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Responding to online “no-match” correction requests proves even trickier than responding to “no-match” letters.
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Much has been written about the Social Security Administration’s (SSA) “no-match” letters and what employers should do in light of safe harbor regulations that the U.S. Department of Homeland Security (DHS) has tried to implement for the past two years. Yet not much has been reported about dealing with no-match correction requests issued to employers reporting wages online to the SSA.
The issues raised by SSA correction requests are important because of the significance DHS officials place on the failure to respond. As the safe harbor regulations reflect, DHS officials believe that an employer’s failure to address a no-match resulting from a no-match letter constitutes constructive knowledge that the employee is not authorized to work. In the government’s view, this constructive knowledge is sufficient to support civil and criminal actions against the employer and those employees, including senior managers and HR professionals, who knew of the no-match but failed or refused to respond.
While the DHS has outlined what employers should do upon receipt of a no-match letter, there has been no direction about how to handle SSA correction requests. Without government guidance, HR professionals have been left on their own to formulate responses.
A Gamut of Responses
Employer responses have varied. Some employers have used the DHS’ safe harbor protocol as a guideline. This is appealing because the protocol outlines easy steps for the employer to follow. However, the protocol may not provide enough time to resolve legitimate issues. Further, because this protocol is designed primarily to deal with immigration issues, it does not fit well when tax issues are concerned.
Other employers follow the E-Verify guidelines, but these provide less time to respond. Given the variables, a consensus developed, especially in light of a 9th U.S. Circuit Court decision, Aramark v. SEIU, Local 1877, AFL-CIO CLC, 530 F.3d 817 (9th Cir. 2008), stating that employers should give employees a reasonable time to resolve problems raised by no-match letters and correction requests.
These problems are complicated by the SSA’s procedures not always corresponding to what the DHS regulations address. The SSA business services online site lets employers submit W-2 and W-2c forms by uploading a specifically formatted electronic file or by directly keying W-2 and W-2c information into an online form. The SSA verifies the Social Security numbers (SSNs) against its records using the Social Security Number Verification System. In the case of a no-match, the system electronically returns the W-2 form to the employer with a no-match request for correction.
The no-match request for correction on the electronically returned W-2 is displayed within a box in the upper portion of the form. The request states:
“Name and SSN Mismatch Alert: The name and SSN you provided does not match our records. Please verify that the name and SSN exactly match the name and SSN on the employee’s Social Security card. If you are sure the SSN and name are correct, check the box below.”
This narrative is similar to the language found in the SSA’s no-match letters. In our view, this is sufficient to require the employer to treat the correction request as if it was a no-match letter to avoid the serious legal consequences that ignoring such a no-match might cause. As with no-match letters, communication with affected employees often will be a significant part of the employer’s response to an electronic correction request.
The Social Security Number Verification System Handbook indicates that the information provided in a correction request does not mean the subject employee lacks work authorization and that no action should be taken against the employee based solely on that information. Yet employers have a legal obligation to report earnings to the government with valid identifying information. In no-match cases, the reporting cannot be done with the SSNs provided in the electronic W-2 forms that have been returned to the employer.
Moreover, for immigration purposes, the DHS has stated that failure to act responsibly in the face of evidence demonstrating an SSN no-match could give rise to civil or criminal liability. The intentional failure to accurately report SSNs is a federal crime.
The SSA’s electronic correction requests do not provide a procedural framework for correcting the no-match information.
The DHS, however, expects the employer to resolve the problem within a reasonable period of time or else run the risk of being accused of maintaining an undocumented worker on the payroll.
In response to SSA correction requests, employers may be tempted to ask workers for new documents and suspend, or even terminate, workers who do not provide new documentation to establish identity and employment authorization. Under existing law, however, employers must continue employing workers until the matters raised by the correction requests are resolved.
This creates a dilemma for employers because the DHS expects worksite compliance, while the SSA instructs employers not to take any act adverse to affected workers’ employment solely on the basis of a correction request.
To help resolve this dilemma, we suggest the following:
Correct clerical errors. Within 30 days after receipt of a correction request, check records for discrepancies in recording the employee’s information that might explain the correction request as a clerical error, and correct any clerical errors. This check should include a comparison of the employee’s W-4 form with the SSN reported in the correction request, as well as an examination of records to determine whether there was simply a typographical or transcription error.
Ask the employee to correct the problem. If you’re unable to resolve the SSA’s no-match discrepancy within 30 days, provide notices to the affected employees and former employees, directing them to correct the problems within a specified period of time if they want to retain their jobs.
The standard notice can be included in pay envelopes for current employees or sent via U.S.-certified mail to each current and former employee affected. For former employees, use the last known mailing address. Employers can include a courtesy version in Spanish.
Track employees who receive this document and all subsequent notices by keeping lists and placing copies of the notice in each affected employee’s payroll file.
