On October 23, 2008, the Department of Homeland Security (DHS) issued a supplemental final Social Security “No-Match” rule, the substance of which remains virtually identical to the original rule that has been tied up in litigation for over a year.

Originally scheduled for an effective date of September 14, 2007, the rule would require employers who receive a “no match” letter from the Social Security Administration (SSA) or Immigration and Customs Enforcement (ICE) to take specific steps to resolve the no-match. Under the rule, employers who fail to take those steps would risk a finding that they “knowingly” hired an unauthorized worker.

In October 2007, the U.S. District Court for the Northern District of California issued a preliminary injunction that prevented the government from implementing the new rule and stopped the SSA from sending notices to employers informing them of the new rule. The court granted the injunction based on its finding that implementation of the new rule would cause irreparable harm to employers and workers.

On November 23, 2007, DHS requested that the court stay the litigation surrounding the rule. Rather than proceed with the litigation, DHS indicated that it would revise the rule to address the court’s concerns about the rule’s legality.

DHS subsequently published supplemental materials in the Federal Register on March 26, 2008 and a 30-day comment period was announced. After reviewing the comments, DHS issued the supplemental final rule. The agency stated that it believes it has addressed the concerns of the court. DHS will now request that the U.S. District Court for the Northern District of California lift the injunction so that the rule can be implemented.

In the meantime, the SSA has announced that it will not issue no-match letters to employers until the court decides whether to lift the injunction. At that time, the SSA will decide whether to issue the “old” version of the letters that it sent to employers prior to 2007 (which version is not subject to the court’s injunction), to issue new letters that include references to the DHS rule (assuming the injunction is lifted), or to not issue the 2007 letters to employers at all. SSA did not issue letters to employers for tax year 2006 due to the injunction. Individual workers, however, received no-match letters last year and will receive them for tax year 2007, regardless of the outcome of the litigation.