New federal regulations will impose requirements for how a company’s HR department must handle "No-Match" letters received from the Social Security Administration (SSA) in response to SSA’s review of the W-2 forms they issue and file.
The Department of Homeland Security (DHS) recently-issued regulations (72 Fed. Reg. 45611, 8/15/07), which would require an employer to follow certain procedures when it receives a "No-Match" letter from the SSA. The new regulations were scheduled to go into effect on September 14, 2007, but a federal court stayed their implementation temporarily. Under the regulations, if an employer does not comply with certain requirements, the DHS may use such noncompliance as evidence of the employer’s "constructive knowledge" of a violation of immigration law, and the employer may face criminal and civil penalties.
It has been common practice for the SSA to send an "Employer Correction Request" (commonly known as a "No-Match" letter) to employers when employee information (including name and Social Security number) received by the SSA from such employer in a W-2 form does not match the information maintained by the SSA. In the past, "No-Match" letters played a merely informative role, identifying such mismatches to the employer, so that the employer could respond appropriately. Now, because of this new regulation, "No-Match" letters will be accompanied by a notice from the DHS outlining specific obligations and procedures the employer must follow in response to the letter.
Through this regulation, the DHS has expanded its definition of what it means for an employer to have "constructive knowledge." Under the new definition, an employer’s failure to take certain proscribed actions after it receives a "No-Match" letter from the SSA constitutes its "constructive knowledge" that an identified employee is an "unauthorized alien." However, if the employer complies with the DHS’s procedures, the regulations provide that "receipt of the written notice will therefore not be used as evidence of constructive knowledge." Compliance with such procedures would establish a "safe harbor" for the employer, shielding it from potential criminal and civil liability and, as long as the procedures are applied uniformly to all employees, protecting the employer from employee claims of unlawful discrimination.
This regulation is being challenged, and, as mentioned above, a temporary restraining order has been issued against the DHS and SSA by the U.S. District Court for the Northern District of California, enjoining and restraining the two agencies from implementing the regulation.