of the Form I-9 should be completed no later than three
days of the first day of work. If an individual completes the new hire
paperwork prior to reporting to work the first day, the employer has
three days to complete section 2 of Form I-9.

\* \* \* \* \*

\(iv\) \* \* \* If a recruiter or referrer designates an employer to
complete the employment verification procedures, the employer need only
provide the recruiter or referrer with a photocopy or printed electronic
image of the Form I--9, electronic Form I--9, or a Form I--9 on
microfilm or microfiche.

\* \* \* \* \*

\(vii\) \* \* \* The employer or the recruiter or referrer for a fee
must review this document, and if it appears to be genuine and relate to
the individual, re-verify by noting the document's identification number
and expiration date, if any, on the Form I--9 and signing the
attestation by 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 that meets the requirements of 8 CFR 274a.2(e), (f),
and (g)), or microfilm or microfiche copy of the original signed version
of the Form I--9 must be retained by an employer or a recruiter or
referrer for a fee for the following time periods:

Is a fax machine also considered a scanner? Does a softcopy faxed image
of the original signed paper version of a Form I-9 meet the definition
of an electronic format provided it meets the requirements of 8 CFR
274a.2(e), (f), and (g)? Does a hardcopy fax image of the original
signed paper version of a Form I-9 that is scanned into an electronic
format meet the definition of and electronic format provided it meets
the requirements of 8 CFR 274a.2(e), (f), and (g)?

\* \* \* \* \*

\(ii\) Any person or entity required to retain Forms I--9 in accordance
with this section shall be provided with at least three days notice
prior to an inspection of the Forms I--9 by officers of an authorized
agency of the United States. At the time of inspection, Forms I--9 must
be made available in their original paper, electronic form, a paper copy
of the electronic form, or on microfilm or microfiche at the location
where the request for production was made. If Forms I--9 are kept at
another location, the person or entity must inform the officer of the
authorized agency of the United States of the location where the forms
are kept and make arrangements for the inspection. Inspections may be
performed at an office of an authorized agency of the United States. A
recruiter or referrer for a fee who has designated an employer to
complete the employment verification procedures may present a photocopy
or printed electronic image of the Form I--9 in lieu of presenting the
Form I--9 in its original paper or electronic form or on microfilm or
microfiche, as set forth in paragraph (b)(1)(iv) of this section. Any
refusal or delay in presentation of the Forms I--9 for inspection is a
violation of the retention requirements as set forth in section
274A(b)(3) of the Act. No Subpoena or warrant shall be required for such
inspection, but the use of such enforcement tools is not precluded. In
addition, if the person or entity has not complied with a request to
present the Forms I--9, any officer listed in 8 CFR 287.4 may compel
production of the Forms I--9 and any other relevant documents by issuing
a subpoena. Nothing in this section is intended to limit the subpoena
power under section 235(a) of the Act.

\* \* \* \* \*

\(iv\) Paragraphs (e), (f), (g), (h), and (i) of this section specify
the standards for electronic Forms I--9.

\(3\) *Copying of documentation.*

An employer, or a recruiter or referrer for a fee may, but is not
required to, copy or make an electronic image of a document presented by
an individual solely for the purpose of complying with the verification
requirements of this section. If such a copy or electronic image is
made, it must be retained with the Form I--9. The copying or electronic
imaging of any such document and retention of the copy or electronic
image does not relieve the employer from the requirement to fully
complete section 2 of the Form I--9. An employer, recruiter or referrer
for a fee should not, however, copy or electronically image only the
documents of individuals of certain national origins or citizenship
statuses. To do so may violate section 274B of the Act.

\(4\) *Limitation on use of Form I--9*.

Any information contained in or appended to the Form I--9, including
copies or electronic images of documents listed in paragraph (c) of this
section used to verify an individual's identity or employment
eligibility, may be used only for enforcement of the Act and 18 U.S.C.
1001, 1028, 1546, or 1621.

\* \* \* \* \*

\(e\) *Standards for electronic retention of Form I--9*.

