On Sept. 14, 2007, a new rule from the Department of Homeland Security (DHS) takes effect that will significantly change the way employers must respond to no-match letters from the Social Security Administration (SSA) or notices from DHS concerning discrepancies on I-9 employment verification forms. Entitled “Safe-Harbor Procedures for Employers Who Receive a No-Match Letter,” the new rule amends existing regulations relating to the unlawful hiring or continued employment of unauthorized aliens. The rule requires the employer to take affirmative action to attempt to resolve the no-match within 30 days, and if the no-match cannot be resolved within 90 days, the employer must re-verify the alien’s identity and employment authorization using a modified I-9 process. Below is a summary of the new rule and a step-by-step guide for employers to ensure compliance with the new so-called “safe harbor” procedures.
Constructive Knowledge Redefined
Under the Immigration Reform and Control Act (IRCA), an employer may be held liable for actual or constructive knowledge that an employee does not have employment authorization. The final rule expands liability under the IRCA by adding two additional examples of constructive knowledge. Under the new rule, employers may be found to have constructive knowledge if they fail to take reasonable steps after receiving: 1) a “no-match” letter from SSA, or 2) notice from DHS (usually after an I-9 audit) that the employee's employment authorization documents presented in connection with completion of the I-9 form do not match DHS records.
Responding to No-Match Letter from SSA
Each year the SSA sends thousands of letters to employers across the country listing the names and social security numbers (SSNs) of employees whose SSNs do not match their names on the earnings records of the SSA. The stated purpose of the so-called “no-match” letter is to properly credit earnings records to the employee’s SSA account for future benefits. The new rule provides employers with specific guidelines to follow after receiving a no-match letter from SSA (the so-called “safe harbor” procedure). If an employer follows the steps outlined in the safe harbor procedure, DHS is prohibited from using an employer’s receipt of an SSA no-match letter as evidence of constructive knowledge of unauthorized employment. It is important to note that even if an employer follows the safe harbor procedures, it may still be found liable based on actual knowledge (i.e. if the employee admits to the employer that he/she is unauthorized) or constructive knowledge based on other evidence. The safe harbor procedure involves the following steps:
Step 1: Employer must check its own records within 30 days
Following receipt of an SSA no-match letter, the employer must check its records to determine whether the discrepancy was caused by a clerical error, such as errors in spelling the employee’s name or in listing the employee’s SSN. If such an error occurred, the employer must correct the error with SSA, and verify that the corrected name and social security number now match SSA's records. The 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. Employers may verify a SSN with SSA by calling 1-800-772-6270 or online at www.ssa.gov/employer/ssnv.htm. The employer may update the I-9 form relating to the employee or complete a new I-9 form (retaining the original), but should not perform a new I-9 verification. The above steps must be completed within 30 days after receipt of the no-match letter.
Step 2: Employer must ask employee to assist in resolving no-match within 90 days
If the employer determines that the SSA no-match is not a result of an error in the employer's records, the employer must promptly request that the employee confirm that the name and social security account number in the employer's records are correct. If the employee states that the information is incorrect, the employer should correct the error as outlined above. If the employee states that the employer's record is correct, 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 ninety (90) days after the receipt date. The employer is under no legal obligation to advise the employee regarding the means or manner of resolving the discrepancy with the agency.
Step 3: Employer must re-verify employment authorization within 93 days
If the no-match cannot be resolved with SSA within 90 days of receipt of the no-match letter, the employer must attempt to re-verify the worker's employment eligibility by completing a new I-9 employment verification form. Companies should use the same procedures as when completing an I-9 form at the time of hire, with a few exceptions:
- The employee must complete section one and the employer must complete section two of the new I-9 form within 93 days of receipt of the no-match letter.
- The employer cannot accept a social security number that is the subject of an SSA no-match letter or any other document referenced in a DHS notice of I-9 discrepancy to establish employment authorization or identity.
- The employee must present a 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.
Step 4: Consult with counsel about possible termination of employee after 93 days
If the employer cannot re-verify the employee's work eligibility through completion of a new I-9 form, the employer must decide whether to terminate the employee or face the risk in any subsequent DHS enforcement action of being determined to have constructive knowledge and being penalized for the continuing employment of an unauthorized alien. In most circumstances, employers should terminate the employee to avoid a finding of constructive knowledge of unauthorized employment. However, we recommend that you always consult with legal counsel before terminating the employee to ensure that such action is in compliance with the final rule and applicable employment laws. There may be special cases where you have strong evidence that the employee is authorized to work in spite of the no-match and inability to re-verify identity and employment authorization. An employer should not terminate an employee until the process is completed, unless the employer obtains actual knowledge (such as through an admission by the employee) that the employee is not eligible for employment in the United States.
Responding to Notice of I-9 Discrepancy from DHS
The safe harbor procedures for responding to a notice of I-9 discrepancy from DHS are somewhat different than those listed above for the SSA no-match letter. The employer must contact the local DHS office in accordance with instructions in the written notice and attempt to resolve the question raised by DHS about the immigration status document or employment authorization document. The instructions in the DHS notice may provide less than 30 days for the employer to respond. If the employer is unable to resolve the discrepancy with DHS within 90 days of receiving the written notice, the employer must re-verify the employee’s employment authorization within the following three days as outlined above.
Does mere receipt of an SSA no-match letter open up potential liability?
Not initially. Keep in mind that potential liability only arises when an employer “fails to take reasonable steps after receiving information indicating that the employee may be an alien who is not employment authorized.” DHS acknowledges that there will be situations where mere receipt of a no-match letter does not indicate that the employee may be an individual who is not employment authorized. However, because such a determination would depend on a number of factors, we recommend that the safe harbor provision be followed in response to receipt of every SSA no-match letter.
