On June 14, 2006, the Department of Homeland Security (“DHS”) published a proposed rule in the Federal Register, 71 FR 34281, describing the legal obligations of an employer—under current immigration laws—when the employer receives a “no-match” letter from DHS or the Social Security Administration (“SSA”). The proposed rule also provides “safe harbor” procedures that the employer can follow in response to a no-match letter. By following the specified procedures, the employer can avoid a DHS finding that the company has violated the federal immigration laws by continuing to employ an unauthorized alien with constructive knowledge of that employee’s illegal status. Comments on the proposed rule may be submitted by August 14, 2006.

Background

A “no-match letter” is either a letter to the employer from SSA stating that the combination of name and social security account number submitted for an employee on the W-2 earnings reports does not match the agency records, or a letter from DHS notifying the employer that the immigration-status or employment-authorization documentation presented or referenced by the employee is not consistent with DHS records.

There can be several causes for a no-match, including clerical errors, name changes, or submission of information for an alien who is not authorized to work in the U.S. and is using a false SSN or someone else’s SSN. Receipt of a no-match letter may be the only indicator to an employer that one of its employees may be an unauthorized alien.

The Immigration and Nationality Act (“INA”) makes it unlawful for an employer to continue to employ an alien in the U.S. knowing the alien is (or has become) an unauthorized alien with respect to such employment. “Knowing” includes constructive knowledge, which is basically knowledge reasonably inferred from known facts, one of which under the proposed rule is the employer’s receipt of a no-match letter from SSA or DHS.

Safe-Harbor Procedure for Employers

An employer who takes the following actions upon receipt of a no-match letter from SSA or DHS can establish that the company did not have constructive knowledge that an employee is an unauthorized alien. The procedures must be applied uniformly with respect to all affected employees. It is recommended that an employer document in writing that the procedures were followed.

Step 1

The employer takes reasonable steps within 14 days of receipt of the no-match letter to attempt to resolve the discrepancy. For an SSA no-match letter such
steps may include:

1. Checking the employer’s records promptly after receiving the notice, to determine whether the discrepancy results from a typographical, transcribing, or similar clerical error, and if so, correcting the error(s), informing the SSA of the correct information (in accordance with the letter’s instructions, if any; otherwise in any reasonable way), verifying with the SSA that the employee’s name and social security account number, as corrected, match in SSA records, and making a record of the manner, date, and time of such verification; and

2. If no such error is found, promptly requesting the employee to confirm that the name and social security account number in the employer’s records are correct—and, if they are correct according to the employee, requesting the employee to resolve the discrepancy with the SSA, such as by visiting an SSA office, bringing original documents or certified copies required by SSA, which might include documents that prove age, identity, and citizenship or alien status, and other documents that may be relevant, such as those that prove a name change, or if the employee states that the employer’s records are in error, taking the actions to correct, inform, verify, and making a record of such action.

Step 2

In the event that, within 60 days of receiving the notice, the employer does not verify with the SSA that the employee’s name matches in the SSA’s records a number assigned to that name and that the number is valid for work or is valid for work with DHS authorization (and, with respect to the latter, verify the authorization with DHS), the employer takes reasonable steps, within an additional 3 days, to verify the employee’s employment authorization and identity. The suggested procedure is for the employer to complete a new Form I-9 for the employee, using the same procedures as if the employee were newly hired, except:

1. Sections 1 and 2 of Form I-9 must be completed within 63 days of receipt of the no-match letter;

2. No document containing the social security account number or alien number that is the subject of a no-match letter, and no receipt for an application for a replacement of such document, may be used to establish employment authorization or identity or both;

3. No document without a photograph may be used to establish identity or both identity and employment authorization; and

4. The employer retains the employee’s new Form I-9 for three years, or one year after employment is terminated, whichever is later.

What If The Discrepancy Can’t Be Resolved?

If 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, such as that described in the proposed rule, 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, the employer is in violation of the INA.

As with any employee termination decision, the employer may have potential liability exposure, so consultation with your professional advisors is recommended.

Conclusion

The proposed regulations have two additional cautions for employers: an employer who follows the above procedures may still be adjudged by DHS as having actual knowledge that an employee is an unauthorized alien; and knowledge that an employee is unauthorized may not be inferred from the employee’s foreign appearance or accent. Employers should also anticipate that once the new rule becomes effective enforcement efforts are likely to increase.

It is important to note that the proposed rule is subject to change by the agency and will not go into effect until published in the Federal Register as a final rule.

Neil J. Kuenn is a partner with the law firm of Keeley, Kuenn & Reid, practicing in the areas of corporate law, antitrust and trade association law, employment law and regulatory matters. He has written numerous articles on topics such as antitrust compliance, employment law, strategic alliances and other business related matters. He is a frequent presenter at association conferences and serves as the Association’s general counsel.