Please refer to comments in (a)(2) regarding an electronic Form I-9
consisting of only page 2 with no requirement to store the static
information on pages 1 (instructions) and 3 (acceptable documents) to
reduce by 66% the amount of storage space required for an electronic
Form I-9.

\(1\) Any person or entity who is required by this section to complete
and retain Forms I--9 may complete or retain electronically Form I--9 in
an electronic generation or storage system that includes:

\(i\) Reasonable controls to ensure the integrity, accuracy and
reliability of the electronic generation or storage system;

\(ii\) Reasonable controls designed to prevent and detect the
unauthorized or accidental creation of, addition to, alteration of,
deletion of, or deterioration of an electronically completed or stored
Form I--9, including the electronic signature if used;

\(iii\) An inspection and quality assurance program evidenced by regular
evaluations of the electronic generation or storage system, including
periodic checks of the electronically stored Form I--9, including the
electronic signature if used;

\(iv\) In the case of electronically retained Forms I--9, a retrieval
system that includes an indexing system that permits searches by any
data element; and

Requiring the retrieval and indexing systems to permit searches by any
data element appears to be inconsistent with the statement in (e)(6),
which reads, "The requirement to maintain an indexing system will be
satisfied if the indexing system is functionally comparable to a
reasonable hardcopy filing system." Perhaps the requirement of this
section (e)(1)(iv) can be satisfied by using third party tools. For
example, exporting the Form I-9 data in a format compatible with a
spreadsheet tool and performing the necessary searches using the
spreadsheet. This approach is more reasonable than requiring a retrieval
system to accommodate every possible data element on the Form I-9.
Searching on a single Form I-9 data element such as a middle initial,
apartment number, or issuing authority will provide little or no value
in an investigation. It is not practical and represents an undue burden
on employers to build and maintain a retrieval system with a user
interface to search on any single Form I-9 data element or any
combination of Form I-9 data elements. A retrieval system that provides
a search capability "comparable to a reasonable hardcopy filing system."
should be sufficient and in compliance with the rule.

\(v\) The ability to reproduce legible and readable hardcopies.

\(2\) All documents reproduced by the electronic retention system must
exhibit a high degree of legibility and readability when displayed on a
video display terminal or when printed on paper, microfilm, or
microfiche. The term ''legibility'' means the observer must be able to
identify all letters and numerals positively and quickly, to the
exclusion of all other letters or numerals. The term ''readability''
means that the observer must be able to recognize any group of letters
or numerals that form words or numbers as those words or complete
numbers. The employer, or recruiter or referrer for a fee, must ensure
that the reproduction process maintains the legibility and readability
of the electronically stored document.

The language in the first sentence "...when displayed on a video display
terminal or when printed on paper, microfilm, or microfiche." is
somewhat confusing since it seems to indicate that a document can be
printed on microfilm or microfiche. The intended meaning seems to be
that a Form I-9 stored on microfilm or microfiche "...must exhibit a
high degree of legibility and readability..." when viewed on a video
display terminal or as a printed hardcopy.

\(3\) An electronic generation or storage system must not be subject, in
whole or in part, to any agreement (such as a contract or license) that
would limit or restrict access to and use of the electronic generation
or storage system by an agency of the United States, on the premises of
the employer, recruiter or referrer for a fee (or at any other place
where the electronic generation or storage system is maintained),
including personnel, hardware, software, files, indexes, and software
documentation.

There should be no requirement that the employer must provide unlimited
access to the electronic generation or storage system to any agency of
the United States. The employer should be required to provide paper
copies of electronic Forms I-9 and any supporting documents to comply
with an inspection as is stated in (b)(2)(ii) where it states "At the
time of inspection, Forms I--9 must be made available in their original
paper, electronic form, a paper copy of the electronic form, or on
microfilm or microfiche at the location where the request for production
was made." It should be up to the employer to grant an investigator
access, either limited or complete, to the electronic generation or
storage system.

\(4\) A person or entity who chooses to complete or retain Forms I--9
electronically may use more than one electronic generation or storage
system. 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.

