The Social Security “No Match” Regulation
By Sarah Peterson Stensrud
In an economy that relies on foreign labor, few companies remain untouched by immigration enforcement issues. Many believe that the United States will gain control over illegal immigration only through a strengthened worksite enforcement program complemented by strict border security. Particularly after the failure of the U.S. Congress to pass Comprehensive Immigration Reform in the summer of 2007, we will likely continue to see time, energy, and money directed toward internal workplace enforcement.
A new Department of Homeland Security (DHS) regulation, entitled "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter," clarifies an employer’s responsibilities upon receiving notification from the Social Security Administration (SSA) that an employee’s social security number as listed on Form W-2 does not match SSA’s records2. Although compliance is ostensibly optional, employers who do not follow these step-by-step instructions when responding to a SSA “No Match” letter face greater exposure to liability of constructive knowledge of employing undocumented workers.
The “No Match” regulation was scheduled to take effect September 14, 2007, but the U.S. District Court for the Northern District of California temporarily enjoined its implementation nationally until at least October 1, 2007.3 Nevertheless, the SSA continues to send out “No Match” letters so it is useful to review this regulation and explain the steps required for employers to gain safe harbor from liability after receiving a SSA “No Match” letter.
I. The I-9 Form
In 1986, the Congress passed the Immigration Reform and Control Act (IRCA)4 that, in part, addresses the rise in illegal employment in the United States. IRCA was Congress’ first attempt to create employer responsibility for ensuring that employees possess legal employment and immigration authorization. Until IRCA, the government could only penalize a foreign national for unlawful employment; following IRCA, employers also became liable if they failed to follow specific steps to ensure an employee had valid employment authorization.
IRCA created a two-tired system of employer obligations. First, IRCA created the I-9 Employment Eligibility Form that requires employers to document every employee’s legal employment eligibility.5 Second, IRCA created a series of penalties for employers who knowingly hire or continue to employ foreign nationals who are not authorized to work in the United States.6 Under current IRCA provisions, an employer satisfactorily documents an employee’s employment eligibility if it in good faith verifies an employee’s employment documentation that reasonably appears on its face to be genuine.7 Thus, the current law does not require an employer to be a document expert; it merely requires an employer to act in good faith when reviewing employment eligibility documents.
II. The New Social Security “No Match” Letter Regulation
On August 14, 2007, the DHS published a final rule that was scheduled to take effect September 14, 2007. However, the AFL-CIO challenged this regulation in U.S. Federal Court and was successful in obtaining a temporary restraining order and injunction until October 1, 2007. Although it is not certain when this regulation will take effect, we feel it is nevertheless instructive to review it as it provides specific, time-sensitive steps that an employer should follow after receiving a SSA “No Match” letter to avoid a finding of constructive knowledge of employing an unauthorized worker.8
1. constructive knowledge and knowingly employing unauthorized workers
The IRCA prohibits any person or entity from knowingly hiring or continuing to employ an unauthorized worker.9 An employer can have either actual knowledge or constructive knowledge. Constructive knowledge is knowledge that may fairly be inferred through notice of certain facts and circumstances, which would lead a person, through the exercise of reasonable care, to know about a certain condition.10 Current law gives the following specific examples of when an employer has constructive knowledge: 1) the employer fails to complete Form I-9 or improperly completes form I-9; 2) the employer acts in reckless and wanton disregard for the legal consequences of employing an unauthorized person; or, 3) the employer has information available to it that indicates a worker lacks employment authorization.11
The new regulation adds two critical elements to the definition of constructive knowledge. An employer has constructive knowledge if it fails to take reasonable steps after receiving information indicating that the employee lacks work authorization in these two instances: 1) receiving a “No Match” letter from the SSA; or, 2) receiving written notice from the DHS that an employee’s documentation was assigned to another person or does not exist in its database.12
2. “no match” letters
“No Match” letters are written notices that the SSA sends out when an employee’s name and Social Security Number (SSN) provided on the W-2 form conflict with the SSA’s records. Each year the SSA sends out thousands of these notices. The SSA will first send the notice to an employee requesting an explanation for the discrepancy. Approximately two weeks later, SSA then sends the letter to the employer. The SSA generates “No Match” letters for many reasons, including: clerical errors, name changes, and information suggesting a foreign national is not authorized to work and is using a false SSN or a SSN assigned to someone else. Current SSA policy is to only send out a “No Match” letter to employers when more than 10 “No Matches” are found, and those “No Matches” represent more than 0.5% of the W-2s submitted by that employer.13
3. how must an employer respond to a “no match” letter to receive safe harbor?
