Department of Homeland Security Issues Regulation Advising Employers How to Respond to Social Security "No Match" Letters

Under U.S. immigration law, an employer may be liable if it employs or continues to employ a worker when the employer knows, or reasonably should know, that the worker is not authorized to work in the U.S. The "reasonably should know" standard is known as "constructive knowledge." An employer may face liability if the employer becomes aware of facts that would put a reasonable person on notice that a worker is not authorized to work. The employer then has an obligation to take reasonable steps to investigate the worker's status. This raises two problems: First, the employer can never be sure if a particular fact is sufficient to put the employer on notice. Second, it is not clear what actions the employer is supposed to take if the fact does put the employer on notice.

For several years, the Social Security Administration (SSA) has been sending letters to employers advising that some of the employee names and Social Security numbers (SSNs) submitted by the employer do not match SSA records. These letters are commonly known as "no match letters" or "mismatch letters." Employers have been puzzled about what to do when they receive no match letters. Does a no match letter constitute constructive knowledge that the listed employees are not authorized to work? What steps should the employer take in response to a no match letter?

In June 2006, the Department of Homeland Security (DHS) proposed a regulation that would give employers guidance as to how to respond to no match letters. DHS has now finalized the rule and it will be effective on September 14, 2007.

The regulation does two key things: First, it states clearly that receipt of a no match letter does constitute constructive knowledge that the employees listed may not be authorized to work. Second, it defines a series of steps the employer may take after receiving a no match letter to avoid a DHS allegation of constructive knowledge based on receipt of the no match letter. These steps constitute a "safe harbor" from liability. If the employer takes the prescribed actions within the defined timeframes, DHS will not charge the employer with constructive knowledge based on the no match letter, even if the employee turns out to be unauthorized to work.

After the regulation becomes effective in September, new no match letters sent by SSA will be accompanied by a letter from DHS. The DHS letter will direct employers as to the steps they need to take to take advantage of the safe harbor protection. Within 30 days of receipt of the no match letter, the employer must take the following steps, proceeding as far as necessary to resolve the SSN discrepancy:

1. The employer must immediately check its records to see if the discrepancy is due to a typo or clerical error in its records. If so, the employer must correct its records, provide the correct information to SSA and verify that the name and SSN match SSA records using SSA's telephone or online confirmation systems. The employer must document its verification action.
2. If the check of the employer records does not resolve the discrepancy, the employer must ask the employee to confirm that the employer's records are correct. If the employer's records are not correct, the employer must correct its records, provide the correct information to SSA and verify that the name and SSN match SSA records using SSA's telephone or online confirmation systems. The employer must document its verification action.
3. If the employee states that the employer's records are correct, the employer must ask the employee to contact SSA or the appropriate agency to resolve the discrepancy. The employee must resolve the discrepancy within 90 days of the receipt of the no match letter.

If the employee comes back with a resolution to the discrepancy, the employer must verify the resolution by checking with SSA or the appropriate agency. A discrepancy is not considered resolved until the employer has verified the resolution with the appropriate agency. Employers should document such verification actions.

If the employee has not been able to resolve the discrepancy by the 90^th day after receipt of the no match letter, the employer and the employee must execute a new I-9 form by the 93^rd day after receipt of the no match letter. The I-9 form must be completed just as if the employee were starting employment, with some exceptions: (1) the employee may not satisfy the I-9 List A, B and C document requirements using any document containing the SSN that is the subject of the discrepancy; and (2) the employee must provide a document with a photo to establish identity.

If the employee is able to satisfy the I-9 requirements under these circumstances, the employment may continue. If the employee later turns out to be unauthorized to work, the employer will not be considered to have constructive knowledge based on receipt of the no match letter.

If the employee is not able to satisfy the I-9 requirements under these circumstances, the employer has two choices. The employer could terminate the employee, taking the risk that the employee could sue for wrongful termination if they are in fact authorized to work. Or the employer could continue to employ the employee and take the risk that DHS would determine that the employer had constructive knowledge that the employee was not authorized to work. Such a determination could result in civil or criminal liability for the employer.

It remains to be seen how the new safe harbor regulation will work in practice, but early on, it will be critical for all employers to take at least these steps: (1) make sure that all no match letters get immediately to the proper person for prompt action; (2) record the date the no match letter was received; (3) document each step taken and the date it was taken; and (4) develop a follow-up system to make sure actions are taken by the 30 and 90 day deadlines.