On Friday, August 31, a federal district court judge granted a nationwide temporary restraining order placing a hold on the Department of Homeland Security’s (DHS) new Social Security No-Match regulations. The final regulations were scheduled to take effect on September 14 (see the Ogletree Deakins’ E-Alert dated August 10, 2007.) The ruling also puts a hold on the federal government’s plan to start sending out No-Match Letters today.

The AFL-CIO, ACLU, National Immigration Law Center, and a group of labor and trade councils filed a lawsuit in the U.S. District Court for the Northern District of California on August 29 seeking to invalidate the recently finalized No-Match regulations. U.S. District Court Judge Maxine Chesney issued the temporary restraining order questioning whether the DHS rule was authorized by law. Judge Chesney indicated that the federal government would suffer little inconvenience by the delay as compared to the potential hardship to employees improperly identified as illegal aliens. The order is presently scheduled to remain in effect until October 1, when another judge will consider whether to grant an injunction preventing implementation of the rule until trial.

The No-Match final regulations set forth a process for employers to follow to resolve the No-Match and thereby achieve a “safe-harbor” and avoid potential liability for violating the law by knowingly continuing to employ unauthorized workers. In summary, the employer must: check its own records to ensure the mismatch was not a result of an error on its part; then notify the employee and request the employee resolve the matter with Social Security Administration (SSA); and if the mismatch is not resolved by the 90th day following receipt of the No-Match Letter, either terminate the employee or secure completion of a new I-9 Employment Eligibility Verification form.

Not surprisingly, both government attorneys and attorneys representing the various plaintiffs believe they will ultimately prevail in the lawsuit. Because of the judge’s ruling, the government’s plan to implement new procedures for No-Match Letters has been delayed, at least for now. Employers should continue to watch for new developments in this lawsuit before adopting new procedures to deal with the proposed government changes. However, we encourage employers to take this opportunity to review their current No-Match procedures and to review immigration compliance procedures, as it is likely that the federal government will continue to impose increasing obligations upon employers in the near future.