If an employer follows the procedures provided in the new regulation, DHS will not allege that the employer had ‘constructive knowledge’ it was employing an illegal worker.
Summary
In the wake of a failed attempt to negotiate legislation for comprehensive US immigration reform with Congress, the Bush Administration recently announced a series of "regulatory" reforms to tighten immigration enforcement. Perhaps the most significant and controversial of those reforms is the Department of Homeland Security's new regulation addressing "no match" letters.
Recent statistics have suggested that several million people are working in the United States illegally.1 On August 10, 2007, US Immigration and Customs Enforcement (ICE), a division of the US Department of Homeland Security (DHS), announced new regulations to help federal authorities and US employers identify illegal workers who have used fraudulent documents to obtain employment. Every year, the Social Security Administration (SSA) and ICE send "no-match" letters notifying employers that certain of their employees' social security numbers or immigration data do not match the employees' names in official records.2 The new ICE regulations provide employers with specific instructions on how to address these "no-match" notifications properly and create a "safe harbor" for those employers who follow the instructions carefully. An employer who receives a "no-match" letter but who does not follow the instructions or take other appropriate action may risk a later ICE determination that the employer had "constructive knowledge" that the employee(s) at issue were working illegally. This could expose the employer to civil penalties and, in certain circumstances, to prosecution. The regulations take effect 30 days after they are published in the Federal Register (publication is likely by August 17, 2007 so the effective date will be in mid-September). SSA plans to dispatch thousands of "no match" notifications to employers in September, October and November of this year.
Background
US employers are familiar with the "I-9" Employment Eligibility Verification Form that they must complete for each new employee. The form requires employers to request and review specified documents from new employees by no later than the third day of employment. Most employees meet the requirement by presenting a driver's license and social security card or a green card or other immigration-related work authorization document. A US passport and certain other specified documents can also be sufficient. Under current law, employers are not required to be experts in examining documents, but they must review the documents the employee presents and check to ensure the documents appear genuine. If the employer properly completes the I-9 form in good faith, the employer has established a rebuttable "affirmative defense" that it has not violated the ICE regulation by knowingly hiring an illegal worker. 8 C.F.R. § 274a.4; 8 U.S.C. § 1324a.
Every year, SSA receives millions of earnings reports (W-2 Forms) from employers in which the combination of name and social security number do not match SSA records. In response to many of these discrepancies, SSA sends "no-match" letters to employers. ICE sends similar letters when it detects discrepancies in immigration documents used to establish work authorization. While such discrepancies could occur for many reasons, including clerical errors or name changes, they could also indicate that the employee is working illegally.
Prior to the recent amendments to the regulation, the obligations of an employer receiving a no-match letter were unclear. The no-match letters themselves warned employers that singling out workers who might appear to be immigrants could give rise to discrimination claims, and the Department of Justice issued confusing guidance on the issue. In the new rule however, ICE — in consultation with the Justice Department — delineates specific steps that, if applied uniformly to all employees with "no-matches," will be appropriate and will preserve an employer's "presumption of good faith" under the law.
Key Provisions of the Regulation
Under the new regulation, receipt of a "no-match" letter from either SSA or DHS can serve as evidence of an employer's constructive knowledge that an employee is not authorized to work. The amended regulation sets out steps an employer should take to remain in good faith compliance with immigration laws. Specifically:
(1) Within 30 days of receiving the no-match letter, the employer should:
- Check the employer's own records to determine whether the discrepancy resulted from a clerical error in the employer's records or in its communication to SSA or DHS. If such an error is found, the employer should promptly correct its records, inform the relevant agency, and verify that the correction matches the agency's records. The employer should record the manner, date and time of the verification and keep this record on file with the employee's Form I-9; or
- If no clerical error is found, ask the employee to confirm that the employer's records are correct. If the employee cannot identify a clerical error, the employer should ask the employee to resolve the discrepancy with the relevant agency.
(2) If the employee cannot resolve the discrepancy with SSA or DHS within 90 days, the employer should ask the employee to complete a new Form I-9 within three days to re-verify the employee's work authorization and identity. The same procedures should be followed as if the employee were newly hired, except that the re-verification can only be based on a photo identification (such as a passport), and no document may be used with the problematic social security number or visa/work authorization number that is the subject of the no-match letter.
(3) If the employer and employee are unable to resolve the discrepancy through these steps, the employer must choose between terminating the employee or assuming the risk of being found to have had constructive knowledge that the employee was unauthorized to work.
