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ICE Ignites the SSA “No-Match” Keg of Dynamite
by Josie Gonzalez+
(Reprinted with the permission of the Employers Group*, as published in its October 2007 Newsletter.)
The content of the featured article was current as of the submission deadline in September. During the past two weeks, several significant developments have occurred as a result of a lawsuit filed by the AFL-CIO and other organizations to challenge the SSA No-Match rule. Despite these developments, the article contains useful information regarding ICE's views on the importance of the SSA No-Match letter. The following update should be read in conjunction with the article which follows.
Breaking News
A preliminary injunction was issued on October 10, 2007, preventing DHS from enacting the recently published final rule entitled “Safe-Harbor Procedures for Employers Who Receive a No-Match Letter.” Don’t be fooled into thinking this eliminates any obligations on the part of the employer, or that this decision might not be reversed at a later date. Most likely, SSA will send out a no-match letter for the 2006 W-2 discrepancies but without the DHS insert, revising it somewhat from former versions to now make a reference to lack of immigration status as one possible basis for the no-match. Companies will still need to review current due diligence procedures for responding to the letter and see how they can be upgraded to demonstrate good faith. The specific steps outlined in the "safe harbor" regulations do not need to be followed right now; but some responsible manner of responding to these letters should be adopted. Also, the criminal prosecutions of employers will continue and the presence of a no-match letter will continue to be a nail in the coffin that helps make the prosecution's case. It isn't merely the receipt of the letter that determines if company liability exists, but how an employer responds to it, as well as other factors that give rise to "actual" versus "constructive" knowledge.
Featured Article
ICE Ignites the SSA “No-Match” Keg of Dynamite
by Josie Gonzalez+
Much to the dismay of many employers, the Department of Homeland Security (DHS) and its immigration enforcement arm, Immigration and Customs Enforcement (ICE), have turned up the heat on the business community by issuing a regulation on August 15, 2007 that addresses employer liability for knowingly continuing the employment of unauthorized workers under a “constructive knowledge” standard. (72 Fed Reg. 45611)
What the regulation says
The ICE regulation explains how an employer can gain constructive knowledge that it is employing an unauthorized worker when it fails to exercise due diligence after receipt of a no-match letter from the Social Security Administration (SSA) advising it that the name and number on the W-2 do not match SSA records.
“Constructive knowledge” is a legal standard akin to “willful blindness.” It has been defined as “a mental state in which the defendant is aware that the fact in question is highly probable but consciously avoids enlightenment.” According to established case law, “deliberate failure to investigate suspicious circumstances imputes knowledge.” (United States v. Jewell, 532 F2d 697 (9th Cir.1976)
Since the no-match discrepancy may be the result of clerical errors, the letter, standing alone, is not proof that the employee lacks the right to work in the U.S. But a total disregard of the letter combined with other evidence obtained during ICE investigations can establish constructive knowledge based on a “totality of the circumstances.”
The regulation sets forth guidance on how to establish “safe harbor” protection against a finding of constructive knowledge. This guidance, currently posted on the websites of both the SSA (www.ssa.gov/employer/noMatchNotices.htm) and ICE (www.ice.gov), is intended to be disseminated to employers in an SSA mailing that contains both the no-match letter and a separate insert from ICE describing the steps to take and the timetable to respond to the letter.
Challenged by labor unions’ TRO
Implementation of the regulation, however, has been challenged by the AFL-CIO, ACLU and California labor unions, resulting in the issuance of a nationwide Temporary Restraining Order (TRO) on August 31, 2007 – which also halted the ICE insert with the SSA letter. The lawsuit alleges that 17.8 million errors in the SSA database will result in wrongful discharges, and that the regulation is beyond the scope of the immigration laws.
In a declaration in support of DHS’ opposition to the TRO from David Rust, an Acting Deputy Commissioner within the SSA, it states that SSA intends to send 141,000 letters, affecting over 8 million workers. In order to minimize the impact on its field offices and regulate the volume of calls to its 800 number, it planned to release the letters in varying amounts each day, ranging from an initial 500 to upwards of 3,200 daily between September 2007 and early November 2007. SSA declared that uncoupling the SSA letter from the ICE insert would be laborious and impact its resources. Now, with the TRO, the timing for mailing of these letters and the inclusion of the ICE insert is uncertain.
What to do in the meantime
Regardless of the outcome of this litigation, employers who have already received no-match letters in prior years need to realize that ICE views these regulations as merely a reflection of current immigration law regarding an employer’s responsibility when confronted with evidence which, under a “totality of the circumstances” standard, raises serious doubts about the legality of one’s workforce.
Today, an employer who does nothing meaningfully to address the receipt of a no-match letter is sitting on a keg of dynamite and may find itself in the same shoes as others that ICE has criminally prosecuted over the last two years. It’s not a pretty picture.
