The Social Security Administration (“SSA”) uses “no-match” letters to notify employers that listed employees’ names and social security numbers provided to the employers do not match SSA’s records. The Department of Homeland Security (“DHS”) recently issued new regulations related to no-match letters. The new regulations dictate that if an employer receives a letter from SSA or DHS, indicating that employee information (e.g., name, Social Security number, or proof of work authorization) submitted by the employer does not match the government’s records, the employer will be deemed to have constructive knowledge of the employee’s illegal status. The new regulations take effect on September 10, 2007.

These new regulations warrant employers rethinking how they should respond to—and evaluate the risks arising from—no-match letters. This bulletin will provide employers with practical suggestions about responding to no-match letters in compliance with DHS’ new regulations.

How to Respond: Safe Harbor Procedures

The procedures for the government’s issuing no-match letters and SSA’s guidance on how to correct Social Security records remain unchanged. However, no-match letters now will be accompanied by a letter from U.S. Immigration and Customs Enforcement, giving employers information about the no-match letter and the employer’s related obligations under U.S. immigration laws.

DHS has indicated that employers who follow certain “safe harbor” procedures upon receiving a no-match letter generally will be deemed to comply with their obligations under the new regulations. These are the procedures:

  1. Verify within a reasonable time (i.e., 14-30 days) that the mismatch was not the result of a record-keeping error by the employer.
  2. Give each employee listed in the no-match letter a memo, asking that the employee confirm the accuracy of the information (name, Social Security number, or proof of work authorization) in the company’s employment records.
  3. If the employee confirms that the information in the company’s records is accurate, the employer should request (in a subsequent memo) that the employee contact SSA to resolve the discrepancy issue.

If these steps lead to resolution of the problem, the discrepancy identified in the no-match letter likely was the result of juxtaposing numerals or similar clerical error. In that event, the employer should follow instructions on the no-match letter for correcting information submitted to SSA, and retain documentation showing that the corrected information has been provided to SSA. However,

  1. Where the information cannot be corrected through the above steps, the employer must complete a new I-9 form without using the questionable Social Security number and instead using documentation supplied by the employee that conforms to the I-9 document identity requirements and includes a photograph and other biographic data.

Employers are permitted 90 days to complete this verification process and an additional three days to complete the final step of the verification process described above. DHS’s new regulations provide that a discrepancy is deemed resolved only if and when the employer receives verification from SSA or DHS that the employee’s name and Social Security number matches the government’s records.

Potential Sanctions for Noncompliance

As under prior regulations, DHS still looks at the “totality of the circumstances” to determine whether it believes that an employer had actual or constructive knowledge that an employee is unauthorized to work in the United States. However, the new regulations state that even if an employer follows the safe-harbor procedures outlined above, this will not preclude DHS from finding that an employer knew an employee was unauthorized to work where evidence shows that the employer knew about the lack of authorization from some other source.

If the discrepancy is not resolved and the employee’s identity and work authorization are not verified, the employer must either terminate the employee or face the risk that DHS will find constructive knowledge of lack of employment authorization. DHS may institute an investigation into the employer’s alleged violations and fine the employer between $250 and $2,000 (per unauthorized employee) for a first violation and up to $10,000 for subsequent violations.

Non-Discrimination Obligations

Employers should not assume that a mismatch reported by SSA or DHS means that the listed employees have done anything wrong. Similarly, employers who discipline or terminate employees solely because the employees are listed as a mismatch risk violating the citizenship discrimination prohibitions of the Immigration Reform Act of 1986, the national origin discrimination prohibitions of Title VII of the Civil Rights Act of 1964, and other federal and state laws. In view of these non-discrimination obligations and the increased employer obligations under DHS’ new regulations, prudent employers now should rethink their handling of no-match letters.