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EMPLOYER ALERT: NEW REGULATIONS FOR HANDLING SSA NO-MATCH LETTERS AND DHS NOTICES

Increasing its pressure on employers to address the undocumented workforce, the Department of Homeland Security ("DHS") on August 15, 2007 published in the Federal Register a final rule detailing an employer's obligations to respond to Social Security Administration ("SSA") "no-match" letters and notices from DHS that an employee's employment authorization documents presented in completion of the I-9 Employment Verification form do not match DHS records. Entitled "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter", the regulations describe the legal obligations of an employer when it receives an SSA no-match letter or receives a DHS notice regarding employment verification forms. The regs contain "safe-harbor" procedures that an employer must follow in response to such letter or notice to be shielded from DHS use of the letter or notice as an allegation that the employer had constructive knowledge that the employee was not authorized to work in the United States. The final regulations follow proposed regulations published in June 2006 which received more than 5,000 comments and will require that employers rethink how to respond to no-match letters and DHS notices and the risk of noncompliance.

WHAT ARE NO-MATCH LETTERS AND DHS NOTICES COVERED BY THE REGS?
No-match letters are sent by the SSA when a sufficient number of social security numbers ("SSN") reported by an employer do not match SSA records. The letters, currently titled an "Employer Correction Request", often remind employers of the importance of providing correct SSNs and encourage them to correct their records. The no-match letters importantly advise employers that they should not use the no-match letter to take adverse action against the employee and doing so may in fact violate state and federal law. For Tax Year 2006, DHS intends to accompany the no-match letter with a letter from its enforcement branch, US Immigration and Customs Enforcement, informing employers on an appropriate response to the no-match letter. DHS sends a letter, called a "Notice of Suspect Documents" after an I-9 audit if it is unable to confirm in its records that an immigration status document or employment authorization document was assigned to an employee.

CONSTRUCTIVE KNOWLEDGE
Under the Immigration and Nationality Act, it is unlawful to employ an alien knowing the alien is unauthorized to work and an employer may be in violation of the Act by having constructive knowledge that the employee is unauthorized to work. Among other things, the final regulations expands the definition of "constructive knowledge" to include the failure to take reasonable steps to address: (1) receipt of a no-match letter from the SSA; and (2) receipt of notice from DHS that the employee's employment authorization documents presented in connection with the completion of the Form I-9 do not match DHS records. The regulations describe "safe harbor" procedures to respond to the no-match letter or DHS notice and promises immunity from a constructive knowledge charge based on such letters or notices should the employer follow the procedure. While acknowledging that other actions taken by employers may constitute "reasonable steps", employers who fail to follow the procedure may not have the "safe harbor" from a finding of constructive knowledge based on the no-match letter or DHS notice.

THE SAFE HARBOR FOR THE NO-MATCH LETTER
To take advantage of the safe harbor upon receipt of a no-match letter, an employer must do the following:

Within 30 days of the receipt of the no-match letter

• Check its records to determine whether the discrepancy was caused by a clerical error, correct the error with SSA and verify that the corrected name and SSN matches SSA records (in accordance with the written notice instructions on the no-match letter, if any). DHS suggests that employers verify a SSN with SSA through the SSN Verification System (SSNVS) either by telephone or online. Employer should make a record of the manner, date and time of such verification and then store such record with the employee's I-9 form by updating the I-9 form or completing a new I-9, but not performing a new I-9 verification.
• If the SSN no-match is not a result of the employer's record keeping error, the employer must request that the employee confirm that the name and SSN in the employer's records are correct. The employer should request this confirmation promptly to give as much time as possible to the employee. If the employee advises that the information is incorrect, the employer must make corrections, inform the SSA of the correction and verify SSA match of the corrected information, and make a record of its actions.
• If the employee confirms the accuracy of the employer's information, the employer must promptly advise the employee of the date of receipt of the no-match letter and advise the employee to resolve the discrepancy with the SSA no later than 90 days after the receipt date.

And Within 93 Days Of The Receipt Date Of The No-Match Letter

If the discrepancy in the SSN cannot be resolved within 90 days of receipt of the no-match letter, the employer has three additional days to re-verify the worker's employment eligibility by completing a new I-9 Employment Verification Form. The employer should use the same procedures as when completing an I-9 form at the time of hire except that:

• The employee must complete Section 1 of the form and the employer Section 2 within 93 days of receipt of the no-match letter.
• The employer cannot accept any document (or receipt for such a document) that contains the disputed SSN referenced in the no-match letter to establish employment authorization or identity.
• The employee must present an approved document that contains a photograph in order to establish identity or both identity and employment authorization.
• The new I-9 form should be retained with the original I-9 form.

