Minnesota firms face federal audits after immigration standoff

The audits, confirmed by company executives and local authorities, are being conducted by the Department of Homeland Security and its enforcement arm, Immigration and Customs Enforcement, and focus on I-9 employment eligibility records and payroll documentation. At least two firms in the Minneapolis metropolitan area have been notified, with officials indicating more inquiries could follow.

State leaders say the scrutiny intensified after businesses declined to allow agents access to non-public areas or declined to provide information without warrants, actions permitted under Minnesota law. Employers have long been advised that they may insist on judicial warrants for private premises and are not required to act as immigration agents, a position reinforced by state guidance issued after changes to workplace enforcement practices.

The clash has elevated a simmering federal–state tension over immigration enforcement into a concrete test of authority. Minnesota officials say the audits appear timed to penalise companies that asserted their rights, while DHS maintains that compliance reviews are routine and lawful. A DHS spokesperson has said audits are a standard tool to ensure employers follow federal hiring rules and prevent the employment of unauthorised workers, rejecting claims of reprisal.

Business owners caught in the crossfire describe a process that is disruptive even when companies believe they are compliant. Audit notices typically require employers to produce years of records within tight deadlines, diverting staff time and legal resources. Penalties for paperwork violations can reach thousands of dollars per employee, and findings can lead to follow-up inspections or referrals for civil fines.

Minnesota’s labour regulators argue the threat of audits undermines state efforts to promote safe workplaces and wage compliance. The Minnesota Department of Labor and Industry has warned that fear of federal enforcement can deter workers from reporting safety violations or wage theft, weakening oversight across sectors such as construction, food processing and hospitality. City officials in Minneapolis echo that concern, saying trust between employers, workers and regulators is essential to public safety.

Legal experts say the dispute sits at the intersection of federal supremacy and states’ police powers. While immigration enforcement is federal, states retain authority over labour standards and business regulation. Courts have generally allowed I-9 audits but have also recognised limits on warrantless access to private workplaces. Whether motive matters—retaliation versus routine enforcement—could become a central question if companies or states seek judicial review.

Industry groups are advising employers to prepare for audits regardless of their stance on cooperation. Best practices include maintaining up-to-date I-9 forms, separating immigration records from general personnel files, and designating trained staff to handle inspections. Some firms are accelerating internal compliance reviews, while others are retaining counsel to challenge what they view as targeted enforcement.

The political backdrop has sharpened scrutiny. Minnesota’s leadership has publicly criticised aggressive workplace raids and emphasised that local law enforcement does not assist with civil immigration actions. Federal officials counter that uniform enforcement is necessary to protect authorised workers and deter exploitation, arguing that lax compliance invites abuse by bad actors.

For workers, the uncertainty is palpable. Advocacy groups report anxiety among mixed-status households and warn that audits can lead to job losses even when employers are not accused of knowingly hiring unauthorised workers. Employers note that sudden staffing gaps can disrupt operations and local supply chains, especially in industries already facing labour shortages.