Volume 24: Crackdown on Immigration Creates Concern for Businesses

What’s the common link between the Americans with Disabilities Act, HIPPA, Y2K and Sarbanes-Oxley? Each, in its time, sent chills down the spines of managers whose job it was to figure out how to adjust their business operations to meet the new rules and procedures. Now, in an effort to crackdown on illegal immigration, the Department of Homeland Security (DHS) is striking fear in the hearts of business owners everywhere by implementing new, stricter rules related to employers’ obligations in response to social security number No-Match Notices.

With an estimated 12 to 20 million undocumented workers currently employed in the US, it is anticipated that businesses in the services industries, such as restaurants and hotels, as well as the construction and farming industries will feel the greatest impact from the Department of DHS’ new rules, scheduled to go into effect on September 14, 2007.

"For some employers, the DHS’ new rules are every bit as significant as the ADA, HIPPA or Sarbanes-Oxley,” said Jacob Monty, an employment lawyer who manages Monty Partners LLP and serves as a consultant to G&A Partners, a Houston-based HR services firm. “The difference is that those changes had a broad but shallow impact–conversely, the new DHS rules will likely affect fewer industries, but they have the potential to deliver a deep and lasting blow to the industries impacted."

Under the DHS’s new, stricter rules, employers who receive a No-Match letter from the Social Security Administration (SSA), that is a letter notifying an employer that a listed social security number does not match the employee’s name in the SSA’s database, may be subject to harsher penalties unless the employer attempts to promptly resolve the discrepancy.

Previously, a No-Match letter did not constitute notice to an employer that an employee is unauthorized to work. Now, however, receipt of a No-Match letter can constitute “constructive knowledge” that the employer knew that the employee’s social security number was, in fact, inaccurate and that he or she was unauthorized to work in the U.S. So it is critical that employers, after receiving a No-Match notice, take quick action if they hope to find “safe harbor” from penalties.

Safe Harbor Provisions

• Within 30 days of receipt of the No-Match letter, an employer has to check its records for a discrepancy. If the problem is a typographical or clerical error, the employer must correct the error with the SSA and verify that the employee’s name and social security number now match the agency’s records.

• Employers must now also contact their local DHS office in accordance with the notice's instructions and attempt to resolve the question raised by DHS about the immigration status document or employment authorization document. Note that the specific instructions in the notice may provide less than 30 days for the employer to respond.

• Within 90 days of receipt of the no-match letter, the employer should advise the employee that he or she must resolve the discrepancy with the SSA within 90 days of the date that the employer received the notice from the SSA.

• Within 93 days of receipt of the No-Match letter, if the employee cannot resolve the discrepancy with the SSA within 90 days of receipt of the notice, the employer must again verify the employee’s employment authorization and identity by completing a new I-9 form with certain exceptions.

• If at the end of this process the employee’s work eligibility cannot be re-verified, the employer will need to terminate employment of the worker or risk the DHS imposing penalties on them for knowingly employing an unauthorized alien.

Monty points out that this is an extremely complex employment issue, and as a result, there are a number of myths circulating. For instance, it is a common misperception that the new rules apply to previously-received No-Match notices when in fact the revised rules only apply to No-Match notices received after September 14, 2007.

Monty offers some advice for companies struggling to understand and comply with the new rules.

“I recommend that employers enroll in the DHS’ E-Verify Program,” Monty said. “The program allows employers to instantaneously verify the employment eligibility of potential new hires, and perhaps more importantly, by being enrolled in the program, employers are protected to some degree from civil and criminal prosecution.”

Monty also suggests that companies consider contracting with a HR services firm, like G&A Partners, to assist them with what could become both a legal and administrative nightmare.

“It is next to impossible for small to medium-size business owners to remain focused on running their business if they have to try to understand and comply with intricate employment law issues,” said Monty. “HR firms have knowledgeable experts on staff and are well-equipped to manage all these issues for their clients.”

Sideline: Update on DHS "No-Match" Rules

This week (10/15/07) a U.S. district court judge in California granted a motion for a preliminary injunction that temporarily halts the implementation of the new “No-Match” regulations. This nationwide injunction prevents the DHS from not only enforcing the new “No-Match” regulations, but also the mailing of approximately 140,000 "No-Match" letters by the Social Security Administration (SSA), covering up to approximately 8 million employees. These letters would give employers 93 days to resolve any discrepancy based on a worker’s Social Security number, or else face potential civil and criminal violations. The “No-Match” regulations were scheduled to go into effect Sept. 14, 2007, but as a result of the recent ruling, the nationwide injunction will remain in effect until a higher court intervenes or until the lawsuit filed goes to trial. The DHS is currently considering its options, which include an appeal to the Ninth U.S. Circuit Court of Appeals. While the judge’s ruling temporarily prevents the implementation of the “No-Match” regulations and the SSA from sending "No-Match" letters with instructions for employers on how to comply with the rule, it does not prevent the SSA from sending employers the type of "No-Match" letters it has sent since 1994, but it is uncertain at this time whether the SSA will opt to do so.

For more information about the DHS' new rules related to "No-Match" notices, go to www.montypartners.com. For more information about working with a human resource services firm that can assist your company in managing this and other complex employee compliance issues, call G&A Partners at 713-784-1181.