THE SAFE HARBOR FOR THE DHS NOTICE
The safe harbor requires the employer to take the following measures:

• Within 30 days of receipt of the DHS notice, the employer must contact the local DHS office pursuant to the instructions provided with the notice and attempt to resolve the question raised by DHS about the immigration status or employment authorization document.
• If within 90 days of DHS notice, the employer is unable to verify with DHS that the document is assigned to the employee, the employer must within 93 days of receipt of the DHS notice follow the I-9 re-verification procedure described above for no-match letters without accepting any document (or receipt for such document) referenced in the DHS notice.

OPINIONS FOLLOWING NEW I-9 VERIFICATION
If the employer cannot verify the employee's work eligibility through the completion of a new I-9 form, the employer is then presented with two choices: terminate the employee, or face the risk in any subsequent DHS enforcement action of being determined because of the no-match letter or DHS notice to have constructive knowledge of unauthorized employment and being penalized for the continuing employment of an unauthorized alien.

The "totality of relevant circumstances" will determine whether an employer would be found to have constructive knowledge in any particular case. An employer that follows a procedure other than the "safe harbor" procedures could face the risk that DHS may not agree such procedures were reasonable. It is clear that employers should not terminate an employee until the process is completed unless the employer obtains actual knowledge that the employee is ineligible for employment in the United States.

Following the safe harbor procedures will stop DHS from using the no-match letter or DHS notice as evidence of constructive knowledge but would not preclude DHS from finding that an employer had actual knowledge that an employee was an unauthorized alien. Also, DHS may find that the employer had constructive knowledge from other sources.

DHS takes the position that applying the safe harbor rule in a uniform manner for all employees whose SSN or work authorization documents are challenged by SSA or DHS should not subject the employer to liability for document abuse and/or unlawful discrimination on the basis of national origin and citizenship status. In the future, employers can expect other federal agencies and court decisions to refine this position.

ADDITIONAL EXPANSION OF CONSTRUCTIVE KNOWLEDGE
The final regs also expands the definition of constructive knowledge to include an employee's request to the employer for sponsorship of the employee for labor certification or a visa petition. No safe harbor procedure is available if this request is made and the employee turns out to be unauthorized. If the employee admits that she or he is currently unauthorized or if the request is inconsistent with the information the employer received from the employee during the original verification process, the employer may be charged with actual constructive knowledge of the unauthorized status if the employer permits the employee to continue working.

INCREASED ENFORCEMENT
The safe harbor for no-match letters and DHS notices is part of an increased enforcement focus announced by the government. In the coming months, DHS will reduce the number of documents that employers must accept to confirm the identity and work eligibility of employees. Fines for employers who knowingly hire illegal immigrants are expected to be increased in the near future by approximately 25%. DHS is expected to expand criminal investigations against employers who knowingly hire large numbers of illegal aliens and will commence rule making to require all federal contractors and vendors to use the federal electronic employment verification system to be called E-Verify. DHS will voluntarily ask states to allow E-Verify access to photographs in state motor vehicle databases to further expand the electronic employment verification system.

WHAT EMPLOYERS SHOULD DO NOW
Safe harbor no-match regulations become effective September 14, 2007. Prudent employers should now take steps to develop an approach upon receipt of a no-match letter or DHS notice to come within the protection of the safe harbors. Employers should rethink whether to have or revise honesty policies in the event employees offer different identities through the safe harbor procedures. Anticipating additional DHS enforcement attention in the future, employers should conduct an internal self audit of its I-9 procedures. If employers do not feel comfortable with the numerous requirements of the I-9 process, they should consider bringing in legal counsel for assistance. Among the issues to consider are the following:

• The I-9 procedures should be centralized with employees trained in the process to ensure better compliance
• The I-9 should be completed within three days of hire
• Complete the I-9 fully and examine original documents
• Only note the minimum required documents on the I-9 form
• The I-9 should be stored separately from personnel files and kept for the required time periods
• Consider copying the documents presented. Copies are not required and experts differ on whether or not to keep copies. Be consistent in the approach taken.
• Properly re-verify expiring work authorizations. Do not ask for reverification of permanent residence cards
• If changes need to be made on I-9 forms, do not back date the forms but annotate changes

Employers should take care now to develop procedures for response to SSA no-match letters or DHS notices and prepare for an onslaught of ever increasing government enforcement activity. If you require any assistance in responding to SSA no-match letters or DHS notices, developing an I-9 employment verification procedure, conducting internal audits of I-9 procedures, or concerning other employment or employment related immigration issues, please contact Philip J. Ripani, (317) 684-5280, pripani@boselaw.com or Sandra Perry, (317) 684-5175, sperry@boselaw.com in the Labor and Employment Group at Bose McKinney & Evans LLP.