While an employer could take other steps that DHS would consider a "reasonable" response to a no-match letter, an employer can only be certain that it will not be found to have constructive knowledge of the employee's unauthorized employment status if it follows the safe-harbor procedures described in the new regulation. DHS has not yet identified any other appropriate "reasonable steps" with any specificity, but has indicated that participation in certain other government programs, such as the Electronic Employment Verification System, may qualify.3
If the employer does not follow the safe-harbor procedures described in the new rule or take other appropriate action, the employer may be found to have constructive knowledge regarding the illegal work status of the employee, and may be held liable under section 274A(a)(2) of the Immigration and Nationality Act. Current civil penalties range from $250 to $2,200 for each unauthorized alien for the first offense, $2,000 to $5,500 for the second offense, and $3,000 to $11,000 for subsequent offenses. 8 C.F.R. § 274a.10(b). ICE has announced its intention to increase these civil penalties by regulation in the near future.4 The employer may also be subject to criminal penalties, including fines and/or imprisonment for up to six months if it engages in a pattern or practice of violations. 8 C.F.R. § 274a.10(a).
Additionally, the Attorney General may bring a civil action in a United States District Court seeking an injunction or restraining order against an employer whom the Attorney General has reasonable cause to believe is engaged in a pattern or practice of employment, recruitment, or referral in violation of the regulation. 8 C.F.R. § 274a.10(c). Further, 8 U.S.C. § 1324 may impose criminal liability for a range of conduct that can be broadly described as encouraging or inducing illegal immigrants to reside or remain in the United States with knowledge or in reckless disregard of the immigrant's illegal status.
Also, while the safe harbor procedures protect an employer from federal claims of civil liability on the grounds of constructive knowledge, they do not provide a safeguard against civil or criminal liability when the government can prove that the employer had actual knowledge of the employee's illegal status.
Conclusions
If an employer follows the procedures provided in the new regulation, DHS will not allege that the employer had "constructive knowledge" it was employing an illegal worker. If an employer chooses to terminate an employee after following these procedures — and has followed the same procedures for all its employees with "no matches" regardless of race or ethnicity — the termination will not be considered a civil rights violation by the Federal Government. While this "safe harbor" does not immunize an employer from an individual's claims of discrimination under the Immigration and Nationality Act (8 U.S.C. § 1324b) and Title VII of the Civil Rights Act of 1964 (42 U.S.C. § 2000e), it should provide an effective defense to any such claims. As new regulations expose employers to potential new legal risks, employers would be well advised to develop very clear and systematic set of instructions for human resources personnel on how to navigate these safe harbor procedures while avoiding possible discrimination claims. Certain employers who have not previously reconciled "no matches" identified in earlier SSA or ICE letters may wish to employ the safe harbor procedures in this rule to do so now.
About the Authors
Philip J. Perry is a Litigation Partner in the Washington, D.C. office of Latham & Watkins. He previously served as the General Counsel of the US Department of Homeland Security. Mr. Perry also previously served as the General Counsel of the White House Office of Management and Budget, and as the Acting Associate Attorney General of the Department of Justice. He chairs the firm's Public Policy Group.
John D. Shyer is a partner in the New York office of Latham & Watkins, where he practices primarily in the areas of Employment Law and Benefits and Compensation. Mr. Shyer has defended clients in actions alleging race, sex, national origin, disability, and age discrimination, breach of contract, and wrongful termination filed with administrative agencies and federal and state courts. He currently serves on the Board of Editorial Advisors of Employment and Labor Lawcast and Board of Editors of The Employment Law Strategist.
Kathryn H. Ruemmler is a partner in the Washington, D.C. office of Latham & Watkins, and is a member of the firm's White Collar and Government Investigations group. Ms. Ruemmler is a former federal prosecutor and the former Deputy Director of the US Department of Justice's Enron Task Force.
Endnotes
1 See generally Michael Hoefer, Nancy Rytina and Christopher Campbell, Department of Homeland Security, Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2005 1 (2006).
2 "No match" is the commonly used terminology for these letters. Officially, SSA's letters are "Employer Correction Requests" and ICE's letters are titled "Notice of Suspect Documents."
3 Safe Harbor Procedures for Employers Who Receive a No-Match Letter, Supplementary Information Section II.E.8, DHS Docket No. ICEB-2006-0004.
4 Press Release, Department of Homeland Security, Fact Sheet: Improving Border Security and immigration within Existing Law (Aug. 10, 2007).
If you have any questions about this Client Alert, please contact Philip J. Perry or Kathryn H. Ruemmler in our Washington, D.C. office or John D. Shyer in our New York office.
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