February 1, 2026

Labor Law Compliances, Forms, And Keeping Forms For Audits Or Other Verification Purposes

By Raj Singh, NCASEF Treasurer

Understanding Form I-9 Requirements
When hiring or rehiring employees in the United States, every employer—regardless of company size or industry—must comply with federal employment eligibility verification laws. The cornerstone of this process is Form I-9, issued by the U.S. Citizenship and Immigration Services (USCIS). Properly completing, maintaining, and retaining this form is not just good practice, it’s a legal requirement.

What Is Form I-9?
Form I-9, officially titled Employment Eligibility Verification, is used to verify the identity and work authorization of individuals hired to work in the U.S. The form ensures that employers only hire people who are legally permitted to work—U.S. citizens, permanent residents, or individuals authorized to work under specific visa categories.

Who Must Complete Form I-9
Every new hire, regardless of citizenship or immigration status, must complete Form I-9. This also applies to rehired employees if:

  • The previous I-9 is more than three years old, or
  • The employee’s work authorization or documentation has expired.

Where To Find Form I-9
The most current version of Form I-9 and its detailed instructions are available for free on the USCIS website: https://www.uscis.gov/i-9.

Employers should always download the latest version directly from USCIS to ensure compliance with current rules and document lists.

How To Complete Form I-9

  • Section 1—Employee Information and Attestation: The employee must complete and sign this section no later than their first day of work.
  • Section 2—Employer Review and Verification: The employer must review the employee’s identity and work authorization documents and complete this section within three business days of the employee’s start date.
  • Section 3—Reverification and Rehires: Used when an employee’s work authorization expires or when rehiring within three years of the original I-9.

Employers must examine the original documents (not copies) and ensure they appear genuine and relate to the employee presenting them.

How Long To Keep Form I-9
Employers are required to retain each Form I-9 for a specific period, whichever is later:

  • Three years after the date of hire, or
  • One year after the date employment ends.

Forms may be stored on paper, microfilm, microfiche, or electronically, but they must be accessible for inspection by authorized government officials such as the Department of Homeland Security (DHS), Department of Labor (DOL), or Immigration and Customs Enforcement (ICE).

Consequences Of Incorrect Or Missing I-9 Forms
Failing to properly complete or maintain I-9 forms can lead to serious penalties. Common violations include missing forms, incomplete sections, use of outdated versions, or accepting invalid documents. Consequences may include:

  • Civil Fines: Fines range from hundreds to several thousand dollars per violation, depending on the severity and frequency of the errors.
  • Criminal Penalties: Knowingly hiring or continuing to employ unauthorized workers can lead to criminal charges and higher fines.
  • Loss of Business Licenses or Contracts: Repeated or willful noncompliance may lead to the suspension or loss of federal or state contracts and business licenses.
  • Reputation and Compliance Risk: A poor record in immigration compliance can trigger audits and damage a company’s credibility with regulators and partners.

Best Practices For Compliance

  • Always use the latest USCIS Form I-9.
  • Train hiring managers and HR staff on proper I-9 completion.
  • Conduct periodic internal audits.
  • Store I-9s separately from personnel files for easier access during inspections.
  • Never discriminate based on citizenship or national origin when completing the form.

Final Thoughts
 Form I-9 compliance may seem routine, but it’s a critical part of responsible hiring. Accurate completion, timely verification, and proper recordkeeping protect your business from costly penalties and help maintain a lawful workforce. Staying informed and organized ensures that your hiring process remains compliant, efficient, and audit ready.

Understanding W-4 Requirements For New Hires & Rehires
The IRS Form W-4 (Employee’s Withholding Certificate) is a mandatory document that every employer must collect from each new hire (and rehire) before processing payroll. It ensures the correct amount of federal income tax is withheld from an employee’s paycheck.

Where To Find The W-4 Form

  • The current version of Form W-4 is available directly from the IRS website at irs.gov/w4.
  • Employers can also provide the form as part of their new hire onboarding packet, either in paper or electronic format.
  • Payroll and HR software platforms often include the W-4 as part of their employee setup workflow.

When & How Employees Should Complete The W-4

  • A new hire must complete Form W-4 before their first paycheck is processed.
  • A rehire should complete a new W-4 if any personal or financial circumstances have changed since their previous employment (e.g., marital status, dependents, or other income).
  • Employees can update their W-4 at any time during employment if their tax situation changes.

How Long Employers Must Keep W-4 Forms
Employers are required to retain each employee’s W-4 for at least four years after the date of the last tax return filed using that form or four years after the employee leaves the company, whichever is later.

