02/01/2007
Will Proposed Legislation Alter Employer Responsibility for “No Match” Letters?
Don’t Start Following the DHS’ Proposed Regulation Just Yet

Introduction

Most employers are aware of or have received “no-match letters” from the Social Security Administration (“SSA”).  This letter informs the employer that one or more of the social security numbers submitted by the employer on a W-2 form for a new employee does not match SSA records.  These letters often cause confusion among employers regarding how they should handle them.  As we have addressed in prior newsletters, an employer should not treat no-match letters as evidence that the identified employees are in the country illegally or unauthorized to work, and should not terminate an employee based solely on the receipt of a no-match letter.

In June 2006, the Department of Homeland Security (“DHS”) proposed a new regulation that would change the steps an employer should take when it receives a no-match letter.  The public comment period on the proposed regulation expired in August 2006 and it is unknown when (or if) this regulation will become final.  With immigration as one of the top domestic issues before the 110th Congress, employer sanctions for employing unauthorized aliens could change dramatically.  The purpose of this article is to summarize the DHS’ proposed “Safe-Harbor Procedures for Employers Who Receive a No-Match Letter” rule and to remind our clients and friends that the proposed rule does not reflect current requirements.  With the lack of clear guidance about the value of the current no-match letters and an employer’s responsibilities upon receipt of one, some employers have gravitated to the clear steps mandated by the DHS’ proposed regulation.  However, as addressed below, until this regulation is finalized, employers who apply the proposed rule expose themselves to a risk of liability.

The Proposed Regulation

The most fundamental change proposed by the DHS is the addition of two scenarios where an employer would be deemed to have “constructive knowledge” that an employee is not authorized to work in the United States.  Currently, constructive knowledge, or the lack thereof, is determined from the “totality of the circumstances.”  The first proposed scenario is when an employee receives a no-match letter from the SSA and the second is where an employer receives a similar letter from the DHS regarding documents presented by the employee in the I-9 process.  The proposed regulation also sets forth “safe harbor” procedures which, if followed by an employer, the DHS would deem reasonable and not giving rise to constructive knowledge on the part of the employer.

Within 14 days of receipt of the no-match letter, the employer would need to:

• • Check its records to determine if the discrepancy is because of a typographical or other clerical error in the employer’s records or in its communications to the SSA or DHS.  If there is such an error, the employer should correct its records and inform the relevant agency.  An employer should also make a record of the manner, date, and time of the verification efforts; or
• Ask the employee to confirm that the information the employer has in its records is correct if the employer did not find any errors in its own records.  If the employee provides corrected information, the employer should follow the steps above.  If the employee states that the employer’s records are correct, the employer should ask the employee to resolve the apparent discrepancy with the appropriate agency.  Again, the employer should thoroughly document the steps taken with respect to the verification process.

Within 60 days of receipt of the no-match letter if the discrepancy has not been resolved, the employer would need to:

• Re-verify the employee’s identity and work authorization by completing a new I-9 form within three (3) days (63 days from the receipt of the no-match letter if discrepancy is not already corrected).  During this re-verification process, the employer would not be able to use any document containing the document or number that is subject to the no-match letter (i.e., social security number or employment authorization document as the case may be).  In addition, all documents used to establish identity or identity and work authorization would be required to contain a photograph.

If the discrepancy addressed in the no-match letter cannot be resolved and the employer cannot complete the re-verification process, the employer will be forced to choose between terminating the employment of the individual or facing the risk of the DHS finding that the employer had constructive knowledge that the employee was not authorized to work in the United States and the civil and criminal penalties that can go with such a finding.  Finally, the proposed rule makes clear that an employer would risk a finding of unlawful discrimination if it did not follow these procedures uniformly upon receipt of a no-match letter, i.e., not just take these steps when an employee has a “foreign-sounding” name or some other characteristic that an employer assumes to be an indicator of his or her immigration status.

For Now, Follow Current Law

We cannot warn employers enough that, regardless of the amount of media hype on the proposed regulation, the law has not yet changed with respect to the I-9 process or the proper approach to take when an employer receives a no-match letter.  Most critically, an employer should not take job action against an individual solely due to the receipt of a no-match letter or otherwise assume that the employee is in the country illegally.  Under current law, such an approach would create a significant risk of liability if your assumption is incorrect.  As we have addressed in previous articles and seminars, the Immigration Reform and Control Act (“IRCA”) provides a cause of action for citizenship discrimination for individuals who are, in fact, authorized to be employed if an employer asks for too many documents or takes an employment action against them believing that they are “illegal.”  Instead, an employer should first ensure that its records are correct and, if so, then request that the employee visit a SSA office to address the apparent discrepancy.  Absent some other actual or constructive knowledge of an employee’s unauthorized status, in most cases this is where an employer’s actions should stop.  Under the current “tight rope” an employer must walk between I-9/IRCA compliance and IRCA’s non-discrimination provisions, it is important to tread cautiously in this area.  Furthermore, given the fact-specific nature of the current “totality of the circumstances” test for constructive knowledge, it is helpful to seek legal guidance before acting in situations where it is unclear whether an employer has such constructive knowledge of an individual’s unauthorized employment status.

Conclusion

Until Congress passes an immigration reform package or the DHS finalizes a regulation that alters the responsibilities of employers with respect to verification procedures, an employer should ensure that its I-9 procedures are correct and continue to follow them.  For past articles on both the I-9 procedures and no-match letters, feel free to visit www.boultcummings.com/publications and access our past articles on these subjects: The Dark Side of the I-9 Verification Process: What Every Employer Should Know About IRCA’s Non-Discrimination Provisions (Summer 2000) and IRS to Begin Imposing Penalties for Incorrect Social Security Numbers (January 2003).  If you have any questions about these areas or you would like assistance reviewing your company’s current procedures or addressing a particular situation, please do not hesitate to contact one of our team members.