As the tense months of immigration debate continue, courts are currently reviewing federal legislation and regulations placing more responsibility on employers to verify employees’ eligibility to work in the United States. This litigation includes suits across the country regarding the E-Verify system and no-match rules. In the aftermath of the Senate’s failure to pass comprehensive immigration reform, the Bush administration has shifted the focus of the debate to the utilization of Social Security records to seek out undocumented workers.

On a state and federal level, however, these measures have been challenged due to inaccuracies in the government databases and concern that U.S. citizens and legal residents may be mistakenly singled out or fired for fear of government prosecution.

Currently, when an applicant accepts a job offer, he or she presents documentation to the participating employer and completes part of Form I-9. Within three days of the hire, the employer examines the documentation to determine whether it reasonably appears genuine and, if so, completes the employer portion of Form I-9. If the employer chooses to participate in the E-Verify program, it must also submit required information to the E-Verify system within three days of hire in order for the system to compare the information submitted by the employer against the Social Security Administration (“SSA”) and the Department of Homeland Security (“DHS”) records. The Illegal Immigration Reform and Immigrant Responsibility Act allows up to three days for a response from the E-Verify system, which electronically ascertains that the new hire is authorized to work, or that it cannot confirm the eligibility of the new hire in which case it issues a tentative non-confirmation notice (“TNC”).

If the new hire does not contest the TNC, it becomes a final non-confirmation. If the new hire wishes to contest the TNC, the employee must complete a secondary verification process within eight working days by contacting SSA or DHS to seek resolution of the TNC. The Act prohibits an employer from taking an adverse employment action against a new hire based upon a pending TNC, unless it is resolved with a final confirmation.

Upon completion of the secondary verification process, the E-Verify system issues a final confirmation or final non-confirmation of employment eligibility within ten working days after the date of a TNC. If the system issues a final non-confirmation, the employer may either dismiss the new hire as unauthorized to work in the United States or continue to employ the new hire. However, if the employer retains the new hire, it must notify DHS of its decision and faces a rebuttable presumption that the employer knowingly hired an unauthorized alien employee. Thus, as a practical matter, notices of final non-confirmation may lead many employers to terminate the new hire.

An act to amend the Illinois’ Right to Privacy in the Workplace Act was recently signed by Gov. Blagojevich, and is scheduled to become effective January 1, 2008. The Act prohibits employers in Illinois from participating in the federal E-Verify program until the SSA and the DHS databases can make a determination of 99 percent of TNC’s issued to employers within three days. The Act aims to ensure that Illinois employers discontinue use of the E-Verify system until it is more accurate.

However, the federal government is actively enforcing this program as the Department of Justice filed a federal lawsuit, on behalf of the DHS, against Illinois last month, arguing that the State cannot block the federal government from carrying out immigration laws. The suit seeks to invalidate the state law because it would hamper Illinois’ estimated 750 employers that currently participate in the program from continuing to do so. Currently, the suit is in initial stages of litigation and subsequent developments in the The United States of America v. Illinois (C.D. Ill., No. 3:07-cv-03261-JES-BGC, filed 09/25/2007) case will determine whether Illinois employers are permitted to use the E-Verify system.

The accuracy of SSA and DHS databases is at the center of another ongoing court battle as well. A federal trial court in California recently ruled that DHS could not enforce the “no-match” letter policy requiring employers to fire workers if their Social Security numbers could not be verified within 90 days. The assumption behind the policy was that employees whose numbers did not match the SSA’s database were undocumented workers using forged or stolen identities. Similar to the issues arising in the E-Verify debate, the court reasoned that no match letter regulations would be burdensome for employers to enforce, and flaws in the current no-match system would lead to the firing of innocent employees and improperly penalizing employers.

This preliminary decision does not end employers’ potential problems arising from the “no-match” policy—especially given the multiple state and federal administrative agencies empowered to inspect a company’s I-9 forms (e.g., in addition to DHS and SSA, Departments of Labor, OSHA, EEOC, unemployment insurance agencies, etc.). Accordingly, employers should continue to practice “safe harbor” procedures upon receiving a no-match letter in order to comply with obligations under DHS regulations and demonstrate good faith compliance with law to the satisfaction of other governmental agencies that may inspect a company’s I-9 forms. These procedures include: (1) verification within 14 – 30 days that a reported mismatch did not result from the company’s record-keeping errors; (2) provide written notice to each employee listed in the no-match letter asking that he or she confirm the accuracy of the information in the company’s employment records; and (3) if the employee confirms the information in the company records, the employer should request that the employee contact the SSA to resolve the discrepancy. If the discrepancy is not resolved using the above procedures, employers should complete a new I-9 Form without using the questionable employee information.