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New Rule Triggered Lawsuit.

The lawsuit was triggered by the Bush administration’s Aug. 10 announcement that SSA would be altering how it sends out no-match letters. According to the new rule, SSA would include language in the letter explaining there was possible liability under immigration laws. In addition, SSA planned to include a general letter from DHS explaining the liability as well as describing a “safe harbor provision” meant to protect employers who attempted to comply with the letter ( 155 DLR AA-1, 8/13/07).

Although DHS was not going to have access to the names of employers sent the no-match letters, the new rule would treat the receipt of the letter as evidence that the employer had “constructive knowledge” that an immigration violation was taking place.

The final rule was challenged in the U.S. District Court for the Northern District of California by a coalition of immigrant rights, organized labor, and civil liberties groups led by the AFL-CIO, the American Civil Liberties Union, and the National Immigration Law Center. The U.S. Chamber of Commerce and other business groups later joined the litigation.

SSA had planned to send out no-match letters containing warnings from DHS regarding immigration law liability beginning Sept. 4, even before the final rule was to be implemented. That plan was derailed, however, when Judge Maxine Chesney of the Northern District of California Aug. 31 issued a temporary restraining order preventing the letters from being sent ( 171 DLR A-2, 9/5/07).

After the delay prompted by Chesney’s order and then Judge Charles Breyer’s Oct. 10 grant of a preliminary injunction, Hinkle said that SSA believed it was running out of time to rewrite the notice and expect employers to correct wage data.

Nine Million Employees Checked Each Year.

Each year, the SSA sends letters to some 138,000 employers pointing out discrepancies between data sent to SSA by employers and the information already available in the SSA database. Hinkle said the letters involve as many as 9 million employees each year who may have provided incorrect Social Security data. SSA has sent out the letters since 1994.

The letters are usually sent out in “batches” starting in March or April, Hinkle said, and employers are asked to correct data. Anticipating the final rule from DHS, he said SSA last spring sent out no employer letters based on the 2006 tax year but that some workers did receive personal notices as part of SSA’s efforts.

SSA uses the no-match letters as a way of informing employers that there is a problem with the W-2 information provided to SSA. Those problems can be due to the wrong name being put on the form, an error in reporting the Social Security number, or other errors that can occur on the employer’s part.

Until this year, SSA has said that the no-match letters were designed to correct information and not meant to serve as an worksite immigration enforcement tool. SSA has opposed permitting DHS to have access to the names of employers who receive the letters because it says the letters are designed to correct data, not create liability.

SSA Argued Potential Harm.

In arguments to the federal court on whether a preliminary injunction should be granted, SSA joined with DHS in arguing that SSA would be harmed if they were unable to send out no-match letters for this tax year because it would mean that there would be a large batch of information that would not be corrected.

In addition, SSA argued to the federal court that pushing back the date it could send the no-match letters would conflict with SSA’s busiest time period — the season from January to March when W-2 forms are sent out — and therefore burden the agency. In its brief to the court, the government argued the failure to send out the no-match letters would “frustrate the purpose of providing notice to employers that their employees’ Social Security earnings are not being credited to their accounts.”

Breyer, however, was unconvinced and pointed out that the injunction did not bar SSA from sending out its letters and instead barred it from including the DHS liability language.

“[T]he plaintiffs have not requested a preliminary injunction precluding SSA from sending out its traditional no-match letters for tax purposes, as the agency has for over a decade,” Breyer said, adding “SSA has acknowledged that it could remove the DHS insert and related language from its mailing in 30 days.”

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Constructive knowledge.
The final rule expands the current regulation’s definition of “constructive knowledge” and illustrates several situations that may lead to a finding that an employer had constructive knowledge that undocumented workers were employed. These additional examples involve an employer’s failure to take reasonable steps in response to several events: The employer receives a written notice from the Social Security Administration (such as an “Employer Correction Request,” commonly known as an employer “no-match letter”) stating that the combination of an employee’s name and Social Security number does not match SSA records, or the employer receives written notice from the DHS that the immigration status or employment authorization documentation presented or referenced by an employee in completing the I-9 verification form was not assigned to the employee according to DHS records. DHS said it “will continue to review the totality of relevant circumstances in determining if an employer had constructive knowledge that an employee was an unauthorized alien in a situation described in any of the regulation’s examples.”

