The Immigration and Customs Enforcement ("ICE") Agency of the Department of Homeland Security ("DHS") announced its final regulation on Social Security Administration ("SSA") "no-match" letters, despite overwhelming and nearly unanimous opposition from business and labor alike. Under the new regulation employers who receive letters from the SSA stating that the employee’s reported social security number does not match SSA records must take affirmative steps to resolve the discrepancy or face possible civil or criminal penalties. The regulations go into effect September 15, 2007 and significantly change how employers must respond to no-match letters. The final rule also applies to the Notice of Suspect Documents that ICE sends when an audit of an employer’s I-9 forms discloses an immigration status or employment authorization document that cannot be confirmed as assigned to the presenting employee.
Prior to the new rule, employers were not required to respond to "no-match" letters and indeed were advised not to take action against employees who were the subject of no match letters. The SSA’s position was that the letters were merely informational and not to be used for enforcement purposes. Now, employers must respond to no-match letters and must do so within a specified timeframe to avoid liability. The DHS regulation establishes a "safe harbor" provision to protect employers who take the steps outlined in the new rule within the timeline prescribed. However, employers who fail to take the required actions run the risk that DHS will impute to the employer "constructive knowledge" of unauthorized alien employment. The employer can then be prosecuted by DHS and subjected to sanctions, civil fines and criminal prosecution, including felony prosecution.
It is unclear how DHS will enforce the new regulation. According to DHS, of the approximately 250 million wage reports SSA receives each year, as many as four percent belong to employees whose names and SSNs do not match SSA’s records. Some of the discrepancies are legitimate clerical errors or cases where there has been a name change. However, the vast majority are thought to reflect undocumented immigrants working in the U.S. illegally. Given current DHS staffing levels, we anticipate random checking and that DHS is likely to focus on industries with a typically high percentage of immigrant workers, such as agriculture, landscaping and garment manufacture.
Employer Requirements and Timelines
Under the new rule, employers who ignore "no-match" letters and fail to complete corrective action within 90 days will be in violation of federal immigration laws. The rule provides that receipt of a no-match letter is "evidence" that the employer has "constructive knowledge" that an employee lacks authorization to work in the U.S.
Employers responding to a no-match letter must carefully follow the steps mandated by the DHS regulation. However, employers must not act too quickly when notified of an employee with a mismatched SSN. The rule specifically provides that "the employer may continue to employ the individual until all of the steps in the safe-harbor procedure are completed." Acting before the safe harbor procedures are completed could subject the company to national origin discrimination and wrongful termination claims.
- Employers will have 30 days from receipt of a no-match letter to verify that the discrepancy was not due to a recordkeeping error by the employer. If an error is found, the employer must (1) correct its records, (2) inform the SSA of the correction, (3) verify that the information in the employer’s file matches that in the SSA records, and (4) document the manner, date and time of the verification.
- If a check of the employer’s records does not resolve the mismatch, the employer must promptly ask the employee to confirm that the employer’s records are correct.
- If the records are correct, the employer must request that the employee personally pursue the matter with the SSA in order to resolve the discrepancy.
- If, after 90 days, the steps taken by the employer and employee do not resolve the problem respecting the mismatched number, the employer has three days to re-verify the employee’s authorization to work by completing a new I-9 form, as if the employee were newly hired, using documentation presented by the employee that conforms with the I-9 document identity requirements. In completing the new I-9 form to establish employment authorization or identity, or both, no document may be used which contains the SSN that is the subject of the no-match letter, or which does not have a photograph of the employee.
- Employers may not request more or different documents than are otherwise required for an I-9 form and employers cannot refuse to honor tendered documents that appear on their face to be genuine and relate to the individual.
- The employer must retain both the new I-9 and the prior I-9 in the same manner as if the employee were newly hired.
- If the employee cannot meet the I-9 standards in the re-verification process and confirm his or her authorization to work in the United States, the employer is expected to terminate the employee.
Consequences For Failure to Comply With the New Regulation
The new rule provides that DHS can use an employer’s noncompliance as evidence that the employer had constructive knowledge that the employee is an unauthorized worker. The failure to properly respond to no-match letters can be used as evidence in civil and criminal actions brought by DHS, subjecting employers to sanctions and fines and even imprisonment.
If DHS determines that an employer has violated the Immigration and Nationality Act ("INA") by knowingly employing unauthorized aliens, DHS can commence administrative proceedings against the employer by issuing a Notice of Intent to Fine. The current civil fine for a first-time offense for employers that knowingly hire illegal immigrants is $2,200 per employee, however, DHS announced that under its existing authority to make inflationary adjustments, civil fines will be increased by 25 percent when the regulation becomes effective.
DHS criminal worksite enforcement has also been stepped up, from 130 cases in 2005 to 716 in 2006, and DHS reports it has prosecuted 742 felony cases to date in 2007. Criminal penalties for possession of fraudulent immigration documentation carry a maximum punishment of 10 years imprisonment and a $250,000 fine. ICE worksite investigations now support felony charges and not just the traditional misdemeanor worksite violations under the INA. In recent ICE worksite investigations, DHS reports that employers have been charged with felonies such as conspiracy to transport and harbor unlawful aliens for financial gain as well as fraud and misuse of immigration documents.
Electronic Verification Program and Expanded Photo Database
The DHS also announced that it plans to issue a proposed rule mandating that all federal contractors participate in the DHS electronic employment verification system, E-Verify. E-Verify (formerly known as the Basic Pilot/Employment Eligibility Verification Program) is an Internet-based system operated by DHS in partnership with the SSA that allows participating employers to electronically verify the employment eligibility of their newly hired employees. E-Verify compares information taken from I-9 forms and matches it against the records in the SSA database as well as checking against the 60 million records held in DHS’s immigration databases. Under the rule to be proposed by DHS, federal contractors who fail to use the system would be subject to termination of their federal contract for non-performance.
Participation in E-Verify does not provide protection from worksite enforcement. However, an employer who verifies work authorization under E-Verify is presumed to have not knowingly hired an unauthorized alien. DHS takes the position that E-Verify virtually eliminates SSA mismatch letters and that it is currently the best means available for employers to verify electronically the employment eligibility of their newly hired employees. E-Verify can only be used with new hires and not in connection with SSN no-match letters.
DHS also announced that a photo-matching component will be added to E-Verify allowing employers to match photographs provided by employees with photographs that already exist in federal databases obtained from employment authorization documents given to visa holders and on green cards. Citing the need to reduce identity fraud problems, DHS announced that it will approach other government and state agencies to contribute to the photographic database, including obtaining passport photos and driver’s license photos in states willing to participate.
What The New DHS Regulation Means For Employers
- Employers receiving a no-match letter must respond promptly, follow the steps set forth in the new DHS rule and consult with counsel.
- Employers should follow the new DHS procedures uniformly with respect to all employees with unresolved mismatched SSNs and not take employment action against an employee who is the subject of a no-match letter until all safe harbor steps are followed and the employee is still unable to resolve the problem.
- Employers should carefully document all action taken in response to no-match letters.
- Employers may verify a SSN with SSA by telephoning 1-800-772-6270 from 7:00 a.m. to 7:00 p.m. EST, or by going online at http://www.ssa.gov/employer/ssnv.htm. Employers should keep careful record of any verification and send an e-mail to SSA confirming the verification because SSA will not itself make a record of the verification.
- Termination should be considered only where an employee cannot meet the I-9 standards in the event the discrepancy cannot be resolved and re-verification is required. Employers should consult with counsel before terminating any worker with a mismatched SSN.
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