Current Status
The Department of Homeland Security (DHS) recently published in the Federal Register a Supplemental Proposed Rulemaking for the No-Match Rule. The initial No-Match rule, which created new legal obligations for businesses to verify employees are authorized for domestic work, was published on August 15, 2007, and scheduled to take effect on September 14, 2007 (see background below). However, the implementation of the rule was delayed due to litigation led by the U.S. Chamber of Commerce, National Roofing Contractors Association, American Nursery and Landscape Association, and United Fresh. Last October, these groups successfully challenged some of the procedural aspects of how the rule was issued.
In a press statement, DHS notes that "the rule does not create new legal obligations for businesses. It simply outlines clear steps an employer may take in response to receiving a letter from the Social Security Administration indicating that an employee’s name does not match the social security number on file. If the business follows the guidance in the No-Match Rule, comprising various actions to rectify the no-match within 90 days of receiving the letter, they will have a safe harbor from the no-match letter being used against them in an enforcement action". However, preliminary analysis of the revised rule so far confirms that the Department made very few changes to the substance of the initial rule. Instead, the revised rule is merely an attempt to supplement the rulemaking and address the procedural deficiencies noted by the court.
Background
In August of 2007, the U.S. Department of Homeland Security’s Immigration and Customs Enforcement Agency issued a final regulation governing the Social Security Number no-match letters that employers receive for withholding employees’ Social Security allocations. This regulation is very important because it directly affects the customary practices of all businesses and their employees.
Each year, employers are required to send Forms W-2 to the Social Security Administration (SSA) by the last day of February (or last day of March if you file electronically) to report the wages and taxes of their employees for the previous calendar year. Employers are required to file Form W-2 for wages paid to each employee from whom: a) income, social security, or Medicare taxes were withheld or b) income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4, Employee’s Withholding Allowance Certificate. In many cases, employee names and social security numbers do not match SSA records. SSA then sends a letter, commonly referred to as a “no-match” letter that informs the employer of the mismatch. There can be many causes for a no-match, including a technical error, such as a misspelled name or clerical error. However, another cause for a no-match may be that an employee is not authorized to work in the United States, and may be using false SSN or an SSN assigned to someone else. Therefore, a “no match” letter as well as an employer’s Employment Eligibility Verification form can serve as indicators to an employer that one of its employees may be an unauthorized alien.
The Law
Section 274A (a) (2) of the Immigration and Nationality Act (INA), 8 U.S.C. 1324 (a)(2) provides that “it is unlawful for a person or entity, after hiring an alien for employment in accordance with paragraph (1), to continue to employ the alien in the United States knowing the alien is an unauthorized alien with respect to such employment.” Both case law and regulations have supported the view that actual knowledge that an employee is unauthorized to work in unnecessary to hold an employer liable for violating the law. Instead, proving that an employer had “constructive” knowledge (knowledge which may fairly be inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition) is sufficient. The “constructive” knowledge standard is an easier standard to prove, and thus, places a greater burden on employers to exercise extreme caution and reasonable care in managing its employees. The definition of “constructive knowledge” as it relates to an individual’s authorization to work in the U.S. continues to expand through case law and regulations. Such is the case with the newly released “no match” regulation.
Summary of Final DHS Rule
Under the new regulation, the definition of “constructive” knowledge is expanded even further, and provides that an employer’s receipt of a SSN no-match letter from the SSA or DHS may be sufficient to constitute constructive knowledge of unauthorized employment. However, the regulation also provides specific steps that an employer should take that would constitute “due diligence” and hopefully, avoid liability in situations where they have received an SSN “no match” letter. Summarized below are the key components of DHS’ final no match rule. In addition, the following links provide indepth analysis and information about the rule.
The rule will become effective on September 14, 2007.
Upon receipt of a no match letter from DHS or SSA, an employer will have to review the letter within 30 days of its receipt to determine whether it properly recorded the listed employees’ names and social security number (SSN) or alien documents. If the employer did not and made a clerical mistake, it is required to make the correction and file the corrected information with SSA or DHS within the 30- day period. The proposed rule provided for only a 14-day period.
If the employer reported the information correctly on its I-9 or W-2 forms, it must confirm with the employee that the employee provided accurate information. If the employee did report the information accurately, the employer must ask the employee to ascertain and correct the problem with the appropriate agency. While the employer does not have a duty to solve the problem for the employee, it must inform the employee of the 90-day time frame within which the employee must provide verifiably legitimate documents.
The employer and employee have 90 days from the receipt of the agency letter within which to complete this process. The proposed rule provided for only a 60-day period.
If during the 90-day period the employee provides corrected information, the employer is responsible for verifying the correction with DHS or SSA.
If at the end of the 90-day period the employer cannot obtain verification from DHS or SSA that the document in question is acceptable, then the employer will have to take action to terminate the employee or face the risk that DHS may find that it had constructive knowledge that the employee was unauthorized.
If at the end of the 90 days the employer cannot obtain verification, it has an additional 3 days within which to complete a new I-9 Form for the employee, using the same procedures as if the employee were newly hired. In completing the form, the employer may not accept any document referenced in the written notice that is disputed. The employer must require that a document establishing identity or identity and work authorization contain a photograph.
An employer that follows DHS’ procedures will have a “safe harbor.” It will not be considered by DHS to have constructive knowledge that it employed unauthorized workers, unless DHS could prove independently that the employer had actual or other knowledge that the employee in question was unauthorized to work. The safe harbor would be available even if the worker later were determined to be unauthorized, assuming the employer followed the DHS procedures and could prove that it did so.
An employer that fails to follow the procedures set forth in DHS’ rule will be considered by DHS to have constructive knowledge that it employed unauthorized workers. This will influence DHS’ exercise of its prosecutorial discretion in deciding whether it will bring charges against employers that receive no match letters and do not follow up on them.
Employers that reverify documents listed in no match letters will have a defense against discrimination allegations based on document abuse provisions of current immigration law.
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