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SSA no-match letter regs catch employers attention

The U.S. Department of Homeland Security (DHS) has published final regulations that will affect many employers in Mississippi. Here are the details:

Q: What are the new regulations affecting employers, which were published by the DHS?

A: DHS recently published regulations regarding what employers should do if they receive a no-match letter from the Social Security Administration (SSA). These regulations were published on August 15, 2007, and they will take effect on September 14, 2007.

Q: What are no-match letters?

A: No-match letters are letters sent by SSA to employers, which report that employees’ names or social security numbers reported to the SSA on W-2 forms do not match the information that SSA has in its own database.

Q: Why is DHS concerned about letters sent by SSA?

A: The Immigration & Nationality Act prohibits employers from knowingly hiring or continuing to employ workers who do not have authorization to work in the United States. Additionally, current DHS regulations define “knowing” violations to include constructive knowledge. In other words, if an employer should reasonably have known that its employees lacked proper work authorization, then that employer could be found to have knowingly violated the law and could be subject to sanctions by DHS.

The new regulations are significant because they clearly state DHS’ view that no-match letters should not be ignored by employers, as these letters may indicate that the employees named within the letter do not have the proper work authorization. In the past, many employers have failed to or chosen not to investigate their employees’ work authorization in the wake of these letters. However, under the new regulatory regime, employers who continue to ignore these letters will place themselves at substantial risk that DHS may charge them with constructive knowledge of unauthorized employment.

Q: How can employers comply with the new and final DHS regulations?

A: The new DHS regulations specify a procedure that DHS considers a “reasonable” response to an employer’s receipt of a no-match letter. Since the new regulations grant employers who follow this procedure a “safe harbor” (i.e., defense) against an allegation of constructive knowledge based on the receipt of a no-match letter, employers are well-advised to comply with these procedures if they receive no-match letters.

Q: What is the procedure recommended by the new DHS regulations?

A: Briefly, the procedure is as follows:

Step 1: The employer should check its records promptly to see if the discrepancy reported in the no-match letter was the result of the employer’s own typographical, transcription or similar clerical error. If there is such an error, then the employer should independently verify the corrected information with SSA and report the corrected information to SSA. SSA maintains a 1-800 number and a Web site, which employers may use to verify corrected information with SSA. The employer should also retain all information showing that it resolved the discrepancy and verified the new information.

Step 2: If the employer cannot resolve the discrepancy itself, then the employer should promptly request the employee to confirm that the employer’s records are correct. If the employee denies that records are correct, then the employer should attempt to verify the new information provided by the employee using the methods discussed above. Steps 1 and 2 should be taken within 30 days of the employer’s receipt of the no-match letter.

Step 3: If, on the other hand, the employee states that the employer’s records are correct, then the employer should ask the employee to pursue the matter personally with the SSA and report back to the employer within 90 days from the date the employer received the no-match letter.

Step 4: If these steps fail to resolve the discrepancy with respect to a given employee, then the employer and the employee should fill out a new I-9 form for the employee within 91-93 days after receipt of the no-match letter. [I-9 forms are those filled out by employers and new hires, which attest to the newly-hired employee’s work authorization.] However, the employer may not accept any documents which contain the Social Security number listed in the no-match letter or any identifying documents which do not contain a photograph.

Q: What happens if the employee cannot pass the “modified” I-9 procedure?

A: If the employee can demonstrate continuing work authorization via this “modified” I-9 procedure, then the employer may retain him and enjoy the benefit of the ‘safe harbor’ provided by the new regulations. If, on the other hand, the employee cannot present such documentation, then the employer will have to decide whether or not to terminate the employee.

While ICE has stated in guidance posted on its Web site that the regulations do not require an employer to terminate an employee who cannot present documentation to satisfy the “modified” I-9 procedure, a decision not to discharge the employee under these circumstances will subject the employer to the risk that DHS charge the employer with constructive knowledge of his unauthorized status. Indeed, the preamble to the final regulations suggests as much: “If this special Form I-9 verification is unsuccessful, or if the employee refuses to participate in the Form I-9 verification, the employer risks being deemed to have constructive knowledge of unlawful employment of workers in a subsequent [DHS] enforcement action…. [E]mployers who have constructive knowledge that certain employees are unauthorized aliens should terminate employment or risk sanctions by DHS.”

Q: Should employers terminate employees based on receipt of a no-match letter alone?

A: No. There can be many reasons, other than unauthorized employment, why an employee’s name appears in a no-match letter. For instance, the mismatch could be a result of a transcription error or a name change, which was not reported to SSA. Accordingly, the new DHS regulations should not encourage terminations based solely on an employer’s receipt of a no-match letter, as such terminations could result in claims of discrimination. Instead of acting precipitously, employers should take care to follow DHS’ recommended procedure carefully, as this procedure is designed to help employers investigate and resolve these discrepancies in a way which protects both employees and employers.

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