Previously, a “No Match” letter did not constitute constructive notice and an employer was not required to take further corrective action. The new regulation changes current policy by stipulating that a “No Match” letter serves as constructive knowledge that an employee is unauthorized to work, thereby potentially subjecting the employer to liability of knowingly hiring and employing an unauthorized worker. Thus, the regulations broaden the definition of “constructive knowledge,” by stating that the mere receipt of a “No Match” letter constitutes “constructive knowledge,” which means the employer can face civil fines and even potential criminal charges.
The new regulations list a series of time-sensitive steps an employer should follow upon receipt of a “No Match” letter to achieve safe harbor from a finding of constructive knowledge.14 This regulation puts the burden on the employer to confirm that an employee is legally authorized to work in the U.S. Specifically, to gain safe harbor, an employer must take the following steps:
Within 30 days of receiving a “No Match” letter, an employer must take reasonable action to correct the information and, if applicable, must notify the SSA of what corrective steps were taken. This can include:
- Checking for typographical errors, correcting the form, and notifying the SSA; and,
- Requesting that the employee confirm the name and SS number are correct on the I-9 and, if the information is correct, having the employee directly resolve the discrepancy with the SSA.
If an employer is unable to fix the problem within 30 days, the employer must talk to the employee who has 60 additional days to resolve the discrepancy with the SSA.
Within three days after the 90th day, or 93 days from receiving the “No Match” letter, the employer must re-execute an I-9, as if the employee was newly hired. The employer cannot use any document referenced in the written notice, any document that contains the disputed SSN, or any document that contains the disputed alien number. The employer must retain the new I-9 with the prior I-9.
If the employee cannot produce new documents that have a photograph and establish employment authorization, the employer must terminate the employee or the employer is presumed to have constructive knowledge thereby subjecting it to possible civil fines and criminal charges.15
Throughout this entire process an employer is encouraged to document telephone conversations and retain all SSA correspondence, computer-generated printouts, emails, and Social Security Number Verification System (SSNVS) screen shots that evidence the employer corrected the discrepancy.
If the employer fails to follow these steps, it faces a finding of constructive knowledge that it is employing an unauthorized worker. Although the new regulations allow employers to follow other reasonable procedures, the employer carries the burden to establish why these steps are adequate in light of the new regulations. Thus, unless the employer follows the safe-harbor procedures it risks a finding of “constructive knowledge” and the ensuing penalties. However, even if an employer follows these steps, it is only provided safe harbor from a finding of constructive knowledge; the government may still find that an employer had actual knowledge it was employing an unauthorized worker. The most obvious example is if an employee produces different documents with different numbers, which might create a situation where the employer has actual notice that an employee has committed document fraud.
4. “no match” obligations and hiring practices
The problem in applying this regulation is that an employer must balance the competing responsibilities of ensuring it is employing an authorized workforce against not engaging in discriminatory employment practices. The mere issuance of a “No Match” letter does not give an employer the legal right to fire any employee listed on the form. In fact, the “No Match” letter clearly states that the letter, by itself, makes no statement or judgment about an employee’s immigration status.16 Thus, an employer must consistently and rigorously abide by the steps outlined in these rules, or follow its alternative written policy, before making a determination to fire an employee listed on a “No Match” letter. If, during the course of completing these steps, an employer gains actual knowledge that a worker is not authorized to work, it should immediately terminate this employee. Similarly, if an employer reaches the 93rd day and is unable to re-verify an employee’s employment authorization, it should terminate employment. If, however, by the 93rd day an employer is able to either fix the error or re-verify that an employee is authorized to work, it should continue to employ the employee knowing that it is protected against a future finding of employing an unauthorized worker for this particular “No Match” letter.