  • Forms may be stored electronically or on paper, as long as they are easily accessible for IRS inspection.

Consequences Of Incorrect Or Missing W-4 Forms

  1. For Employers:
    • Penalties and Fines: The IRS may impose fines for failing to maintain or produce a W-4 during an audit.
    • Incorrect Tax Withholding: Employers may be held liable for unpaid taxes if they fail to withhold the correct amounts due to missing or incorrect W-4 data.
    • Backup Withholding: If a valid W-4 is not on file, employers must withhold taxes as if the employee is single with no adjustments, which can cause employee dissatisfaction.
  2. For Employees:
    • Incorrect Tax Withholding: Underpayment can result in a tax bill and penalties at year-end.
    • Over-withholding: May lead to a smaller paycheck and a large refund later, reducing take-home pay unnecessarily.

Best Practices For Employers

  • Always ensure a completed and signed W-4 is on file before processing the first payroll.
  • Encourage employees to review and update their W-4 annually or after major life events.
  • Store all W-4s securely and ensure easy retrieval for IRS or state audits.

In Summary
The W-4 form is not just a formality—it directly affects tax compliance and employee satisfaction. Keeping accurate, up-to-date W-4s for every employee protects both the employer and the worker from unnecessary tax issues and penalties.

Labor Compliance Audits
Preparing for a labor compliance audit is essential for avoiding penalties, ensuring smooth operations, and demonstrating that your business follows federal and state employment laws. Here’s a clear, step-by-step guide to help you get ready.

  1. Understand What’s Being Audited

            Labor compliance audits typically review:

  • Employee records (hiring documents, payroll, time sheets)
  • Wage and hour compliance (minimum wage, overtime, breaks)
  • Work eligibility verification (Form I-9, E-Verify)
  • Tax and withholding documentation (Form W-4, payroll taxes)
  • Workplace policies (anti-discrimination, harassment prevention, safety)
  • Posters and notices (mandatory federal and state postings)
  1. Review Employment Records
    Make sure all employee files are complete, organized, and up-to-date:
  • Form I-9: Verify that forms are completed correctly and stored separately from personnel files.
  • Form W-4: Ensure current versions are on file for all employees.
  • Pay Records: Keep detailed records of wages, hours worked, and deductions.
  • Employee Classification: Verify that employees are correctly classified as exempt/non-exempt and employee/independent contractor.

            Retention Tip: Keep payroll and employment records for at least 3 years, and I-9 forms for 1 year after termination or 3 years after hire (whichever is later).

  1. Audit Your Payroll Practices
  • Check that employees receive at least minimum wage and overtime as required.
  • Ensure all deductions are legal and authorized.
  • Verify that payroll taxes (FICA, federal and state withholding, unemployment) are filed and paid correctly.
  1. Verify Required Workplace Posters
    Post updated federal and state labor law posters in visible areas (break room, near time clocks, etc.). These include:
  • Fair Labor Standards Act (FLSA)
  • OSHA Job Safety and Health
  • Equal Employment Opportunity (EEO)
  • Family and Medical Leave Act (FMLA)
  • State-specific wage and hour notices
  1. Check Policies & Training
    Confirm that your company’s written policies and employee handbook cover:
  • Non-discrimination and harassment prevention
  • Leave policies (sick, family, medical)
  • Workplace safety (OSHA compliance)
  • Complaint and reporting procedures

Also ensure employees have received any required trainings (e.g., harassment prevention, safety training).

  1. Conduct An Internal Self-Audit
    Before the official audit:
  • Assign HR or a compliance officer to perform a mock audit.
  • Identify gaps and correct errors proactively.
  • Document all corrective actions taken.

Tip: Keep a checklist of all required compliance items for future audits.

  1. Organize Documentation For Easy Access
    Prepare a well-labeled binder or secure digital folder with:
  • Hiring documents (I-9s, W-4s, applications)
  • Payroll and tax records
  • Employee handbook and policy acknowledgments
  • Posters and training certificates
  • Any correspondence with labor agencies
  1. Train Supervisors & Managers
    Supervisors should understand:
  • Employee rights and company obligations.
  • What to do during an audit.
  • How to handle auditor requests professionally and accurately.
  1. During The Audit
  • Be cooperative but only provide what is requested.
  • Designate one spokesperson to interact with the auditor.
  • Keep copies of all documents you provide.
  1. After The Audit
  • Review the audit findings carefully.
  • Address any violations or corrective recommendations immediately.
  • Document your response and maintain a record for future reference.