Against the backdrop of a lengthy and unsuccessful debate in Congress on the future of immigration laws, the Department of Homeland Security (DHS) published a final rule to guide employers who receive no-match letters from the Social Security Administration (SSA). While introducing the regulation at a press conference before publication, DHS Secretary Michael Chertoff revealed that the final rule had been withheld until after Congressional debate concluded. In the end, Congress was unable to reach agreement on an appropriate policy to legalize the immigration status of an estimated six million undocumented workers. Secretary Chertoff announced that DHS planned to “come down on employers of undocumented workers like a ton of bricks” and that the new regulation would be an important tool in DHS’s enforcement arsenal. The new regulation — published on August 15, 2007 — will become effective on September 14, 2007.

This new regulation does not impose any new duties on employers, rather it seeks to clarify their obligations after receiving information that could indicate that an employee lacks work authorization. Currently, employers are prohibited by the Immigration Reform and Control Act of 1986 from knowingly hiring employees without authorization to work in the United States. Employers violate this law if they have either actual or constructive knowledge that an employee is not authorized to accept employment. For its part, the new regulation identifies three common situations in which employers should suspect that an employee may lack valid employment authorization and be obligated to conduct further inquiry. In addition, DHS’s new regulation sets forth a procedure that will, if followed, provide a “safe harbor” for employers in any investigation, audit, or criminal prosecution by Immigration and Customs Enforcement (ICE).

The first and most common situation in which employers should be aware of a possible problem is receipt of a nomatch letter from the SSA. Employers annually send earnings reports (W-2 Forms), which contain the name and social security number of their employees, to SSA. In situations where the name and social security number on the W-2 do not match SSA’s records, SSA sends employers a “no-match” letter indicating this discrepancy. Although SSA makes it clear in the no-match letter that the letter, by itself, is not evidence that an employee is not authorized to work in the United States, the new regulation makes a strong point that a lack of work authorization is one common reason for SSA’s failure to match the name to an existing social security number.

In particular, the new regulation specifically defines constructive knowledge as knowledge that “may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know about a certain condition.” Under this definition, receipt of a no-match letter may constitute constructive knowledge that the employee is not authorized to work unless certain steps are taken to verify the employee’s work authorization. First, employers must check for and correct obvious typographical errors that could have caused the inability to match the social security number to a valid account within 30 days. If no clerical or typographical errors are found, the employer must then take reasonable steps to correct the problem, including notifying the employee of the no-match letter and instructing the employee to correct the mistake. If the employee later notifies the employer that the problem has been corrected, the employer is required to verify the correction with SSA. Employers should maintain records of all contacts with SSA.

If the employee fails to correct the no-match information, the employer should assume that the letter was caused by the employee’s lack of valid employment authorization. Within 90 days, the employer must prepare a revised I-9 with new, valid documentation. In the absence of a valid I-9 within 93 days of receipt of the no-match letter, the employer may be charged with constructive knowledge that the individual is not authorized to accept employment. Continued employment beyond this time could subject the employer to both civil and criminal penalties.

The obligation to prepare a new I-9, together with new documentation, simply repeats the employer’s initial obligation within the first three days of employment. There are, however, additional limitations on the documents employers may accept to verify employment eligibility after receipt of a no-match letter. The employer may not accept any document that contains the discredited social security number. In addition, the identity document (or document that verifies both identity and authorization, such as a U.S. Passport) must contain a photograph of the employee.

The second situation through which employers may be charged with constructive knowledge that an employee is not authorized to work is notice from the government that documentation provided by an employee does not match U.S. Citizenship and Immigration Services (USCIS) records. This situation typically occurs after Homeland Security audits of employer I-9 forms and is much less common than no-match letters. Nonetheless, receipt of such notice requires renewed verification through the same procedures outlined in response to no-match letters. That said, when government investigators determine that an employee has provided potentially false documents to support an I-9, they will likely complete an investigation and begin enforcement proceedings against the individual immediately, without notice to the employer and an opportunity to correct the records. Thus, this particular scenario, although possible, is less likely to occur.

Finally, the regulation provides that employee requests to employers for assistance to secure permanent resident status through applications for labor certification or requests to file either nonimmigrant or immigrant visa petitions, will give employers constructive (if not actual) knowledge that such employees are not authorized to accept employment. The regulation does not require employers to complete the same steps to verify employment in this situation. However, employers should be aware that requests for “visa sponsorship” suggest that employees require employment authorization and are not otherwise authorized to work. Of course, if an employer has previously submitted a visa petition on behalf of an employee, and the petition has been approved, the employer will presumably be aware of this limited authorization and will have already properly prepared the I-9 forms consistent with the employee’s nonimmigrant visa status. Nonimmigrant status, alone, is not a barrier to employment; it merely puts an employer on notice that, without specific authorization from USCIS, the individual is not authorized to accept employment.

Secretary Chertoff noted that SSA will be issuing the no-match letters shortly, and the government is using this new rule — together with pending no-match letters — to step up enforcement actions against employers. The DHS recently posted a five-page press release on its website, detailing 15 recent law enforcement operations in which employees were arrested and charged with unauthorized employment, the use of fraudulent documents, and identify theft. Both civil and criminal sanctions have been levied against many of the employers. As Secretary Chertoff noted in his press conference, approximately four percent of American workers are undocumented workers. We can therefore expect increased investigations and enforcement actions by DHS to seek to eliminate these workers from the workforce.