Yes. A non-REAL ID drivers' license with the “Federal Limits Apply” notation can be used to establish identity for Form I-9 purposes. This notation shows that the license does not meet federal standards for the issuance and production of a compliant card under the REAL ID Act, but this doesn’t apply for employment purposes.
What this notation means is that an individual will not be able to use a noncompliant REAL ID drivers' license or identity card to fly within the United States or enter secure federal buildings and military bases that require identification after October 20, 2020.
The California Department of Motor Vehicles (DMV) now issues two types of drivers' licenses or identity cards — one that complies with the REAL ID Act and one that does not. Either license is an acceptable identity document for purposes of Form I-9 requirements.
Additional information and copies of what the two California licenses look like are available on the DMV’s REAL ID page.
For more information, read I-9: Verifying Eligibility in the HR Library.