Monday, October 19, 2009

No-Match Rescission Leaves Matter in Limbo

by Charles M. Miller

The Department of Homeland Security has rescinded its 2007 No-Match regulation (72 Fed. Reg. 45611•45624 (Aug. 15, 2007)), leaving U.S. employers wondering if the Social Security Administration has plans to resume no-match letters, and if so, what steps to take to protect their companies from DHS charges of constructive knowledge IRCA violations.

The no-match regulation had changed the legal obligations of an employer when receiving a no-match letter from the SSA or a notice of suspect documents letter from
ICE. The rule had amended the definition of constructive knowledge to include receipt by an employer of a no-match letter from Social Security Administration (SSA) or a notice from DHS, with a potential finding that the employer had constructive knowledge that it was employing an alien not authorized to work in the United States. The rule also described the three "safe harbor" steps that the Department of Homeland Security (DHS) considered to be a reasonable response by an employer to receipt of a no-match letter. Employers with knowledge that their employees are not authorized to work in the US are liable for both civil and criminal penalties under the Immigration Reform and Control Act of 1986 (IRCA).

Employers send the Social Security Administration (SSA) earnings reports (W-2 Forms) with the employee’s name and social security number (SSN). The previous No-Match procedure was that if the W-2 information that the employer submitted did not match SSA records, the SSA sent an “Employer Correction Request” also referred to as a “code v” or “no-match” letter, informing the employer of the discrepancy. When the SSA was unable to match an employee’s name and Social Security Number (SSN) from the W-2 with its own records, the employee’s earnings were posted to SSA’s Earnings Suspense File until that employee’s data matched with SSA records.

A no-match situation occurred for a variety of causes including clerical error and name changes. One of the causes of a no-match situation is the submission of information for an alien who is not an authorized U.S. worker and is using a false SSN or a SSN assigned to someone else. Such a letter may be one of the only indicators to an employer that one of its employees may be an unauthorized alien. ICE may send a similar letter (Notice of Suspect Documents) during an I-9 audit if that agency is unsuccessful at confirming in DHS records, that an immigration status document or employment authorization document presented or referenced by the employee in completing the Form I-9 was assigned to that person.

No-match letters had become an issue in worksite enforcement actions and federal prosecutions. Employers who had received “no-match letters” that represented a high percentage of their total workforce, faced constructive knowledge criminal and civil penalties. The sheer numbers of the no-match letters sent out to employers caused the DHS to consider this rulemaking to enhance the responsibilities of the affected employers. SSA indicated that in 2004, 138,000 no-match letters were sent to employers. The large scale of the no-match situation can be measured by the SSA’s Earning Suspense File (ESF), an electronic fund constituted of earnings that cannot be matched to the accounts of workers. In 2006, the ESF had cumulatively grown to approximately $586 billion. Steve Schaeffer, Assistant Inspector General for the Office of Audit, Social Security Administration Office of the Inspector General, Testimony Before the Subcommittee on Social Security of the House Committee on Ways and Means, June 7, 2007;

In the AFL-CIO v Chertoff litigation concerning the DHS rulemaking, the District Court in the Northern District of California had issued a preliminary injunction to stay the effect of the DHS no-match safe-harbor final rule. In that preliminary injunction order decision, Judge Breyer indicated that SSA had been prepared to send 140,000 letters concerning 8 million employees for tax year 2007. SSA had indicated that it did not send out no-match letters for tax years 2005 and 2006.

The DHS notice leaves employers with uncertainty as to what actions they should take if, and when, SSA resumes issuing the No-Match letters.

An SSA resumption of the No-Match letters will see immigration counsel return to the advice we were giving prior to the 2007 rule that DHS rescinded. But that's for another post.