Send follow-up notices. If you have not heard from an employee within 30 days, you must follow up. Again, you can send a form notice. If any prior notice or letter was returned as undeliverable, confirm that it was sent to the employee’s last known address. If it was not, it should be resent. If it was sent to the correct address, confirm with the employee that the document was received. You need not keep sending the notice to the same address. However, employees must understand that they face termination if they do not address and correct this problem.
If an employee has failed to respond after documented receipt of these two notices, send a strongly worded notice advising the employee that he or she will be terminated if he or she does not respond within the next 30 days.
Update records. If an employee returns with a different Social Security card from the one originally presented, or a receipt for a new card, and has a reasonable explanation for the problem—such as the need for a new SSA number as a result of identity theft or domestic violence—update your records and file a W-2c online with the corrected information or in a Form W-2c with the SSA so that the employee’s earnings are properly credited to him or her.
If the employee has a new SSN, he or she must complete a new Form I-9, or amend the outdated information on the old Form I-9 and initial and date the changes. The employee still is responsible for completing part one, and the employer must complete part two of the Form I-9. Retain the old Form I-9, if a new one has been completed, to document initial compliance with the law when the employee was hired.
Although an employer can request an employee’s Social Security card for W-2 or other business purposes, it cannot request the Social Security card for Form I-9 purposes unless the employer is already registered with and uses E-Verify. If the employer uses E-Verify, the no-match request for correction should be done in accordance with the DHS’ safe harbor protocol. The employee is free to provide it as a List C document.
Consider adverse employment action. Pay careful attention to whether there is a new name or SSN and the employee’s explanation of this change. If there is a complete name change or if he or she has an entirely new SSN, the employer may be on notice that the employee committed a fraud by originally using a false SSN. While this may not mean that the employee lacks employment authorization, it could mean that the employee has violated the law.
Individuals who use fraudulent documents or make false statements or attestations for purposes of satisfying the employment eligibility verification requirements may be fined or imprisoned, or both. In such a case, the employer may apply, in a nondiscriminatory manner, any termination policies it has for suspected criminal conduct or suspected false statements in employment documentation. The employer should be mindful that DHS regulations make it unlawful to knowingly hire or continue to employ an unauthorized alien.
Every employee in the United States subject to the Federal Insurance Contributions Act or income tax must have an SSN. Treasury regulations require an employee to show his or her Social Security card to the employer. If the employee does not go to the SSA office to clarify the matter, it is strongly recommended that the employer consider an adverse employment action, including termination.
If the employee goes to the SSA office but cannot correct the error and returns without a new Social Security card or receipt, inquire into the employee’s actions and obtain a copy of all documents or other materials that relate to his efforts. Review these carefully to determine if the employee has approached this important legal compliance issue diligently. If not, seriously consider termination so that the employer is not considered lax when it comes to worksite enforcement. In all these situations, it is important to treat all employees the same to avoid any possible discrimination claim.
If you believe that the employee has acted responsibly, continue monitoring the worker’s efforts closely. The SSA simply requires that the employer document its records with the information it relied on in preparing the W-2 that was filed. If the employer continues to employ the worker, the Internal Revenue Service (IRS) requires the employer to provide an employee or employer statement with any future returns. The employer should advise the employee that the Treasury regulations require it to provide a written, signed and dated statement explaining the discrepancy. A copy of the statement must be attached to the employer’s return. Retain a copy in your files. The statement should be provided on a completed Form SS-5. Providing the statement does not relieve the employee from the obligation of filing an application for a Social Security card.
If the employee does not provide the statement, consider termination. Alternatively, the employer can include its statement or Form SS-5, signed and including the word “Employer” as part of the signature. The employer also must include an explanation of why it has not secured a statement from the employee. With either statement, the employer should include a sentence at the top stating, “This information is being provided pursuant to Treasury Regulation 26 C.F.R. §31.6011(b)-2(c)(3).”
These statements are necessary to avoid the possible fines and penalties that can result if an employer fails to furnish the IRS with an employee’s SSN or furnishes an incorrect SSN.
If the employee is not a U.S. citizen, as evidenced by the box checked on part one of the Form I-9, there are additional DHS issues the employer should consider. These may warrant the employee’s termination. If the employee cannot present a valid Social Security card, be careful, because the DHS may find that the employer is on notice that the employee does not have employment authorization.
By following these steps, HR professionals can help ensure that employers will not face civil or criminal liability from any of the multiple government agencies involved in enforcement of the immigration laws or from the IRS for willful neglect to report accurate tax information.
The authors are attorneys at Epstein Becker & Green PC. Chichoni (firstname.lastname@example.org) is South Region chairperson of the firm’s Immigration Law Group. Groban (email@example.com) is the group’s national chairperson.
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