Corporations, executives and managers have faced felony charges, and personal and corporate assets such as real property, bank accounts, automobiles and inventory have been seized under criminal forfeiture statutes. The parade of “horribles” describing these prosecutions can be found on the ICE website. Adopting a sensible approach to the receipt of the no-match letter that is non-discriminatory and comports with fair labor standards is essential.
This article will describe the “safe harbor” provisions under the new regulations. Along with the release of the regulations, DHS announced a 26 point edict including efforts to improve worksite enforcement and to streamline guest worker programs. A description of most important points is included.
“Safe Harbor” steps
The regulation superficially sets forth simple steps to take to achieve safe harbor protection. The first four steps are clear and non-controversial; however, a resolution of the no-match is normally not reached after taking these steps.
(1) Within 30 days of receipt of letter, check records to ensure mismatch is not result of employer error;
(2) If the discrepancy is not resolved, ask the employee to confirm the accuracy of the number;
(3) If the records are accurate, ask the employee to resolve the no match with SSA within 90 days from the receipt of no-match letter;
(4) If able to resolve, verify the correction by using SSA records described at www.ssa.gov/employer/ssnv.htm or by calling the SSA at 1-800-772-6270, and retain a record of the verification.
Records of verified resolutions such as SSA correspondence, computer generated printouts, or SSNVS screen prints documenting the discrepancy correction should be kept with the employee’s I-9. The correction can be accomplished by updating the I-9 or completing a new I-9.
Special I-9 process
The devil is always in the details and such is the case with the final “safe harbor” guidance. If not resolved with SSA within 90 days and the employee insists that, notwithstanding the SSA discrepancy, he does have the legal right to work, re-verification of work authorization is required through the completion of a new I-9 within 93 days. The employee cannot use the disputed social security card or a receipt for the social security card and must present a document that contains a photo. The new I-9 must be retained for the same period as the original I-9.
Two examples of how an I-9 would be completed in these circumstances are:
1. An employee insists that he is a U.S. citizen. Instead of presenting the problem social security card for the new I-9, a U.S. passport, or a birth certificate and driver’s license are used.
2. A permanent resident, in lieu of using a social security card and driver’s license, presents an immigration-issued work authorization card containing a photo, thus establishing work eligibility and identity.
As soon as it is evident that the social security no-match is not attributable to employer or employee error, the employee should be notified that re-verification of work authorization will be required in order to continue employment. There can be delays in securing a birth certificate, and securing a U.S. passport for an individual born abroad to U.S. citizen parent(s) is complicated. An individual might have gained permanent residence many years ago but has now lost the green card and doesn’t know the alien number, thus making it very difficult to secure a replacement card.
If the employee cannot present alternate documentation and the SSA discrepancy cannot be resolved, per ICE guidance, the employee must be terminated if the employer is to establish safe-harbor protection.
Since litigation is currently clouding the implementation of the regulations, an employer should be free to develop alternate due diligence steps to handle the receipt of earlier no match letters. In fact, until the litigation is resolved, following the precise steps outlined by the regulations might subject an employer to lawsuits, particularly from unions or trigger organizing drives.
DHS announces additional enforcement measures
In its 26-point enforcement manifesto, DHS announced some interesting employer-related provisions, summarized below.
-->It intends to publish a regulation that will reduce the number of documents that employers can accept to confirm the identity and work authorization of its employees. Although not specifically stated, one wonders if this means that a new I-9 will finally be released?
-->ICE will increase civil fines to account for inflation and boost them by 25%. Since the primary enforcement vehicle is criminal not civil, this news isn’t viewed as particularly noteworthy.
-->DHS will soon publish a proposed regulation to require that all federal contractors and vendors use E-Verify, the federal electronic employment verification system, to verify employees’ right to work.
-->The Department of Labor (DOL) will reform the H-2A agricultural seasonal worker program. Most believe that these reforms are inadequate.
-->DOL will issue regulations streamlining the H-2B program for non-agricultural seasonal workers. Most employers need year-round, not seasonal workers. A worker who has been terminated as a result of the no-match letter would generally be found ineligible for H-2B consideration.
-->A study is being conducted to determine how undocumented workers can be prevented from earning credit for illegal work. Currently, an employee who manages to secure legal status can request that prior earnings be credited to a valid social security account.
In conclusion, one wonders if these aggressive new measures aimed at combating unauthorized employment at the worksite are meant to serve as a catalyst to prompt Congress to pass ameliorative immigration laws, or whether the Bush administration has simply given up on its “comprehensive immigration goals.”
More than ever, employers must be vigilant in their compliance efforts. They should establish a comprehensive compliance program that encompasses both I-9 procedures and no-match letters, and set up process flows to handle and track each safe harbor step. Concurrently, they need to assess production needs and explore all viable options to secure workers.
