Effective July 1, 2026, Indiana’s Senate Enrolled Act 76—known as the FAIRNESS Act—established a new state-level prohibition against employers knowingly or intentionally recruiting, hiring, or continuing to employ individuals who lack authorization to work in the United States. The law applies to essentially every employer with workers performing services in Indiana, regardless of company size or industry. While it does not alter the underlying federal Form I-9 process required under the Immigration Reform and Control Act, it creates a parallel enforcement mechanism administered by the Indiana Attorney General. Employers face potential civil investigative demands, court actions, graduated penalties that can include temporary suspension of operating authorizations at affected locations, longer suspensions for repeat violations, probation with reporting requirements, and, in egregious cases, permanent revocation of authority to operate in the state. These state consequences sit alongside existing federal I-9 fines.
A key feature of the FAIRNESS Act is its “reasonable diligence” safe harbor. An employer is not considered in violation if it took reasonable steps to confirm work eligibility before recruiting, hiring, or continuing to employ a worker. The statute expressly recognizes use of the federal E-Verify system (except in circumstances that would put a reasonable person on notice that the result was unreliable) or diligence consistent with industry-standard best practices. Although private employers are not strictly mandated to enroll in E-Verify, participation creates a strong rebuttable presumption of good-faith compliance and is widely viewed as the clearest path to the safe harbor. The law is not retroactive to pre-July 1 hiring decisions, but it does require employers to address any known lack of work authorization among existing employees after the effective date.
Because the FAIRNESS Act focuses on both new hires and the ongoing employment of unauthorized workers, accurate and complete Form I-9 records become even more critical. Federal rules still require Section 1 completion by the employee’s first day of work, Section 2 completion within three business days after the start date (with original document examination), proper retention of forms, and timely reverification when employment authorization expires. Errors, missing forms, incomplete fields, or failure to reverify can undermine an employer’s ability to demonstrate reasonable diligence if the Attorney General investigates. Internal I-9 audits directly address these risks by systematically reviewing the existing workforce’s forms for technical and substantive deficiencies, identifying employees whose authorization may have expired or whose documentation raises questions, and documenting corrective actions taken in good faith.
A properly conducted internal I-9 audit typically involves a comprehensive review of all current and terminated-employee forms still within the retention period, correction of correctable errors following USCIS guidance, documentation of any non-correctable issues, and implementation of process improvements such as standardized training, consistent document examination practices, and (where adopted) reliable E-Verify procedures. For Indiana employers, such an audit is particularly valuable for the “continuing to employ” obligation: it surfaces potential issues among the existing workforce before they become enforcement problems and creates a contemporaneous record of the employer’s efforts to verify eligibility. When combined with E-Verify enrollment and ongoing monitoring, the audit helps establish the reasonable-diligence defense and reduces exposure to both state operating-authorization penalties and federal fines.
In short, the FAIRNESS Act has raised the stakes for employment-eligibility compliance in Indiana by adding meaningful state-level enforcement and clear incentives for diligent verification practices. An internal Form I-9 audit remains one of the most practical and effective tools available to employers. It identifies and corrects problems, supports good-faith compliance efforts, strengthens the reasonable-diligence safe harbor, and positions the organization to respond confidently should questions arise under the new law. Employers operating in Indiana should treat periodic, well-documented internal audits as a core element of their ongoing compliance program rather than a one-time exercise.