August 2026 update: More insight into how ICE may conduct audits
On August 31, 2026, ICE updated its Form I-9 inspection guidance again. While the update does not create new Form I-9 requirements or reverse the March 2026 changes, it offers additional insight into how ICE may evaluate violations during an audit.
Electronic I-9 systems may face increased scrutiny
One of the most notable changes relates to electronic Form I-9 compliance. Earlier guidance stated that failing to meet the requirements for an electronic I-9 system under 8 C.F.R. § 274a.2(e)-(i) could be considered a substantive violation.
The August update goes a step further by specifically stating that electronic systems must be able to produce readable copies of Forms I-9 along with a compliant audit trail. This signals that ICE may look beyond the completed form itself and review how the record was created, signed, modified, corrected, and retained.
For employers using electronic I-9 software, this underscores the importance of verifying that their system maintains a complete and compliant audit history. For more information on how to vet an I-9 system, see our past blog here: The Five Questions You Should Be Asking to Vet an I-9 System | WorkRight by Fragomen
New notice for employees who lose work authorization
ICE also introduced a new "Notice of Expired or Rescinded Immigration Status and/or Employment Authorization."
The notice is intended to inform employers when an employee has lost work authorization between the time an audit begins and the issuance of the notice. Importantly, receiving the notice does not mean ICE is alleging that the employer knowingly hired or continued to employ an unauthorized worker.
However, the notice should prompt employers to immediately review the employee's current work authorization status and determine what actions, if any, are required.
Penalty calculations may change
Under the March 2026 guidance, ICE indicated that paperwork violations and knowingly hiring or continuing-to-employ violations would be combined when calculating the violation percentage used to determine penalties.
The August update clarifies that these violations will now be calculated separately. ICE will use one percentage for substantive and uncorrected paperwork violations and another percentage for knowingly hiring or continuing-to-employ violations.
Depending on the findings of an inspection, separating these categories could impact the base penalty calculation and ultimately affect the total fines assessed.
What employers should do now
The August guidance reinforces a broader trend: ICE is placing greater emphasis on the quality of I-9 processes, electronic recordkeeping, and audit readiness.
Employers should consider:
- Reviewing electronic I-9 systems to confirm audit trail functionality meets regulatory requirements.
- Conducting internal audits to identify substantive and uncorrected paperwork violations.
- Establishing procedures for responding promptly to notices related to changes in employee work authorization.
- Evaluating whether current I-9 compliance practices would withstand heightened ICE scrutiny during an inspection.
While the August update does not impose new obligations, it provides a clearer roadmap for how ICE may assess compliance during future audits.
