No More No-Match, But Employers Should Still Beware

After more than two years of litigation, the Department of Homeland Security (DHS) has rescinded its Social Security No-Match rule, which would have required employers who received a no-match letter to follow certain "safe harbor" provisions or risk liability for hiring or employing unauthorized workers. DHS has not abandoned its worksite enforcement efforts, however, and employers should be diligent in developing policies and procedures for the appropriate handling of Social Security no-match letters and other circumstances that DHS may consider actual or constructive knowledge by the employer that a worker is not authorized for employment.

What is a "no-match" letter?

An employee's earnings and deductions are reported by an employer to the Social Security Administration (SSA) and the Internal Revenue Service (IRS) on a Wage and Tax Statement (Form W-2). When an employee's name and Social Security Number (SSN) listed on the Form W-2 do not match SSA's records, SSA sends a "no-match" letter to the employer notifying it of this discrepancy. The now-rescinded DHS rule would have required employers to follow a set of specific "safe harbor" procedures upon receipt of an SSA no-match letter, and if an employer failed to do so, DHS could use an employer's receipt of a no-match letter alone as evidence that the employer had "constructive knowledge" that an employee named in the no-match letter was not authorized for employment.

Why has the DHS rule been rescinded?

Shortly after the original rule was published by DHS in 2007, the AFL-CIO, the American Civil Liberties Union, the National Immigration Law Center, and other labor groups filed a lawsuit against DHS to enjoin the agency from implementing the rule, arguing that it violated federal laws, was too burdensome on employers, and would result in discrimination against existing and prospective employees perceived to be foreign nationals. Implementation of the rule was preliminarily enjoined on October 10, 2007, and despite DHS' revisions to the rule in 2008 that were intended to address these arguments, the case has remained in litigation. In rescinding the rule, DHS emphasizes that it has not changed its position on the merits of the no-match rule but that the rule was merely focused on compliance of those limited employers who receive SSA no-match letters. DHS believes that a more universal focus on employer compliance better targets its enforcement priorities. As noted in its final rescission rule published in the Federal Register, DHS will therefore "focus its enforcement efforts relating to the employment of aliens not authorized to work in the United States on increased compliance through improved verification, including participation in E–Verify, ICE Mutual Agreement Between Government and Employers (IMAGE), and other programs."

What should employers do now?

Despite the rescission of this rule, DHS has made it clear that illegal immigration and worksite enforcement will remain a top priority, and Immigration and Customs Enforcement (ICE) has confirmed that it will focus its resources on criminal prosecution of employers who knowingly hire unauthorized workers. DHS also fully supports expansion of the E-Verify program, including use of E-Verify by federal contractors (which became mandatory for certain federal contractors on September 8, 2009). Given this focus by DHS and the expected return of SSA no-match letters (which have not been issued since 2006 as a result of the no-match litigation), all employers must remain diligent in their I-9 employment eligibility compliance efforts and should scrutinize their policies and procedures for addressing SSN discrepancies and other circumstances that may indicate that an individual is not authorized for employment. Employers should consult with legal counsel regarding implementing these and related policies, including consideration of voluntary participation in E-Verify and development of strategies for resolving historical and future no-match issues.

Please contact Jenifer Brown or Christl Glier with any questions relating to employer policies, E-Verify, or I-9 compliance matters.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.