According to the company’s website, Shipley supplies baking materials and provides logistical support to retail stores, and to 120 franchises in Texas, Alabama, Arkansas, Louisiana, Mississippi and Tennessee. Trouble for Shipley arose from a criminal investigation initiated by ICE in January of 2008 which included interviews with former employees and a thorough review of Shipley’s I-9 records and SSA No-Match letters. In April of 2008, an enforcement action was taken by ICE agents that resulted in the administrative arrest of 27 unlawful workers employed by the company.

The I-9 system of employment verification, created by the Immigration Reform and Control Act of 1986, is the nation’s sole mandatory employment eligibility verification program. All U.S. employers are responsible for the completion and retention of Form I-9 for each individual hired for employment in the United States, including citizens and non-citizens. The penalties, both civilly and criminally, are becoming too severe to ignore. Civil fines for employers can range from $3200 (per violation) for a first offense to $16,000 (per violation) for a third or subsequent offense. All company representatives verifying employment eligibility of employees are potentially liable, both criminally and civilly, for errors in completing I-9 Forms.

In light of this case and ICE’s issuance of over 650 audit requests last month, it is imperative now, more than ever, that employers heed the warning. You may be asking, “what can my company do to avoid criminal and civil penalties related to I-9 compliance?” Employers must implement I-9 Compliance Programs that include proper training, internal audits, and third-party audits. The voluntary E-Verify, an online system operated jointly by the Department of Homeland Security and the Social Security Administration (SSA), also provides employers with a “safer harbor” within which to operate.

For more information on effective I-9 compliance programs, see my post entitled “Employers: How not to lose your shirt (and everything else)” or contact me at obranch@sandsanderson.com.

The mailing reportedly encourages recipients to send $125 to Corporate Services, Inc., which would provide appropriate minutes to avoid dissolution. The Attorney General and the Secretary of State have secured a temporary restraining order against Corporate Services, Inc. to halt this mailing. If you receive such a mailing, fax a copy of it to the Secretary of State at (919) 807-2010 or send it to your business lawyer.

Nevertheless, this mailing does make a good point. To retain their limited liability, corporations do need to file annual reports and associated fees with the Secretary of State’s office, hold annual meetings of shareholders and directors, and keep minutes of the meetings.

In addition, just filing Articles of Incorporation is merely the first step in forming a corporation. To be properly formed, the corporation must have issued shares, named directors and officers and held an organizational meeting. If you have not taken all these steps and are not holding annual meetings of shareholders and directors, you are not getting the legal protection you think you have, and your personal assets could be at risk in a worst-case scenario.

We work with a lot of entrepreneurs who have let the formalities slide because they were busy running their business. It is relatively easy to bring a corporation back into compliance, so I encourage you to find a business attorney to assess your risk and estimate the costs of bringing your corporation into compliance.