DHS issues Social Security 'no-match' letter guidance

By Bill Leonard Jun 19, 2006

While Congress grapples with two very different approaches to immigration reform as passed by the House and Senate, the Department of Homeland Security (DHS) has added some new wrinkles to the issue by proposing two new regulations affecting the procedures employers should follow to confirm that employees are eligible to work in the United States.

The proposed changes would allow employers to store I-9 forms electronically and would provide guidelines businesses should follow whenever they receive letters from the Social Security Administration (SSA) or the DHS that the Social Security number and name provided by an employee do not match data in government records. The proposed rules appeared in the Federal Register on June 14 and 15.

The new rules allowing the electronic storage of the I-9 forms take effect immediately. This change comes as welcome news to employers and business groups.

“We’ve been pushing for electronic storage of I-9 forms for years now,” said Michael Aitken, director of governmental affairs for the Society for Human Resource Management (SHRM). “Placing the forms into electronic files should ease some administrative burdens for employers and also reduce the number of errors. It just makes sense that these records should be stored electronically on an employer’s computer systems.”

Technically, however, the rules will not become final until later this year. Once proposed rules appear in the Feder al Register , there is a 60-day comment period. DHS officials will then review the comments.

“Revisions to the final rules are possible, but we felt employers would benefit much more if we made the changes to the I-9 form rule effective immediately,” said Jarrod Agen, a spokesperson for the DHS.

A surprise on ‘no-match’ letters

The proposed guidance for handling “no-match” letters from the DHS and the SSA, however, caught many employer groups off guard. According to several sources contacted by HR News, there was no indication that the DHS was planning to issue the proposed rule changes until department officials announced on June 9 that the revisions would appear in the Federal Register.

Most business groups declined to comment until the revisions were published and they had the chance to examine the proposal.

“We want to review the proposed changes carefully before commenting on them,” said Mike Donohue, a spokesperson for the National Federation of Independent Business.

The proposed regulations offer new guidance to U.S. businesses on how they should handle “no-match” letters from SSA or from the DHS. Employers receive these letters when reported wage earnings or identification documents for employees don’t match data in government records.

According to SSA statistics, about 10 percent of the roughly 250 million wage-earning reports the agency receives every year do not match its Social Security numbers. Most of these no-matches result from typographical errors or name changes. Individuals whose name and addresses don’t match the Social Security records are then sent a letter asking them to resolve the problem.

Employers will receive letters if the individual fails to respond to the initial SSA inquiry or if a “significant number” of the company’s workers do not match the SSA records. For years, employers have received these no-match letters without guidance on what steps to take. According to the most current data available, the SSA sent more than 126,000 letters to employers during 2004.

“The typical response from employers has been to ignore the letters because there has been no clear procedure on what to do,” said Agen. “We believe the proposed changes offer a clear guideline on the appropriate steps employers should take.”

According to the proposed guidance, these steps include checking the employers’ records to ensure that the discrepancy does not result from a typographical or clerical error. If there is such an error, the employer should submit the corrected information to the appropriate agency.

If the problem is more than just a clerical error, the employer should promptly request that the employee confirm that employment records are correct. If records are not correct, the employer should take the necessary steps to correct the error with the appropriate agencies.

Employers have 60 days after the receipt of the “no-match” letter to resolve the problem. During that period, the employer should attempt to reverify the individual’s Social Security number or employment authorization. The guidance allows for an additional three days to acquire new authorizations from the relevant federal agencies.

The DHS says it will consider any employer that follows the proposed guidelines to be in a “safe harbor” if it has attempted to comply with the regulations in good faith. However, an employer that is unable to resolve the no-match problem within 63 days will have the choice of terminating the employee in question or run the risk that the DHS investigators will conclude that the company knew that it was employing an immigrant who is unauthorized to work in the United States.

“The federal government has not offered guidance before on what employers should do when they receive ‘no-match’ letters, so the DHS effort to do this is well-intentioned and could be a welcome change,” said SHRM’s Aitken. “However, we will be reviewing these proposals carefully. The main concern, as I see it, is that the proposal could place an administrative onus on employers to track and report the status of the no-match letters.”

According to Agen, the intention is to gather information that allows DHS Immigration and Customs Enforcement (ICE) agents to catch and penalize employers that abuse the system intentionally.

“Most employers want to do the right thing, and the proposed new rules give employers a clear guidance on what they need to do,” Agen said. “These changes will give the ICE some new tools to enforce the existing immigration laws.”

Problem common in five industries

Statistics from the SSA appear to confirm Agen’s point. Among the more than 2.5 million employers that file earnings reports with the SSA, approximately one-third of the no-match letters were sent to 8,900 employers. Nearly 45 percent of the letters were sent to employers in five industries—health care, food service, construction, agriculture and hospitality.

The higher incident rate within the five industries indicates the challenges these employers face in hiring for many jobs that typically have high turnover rates and employ a large number of immigrant workers.

“We find the vast majority of employers want to comply with the law,” Agen said. “Our goal is to identify the few bad actors and then have the tools to build strong cases against them.”

Federal law limits how the SSA can share its “no-match” information with other federal agencies. Agen said that the DHS staff is working with Congress to create a legislative fix that would make it easier for the SSA to share this information with other federal agencies.

In April, ICE acted on a tip that IFCO Systems North America, a manufacturer of wooden pallets, was employing illegal immigrants and discovered that more than 50 percent of the company’s workforce had invalid or mismatched Social Security numbers.

The ICE raid rounded up more than 1,500 undocumented workers, and several IFCO managers and executives were arrested for willful violations of federal immigration and employment statutes.

“If you look at the example of the IFCO case, you will see how we were able to use some of the no-match data collected by both the DHS and SSA to build a strong case that there were possible violations of immigration laws,” Agen said.

According to the SSA records, nearly 54 percent of IFCO’s workers were using Social Security numbers that did not match government records. The SSA sent multiple letters to the company stating that a large portion of its workforce appeared to be in violation of the law. IFCO’s management ignored the letters, DHS says.

“The information that we can collect on the no-match records will only make our cases against employers that choose to abuse the system stronger,” Agen said. “We are not out to penalize employers that are making good-faith efforts to comply with the rules.”

The U.S. Citizenship and Immigration Services will be providing further information on the regulation changes on its web site, and the agency is encouraging employers to ask questions and provide comments on the proposals. Comments must be made by Aug. 14 and can be e-mailed directly to the DHS at: rfs.regs@dhs.gov ​or can be sent by postal mail to: Director, Regulatory Management Division, U.S. Citizenship and Immigration Services, Department of Homeland Security, 111 Massachusetts Ave. NW, 2nd Floor, Washington, D.C. 20529.

Bill Leonard is senior writer for HR News.


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