New I-9 Regulations Take Effect 9/14/07
September 7, 2007

Sometimes it is truly a marvel to watch our government at work. In 1986, Congress passed the Immigration Reform and Control Act (?IRCA?). Hoping to slow the tide of illegal immigration, and unable to enforce the immigration laws itself, the government passed enforcement responsibilities onto employers. The I-9 requirements were the result, obligating employers to check to see if employees are authorized to work in the U.S. IRCA was enforced by the Immigration and Naturalization Service (?INS?), although if you were audited by the Department of Labor for wage and hour violations, that agency would also examine your I-9's to ensure compliance with IRCA. Failure to comply with IRCA results in civil fines.

After 9/11, the Department of Homeland Security (?DHS?) was created, and INS was re-organized and re-named the U.S. Citizenship and Immigration Services (?USCIS?). USCIS was one of the agencies rolled into DHS. The statute that was created to pass onto employers part of the responsibility for enforcing the immigration laws now has morphed into a statute to pass onto employers part of the responsibility for protecting us against terrorism. And that sets the stage for the following drama.

Background

Every year, the Social Security Administration (?SSA?) performs the ministerial function of informing thousands of employers that certain employees' names and corresponding social security numbers provided on Forms W-2 do not match SSA's records. This is called a ?no match letter.? As many as 4 percent of names and social security numbers do not match SSA's records. There are a variety of totally innocent reasons for this: typos in recording information on the forms, changes of name that occur through marriage, and the like. There are also a number of illegal immigrants who provide falsified social security numbers to employers in attempting to circumvent the requirements of IRCA.

Enter DHS. Not satisfied that employers would take steps to correct the erroneous information because of the administrative hassles it creates, DHS created more rules and regulations, reiterating that employers remain accountable for the workers they hire and ?clarifying? the steps employers should take to resolve mismatches. The DHS regulations outline specific steps employers should take under immigration law when they are notified that employees' names and corresponding social security numbers as provided on Forms W-2 do not match SSA records.

Before going on to discuss those new regulations, employers should realize they put the employer in a vise. On the one hand, if a company hires an individual not authorized to work in the U.S., knowledge that could be imputed to the employer if the requisite precautions are not taken, then the employer is liable for fines and penalties. On the other hand, if the employer is not careful in making sure it does not do more than what is required by the regulations, for instance, an employer that takes action against an employee based on nothing more than a mismatch letter, could be liable for violation of anti-discrimination laws.

The New Regulation

Employers who follow the procedures described in the new regulation will qualify for a ?safe harbor,? meaning that they will not be in violation of IRCA if they comply with the new regulations. The new rules require employers to terminate any workers whose ?no-match? social security number cannot be resolved in 90 days. In order to be protected from liability under the safe harbor, the following steps must be followed upon receipt of a no-match letter:

? Within 30 days of the employer's receipt of a no-match letter, it must verify company records to determine whether the discrepancy is the result of clerical error. If the discrepancy was caused by such an error, the employer must make the necessary corrections and verify that the employee's name and social security number match SSA's records.

? If the discrepancy was not caused by an error in the employer's records, the employer must promptly inform the employee that his or her employment will be terminated if the employee cannot resolve the problem with the SSA within 90 days from the employer's receipt of the no-match letter. Clearly, the sooner the employee is informed of the problem, the better chance the employee has to resolve the issue and retain employment.

? If the discrepancy is not resolved by the employee with the SSA within 90 days from the employer's receipt of the no-match letter, the employer must complete a new I-9 form for the employee, without accepting any document that contains a disputed social security number to establish employment authorization or identity. The employee must also present a document that contains a photograph in order to establish identity or both identity and work authorization. The employee must complete section one of the I-9 form and the employer must complete section two of the I-9 within 93 days of the employer's receipt of the no-match letter from the SSA. The newly completed I-9 form must be retained with the prior I-9 form(s).

? If at the end of the 93 day process, the employee's work eligibility cannot be re-verified, the employee's employment must be terminated. An employer who fails to terminate such an employee within the 93 days, assumes the risk that DHS will impose penalties on the company for ?knowingly? employing an unauthorized alien in violation of the law.

To avoid potential discrimination claims, these procedures must be applied to all employees identified in no-match letters. This regulation becomes effective September 14, 2007.

Enforcement Issues

This new regulation took a hit on August 31, 2007 when a federal judge in California halted implementation of the new enforcement measures in California and stopped SSA from sending out the first round of letters to employers containing DHS warnings. In a lawsuit filed August 28, the Plaintiffs, which included the American Civil Liberties Union and the National Immigration Law Center, argued that DHS lacks the authority to create liability under the Immigration Control and Reform Act based on SSA information. The Plaintiffs raised serious questions as to whether the new DHS rule is inconsistent with the statute and beyond the statutory authority of DHS and the Social Security Administration. The Plaintiffs also alleged that SSA is not permitted to use a procedure designed to correct tax information as a means of creating immigration enforcement.

A noteworthy point raised by the Plaintiffs is that DHS tried to obtain the authority to use SSA data for enforcement efforts as part of the comprehensive immigration overhaul that failed in the Senate. In other words, Congress refused to grant it the authority it arrogated to itself. The California court believed there were enough concerns about the ability of DHS to impose this new requirement, and new potential liability, on employers to put things on hold for a while, at least in California . That stay, however, does not apply outside California , so employers in the remaining 49 states are subject to the new regulations on September 14.

If you have questions, please contact:
Frank Laws or Sara Levinson

(410) 752-2468