As reported in our last Labor and Employment Update the Department of Homeland Security (DHS) published its “no-match” regulations on August 15, 2007. These regulations created a safe-harbor procedure that employers may follow when they receive a no-match letter from either the Social Security Administration or the DHS informing them of mismatched Social Security numbers or employment-authorization documentation of employees. Under the regulations, employers would be required to comply with specified safe-harbor procedures, including terminating employees who cannot resolve data discrepancies within 90 days, or risk liability for knowingly continuing to employ unauthorized workers. Before the effective date of the rule, however, a consortium of labor, civil rights and business groups brought suit in federal court in California challenging the rule. The plaintiffs argued that the no-match letters would result in the mass firing of legal workers while employers sought a safe harbor under the DHS rule. The plaintiffs also contended that the rule would impose substantial administrative costs on employers attempting to resolve the mismatches within the new 90-day time frame. On October 10, 2007, the federal court issued a preliminary injunction barring the government from implementing the safe harbor-rule, finding that the plaintiffs had raised serious questions on the merits of several aspects of the rule.

On November 23, 2007, the Department of Justice filed a motion asking the court to stay the no-match rule lawsuit while the DHS revises the rule in an effort to address the concerns raised by the court. The DHS requested that the lawsuit be stayed until March 24, 2008, when it anticipates that the new rulemaking procedures will be complete. The court is expected to rule on this motion on December 14, 2007. In the meantime, or at least until the injunction is lifted, employers have a reprieve from the no-match rule and its implications.