The Department of Homeland Security (DHS) again published the so-called “No-Match Regulation” on March 26, 2008. The regulation, first proposed on June 14, 2006, and published in final form on August 15, 2007, was withdrawn when the federal court in San Francisco enjoined enforcement actions based on the regulation. DHS now proposes to re-publish the rule in the identical form as it was published last August but with further commentary and justification. The supplemental commentary and justification reads more like an appeal brief challenging the district court’s injunction against the regulation than a review of the comments and considerations typical in Administrative Procedure Act proceedings. The regulation  has no new effective date, but the public is invited to provide comments before April 25, 2008. 

In its newly added commentary, DHS sought to clarify the employer’s obligation upon receipt of a no-match letter from the Social Security Administration (SSA).  One reason the federal court enjoined operation of the regulation was because DHS had not properly justified its change in position on this issue. An earlier DHS position maintained that a no-match letter was not evidence of unauthorized employment; the current rule suggests very strongly that such a letter is evidence that the individual referenced in the letter does not have employment authorization. DHS seeks to clarify this change by noting that a no-match letter, by itself, is not sufficient evidence of a lack of authorization to justify termination. However, receipt of the letter does raise an issue about the individual’s authorization and imposes a duty on the employer to make further inquiries to verify the individual’s employment authorization. The failure to make the further inquiries identified in the regulation (outlined below) justifies DHS’s determination that the employer had “constructive knowledge” that the individual referenced in the no-match letter was working without valid employment authorization. 

The Government also responded to the court’s determination that DHS had not provided sufficient analysis to justify the regulation pursuant to the Regulatory Flexibility Act. In making this determination, he court noted that there are some industries that have been significantly affected by the regulation. DHS recognized and quoted several authorities to confirm that some industries, particularly agriculture, may lose a significant portion of their workforce due to the regulation’s operation. In particular, DHS noted that as much as 70 percent of farm workers could be working without authorization. DHS then justified its position with a technical discussion classifying the rule as interpretative and not legislative. By merely interpreting the statute, DHS suggested that it is not imposing any new obligations on employers but is merely giving guidance with regard to the existing statutory obligations. DHS argued that criticism that the regulation is legislative is misplaced since the regulation merely interprets and applies existing law. 

Turning to the details of the regulation itself and its impact on employers, the proposed regulation provides that an employer who receives a no-match letter and fails to take corrective action will be presumed to have constructive knowledge that the named employee does not have employment authorization. Criminal and civil penalties for the employment of unauthorized workers may then be levied against the employer. However, if the employer takes certain steps to address the problems identified in the no-match letter, it will be granted a “safe-harbor” from civil and criminal penalties. The following steps are set forth in the regulation:

  1. Within 30 days, the employer must check its records and correct any clerical or typographical errors that may have caused the no-match and then validate the correction with the SSA.
  2. If the records can not be corrected, or the SSA does not validate the correction, the employer must notify the employee of the receipt of the no-match letter and advise the employee to resolve the discrepancy with the SSA no later than 90 days following receipt of the letter. 
  3. If the discrepancy is not resolved within 90 days of the receipt of the letter, the employer must attempt to re-verify the employment authorization by completing a new I-9 form. The employee may not present any documents in support of the new I-9 that contain the discredited social security number. The document presented to establish identity or both identity and employment authorization must include a photograph. 
  4. If the employee is unable to resolve the discrepancy with the SSA or verify employment eligibility within 93 days of receipt of the no-match letter, the employer may terminate the employee’s employment. Continued employment of an individual who fails to resolve the no-match discrepancy or complete a new I-9 under the enhanced rules subjects the employer to the charge of knowingly hiring unauthorized workers. 

The Department of Justice, Office of Special Counsel (OSC), is responsible for enforcement of the anti-discrimination provisions of the Immigration Reform and Control Act (IRCA). Often referred to as the other side of the coin, employers must walk a fine line between hiring unauthorized workers and prompting charges of discrimination based on citizenship, immigration status or national origin. OSC has made available a draft statement that seeks to provide guidance to employers as they attempt to walk this fine line. The draft statement has not yet been posted to the OSC web site but is expected when DHS’s clarification is published in the Federal Register. 

After reiterating the position that it will initiate investigations in any case in which there is reasonable cause to believe employers have engaged in unlawful discrimination, the OSC states that an employer who follows the same procedures for all employees subject to the no-match letter will not be subject to charges of unfair discrimination. Employers risk discrimination charges, however, if all employees subject to the no-match letter are not treated the same.