Employer Sanctions Resume With Teeth: What You Need To Know

On July 16, 2025, the U.S. Court of Appeals for the Eleventh Circuit issued a notable decision in Walmart Inc. v. Chief Administrative Law Judge of OCAHO that underscores the need for proactive immigration compliance for U.S. employers. The Eleventh Circuit reversed a lower court and upheld the constitutionality of how the administrative law judges (ALJs) are structured at DOJ's Office of the Chief Administrative Hearing Officer (OCAHO).

In short, the Eleventh Circuit decision clarifies that Immigration and Customs Enforcement (ICE)'s imposition of I-9 fines has teeth again. It also confirms that OCAHO can still hear complaints and enforce penalty assessments made by ICE, as well as charges of immigration-related unfair employment practices brought by DOJ's Immigrant and Employee Rights Section (IER).

Case Background

Walmart, facing a $24 million fine for alleged I‑9 violations, challenged the constitutionality of the limited way in which the ALJs at OCAHO could be removed only for "good cause." Walmart claimed the ALJs were too insulated from executive control, in violation of the Administrative Procedures Act. Initially, the federal district court sided with Walmart, found the ALJ removal limitations unconstitutional, and permanently enjoined the DOJ and OCAHO from enforcing the complaints against Walmart.

However, the Eleventh Circuit reversed and concluded that the ALJ removal procedures were constitutional at OCAHO. The Eleventh Circuit's ruling means that OCAHO could adjudicate the complaints and penalties assessed against Walmart, thus vacating the district court's injunction. The Eleventh Circuit's decision is bolstered by the dismissal of another constitutional challenge to OCAHO after IER dismissed the underlying administrative complaint earlier this year.

What This Decision Means for Employers

If Walmart had been successful on appeal in challenging the ALJ framework at OCAHO, the case could have impeded ICE and IER's ability to penalize employers. But the court rejected Walmart's arguments, effectively preserving ICE's traditional worksite enforcement powers.

This decision is particularly important because Congress just significantly increased ICE's budget for immigration enforcement under the OBBBA (2025 Reconciliation Act). The large increase in funding means that ICE will be able to devote more resources towards worksite inspections, I‑9 audits, or other immigration-related investigations. The Trump Administration also has signaled that IER is focused on pursuing claims of employers unlawfully disfavoring American workers, like it did in its first Administration.

Worksite enforcement implications include:

• OCAHO judges retain full authority to adjudicate employer sanctions and discrimination cases.
• ICE and IER investigations and employer penalties are not on hold — and companies do not have solid legal ground to advance this challenge right now.
• Companies should prepare for increased enforcement efforts, such as claims of improper I-9 completion or retention, as well as claims they are knowingly hiring or continuing to employ unauthorized workers, or that they are disfavoring American workers.
• Companies now face a greater number of audits and site visits, larger proposed fines, and a faster adjudication of worksite enforcement cases.

Next Steps for Employers

Employers should respond proactively to ICE's expanded worksite enforcement authority. They should consider:

• Increasing voluntary internal I-9 audits to
  • Review all I‑9s for active employees and those terminated within the last three years;
  • Look for common errors (missing signatures, incorrect document dates, expired verification);
  • Taking corrective action only when necessary and lawful;
  • Maintain documentation of the audit and corrections.
• Training HR staff, hiring managers, legal, security, business leaders, and employees to be:
  • Familiar with I‑9 completion timelines and procedures;
  • Trained on how to identify acceptable documents;
  • Able to handle reverification correctly.
• Weighing the risks and benefits of enrolling in E-Verify. While enrollment in E-Verify does not make employers immune from employer sanctions, it offers evidence of the employer's good-faith attempts to maintain a lawfully authorized workforce.
• Consider the newly heightened value of challenging ICE and IER administrative complaints to litigate before OCAHO

Regular refresher training is highly recommended, especially if your team experiences turnover or growth.

Looking Ahead

While this decision closes the door on one constitutional challenge, it doesn't mean the issue is permanently settled. Other circuits could take a different view, and there's always a chance this issue could reach the U.S. Supreme Court at some point. But for now, there is clear legal authority for ICE and IER to continue to penalize employers using OCAHO ALJs—and employers must be thoughtful in their immigration compliance measures.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.