Responding to Congress’ failure to enact comprehensive immigration reform legislation, the Bush administration, through Homeland Security Secretary Michael Chertoff and Commerce Secretary Carlos Gutierez, has announced a sweeping package of Executive Branch initiatives to be implemented under existing statutory law. The package includes border security improvement, more funding for personnel, enhanced assimilation efforts, streamlining of existing guest worker programs, and, most importantly for employers, the finalization of the proposed “no-match letter” regulation and a greatly expanded electronic verification system.

The final “no-match letter” regulations address the common situation where an employer receives a letter from the Social Security Administration stating that the employer’s W-2 reports of employee earnings contain discrepancies, often between the employee name and the corresponding social security number. The problem presented was whether the notice to the employer of such discrepancies caused the employer to have “constructive knowledge” that the employee was an alien unauthorized for employment, thereby making the employer liable for possibly substantial penalties. (The final regulations also address a very similar problem when the employer receives a “no-match letter” from U.S. Immigration and Customs Enforcement after an inspection of the employer’s I-9 forms.)

Not surprisingly, the final regulations closely follow the proposed regulations issued well over a year ago. Under both the proposed and final regulations, there is a “safe harbor” procedure for employers who have received a no-match letter which allows the employer to avoid penalties due to having “constructive knowledge” of illegal alien employment. However, the final regulations provide more time than the earlier proposal to determine whether workers are authorized to work in the United States. Following is a comparison of the time frames for the steps that need to be taken to achieve “safe harbor” status:

Comparison of Timing of Actions Under Proposed Final Rules 

The “special I-9 procedure” referenced above involves completing a new I-9 form and giving the employee the opportunity to submit new I-9 documentation of identity and employment eligibility with the provision that: (1) any documentation not contain the disputed social security number/alien registration number, and (2) the identity documentation must contain a photograph.

An employer is not required to follow the safe harbor procedure upon receipt of a no match letter, but one who fails to do so runs the risk that constructive knowledge of illegal employment will be imputed to it.

Further, use of the safe harbor procedure will not protect the employer if the employer has actual knowledge of illegal employment, such as when the employee admits to the employer that he is not authorized to work.

In a related matter, the U.S. District Court for the Middle District of Pennsylvania recently struck down local ordinances in Hazelton, Pennsylvania that penalized employers and landlords for employing or renting to illegal aliens. The court found that the ordinances were preempted by the Immigration Reform and Control Act (“IRCA”), and violated constitutional procedural due process protections and 42 USC §1981. An appeal is expected.