New Department of Homeland Security (DHS) regulations that impact all US employers were published on October 28, 2008. As always, Squire Sanders wants to keep its clients informed of the latest developments in labor and employment as well as immigration matters. This client alert explains the importance of the regulations and provides guidance for employers as DHS seeks to implement the new rule in light of a pending injunction.

The DHS, Bureau of Immigration and Customs Enforcement (ICE), has issued a Supplemental Final Rule, which provides guidance for employers who receive a Social Security Administration (SSA) or DHS "no-match" letter. This rule clarifies, without substantive change, the Final Rule, "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter," which was released in August 2007. The Supplemental Final Rule was published in the Federal Register on October 28, 2008, but it cannot take effect until a Federal District Judge vacates a pending injunction or the pending litigation is concluded.

The Final Rule addressed steps employers should take to resolve discrepancies identified in no-match letters and guaranteed that ICE will consider employers who follow these steps to have acted reasonably. If an employer follows the safe-harbor procedures in good faith, ICE will not use the employer's receipt of a no-match letter as evidence that the employer violated the employment provisions of the Immigration and Nationality Act by knowingly employing unauthorized workers. Our August 2007 Labor & Employment Alert discussed the Final Rule and summarized the steps.

Upon publication, the Final Rule was quickly challenged and the District Court for the Northern District of California issued an injunction prohibiting its implementation in October 2007. In its order granting the injunction, the District Court questioned whether DHS had: (1) supplied a reasoned analysis justifying what the court thought was a change in DHS's position – that a no-match letter may be sufficient, by itself, to put an employer on notice that its employees may not be authorized to work in the United States; (2) exceeded its authority, and encroached on the authority of the Department of Justice, by interpreting antidiscrimination provisions in the Immigration Reform and Control Act of 1986; and (3) violated the Regulatory Flexibility Act by not conducting a regulatory flexibility analysis.

DHS published a supplemental notice of proposed rulemaking in March 2008 attempting to address the specific issues raised by the Court. (See our April 2008 Immigration Alert regarding the supplemental proposed rule.) The injunction, however, remains in effect. On October 23, 2008, DHS concluded it had the authority to finalize the Rule and it republished the text of the August 2007 Final Rule without substantive change. DHS has stated its intent to return to the District Court to request that the injunction be lifted so that the "No-Match Rule" can be implemented.

Concurrent with the publication of this Supplemental Final Rule, the Department of Justice, through the Civil Rights Division's Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC), published a notice in the Federal Register to clarify when the OSC may find reasonable cause to believe that employers following the safe-harbor procedures have engaged in unlawful discrimination in violation of the antidiscrimination provisions of the Immigration and Nationality Act, section 274B. The OCS states in its notice that "an employer that receives an SSA no-match letter and terminates employees without attempting to resolve the mismatches, or who treats employees differently or otherwise acts with the purpose or intent to discriminate based upon national origin or other prohibited characteristics, may be found by OSC to have engaged in unlawful discrimination" if that employee is actually work authorized and a protected class member (i.e., US citizen, lawful permanent resident, refugee, asylee or certain temporary residents). However, the notice confirms that if an employer follows all of the safe-harbor procedures outlined in the DHS no-match rule uniformly and without purpose or intent to discriminate, but is unable to determine that an employee is authorized to work in the United States and terminates that employee, then the OSC will not find reasonable cause to believe that the employer has violated section 274B's antidiscrimination provision, and that employer will not be subject to suit by the United States under that provision.

In the interim, employers should establish consistent procedures to address the receipt of no-match letters once the SSA resumes issuing such letters. Larger companies may want to appoint an internal compliance officer to address employment verification and no-match issues. Employment and immigration counsel should be contacted to assist in developing procedures that best suit the business and are consistent with legal obligations.