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On October 10, 2007, a federal court issued a preliminary injunction that further delays the implementation of new Department of Homeland Security ("DHS") regulations that would require U.S. employers to take specific actions if they receive so-called "no match" letters from the Social Security Administration ("SSA"). "No match" letters are letters sent by the SSA to notify employers that an employee's name and social security number (SSN) as reported on their W-2 form does not match SSA records.
In the latest development in the case of AFL-CIO, et al. v. Chertoff, et al. (N.D. Cal. Case No. 07-CV-4472 CRB), Judge Charles R. Breyer of the U.S. District Court for the Northern District of California held that "serious questions" were raised as to whether, in promulgating the new no-match regulations, the DHS had exceeded its authority or otherwise failed to take certain measures required by law. The regulations, which were set to take effect on September 14, 2007, had been previously blocked by a temporary restraining order issued on August 31, 2007.
The new DHS regulations establish that an employer's receipt of a "no match" letter from SSA, in itself, could be used as evidence that the employer has constructive knowledge of an employee's lack of employment authorization unless the employer takes reasonable steps to resolve the "no match." Failure to do so could subject the employer to civil penalties (up to $10,000 per incident) as well as possible criminal sanctions.
The new regulations set forth certain "safe harbor" procedures that employers can take to resolve the "no match" and avoid a charge of constructive knowledge. These procedures include reviewing employer records, requiring the employee to correct the discrepancy directly with the SSA, or completing a new I-9 Employment Eligibility Verification Form with different documentation, all within specific time frames. If these procedures do not resolve the "no match," the employer must terminate the employee or face liability. However, the employer must follow the regulations' guidelines in terminating the employee so as to avoid a claim of wrongful termination.
The plaintiffs in this case, a coalition of labor unions and immigrant rights groups, including the AFL-CIO, the American Civil Liberties Union, and the National Immigration Law Center, are ultimately seeking a permanent injunction of the new regulations.
We will keep you apprised of developments regarding this issue as they evolve. If you have any questions about this rule or for more information on how to ensure compliance with the law, please contact our Business Transactions, Employment and/or Hospitality Law Groups.
For previous Gordon & Rees publications on this subject, please see the following links:
Not So Fast . Federal Court Halts Implementation of The New "No-Match" Regulations
New Employer Procedures Required For SSA "No Match" Letters
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