I-9 and SSN “No Match” 2007
FAQs on common issues employers face
Q: What if an employer doesn’t want the disruption of possibly losing a large number of workers all at the same time – on the 90th day? Can it implement a shorter period or stagger its notification to employees in stages resulting in a period exceeding 90 days?
A: According to the ICE website, one should allow a full 90 days for the employee to resolve the matter. It also views 90 days as the outside limit.
Q: What if an employee was hired prior to November 6, 1986, the enactment of the Immigration Reform and Control Act (IRCA), and is a “grandfathered” employee for whom no I-9 is required?
A: ICE regulations fail to address this class of employees – an obvious oversight. Congress explicitly exempted these employees from the knowing hire and knowingly continuing to employ prohibitions of IRCA.
Q: Can an employer exercise due diligence but not complete a new I-9?
A: The completion of a new I-9 is one of the objections raised in the TRO litigation. Plaintiffs allege that Congress didn’t impose this type of re-verification obligation after the initial hire. But ICE has taken the position that only by following its guidance, which includes completion of a new I-9, does one achieve a “safe harbor.” Nevertheless, the absence of safe harbor protection doesn’t establish employer liability. ICE has the burden of demonstrating constructive knowledge based on the totality of circumstances.
Q: Can an employer follow IRS guidance for resolving no-matches and not ICE guidance? Does DHS have the authority to dictate how employers should respond to what is essentially a tax reporting obligation?
A: IRS requires the employer to accurately transmit the name and number recorded by the employee on the W-4. If there is a no-match discrepancy, due diligence can be established by the completion of a new W-4. Notwithstanding the IRS due diligence guidance, ICE regulations provide that only by following the regulatory steps can one achieve safe harbor.
Q: Can an employer use Basic Pilot, now re-branded as E-Verify, to verify the legitimacy of any documents presented?
A: Although the SSN can be re-verified through SSA, immigration work authorization documents cannot be verified because Basic Pilot is reserved only for new hires, according to the ICE website, http://faq.ice.gov.
Q: What if prior to the 90 day grace period an employee admits that he is unable to resolve the discrepancy because he is undocumented?
A: Anytime that an employer gains actual knowledge, there is no safe harbor.
Q: Can an employee present a new social security card with a different name?
A: New valid work authorization documents can be secured once an employee legalizes its status – which often takes many years. If there is independent evidence to prove that an employer knows that an employee is merely using another person’s identity, there is no safe harbor protection.
Q: What if an employee asks for assistance in legalizing his status by the submission of an employer-sponsored application such as a labor certification?
A: The new ICE rule specifies that an employee’s request for labor certification or other sponsorship is an example of how an employer can gain constructive knowledge that the employee is undocumented.
Q: What other steps besides the safe harbor guidance can an employer use to avoid immigration liability?
A: ICE suggests that employers consider enrolling in its EEV program, E-Verify (www.dhs.gov/e-verify) or its IMAGE program, in order to verify the work authorization of all new hires.
Q: Can ICE obtain access to the SSA letters directly?
A: Under the privacy protections of section 6103 of the Internal Revenue Code of 1986, ICE cannot obtain employer tax information, nor copies of no-match letters. However, ICE has obtained no match information directly from SSA through ex parte orders from a District Court under 26 U.S.C. section 6103 (i)(1). It can obtain copies of no-match letters from an employer during the course of an I-9 audit or when it issues administrative or Grand Jury subpoenas.
Q: What other evidence has ICE used under the “totality of circumstances” standard to establish that an employer has knowingly employed unauthorized aliens under 8 U.S.C. section 1324?
A: ICE has used undercover investigations to follow up on tips received from the public. It often arrests employees and interrogates them regarding the employer’s knowledge of their illegal status. It can plant a wiretap device on employees and direct them to engage in incriminating conversations with HR managers or supervisors. It has also sent undercover male and female officers to worksites to pose as employees and plead for employment while disclosing their illegal status.
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*The Employers Group is a member of the National Association of Manufacturers (NAM) and the nation's largest and oldest nonprofit employer association dedicated to Human Resources management. Founded in 1896, it now represents close to 4,000 employer organizations throughout California. www.employersgroup.com
+Josie Gonzalez is the Employers Group’s designated immigration attorney on behalf of California employers. She is managing partner at Gonzalez & Harris and has represented employers in all aspects of immigration law for more than 25 years. She is a former public defender and criminal defense attorney, a nationally recognized expert on employer compliance/enforcement and foreign labor certification (PERM), and a frequent commenter on agency regulatory activities and the impact of U.S. immigration laws on the business community. She also serves as an elected member of the Board of Governors for the American Immigration Lawyers Association (AILA), a 10,000 member voluntary bar association in the field of immigration and nationality law.
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