An employer should be able to change their electronic generation and/or
storage system provided a) the new system meets the requirements of this
paragraph, and b) the existing electronic Forms I-9 remain available in
a system that meets the requirements of this paragraph. The employer
should not be required to remain on the same electronic generation or
storage system(s) for as long as the electronic Forms I-9 stored in such
system required to be retained.

\(5\) For each electronic generation or storage system used, the person
or entity retaining the Form I--9 must maintain, and make available upon
request, complete descriptions of:

\(i\) The electronic generation and storage system, including all
procedures relating to its use; and

\(ii\) The indexing system.

\(6\) 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 books and records
maintained in an electronic storage system. For example, an indexing
system might consist of assigning each electronically stored document a
unique identification number and maintaining a separate database that
contains descriptions of all electronically stored books and records
along with their identification numbers. In addition, any system used to
maintain, organize, or coordinate multiple electronic storage systems is
treated as an indexing system. The requirement to maintain an indexing
system will be satisfied if the indexing system is functionally
comparable to a reasonable hardcopy filing system. The requirement to
maintain an indexing system does not require that a separate
electronically stored books and records description database be
maintained if comparable results can be achieved without a separate
description database.

The term "books" should be changed to "documents" in (6).

\(7\) Any person or entity choosing to retain completed Forms I--9
electronically may use reasonable data compression or formatting
technologies as part of the electronic storage system as long as the
requirements of 8 CFR 274a.2 are satisfied.

\(8\) At the time of an inspection, the person or entity required to
retain completed Forms I--9 must:

\(i\) Retrieve and reproduce (including printing copies on paper, if
requested) only the Forms I--9 electronically retained in the electronic
storage system and supporting documentation specifically requested by an
agency of the United States, along with associated audit trails.
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, and

If the electronic Form I-9 includes audit trail information consisting
of who access the computer system, who completed the Form I-9, who
signed the Form I-9, and when the Form I-9 was completed and signed by
each signatory, then it will comply with this section. If the electronic
Form I-9 does not include this audit trail information, the associated
audit trails are required. It is an undue burden to require employers
using electronic Forms I-9 to be required to produce more information
than employers using paper Forms I-9 at the time of an inspection. As
stated in section E. Executive Order 12866 (Regulatory Planning and
Review), employers completing and storing Forms I-9 electronically are
expected to a) improve their accuracy rate, b) be better able to
self-audit Forms I-9 in order to detect and correct errors, c) create an
electronic process for Form I-9 completion that minimizes the
possibility of errors, d) be better able to create a reliable system to
re-verify an employee's employment authorization when it is about to
expire, e) present electronically stored forms for review in a matter of
minutes rather than the lengthy period required to access paper or
microfiche archives, and f) will have a lower error rate that should
translate into a more efficient employment eligibility verification
process for employers and, therefore, a lower incidence of unauthorized
workers in the workplace. Employers opting to implement an electronic
Forms I-9 process will incur additional costs to implement and maintain
such a system. The inspection process for an employer utilizing an
electronic Forms I-9 process should not have more burdensome than it is
for an employer using a more traditional Forms I-9 process since
electronic storage is functionally equivalent to storing Forms I-9 on
microfilm or microfiche, which do not have separate requirements.

The audit trail should not be required if it can be demonstrated
(through documentation and demonstration) that the electronic Form I-9
system will not permit an electronic Form I-9 to be completed and signed
with electronic signatures unless the user successfully logs into the
system and indicates that they have read the attestation and the user
then properly completes the electronic signature process. In this case,
the audit trail is redundant information, does not provide any
additional value, and is an extra burden for the employer.

For Forms I-9 that are completed on paper and then converted to
electronic storage there will be no audit trail for the completion of
the Form I-9. The existing process for microfilm and microfiche storage
of Forms I-9 does not require an audit trail. Again, this is an
additional burden that should not be imposed on an employer for simply
opting to use an electronic storage medium for Forms I-9.

\(ii\) 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.

