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"No Match" Regulation

On December 5th, 2008, the U.S. District Court for the Northern District of California refused to lift an injunction against the Bush Administration's revised Social Security "No Match" rule until late February 2009. While the initial "No Match" rule was to take effect on September 14, 2007, the implementation of the rule was delayed due to litigation led by United Fresh, alongside the U.S. Chamber of Commerce, National Roofing Contractors Association and American Nursery and Landscape Association. The lawsuit was filed on the basis that certain procedures -- including an analysis of the law's economic impact on small businesses -- were not followed. On August 31, 2007, the U.S. District Court for the Northern District of California issued a restraining order against DHS and the Social Security Administration curtailing implementation of the August 15th "No Match" final rule.

In the Federal Register on March 26, 2008, the Department of Homeland Security (DHS) published a Supplemental Proposed Rulemaking for the "No Match" rule, and on October 23, 2008, DHS announced the Supplemental Final Rule, which was meant to address the procedural issues raised in the lawsuit. With this court ruling, the Obama Administration could seek to further consider the merits of the rule.

United Fresh will continue to monitor all future developments related to the Social Security "No Match" Regulation.

What is a “No Match” letter?
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 filed 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 income, social security or Medicare taxes were withheld or income tax would have been withheld had the employee 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. In this case, SSA sends a letter -- commonly referred to as a "No Match" letter -- informing the employer of the mismatch. There can be multiple causes for a "No Match", including a technical error such as a misspelled name, or a clerical error. 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 social security number or a social security number assigned to someone else. 

In August 2007, the DHS 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 "No Match" rule expanded the definition of "constructive knowledge," creating new legal obligations for businesses to verify that employees are authorized for domestic work.

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 is unnecessary to hold an employer liable for violating the law.  Instead, proving that an employer had "constructive" knowledge (knowledge which may be fairly 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 the employer to exercise extreme caution and reasonable care in the management of its employees.  Such as is the case with the "No Match" regulation, 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.

Summary of Final DHS "No Match" Rule
Under the Final "No Match" Rule, the definition of constructive" knowledge is expanded even further, and provides that an employer's receipt of a "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 "No Match" letter.  Summarized below are the key components of the DHS final "No Match" rule.  

  • 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 or alien documents.  If the employer 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, whereas the proposed rule provided for only a 14-day period.
  • If the employer reported the information correctly on the I-9 or W-2 forms, it must confirm with the employee that he or she 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 he or she 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, whereas 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 must take action to terminate the employee or face the risk that DHS may find that it had constructive knowledge of the unauthorized status of that employee.
  • If at the end of 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 and work authorization contain a photograph.
  • An employer that follows DHS’ procedures will have a "safe harbor," meaning 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 re-verify documents listed in "No Match" letters will have a defense against discrimination allegations based on document abuse provisions of current immigration law.

"No Match" Rule Timeline

Additional Resources
United Fresh Produce Association
1901 Pennsylvania Ave. NW, Suite 1100
Washington, DC 20006
Tel: 202 303 3400
Fax: 202 303 3433
united@unitedfresh.org
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