On August 15, 2007, the Department of Homeland Security published its final rules which create a safe-harbor procedure that employers may choose to follow when they receive a letter from the Social Security Administration (SSA) informing them that the combination of an employee name and social security number being used by that employee does not match SSA's records. These letters are commonly called "no-match letters." The rules will become effective on September 14, 2007. [Note: On August 31, 2007, a federal judge in California issued an order which temporarily prohibits the Department of Homeland Security from relying on no-match letters, by themselves, as evidence that employers had constructive knowledge that the employee was not authorized to work in this country. That order also prohibits the Social Security Administration from issuing no-match letters to more than 140,000 employers. Thus, the scope and effect of the safeharbor regulations related to no-match letters is currently uncertain. Employers should consult with legal counsel before making decisions about whether (or how) to implement the safeharbor procedures.] This safe-harbor procedure may be of particular interest to Arizona employers because of the onerous requirements of the recently-enacted Legal Arizona Workers Act.

Under Federal immigration statutes, it is unlawful for an employer to continue to employ workers "knowing" they are not authorized to work in the United States. "Knowing" includes not only actual knowledge but also the concept of "constructive knowledge" - knowledge that may fairly be inferred from facts and circumstances. An employer's receipt of a no-match letter can be evidence that the employer had constructive knowledge if the employer fails to take reasonable steps after receiving the letter. The new rules outline a step-by-step procedure which employers may choose to follow, and which the Department of Homeland Security will deem reasonable and sufficient to eliminate the no-match letter as evidence that the employer had constructive knowledge that the employee involved was not authorized to work.

The actions required and the timeframes within which they must be accomplished to fit within the safe harbor are summarized in the following chart:

Timeframe: Day 0

  • Action: Employer receives no-match letter from SSA

Timeframe: 0-30 days

  • Action: Employer checks its own records to see if the discrepancy results from a typographical, transcription or similar clerical error in its records, or in its communication to SSA. If there is such an error, employer corrects it and verifies with SSA that the name and number, as corrected, match SSA's records.

Timeframe: 0-90 days

  • Action: If the review of the employer's records does not resolve the discrepancy, employer promptly asks employee to confirm that employer's records are correct. If they are not correct, employer corrects them with the information provided by employee and verifies with SSA that the name and number, as corrected, match SSA's records. If employer's records are correct according to employee, employer advises employee of the date the no-match letter was received and asks employee to resolve the discrepancy with SSA within 90 days of the receipt date. If employee resolves discrepancy, employer verifies with SSA that the name and number match SSA's records.

Timeframe: 90-93 days

  • Action: If employer is unable to verify with SSA within 90 days, employer completes a new Form I-9 for employee as if employee were newly hired; however, employee may not rely on any document containing the disputed social security number.

If the no-match discrepancy is not resolved and if the employee cannot produce adequate documentation to complete the new Form I-9, the employer must either terminate the employment relationship or risk being found to have constructive knowledge that the employee is not authorized to work.

Employers are not required to follow this safe-harbor procedure.It simply provides a clear method for employers to exercise reasonable care in addressing no-match letters.There may be other reasonable methods to respond to no-match letters that will prevent a finding of constructive knowledge, but they do not provide the benefit of a "safe-harbor."If an employer chooses to follow the safe-harbor procedure, it should do so uniformly to avoid discrimination claims.Thus, the employer should require all employees who fail to resolve no-match discrepancies to fill out a new Form I-9, and should apply a uniform policy to all employees who refuse to participate or whose Form I-9 verification is unsuccessful.

This safe-harbor procedure has limited application.It prevents a finding of constructive knowledge based on the no-match letter only; it does not prevent finding that an employer has actual or constructive knowledge for some other reason.Also, it does not apply when an employer learns of a SSA no-match discrepancy by any means other than a no-match letter, such as through participation in the U.S. Citizenship and Immigration Services' Employment Eligibility Verification Program ("EEV" formerly known as the "Basic Pilot Program").

Under the newly-enacted Legal Arizona Workers Act, all Arizona employers will be required to participate in the EEV beginning January 1, 2008.As a result, they will likely learn of SSA no-match discrepancies within just a few days of hiring the employee and without the need of a no-match letter.As noted above, the safe-harbor procedures in these new rules technically do not apply to this situation.Nevertheless, liability under the Legal Arizona Workers Act is based on intentionally or knowingly hiring or employing an unauthorized worker. Careful compliance with the safe-harbor procedures will likely be helpful evidence that the employer neither intended nor knew that its employees lacked work authorization.Accordingly, Arizona employers should consider whether they want to incorporate the safe-harbor procedures into their employment policies and practices.

If you have any questions or concerns about the new Safe-Harbor Procedures, contact the Chair of Jennings, Strouss & Salmon's Labor and Employment Department, John J. Egbert.