If the electronic Form I-9 includes audit trail information it should
not be necessary to burden an employer to produce additional information
such as associated audit trails, reports, and other data that exceeds
what is required of an employer using a more traditional Forms I-9
process. For example, a separate audit trail should not be required if
the electronic Form I-9 system creates a PDF (or other image) of the
completed I-9 that includes all the information on the Form I-9 and a
representation of the electronic signature applied by the signatory in
each applicable section.

For Forms I-9 that are completed on paper and then converted to
electronic storage there is no audit trail for the completion of the
Form I-9. The existing process for microfilm and microfiche storage of
Forms I-9 does not require the employer to provide an audit trail.
Additional burdens should not be imposed on employers for simply opting
to convert paper to an electronic storage medium.

The audit trail should not be required if it can be demonstrated that
the electronic Form I-9 system does not permit an electronic Form I-9 to
be completed and signed with electronic signatures unless the user
indicates that they have read the attestation and the user then properly
completes the electronic signature process. This would be based on the
documentation according to section (f) and a demonstration of the
electronic Form I-9 system.

Employers opting to electronically complete and/or store Forms I-9
should not be singled out and subjected to a more burdensome inspection
process than employers who opt to use a traditional paper Forms I-9
process. Employers should be able to provide paper copies of electronic
Forms I-9 and any supporting documents to comply with an inspection as
is stated in (b)(2)(ii) where it states "At the time of inspection,
Forms I--9 must be made available in their original paper, electronic
form, a paper copy of the electronic form, or on microfilm or microfiche
at the location where the request for production was made." There
appears to be a conflict between this section and (b)(2)(ii).

Simply because an employer opts to complete and/or store Forms I-9
electronically should not automatically entitle investigators to
additional information not required of employers opting to complete
and/or store Forms I-9 in a non-electronic medium. Employers should not
be burdened with the expense of providing additional information such as
reports and audit trails that other employers are not required to
provide. In general, employers understand and agree with the requirement
to bear the costs associated with the documentation that this rule
requires to establish the integrity of the electronic Form I-9 process
chosen. However, the additional requirements being placed on such
employers go well beyond any initial costs that may be incurred. The
costs for these additional burdens will continue to be incurred in the
form of maintenance, upgrades, testing, and training. At the end of the
day, the employer who opts to complete and/or store Forms I-9
electronically is doing it to protect the workplace and maintain
compliance with the law. Based on the DHS estimates contained in this
rule, the average savings to an employer per electronic Form I-9 is
\$0.33. This is not sufficient to cover the costs of the retrieval and
indexing system let alone the additional burdens this rule places on
employers utilizing electronic Forms I-9. Employers demonstrating good
faith, a desire to become and maintain 100% compliance with the law, and
assisting federal agencies by utilizing electronic Forms I-9 should be
rewarded rather then subjected to burdens not placed on employers
maintaining paper, microfilm, or microfiche Form I-9 records.

\(iii\) Provide, if requested, any reasonably available or obtainable
electronic summary file(s), such as a spreadsheet, containing all of the
information fields on all of the electronically stored Forms I--9
requested by a requesting agency of the United States.

\(f\) *Documentation.*

\(1\) A person or entity who chooses to complete and/or retain Forms
I--9 electronically must maintain and make available to an agency of the
United States upon request documentation of the business processes that:

\(i\) Create the retained Forms I--9;

\(ii\) Modify and maintain the retained Forms I--9; and

\(iii\) Establish the authenticity and integrity of the Forms I--9, such
as audit trails.

\(2\) Insufficient or incomplete documentation is a violation of section
274A(a)(1)(B) of the Act.

\(3\) Any officer listed in 8 CFR 287.4 may issue a subpoena to compel
production of any documentation required by 8 CFR 274a.2. Nothing in
this section is intended to limit the subpoena power of an agency of the
United States under section 235(a) of the Act.

There should be a certification process for an outsourced electronic
Form I-9 service. It is redundant, inefficient, and wasteful for each
client of an outsourced service to submit the same documentation to an
agency of the United States to demonstrate the integrity of the same
electronic Form I-9 system.

\(g\) *Security.*

A record under all requirements in this section should have the same
data retention requirement as the corresponding Form I-9.

