New Social Security No-Match Letter Update

The Department of Homeland Security (DHS) has published a supplemental final rule regarding an employer's obligations upon receipt of a Social Security no-match letter. However, this new rule is not yet effective due to federal litigation that has been pending against similar rulemaking since late 2007. Written arguments in the pending lawsuit will continue through February 24, 2009. In the interim, employers are well advised to scrutinize their existing policies with respect to no-match letters.

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. Historically, SSA's no‑match letters have stated that employers may not take any adverse action against an employee based on the no‑match notification alone and doing so may implicate a number of discrimination laws. Under the new DHS rule, however, if an employer fails to follow a set of "safe harbor" procedures, Immigration and Customs Enforcement (ICE) can 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 is not authorized for employment.

What is the supplemental final rule?

Including no substantive changes from the original rule published in August 2007, the supplemental final rule provides a safe harbor from the Immigration Reform and Control Act (IRCA) penalties if the employer receives a no‑match letter and its employees named in that letter are found to be unauthorized for employment. To qualify for the safe harbor, the supplemental final rule requires that the employer:

· Within 30 days of receipt of the no-match letter, check its own records to determine if the discrepancy is due to a typographical or clerical error. If not, the employer should promptly (which is defined as immediately upon receipt of the no-match letter or within 5 business days of the employer checking its own records) ask the employee to confirm that the information in the employer's records is accurate and then subsequently verify the proposed correction with SSA or DHS (within 5 additional days).

· If that does not resolve the SSN discrepancy within 90 days of no‑match notification, then the employer is obligated to verify the employee's identity and work authorization (by completing a new Form I‑9) within an additional 3 days without relying on any document containing the SSN that is the subject of the no‑match.

· Finally, if the discrepancy remains unresolved and work authorization cannot be verified, the employer must either (a) terminate the employee; or (b) risk that the agency may find that the employer had constructive knowledge that the employee was an unauthorized alien and therefore, by continuing to employ the alien, violated IRCA.

The supplemental final rule also eliminates some language from the original rule that the court indicated may conflict with the Immigration and Nationality Act's (INA) antidiscrimination provisions regarding document abuse and offers an analysis under the Regulatory Flexibility Act (RFA) asserting that the rule would have a minimal economic impact on businesses. DHS also confirms in the supplemental final rule it does not apply to workers hired before November 6, 1986 (the effective date of IRCA) and that while DHS suggests that employers retain records of their efforts to resolve no-match letters in the event that they need to provide evidence of such efforts during an ICE audit or investigation, it clarifies that the rule does not actually require that employers make or retain any new documentation or records if they follow the safe harbor procedures (other than the completion of a new Form I-9, if required).

Upon publication of the supplemental final rule, the Department of Justice's Office of Special Counsel (OSC) for Immigration-Related Unfair Employment Practices published a notice stating that employers who follow the no-match rule safe harbor provisions "uniformly and without the purpose or intent to discriminate" will not be found to have violated federal anti-discrimination laws.

Why is the rule not yet effective?

The original final rule was published on August 15, 2007. Shortly after the original rule was published 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. The Plaintiffs argued, and continue to contend, that the rule violates federal laws, is too burdensome on employers, and will result in discrimination against existing and prospective employees who are perceived to be foreign nationals.

On October 10, 2007, a federal judge granted a preliminary injunction precluding DHS from implementing this new rule, concluding that "serious questions on the merits" of the rule existed. In response to the Court's decision, DHS filed a motion to stay proceedings to permit it to engage in new rulemaking efforts that it claimed would address the Court's concerns. These efforts were reflected in a proposed supplemental rule that was published by DHS in March, and this new final supplemental rule. DHS sought to make the supplemental final rule effective upon publication, but since the preliminary injunction was and is still in effect, the supplemental final rule cannot be implemented.

DHS asserts that the supplemental final rule addresses Plaintiffs' issues and the court's concerns, and it has filed a motion to remove the preliminary injunction that has prevented the rule from taking effect. DHS requested an accelerated hearing schedule that might have led to the rule taking effect next month, but the federal district court denied that proposal and instead set a standard schedule that permits written arguments by both sides through February 24, 2009.

What should employers do now?

DHS' commitment to this rule indicates that illegal immigration and worksite enforcement will remain a top priority for ICE and DHS. As such, employers must remain diligent in their I-9 employment eligibility compliance efforts and stay abreast of frequent developments in this area. Additionally, while implementation of DHS' formal rule has been delayed by this federal litigation, it is still imperative that employers scrutinize their current policies and work with legal counsel on the appropriate handling of Social Security no-match letters received by the employer.

Please contact Jenifer Brown, Christl Glier or anyone in our immigration group with any questions relating to the Social Security no-match rule, employer no-match policies, 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.