The question of who is responsible for I-9 compliance for a PEO is often asked and is defined clearly on page 48 of the M-274 Handbook for I-9 http://www.uscis.gov/portal/site/uscis.
Diligence in protecting the risk and exposure as well as the brand identity of an employer and the PEO is paramount. The continuity and accuracy in completion of the I-9 should be a priority for PEO's and employers alike. Fines accumulate and the stakes are high, see link: http://www.ice.gov/news/library/factsheets/i9-inspection.htm, the fact sheet that reveals the fines and risk for non-compliance in the event of an audit.
Automation and electronic processing can ensure continuity and accuracy in completion especially for those organizations facing remote hires and are still continuing to manually process paper documents leaving them subject to errors, missteps, and omissions.
M-274, Page 48:
I use a professional employer organization (PEO) that co-employs my employees...am I responsible for Form I-9 compliance for these employees or is the PEO?
Co-employment arrangements can take many forms As an employer, you continue to be responsible for compliance with Form I-9 requirements If the arrangement into which you have entered is one where an employer-employee relationship also exists between the PEO and the employee (e g , the employee performs labor or services for the PEO), the PEO would be considered an employer for Form I-9 purposes and:
• The PEO may rely upon the previously completed Form I-9 at the time of initial hire for each employee continuing employment as a co-employee of you and the PEO, or
• The PEO may choose to complete new Forms I-9 at the time of co-employment If more co-employees are subsequently hired, only one Form I-9 must be completed by either the PEO or the client However, both you and your PEO are responsible for complying with Form I-9 requirements, and DHS may impose penalties on either party for failure to do so Penalties for verification violations, if any, may vary depending on:
1 A party’s control or lack of control over the Form I-9 process,
2 Size of the business,
3 Good faith in complying with Form I-9 re- quirements,
4 The seriousness of the party’s violation,
5 Whether or not the employee was authorized to work,
6 The history of the party’s previous violations and
7 Other relevant factors