On August 31, 2007, the U.S. District Court for the Northern District of California issued a temporary restraining order in AFL-CIO, et al. v. Chertoff, et al. (N.D. Cal. Case No. 07-CV-4472 CRB). The temporary restraining order against the Department of Homeland Security and the Social Security Administration enjoins and restrains those agencies from implementing the Final Rule entitled "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter.

Please note that this week, Immigration and Customs Enforcement, commonly referred to as ICE, has published a rule concerning “No-Match” letters.    As you are probably aware, it is not uncommon for the Social Security Administration to send “No Match” letters to employers in situations where the employee’s social security number does not match the government records. 

Every year, it is estimated that 10% of the social security numbers reported on the wage reports do not match the Social Security Administration records.   It should be noted that in many situations, the fact that the social security records does not match the name stems from the simple fact that the person has changed their surname.   The most common situation would be a married female who begins using the husband’s surname after marriage without taking steps to inform the Social Security Administration.   Of course, a No-Match between the number and the name may also be indicia that the person is not whom he/says he is, that the information provided is false and/or that the person may not be authorized to work in the United States.

The final rule which will become effective in mid-September of 2007 is a much tougher rule than the existing rule.   This rule expands the definition of "constructive knowledge" to include the failure to take reasonable steps to address three situations: (1) an employee's request for the employer's sponsorship of the employee for a labor certification or visa petition; (2) receipt of a no-match letter from the Social Security Administration ("SSA"); and (3) receipt of a notice from DHS (usually after an I-9 audit) that the employee's employment authorization documents presented in connection with completion of the I-9 form do not match DHS records.

Under the new rule, an employer has 93 days to complete reconciliation of information when there is a discrepancy.   The rule promises immunity from a constructive knowledge charge premised on such notices should the employer follow the procedure exactly as stated. While acknowledging that other actions taken by employers may constitute "reasonable steps" in the context of a "total facts and circumstances test," employers who fail to follow the protocol may not have the "safe harbor" from a finding of constructive knowledge in the event of a civil or criminal investigation.

In final form, the "safe harbor" protocol is as follows:

Within 30 days of Receipt of the Notification from the Government

No-Match Letter from SSA: The employer must check its records to determine whether the discrepancy was caused by a clerical error, correct the error with SSA, and verify that the corrected name and social security number now match SSA's records. The rule advises employers to retain a record of the manner, date, and time of such verification. The employer may update the I-9 form relating to the employee or complete a new I-9 (retaining the original), but should not perform a new I-9 verification.

If the employer determines that the SSA no-match is not a result of an error in the employer's records, the employer must promptly request that the employee confirm that the name and social security account number in the employer's records are correct. If the information is incorrect, the employer must make corrections, inform the SSA of the correction and verify a match on the corrected information, and make a record of its actions.

If the employee confirms that the employer's record information is correct, the employer must promptly advise the employee of the date of receipt of the no-match letter and advise the employee to resolve the discrepancy with the SSA no later than ninety (90) days after the receipt date. The employer is under no legal obligation to advise the employee regarding the means or manner of resolving the discrepancy with the agency.

Notice of discrepancy from DHS: The employer must contact the local DHS office in accordance with the written notice's instructions and attempt to resolve the question raised by DHS about the immigration status document or employment authorization document. Note that the specific instructions in the notice may provide less than 30 days for the employer to respond.

Within 93 days of Receipt of Notification From the Government

• If the discrepancy cannot be resolved with either SSA or DHS within 90 days of receipt of the written communication from either agency, the employer must attempt to reverify the worker's employment eligibility by completing a new I-9 employment verification form. Companies should use the same procedures as when completing an I-9 form at the time of hire, with a few exceptions:
1. The employee must complete section one and the employer must complete section two of the new I-9 form within 93 days of receipt of the notice from either SSA or DHS.
2. The employer cannot accept any document (or receipt for such a document) referenced in the DHS notification or any document (or receipt) that contains a social security number that is the subject of the SSA no-match letter to establish employment authorization or identity.
3. The employee must present a document that contains a photograph in order to establish identity or both identity and employment authorization.
4. The new I-9 form should be retained with the original I-9 form(s).

If the employer cannot verify the employee's work eligibility through completion of a new I-9 form, the employer must decide whether to terminate the employee, or face the risk in any subsequent DHS enforcement action of being determined to have constructive knowledge and being penalized for the continuing employment of an unauthorized alien. The final rule provides that whether an employer would be found to have constructive knowledge in any particular case will depend on the "totality of relevant circumstances." An employer should not terminate an employee until the process is completed, unless the employer obtains actual knowledge (such as through an admission by the employee) that the employee is not eligible for employment in the U.S.

DHS takes the position that applying the safe harbor rule in a uniform manner for all employees whose account numbers or work authorization documents are challenged by the SSA or DHS should not subject an employer to liability for document abuse and/or unlawful discrimination on the basis of national origin and citizenship status.

No "safe harbor" protocol is available where an employee requests employer sponsorship for a labor certification or visa petition and the employee turns out to be unauthorized. Where the request is made by an employee who admits to the employer that he/she is currently unauthorized, or where the request is inconsistent with information provided by the employee in connection with the employment verification process (i.e., a claim of U.S. citizenship or permanent resident status in Part I of the form), the employer may be charged with actual or constructive knowledge of unauthorized status if the employer permits the employee to continue working for the employer.

We should add that in the past two years, we have seen an increase in the number of work-place enforcement actions by ICE. Perhaps the most of famous of these cases pertains to Wal-Mart.  Wal-Mart paid over $11,000,000 in fines to settle charges that a subcontractor it used for janitorial services at some of its stores employed illegal aliens. Although this is the case that made news in the general media, the reality is that ICE has gone after many more employers in the past two years than at any time in the recent past.  Most troubling of all, ICE has sought to prosecute members of company management teams pursuant to criminal law.

The bottom line is that companies must pay close attention to employment verification issues. It is also extremely important that employees in the field are properly trained on I-9 issues. In the future, if any no-match letters are received, please do contact us.