THE (MIS)MATCH GAME:  Proposed Immigration Regs Would Alter Response to “Social Security” Mismatches

By: Penni Bradshaw
Winston-Salem, NC

July 17, 2006

EDITOR’S NOTE:
This is the first edition of Constangy’s IMMIGRATION DISPATCH, which will be published as warranted by developments in the immigration arena. 

Employers over the years have received mixed messages from the Social Security Administration and the Department of Homeland Security (formerly the Immigration and Naturalization Service) about employer obligations upon receipt of a Social Security “mismatch” letter.  The Department of Homeland Security has recently published proposed regulations that would significantly change employer obligations in response to Social Security “mismatch” letters.  This newsletter will discuss “Social Security mismatch” and some other significant recent developments.

Mismatched! 

Most employers are familiar with the standard “Social Security mismatch” letter, in which the U.S. Social Security Administration informs the employer that certain employee names and certain Social Security numbers do not match.  Employers can be liable if they fail to take appropriate action in response to receiving such correspondence . . .

. . . however,  they are also warned in the letter that they can be liable for using the letter itself as the basis for adverse action against the employees, “such as laying off, suspending, firing or discriminating against” the employees. 

The law seemed to many employers to present a “Catch 22,” subjecting them to sanctions whether or not they responded to the mismatch letter.

The Bureau of Immigration and Customs Enforcement of the Department of Homeland Security (ICE) has recently issued a proposed amended regulation that clarifies the employer’s obligations in such situations.  The proposed regulation applies to mismatch letters issued by either the Social Security Administration or the Department of Homeland Security.

Clarification of “Knowingly.”  Under the law, employers can be fined if they “knowingly” hire or continue to employ aliens not authorized to work in the United States.  The regulations have long recognized that an employer can be in violation of this law by having “constructive” knowledge in addition to actual knowledge.  In plain language, “constructive knowledge” includes instances in which an employer should have known there was a problem.

The proposed regulation adds two more examples of situations that may lead to a finding of “constructive knowledge”:  (1) The employer receives written notice from Social Security that employee names and SSNs do not match agency records; or (2) the employer receives written notice from Homeland Security that in completing Form I-9 an employee presented documentation that was not assigned to the employee, according to Homeland Security records.

The proposed regulations anticipate that the employer, within 14 days of receiving a mismatch letter or Homeland Security notification, would check its records to determine whether the discrepancy results from a typographical, transcribing or similar clerical error in the employer’s records or in its communications to the SSA or DHS.  If the discrepancy does not appear to have resulted from an employer error, the employer is to promptly instruct the employee to pursue the matter with a relevant agency.  For example, the employee might visit the local Social Security office and provide a proof of name change. 

It is important to note that the proposed regulations provide that the employer could not consider the discrepancy “resolved” unless or until the employer verified with Social Security or Homeland Security the following:  (1) that the employee’s name matches both the information in the Social Security records and the SSN assigned to that name, and (2) that the SSN is valid for work, either with or without authorization from Homeland Security.

If the discrepancy is not resolved within 60 days of the employer’s receipt of the mismatch letter, the employer must either terminate the employee or risk a finding that it had “constructive knowledge” that it was employing an illegal alien.

“Safe Harbor.” Here is the good part.  The proposed regulation provides that, if the employer fully complies with the above procedure, it cannot be found to have “constructive knowledge” of employing an illegal alien.

To get a copy of the proposed regulations, click here.

ICE Puts the Heat on IFCO 

Seven current and former managers, and 1,187 employees of pallet-management company IFCO Systems were apprehended by Immigration and Customs Enforcement, the enforcement arm of Homeland Security.  According to ICE, the arrests resulted from a year-long investigation of IFCO, during which it was determined that more than half of the company’s employees “had invalid or mismatched” SSNs.

Homeland Security has previously said that it does not review Social Security information for employees of employers who receive mis-match letters.  However, under the procedures set forth in the proposed regulations, Homeland Security would have full access to such information for enforcement purposes.

A Word to the Wise 

It is clear that the government has stepped up its immigration enforcement efforts.  I-9 compliance isn’t enough.  The government and, in some cases, private litigants, want to know whether employer “knew or should have known” that its workers – or even those of its subcontractors – might have been illegal aliens.  For example, in one scenario, an employer uses an employee as an informal “recruiter.”  The employee, in turn, readily provides a dozen new workers for consideration, all of whom are from Mexico and many of whom speak little or no English.  Such a situation has red flags all over it, and employer ignorance will be no excuse – assuming it is even believed.

Although they are not currently required to do so, many employers have taken the extra step of using the new on-line verification system (called the “Basic Pilot Program”) to double-check the legal status of all new hires.  To access the system, click here.  Employers will be required to enter into a “Memorandum of Understanding” with Social Security and Homeland Security, acknowledging, for example, that they will use the system only to verify new hires and that if the system is used, it will be used to verify all new hires, not just those of a certain ethnicity.  The system advises employers of issues such as non-matching Social Security numbers and names, or  green cards with identifying numbers where the names and numbers do not match.

Employers may also wish to obtain written representations that their subcontractors and temporary agencies are in compliance with I-9 requirements.  This could include a requirement that subcontractors or temporary agencies use the online verification system as well.  Employers can even require that these entities provide copies of the I-9 forms or on-line verifications.