Is the safe harbor procedure a requirement?
The safe harbor procedure is not a requirement but we highly recommend that all employers follow it. There may be other procedures that would be considered “reasonable steps” of responding to these notices. DHS will base a finding of constructive knowledge on a number of factors, including whether the employer made a good-faith but ultimately unsuccessful attempt to comply with the safe-harbor procedure. When the employer is unable to meet the strict timelines, DHS will take into consideration extenuating factors, such as the unavailability of an employee who is a seasonal worker, or who is on vacation or sabbatical. In such a situation, an employer should respond as rapidly as practicable and keep a file documenting such efforts.
What if employee requests more time to resolve the discrepancy with SSA?
Unless the employee provides an exceptionally good reason, the company should not provide him/her with additional time. The rule implies that an employee should be able to resolve the discrepancy within 90 days of being notified of the letter. An employer that provides an employee any more than 90 days could be found to have failed to take reasonable steps and consequently deemed to have constructive knowledge of unauthorized employment.
What if the employee is no longer employed with the company?
You have no obligation under the final rule to act upon the no-match letter if the employee is no longer employed with the company. However, you should still try to contact him or her to correct the W-2 records. In any case, you should document your records with the information you relied upon in completing the W-2 and the efforts you made to contact former employees. You should keep such documentation for three years since the employer is no longer employing the alien.
What if the no-match letter is sent to the employee and not the employer?
The final rule applies only to no-match letters received by the employer from SSA. However, once the employer becomes aware of the existence of the letter, we recommend that it follow the safe harbor procedure as soon as practicable.
How should I respond to no-match letters received prior to Sept 14, 2007?
Employers should follow the instructions contained in the no-match letter, which are steps 1 and 2, as outlined above (checking the employer’s records and advising the employee to resolve the no-match directly with SSA). Employers, however, should consult with legal counsel prior to taking steps 3 and 4, as the regulations are unclear as to what affect it has, if any, on old no-match letters. Re-verification and termination of an employee based on a pre-September 14 no-match letter may leave the employer liable for wrongful termination.
Practical Tips on Reducing the Number of Future SSN Mismatches
Some employers have a large number of employees with SSN mismatches. The new rule could result in a forced termination of all such employees 93 days after receipt of the SSA no-match letter. To avoid a sudden loss of a large number of employees, employers should consider efforts to reduce the number of SSN mismatches it receives each year.
- You may wish to participate in the Employment Eligibility Verification Program (also known as “E-Verify” or the “Basic Pilot” program), which is an Internet-based system run by U.S. Citizenship and Immigration Services (USCIS) in partnership with SSA. The E-Verify program is free to employers and is now available in all 50 states. This program provides an automated link to federal databases to help employers determine work eligibility of new hires and the validity of their SSNs. For more information on this voluntary program, see the DHS website at www.dhs.gov/e-verify or USCIS web site www.uscis.gov.
- Before you file your next annual wage report for the most recent tax year, you should use SSA’s Social Security Number Verification Service (SSNVS) prior to submitting Forms W-2. This is a free and convenient way to verify that your records match SSA records. However, SSNVS is not to be used to screen job applicants, because a mismatch makes no statement about a job applicant’s immigration status. The SSNVS can be found at: www.ssa.gov/employer/ssnv.htm.
- You should ask your employees to check their Forms W-2 against their social security cards and to inform you of any name or SSN differences on the two. If the Form W-2 is incorrect, you should correct your records and prepare Forms W-2c and W-3c per above. If the social security card is incorrect, you should advise the employee to request a corrected card from the nearest SSA office.
- You should remind employees near the end of each year to report to SSA name changes due to marriage, divorce or other reasons. This is done by the employee using Form SS-5 along with documentation of the name change. If an employee’s name has changed, you should continue to use the old name as it appears on the employee’s social security card until the employee has obtained an updated card with the new name. Using a new name on Form W-2 before the employee has obtained an updated social security card will result in a mismatch.
- When you hire a new employee, in addition to going through the regular I-9 process, you should ask the employee to check his or her social security card and inform you of the name and SSN exactly as shown on the card. The employee is required to furnish the SSN to you, but the employee is not required to show the social security card.
- If the employee submits the social security card during the I-9 process, make a copy so you have a record of exactly how the name and number appear on the card.
- When entering the name on Form W-2, enter it exactly as it appears on the social security card. However, do not use Jr. or Sr. even if it appears on the card. Compound names may be connected by a hyphen or space (do not join them into a single word). For example, John R. Smith-Jones may be entered “Smith Jones” in the last name field. It is especially important to know the exact last name. If an employee provides a name with a compound or multiple last names, question them to determine which name is the beginning of the surname and which (if any) is the middle name. If the social security card contains a middle name, always complete the Form W-2 using just the middle initial.
- If you hire someone who does not have a social security number (SSN), ask him or her to obtain one as soon as possible. If you still don’t have an SSN when your W-2 report is due, complete the account number field by entering “applied for” in Box “d” of a paper form and all zeroes in locations 3-11 of the RW record when filing electronically or on magnetic media. If a job applicant or an employee has lost his or her social security card, encourage him or her to go to the nearest SSA to obtain a replacement.
- You should ensure that all SSNs you report are valid. Here are some tips:
- A valid SSN has 9 digits. The first three digits should never be 000, the middle two digits should never be 00, and the last four digits should never be 0000.
- The first three digits should never be in the 800 or 900 series.
- If the social security card appears on its face to be genuine, you should not question it. You are not expected to be an expert on document fraud. Not all social security cards look exactly alike. There are many slight variations that have been issued over the years.