Safe harbor procedures.
The “safe harbor” procedures that employers may follow to avoid a finding of constructive knowledge include attempting to resolve the no-match and, if it cannot be resolved within a certain period of time, verifying again the employee’s identity and employment authorization through a specified process. Safe harbor is unavailable where the employee requests visa or labor certification sponsorship and is unauthorized to work. Additionally, if the employer knows or has enough inconsistent information to suggest an employee’s ineligibility, the safe harbor provisions will not protect that employer. On the other hand, the safe-harbor steps should be completed before taking any action against the employee to avoid national origin discrimination or wrongful termination claims.

The regulation describes more specifically the “reasonable” steps that an employer might take after receiving a no-match letter. Such steps include, for example, checking its records promptly after receiving a no-match letter to determine whether the discrepancy resulted from a typographical, transcription, or similar clerical error in the employer’s records, or in its communication to the SSA or DHS. If there is such an error, DHS expects the employer to correct its records, inform the relevant agencies, verify that the name and number, as corrected, match agency records, and make a record of the manner, date, and time of the verification. ICE/DHS will consider a reasonable employer to have acted promptly if the employer takes such steps within 30 days of receipt of the no-match letter. The regulation also describes a verification procedure that the employer may follow if the discrepancy is not resolved within 90 days of receipt of the no-match letter.

Enforcement.
Previously, the SSA’s position was that the no-match letters were only for informational purposes, recognizing that discrepancies could be the result of a variety of clerical errors or name changes. The no-match letters were not used for enforcement. That is expected to change, although how enforcement will look remains unclear. A DHS FAQ states, “ICE has determined that worksite enforcement investigations relating to critical infrastructure protection are among the most important. Additionally, ICE has found that simple penalties are not an effective deterrent. Therefore, ICE is looking at ways to bring significant criminal charges against businesses engaging in routine hiring of illegal aliens.”

SSA’s release of the tax year 2006 “no-match” letters will be accompanied by a letter from the DHS. SSA had planned to release the tax year 2006 “no-match” letters to employers beginning in the second week of September when the no-match regulation is due to be effective, but a federal judge issued a temporary restraining order on August 31, 2007, in response to an AFL-CIO lawsuit, and the next hearing is scheduled for October 1, so no letters are expected to be sent before October. DHS Secretary Michael Chertoff said, “They will not send all of them out at once; they’ll probably send about 15,000 out a week, over a period of probably about eight to ten weeks.” SSA expects to send out approximately 140,000 no-match letters that will cover approximately 8.9 million of the roughly 12 million total no-matches. Letters will only be sent to employers who have more than 10 employees with mismatched information, or for whom the mismatched employees represented one-half of one percent of the W-2s filed with SSAs in any given year, whichever is larger. ICE has 18 phone lines with 25 people on duty to answer questions from employers regarding the no-match rule.

Employers may verify a Social Security number by calling 1-800-772-6270 from 7 a.m. to 7 p.m. EST, or online at http://www.ssa.gov/employer/ssnv.htm. Employers should keep a record of any verification. Contact your ABIL member for advice in specific situations.

Reaction.
Many business and labor groups oppose the new requirements. The agricultural trade association Western Growers, for example, whose 3,000 members are responsible for about half the produce grown and shipped in the U.S., immediately issued a strongly worded statement denouncing the requirements. “We know and have told the government that much of agriculture’s workforce is falsely documented. We are one of the only industries in this country that has been forthright with the fact that much of our workforce is illegal and have pleaded with the government to pass laws to address this problem. Instead of securing a legal, stable workforce for agriculture, these rules will make it even more difficult for farmers throughout Arizona, California and the entire nation to find workers to harvest and process the crops all Americans enjoy,” said Western Growers President and CEO Tom Nassif. “In the short term, we are going to see workers fleeing their workplace just prior to the 90-day time limit and beginning anew at a different farm. This cycle could go on for a long time furthering the instability of agriculture’s workforce. Secondly, these rules could expedite the move of American farms abroad. The fact is, our food is going to be picked by a foreign workforce. The question is, will they be harvesting our food here under heavy regulation ensuring our food supply is as safe as scientifically possible, or is it going to be in places like China where regulations are, in some cases, nonexistent?” He advocated a “common-sense” system such as that proposed by the Agricultural Job Opportunities, Benefits and Security Act (AgJOBS) bill.

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