\(1\) Any person or entity who elects to complete or retain Forms I--9
electronically must implement an effective records security program
that:

\(i\) Ensures that only authorized personnel have access to electronic
records;

\(ii\) Provides for backup and recovery of records to protect against
information loss, such as power interruptions;

\(iii\) Ensures that employees are trained to minimize the risk of
unauthorized or accidental alteration or erasure of electronic records;
and

\(iv\) Ensure that whenever the electronic record is created, accessed,
viewed, updated, 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.

The information documenting the actions described in this requirement
should not be required to be permanent. The information should be
subject to the same data retention requirement as the Form I-9.
Therefore, when a Form I-9 has satisfied its data retention requirement,
the corresponding audit trail described in this section should also have
satisfied its data retention requirement and it may be deleted with the
Form I-9. Otherwise, when a Form I-9 is deleted after satisfying its
data retention requirement, the corresponding audit trail could become
an unfair continued liability to the employer.

\(2\) An action or inaction resulting in the unauthorized alteration,
loss, or erasure of electronic records, if it is known, or reasonably
should be known, to be likely to have that effect, is a violation of
section 274A(b)(3) of the Act.

\(h\) *Electronic signatures for employee.*

\(1\) If a Form I--9 is completed electronically, the attestations in
Form I--9 must be completed using a system for capturing an electronic
signature that meets the standards set forth in this paragraph. The
system used to capture the electronic signature must include a method to
acknowledge that the attestation to be signed has been read by the
signatory. The electronic signature must be attached to, or logically
associated with, an electronically completed Form I--9. In addition, the
system must:

\(i\) Affix the electronic signature at the time of the transaction;

Creating a PDF (or other image) of the Form I-9 with a representation of
the electronic signature at the time of the transaction should satisfy
this requirement.

\(ii\) Create and preserve a record verifying the identity of the person
producing the signature; and

Verifying the identity of a signatory using the "click to accept" option
to sign Form I-9 with an electronic signature may consist of a) the
signatory entering their identifying information in section 1 or the
section 2 or section 3 signature block, b) acknowledging that the
attestation has been read, and c) completing the electronic signature
process. Maintaining this information on a PDF (or other image) of the
Form I-9 should satisfy this requirement.

\(iii\) Provide a printed confirmation of the transaction, at the time
of the transaction, to the person providing the signature.

This requirement should only require the electronic Form I-9 system to
provide the employee with the option to obtain a confirmation of the
transaction. It should be up to the employee if the confirmation is a
printed or electronic receipt. The employee should also be able to opt
not to receive a receipt. One of the main reasons for an employer to
electronically complete and store Forms I-9 is to eliminate paper.
Requiring the system to generate a paper receipt simply re-introduces
paper to the process. Providing a paper or electronic copy of the
completed Form I-9 to the employee should also satisfy this requirement.

\(2\) Any person or entity who is required to ensure proper completion
of a Form I--9 and who chooses electronic signature for a required
attestation, but who has failed to comply with the standards set forth
in this paragraph, is deemed to have not properly completed the Form
I--9, in violation of section 274A(a)(1)(B) of the Act and 8 CFR
274a.2(b)(2).

\(i\) *Electronic signatures for employer, recruiter or referrer, or
representative*

If a Form I--9 is completed electronically, the employer, the recruiter
or referrer for a fee, or the representative of the employer or the
recruiter or referrer, must attest to the required information in Form
I--9. The system used to capture the electronic signature should include
a method to acknowledge that the attestation to be signed has been read
by the signatory. Any person or entity who has failed to comply with the
criteria established by this regulation for electronic signatures, if
used, and at the time of inspection does not present a properly
completed Form I--9 for the employee, is in violation of section
274A(a)(1)(B) of the Act and 8 CFR 274a.2(b)(2).

Dated: June 8, 2006.

**Michael Chertoff,**

*Secretary.*

\[FR Doc. E6--9283 Filed 6--14--06; 8:45 am\]

**BILLING CODE 4410--10--P**