I. INTRODUCTION

On August 10, 2007, the Department of Homeland Security (“DHS”) released an advance copy of its final regulation, “Safe Harbor Procedures for Employers who Receive a No-Match Letter.”  The DHS regulation describes the procedure that an employer can follow in response to receiving a “No-Match” letter from the Social Security Administration (“SSA”) advising them that there is a discrepancy between an employee’s name and Social Security Number.  Under the new procedures, employers will be advised by DHS that an employer who fails to follow federal immigration laws could be subjected to significant fines and penalties for hiring unauthorized aliens.  In essence, DHS will simply be “beefing up” what the SSA has already been doing.

The so-called “Safe Harbor Procedures” described by DHS in the new regulation are designed to provide step-by-step instructions for employers to follow once they are placed on notice of a discrepancy by a “No-Match” letter in order to avoid penalties for knowingly employing unauthorized aliens.  This effort represents a coordinated effort by DHS and the SSA, since the “No-Match” letters will now be accompanied by a notice from DHS advising employers of their obligation not to hire unauthorized aliens and is intended to decrease the number of employers who knowingly employ unauthorized aliens after learning of their status. 

President Bush has been straightforward regarding the basis for the new enforcement measures: "[t]hese reforms represent steps my administration can take within the boundaries of existing law," President Bush said in a statement released shortly after Homeland Security Secretary Michael Chertoff and Commerce Secretary Carlos Guiterrez presented the plan at a news conference. The President continued: "[a]lthough the Congress has not addressed our broken immigration system by passing comprehensive reform legislation, my administration will continue to take every possible step to build upon the progress already made in strengthening our borders, enforcing our worksite laws, keeping our economy well-supplied with vital workers, and helping new Americans learn English." 

The new rule became effective on September 14, 2007.  Consequently, employers need to have a plan in place for handling DHS’s new enforcement measures.

II. EXPANDING THE SCOPE OF "CONSTRUCTIVE KNOWLEDGE”

Under the Immigration and Reform Control Act of 1986, it is unlawful for employers to knowingly hire or continue to employ unauthorized aliens.  Knowledge can be either “actual” (meaning that the employer really did not know that its employee was illegal) or “constructive.”

On an annual basis, employers send the SSA earning reports for their employees containing their names and Social Security numbers.  In the event that the SSA is unable to match the name of the employee with the Social Security number given, the SSA issues what is commonly referred to as a “No-Match” letter.  Although the explanation for the non-match may be the result of a simple clerical error, DHS’s new regulations reflect DHS’s opinion that many employees who submit incorrect Social Security numbers to their employers are not authorized to work in the United States. 

The purpose of the new “Safe Harbor” regulation is to prescribe a specific, step-by-step process that employers can take in order to satisfy the DHS requirement that an employer provide a “reasonable response” upon receiving a “No-Match” letter.  If an employer follows the steps prescribed by DHS, it should eliminate the possibility that the “No-Match” letter can be used as any part of an allegation by DHS that an employer had “constructive knowledge” that it was employing an alien not authorized to work in the United States in violation of section 274(A)(a)92) of the Immigration and Nationality Act (INA), 8 U.S.C. 1324a(a)(2), which states:

It is unlawful for a person or other entity, after hiring an alien for employment . . . to continue to employ the alien in the United States knowing the alien is (or has become) an unauthorized alien with respect to such employment.  [Emphasis added.]

According to the new measures, the term “knowing” as stated in the INA includes not only actual knowledge but also “knowledge which may fairly be inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition.”  Examples of situations giving rise to an employer having “constructive knowledge” sufficient to constitute a violation include: (1) where an employer fails to complete or improperly completes the Employment Eligibility Verification, Form I-9; (2) where an employer acts with reckless and wanton disregard of the legal consequences of allowing an unauthorized alien to be part of its workforce; and (3) where an employer fails to take reasonable steps after receiving information indicating that an employee may be an unauthorized alien, such as when the employee requests that the employer file a labor certification or employment-based visa on his or her behalf, or when the employer receives either a “No-Match” letter from the SSA or notice from DHS that the employment authorization documents presented by the employee are assigned to another person.

Overall, the purpose behind the new enforcement measures is, according to Michael Chertoff: “to clamp down on employers who knowingly and willfully violate the law.”  Consequently, employers must take steps to avoid “knowingly” or “willfully” employing unauthorized workers.

III. PENALTIES for noncompliance

An employer found to have knowingly hired or to have knowingly continued to employ an unauthorized alien can be subject to both substantial fines and even prison time.  On the first offense, an employer can be fined up to $2,200 for each unauthorized alien.  If an employer commits more than two offenses, an employer can be fined up to $11,000 for each unauthorized alien with respect to whom the subsequent offense occurred.  Depending on the number of violations, an employer may also be subject to as much as $5,000 per violation for document fraud and may also be imprisoned for up to six months.  An employer convicted of harboring unauthorized aliens can also receive a maximum of five years in prison.

IV. HOW TO GET INTO THE “SAFE HARBOR” if you receive a “no-match” letter

In the past, employers have sometimes ignored “No-Match” letters from the SSA.  This is the primary rationale behind the current joint SSA/DHS crack-down.  The bottom line of the new regulation is that the federal government has established a 93-day “resolution” period for employers to resolve any discrepancies relating to employee authorization to work after being put on notice of the discrepancy.

