United States: DHS Publishes Proposed "Safe-Harbor" Procedures for Employers who Receive "No-Match" Letters

Recent media reports revealing that employers indicted for harboring illegal aliens had disregarded hundreds of Social Security mismatch notifications (See Immigration Raids Signal New Enforcement Emphasis by ICE (June 2006)) have, at last, led the Department of Homeland Security (DHS) to address the role that mismatch letters should play in assessing the legitimacy of work authorization. On Wednesday, June 14, DHS published in the Federal Register proposed rules outlining recommended procedures for employers to follow in response to mismatch notices in order to stave off claims that mismatch notices provided constructive knowledge that the company employed unauthorized alien workers.

The proposed regulations do not impose mandatory obligations. Rather, employers following the prescribed processes will have a safe harbor defense. The proposed regulations are subject to a 60-day comment period before they take effect, and it is likely that amendments will be made as a result of comments. In fact, DHS has specifically solicited comments relating to the time periods for actions laid out in the proposals. However, because the rules address ways employers can mitigate risk under current law, prudence suggests that employers should implement these processes, to the extent feasible, as soon as possible.

Existing law prohibits knowing employment of unauthorized labor. Under current regulations, knowledge can be actual or "constructive." The proposed regulations deal only with the constructive knowledge standard; following the prescribed steps for mismatch letters is no defense to a claim of actual knowing employment of unauthorized workers.

Constructive knowledge is defined by the proposed rules as "knowledge which may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know about a certain situation." The proposed rules add two specific situations to the existing examples where an employer may have constructive knowledge:

1. Written notice from the Social Security Administration (SSA) that the combination of name and SSN submitted for an employee does not match SSA records; or
2. Written notice from DHS that an immigration status document or an Employment Authorization Document (EAD) presented by an employee as proof of work authorization is assigned to another person, or that there is no record of a status document or EAD being issued to that person.

The proposed rules outline a suggested procedure that employers should follow in the event they receive no-match letters from either SSA or DHS.

Within 14 days of receipt of the no-match notice, an employer should attempt to resolve the discrepancy by:

1. Checking its personnel and payroll records to determine whether the discrepancy results from a clerical error on the employer's part. If an error is found, the employer must make the correction, notify SSA of the correction, verify that SSA has made the correction and the new information matches SSA records, and make a record of the manner, date, and time of such verification. (The proposed rules do not anticipate that the SSA will send confirmation of verification, and as a practical matter, it does not have capacity to do so. Verification inquiries can be addressed by telephone at 1-800-772-6270, Monday-Friday from 7:00 a.m. to 7:00 p.m.)
2. If there is not a simple remedy for the mismatch, the employer must promptly ask the employee whether the information in its personnel records is correct. If the employee claims the information is correct, the no-match letter notwithstanding, the employer should direct the employee to resolve the discrepancy with SSA. On the other hand, if the employee claims that the employer's records are incorrect, the employer should re-check its records, as described above.

Unlike the SSA no-match notification process, there is no system that checks and catches mismatched immigration documents as a matter of course. These mismatches generally arise in connection with an audit, likely by ICE—the Immigration and Customs Enforcement office within DHS, or by the OFCCP, in connection with affirmative action audits. When an employer receives a DHS immigration related no-match notice, the proposed regulations direct the employer to attempt to resolve the discrepancy by "taking reasonable steps to resolve the question raised by DHS about the immigration status document or EAD." It is notable that the DHS, the agency publishing these regulations, provides no guidance about what those steps would be! In the absence of further guidance, the employer should follow the steps outlined on the notice, if any. If no steps are outlined, the employer should attempt to contact the nearest Citizenship and Immigration Service, a division of DHS to inquire about the mismatch, and document efforts to do so. If that proves unsuccessful, the employer should confront the employee and follow the same steps suggested in connection with a Social Security Mismatch, as described above.

If a Social Security number or immigration number mismatch is not resolved within 60 days of receipt of the mismatch, the proposed regulations require the employer to re-verify the employee's work eligibility and identity, within 3 additional days after the 60^th day following receipt of the no match document. The method for doing this is a new I-9 form, as though the employee were commencing new employment, with some important exceptions:

1. Use a new I-9 form and have the employee complete section 1, just as if he or she were newly hired. In section 2, the rules are similar to those at commencement of employment, except that the employee may not present the document that is the subject of the no-match letter, and any document used to establish identity must include a photograph; and
2. The employer must retain the new I-9, in addition to the prior I-9, for the same period and in the same manner as though the employee were newly hired.

The requirement that the employer obtain a new I-9 document with different work and identity documents underscores that past use of inaccurate, false, or purloined work authorization documents does not mean that the employer has violated the immigration act by employing that person. To the contrary, the regulations anticipate that it is permissible to accept a new I-9 form with facially valid identity and work authorization documents and continue the employee's employment "..if the employee is verified, then even if the employee is in fact an unauthorized alien, the employer will not be considered to have constructive knowledge of that fact." In other words, should an employer elect to terminate for breach of honesty related policies, and faces a legal challenge, the employer will not be able to rely on the fact that a failure to terminate would have exposed the employer to risk of immigration enforcement action. Employers, especially those with union agreements or in states with liberal protections for undocumented workers, must tread carefully in imposing discipline in these circumstances.

The regulatory history of the proposed regulation states that:

"[i]f the discrepancy referred to in the no-match letter is not resolved, and if the employee's identity and work authorization cannot be verified using a reasonable verification procedure . . . , then the employer must choose between taking action to terminate the employee or facing the risk that DHS may find that the employer had constructive knowledge that the employee was an unauthorized alien and therefore, by continuing to employ the alien, violated INA section 274A(a)(2), 8 U.S.C. 1324a(a)(2)."

Implicit in the "either/or" scenario outlined by the DHS is an expectation that, contrary to current understanding, an uncorrectable Social Security mismatch is evidence of immigration status. It remains to be seen whether the Social Security Administration, an agency independent of the DHS, will follow suit and modify its no match correspondence to alert employers to the possibility that an unresolved mismatch can mean unauthorized work status and a need to terminate employment. Until further guidance from SSA or DHS through the comment period, employers should likewise proceed with caution in implementing termination for unresolved mismatches as suggested by the proposed regulations. The most prudent approach remains an investigation of the underlying facts, credibility assessments, and discipline that reflects a consistent, nondiscriminatory application of workplace rules.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.