5. Penalties for I-9 Violations
An employer found to have engaged in a pattern and practice of unlawful hiring of unauthorized workers faces criminal charges with penalties ranging from $3,000 to six months in prison.17 Employers also face possible civil fines ranging from $110 - $1,100 for each paperwork violation and $275 - $11,000 for each hiring violation.18 Generally, the government looks at the company’s policies, patterns, and numbers of violations in assessing penalties.19 The government can also impose criminal penalties for identify theft, harboring, or other federal crimes.
In assessing civil penalties, the government considers five statutory factors: 1) the size of the employer, 2) the good faith of the employer, 3) the seriousness of the violation, 4) whether or not the individual was an unauthorized worker, and 5) any history of previous violations.20 An employer who conducts regular internal audits can claim a good faith defense against findings of I-9 violations.21
III. Best Practices
What follows is a list of suggestions employers can implement to effectively deal with SSA “No Match” letters:
1. Designate one central person, or a few key individuals, for I-9 review and retention, complaints, and hiring policies.
2. Create a written policy for I-9 completion and retention. This includes the level of review before filing, a system for reverification, document retention and removal, and a consistent process for handling complaints.
3. Consistently implement your written policy. Employers should commit to ongoing training on I-9 laws, immigration laws, and employment laws.
4. Become familiar with the “No Match” regulation. If you deem not to implement it until it becomes law, ensure that you have a consistent written policy that outlines how to remedy a SSA “No Match” letter in a non-discriminatory manner.
1 Sarah K. Peterson Stensrud is an Associate Attorney with Aronson & Associates, P.A., working exclusively in employment-based immigration. She holds her J.D. Cum Laude from the University of Minnesota Law School and a Master of Public Policy from the Hubert H. Humphrey Institute of Public Affairs.
The information in this article is of a general nature and is provided as a courtesy. It should not be relied on as legal advice for specific cases. Receiving or reading this article does not create an attorney-client relationship between the reader(s) and Aronson & Associates, P.A. or between the authors and foreign national. As the information herein presented should make amply clear, sound immigration advice can only be provided after careful review of a potential client’s facts and the creation of a formal attorney-client relationship.
Copyright © by the author. All rights reserved.
2 8 CFR § 274a, Federal Register, Vol. 72, No. 157 (August 15, 2007).
3 AFL-CIO, et al. v. Chertoff, et al. (N.D. Cal. Case No. C 07 4472 CRB).
4 Pub. L. No. 99-603, 100 Stat. 3359 (Nov. 6, 1986).
7 INA § 274A(b)(1)(A).
8 8 CFR § 274a, Federal Register, Vol. 72, No. 157 (August 15, 2007).
9 INA § 274A(a).
10 8 CFR § 274a.1(l)(1).
11 8 CFR. § 274a.1(l)(1)(i)-(iii).
12 8 CFR. § 274a, Federal Register, Vol. 72, No. 157 (August 15, 2007).
13 www.ssa.gov, last visited August 23, 2007.
14 8 CFR. § 274a, Federal Register, Vol. 72, No. 157 (August 15, 2007).
16 For a sample letter see, http://www.ssa.gov/legislation/FINAL%20TY2006%20EDCOR%20Code%20V%2008202007.htm, last visited August 27, 2007.
17 INA § 274A(f)(1), 8 CFR 274a.10(a). The term pattern or practice means regular, repeated, and intentional activities, but does not include isolated, sporadic, or accidental acts. 8 CFR § 274a.1(k).
18 8 CFR § 274a.10(b).
19 INA § 274A(b)(6)(C).
20 INA § 274A(e)(5).
21 INA § 274A(b)(6)(A); 8 CFR. § 274A.4.