To the extent there is any good news regarding the new enforcement measures, it is that  DHS has provided guidance regarding employer obligations and outlining “Safe Harbor” procedures that employers should follow upon their receipt of a “No-Match” letter from the SSA.  An employer who receives a “No-Match” letter from the SSA will be considered by DHS to have taken “reasonable steps” to allow it to be in the “Safe Harbor” if the employer takes the following actions:

A.                Within 30 days of receiving a “No-Match” letter, a reasonable employer must check its internal records to insure that the mismatch was not the result of an administrative error such as the transposition of a letter or a number on the W-2.  

If the employer finds such an error, it should promptly correct its records and inform the SSA.  The rule also suggests that the employer may update the employee’s I-9 form, or complete a new I-9, but the employer should not perform a new I-9 verification at this time.   

B.                 If checking its internal records does not resolve the discrepancy, a reasonable employer promptly requests that the employee confirm that the employer’s records are correct. 

If the employer is unable to match its employee’s name and Social Security number, it should request that its employee verify that its records are correct.  If the records are not correct according to the employee, a reasonable employer should ask its employee to handle the matter with the relevant agency, such as the SSA, and then provide it with original or certified documents documenting that the discrepancy has been resolved.  The regulation further provides that a discrepancy will not be considered to be resolved unless the employer verifies that the employee’s name matches his or her Social Security number.  Social Security numbers may be verified by the SSA by telephoning (800) 772-6270.  If an employer receives verification from the SSA, the employer should document the time, date and manner of the verification as it may not be able to obtain written documentation from the SSA regarding the verification.

If a Social Security “No-Match” letter or a notice from DHS cannot be resolved within 90 days of the employer’s receipt of the original communication, the employer has only three additional days to attempt to re-verify the wokers’ employment eligibility by completing a new I-9 employment verification form.  If the employee cannot verify the employee’s work eligibility, the employer must terminate the employee or risk enforcement action by DHS.

V. RECOMMENDATIONS FOR EMPLOYERS IN LIGHT OF THE NEW REGULATION

A.                Anticipate and prepare for heavy turnover within the next few months and a very tight labor market. 

Because nothing in the new regulation requires an employer to terminate an employee during the 93-day resolution period for correcting a mismatch, and because it is anticipated that letters will start going out very soon, it is likely that there may be a significant labor crunch occurring during the holiday season.  As a result, we suggest that employers consider increasing recruitment efforts to prepare for what may be a period of high turnover.  With this cautionary advice, we also suggest that a grain of salt is in order: if an employer has not received many “No-Match” letters for current employees in the past from the SSA, there is no reason to assume that such an employer will necessarily be targeted to receive them in the future. 

B.                 Recognize that an employee who learns that you have received a “No-Match” letter is likely to leave.

As would be expected, DHS received numerous comments from interest groups representing employers regarding the potential impact of the regulation on employers.  Primarily, those comments expressed many employers’ belief that the proposed regulation would lead to an unstable workforce since it seems likely that most employees who learn that their employers have received a “No-Match” letter will either quit immediately, quit at the end of the 93-day verification period, or perhaps come up with new paperwork containing a “new” name resulting in their termination.  This is likely to result in low-wage job earners frequently moving from job-to-job once their status is determined to be unauthorized.  As such, employers may not be likely to risk significant penalties since the employees giving rise to the “No-Match” letters may be likely to resign, or to have already resigned, once it is clear that they have been discovered. 

C.                Participate in E-Verify and verify Social Security Numbers of all new employees from this point onward. 

“E-Verify” is a web-based system that allows employers to determine the eligibility of all new hires going forward.  Although DHS has mandated that federal government contractors and vendors participate in this program, it is still voluntary for private sector employers.  Although participating in this program will not guarantee that an employer will be protected from penalties, an employer who verifies work authorization of its employees under E-Verify is presumed not to have “knowingly” hired an unauthorized alien.  Consequently, the presumption is that employers who opt to participate in this system will also be less likely to be examined for potential immigration law violations by DHS and SSA. If you utilize E-Verify, be sure to document the time, date and manner of any verification you receive in case it becomes an issue at a later date. More information regarding E-Verify can be located at www.dhs.gov/e-verify or at 1-888-464-4218.

D.                Do not overreact to the new regulations. 

The final DHS regulation emphasizes that employers should not react prematurely by terminating an employee immediately upon receipt of a “No-Match” letter.  In addition, although it is clear that DHS is likely to be aggressive about these new enforcement measures, we advise that you not re-verify the identity of each current employee.  To do so could subject an employer to potential claims of national origin discrimination.  There is little doubt that enterprising lawyers representing employees will take advantage of any “panic measures” taken by employers with regard to verifying employee identity to bring claims of national origin discrimination or retaliation.  Consequently, an employer should be prepared to follow the steps to get into the “Safe Harbor” outlined above. 

Remember: the new enforcement efforts by DHS do not impose any new responsibilities upon employers that do not already exist under current law.  As DHS observed: “With or without this rule, employers who have constructive knowledge that certain employees are unauthorized aliens should terminate employment or risk sanctions from DHS.  Moreover, employers will not be engaging in unlawful discrimination by uniformly following the procedures of this regulation without regard to perceived national origin or citizenship status.”