Wisconsin Lawyer
Vol. 84, No. 10, October 2011

When was the last time you received a call from a client regarding receipt of a “no-match” letter from the Social Security Administration (SSA)? Probably sometime before 2007, when the SSA suspended its practice of sending notices to employers advising them that an employee’s name or Social Security number (SSN) did not match SSA records. Your phone is apt to start ringing again with calls concerning such notifications. As of April 2011, the SSA began mailing no-match letters to employers that submitted a wage report during the 2010 tax year containing a reported name, SSN, or combination thereof for an employee that does not match information in SSA records. This article describes the purpose of no-match letters and answers common questions about responding to their receipt.

Overview

The SSA sends out a separate letter for each employee for whom there is a no match with its database, as opposed to its prior practice of sending letters listing multiple employees. The letters will advise employers that the issuance of the letter “does not imply that you or your employee intentionally provided incorrect information about the employee’s name or SSN. It is not a basis, in and of itself, for you to take any adverse action against the employee, such as laying off, suspending, firing, or discriminating against the individual.”

The new version of the no-match letter states that there are many reasons – not just outright fraud – for the SSA to generate a no-match letter. These reasons include input errors by the SSA, reporting errors by an employer or employee, identity theft, errors in reporting hyphenated or multiple last names, and an unreported name change. You should advise business clients to resist jumping to the conclusion that fraud is the cause for their receipt of a no-match letter and then taking immediate adverse action against any employee for whom such a letter is generated. An overly zealous response could give rise to a cause of action under one of several antidiscrimination or immigration-related statutes. The U.S. Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices (OSC) has promised stepped-up enforcement and vigilance against national-origin and citizenship-status discrimination connected with receipt of no-match letters.

However, despite the discrimination-claim risks your clients face whenever they approach an employee with regard to the receipt of a no-match letter, taking no action in response to the receipt of a no-match letter also presents risks. In every Form I-9 audit conducted by Immigration and Customs Enforcement (ICE), ICE requests production of any no-match letters received with regard to any current employees. As ICE continues on its path to conducting more frequent Form I-9 audits across the country, your business clients now face a much greater risk of being asked to produce all no-match letters they may have received. A business client’s failure to provide evidence of how it responded to receipt of a no-match letter will increase the likelihood of ICE bringing an enforcement action, either civil or criminal, against the business. Given the challenge for business clients of avoiding an accusation by ICE of complacency (or worse, intentional misbehavior) should an identified employee indeed turn out to be an unauthorized worker, a charge by OSC or the individual employee of unfair or discriminatory conduct, or both, the task of counseling business clients is undeniably complex. As a result, counsel should advise their clients to follow the new no-match guidance issued by the SSA and the OSC and tread lightly when addressing a newly received no-match letter for any current employee.

Answers to Common Questions

• May a business client take immediate action against an employee for whom it has received a no-match letter? A business client should immediately notify the affected employee of the no-match letter in writing but take no immediate adverse action against the employee. Existence of a written notice to the employee will be useful for documenting a client’s efforts to respond appropriately to the no-match letter.

• May a business client assume that an employee is unauthorized to work in the United States if the employee’s name, SSN, or both do not match SSA records? No. As noted above, there are many reasons a no-match letter might be issued, many of which have nothing to do with an individual’s ability to lawfully work in the United States. Conversely, just because an individual has a valid SSN does not mean that the individual is authorized to lawfully work in the United States. SSNs were never intended by the SSA to be a form of work-authorization proof, and the SSA does not welcome being dragged into the illegal-immigration debate. The erroneous assumption that the receipt of a no-match letter means the affected employee is not authorized to work in the United States, and the subsequent erroneous termination of the employee, could result in a finding of liability under the antidiscrimination provision of the Immigration and Nationality Act. Possible penalties under this provision include a requirement that the employer retain the name and address of every person who applies for a job with the employer for three years; reinstatement (with back pay) of the affected individual; payment of a civil penalty of between $100 and $2,000 for each individual so discriminated against (higher fines apply for subsequent violations); a requirement that special antidiscrimination notices and training be provided at the workplace; and attorney fees.

• What actions should a business client take if it receives a no-match letter? A business client should review in person with the affected employee the Form W-4, Form I-9, Social Security number verification system (SSNVS) record, and other documents it holds that may contain the employee’s SSN, to ensure that the employee’s name and SSN are correctly shown on the documents. The client then should advise the SSA (via Form W-2c) of any corrections required to eliminate data-entry errors. If the client’s records accurately show the name and SSN provided by the employee, the client should notify the employee that he or she should immediately contact the SSA to correct any problems with the employee’s SSN or SSA record. Counsel should further advise the client to regularly follow up with the employee to monitor the employee’s progress in correcting any errors with his or her SSN or SSA record. The client should also immediately document all such follow-up efforts and advise the affected employee that a refusal to provide any documentation or credible explanation of good-faith efforts to correct any problems with his or her SSN or SSA record could be grounds for termination. When and if the employee is able to provide a correct SSN, affected clients should then advise the SSA via Form W-2c of any corrections required to eliminate data-entry errors.

• What other actions should business clients avoid taking once they receive a no-match letter for an employee? In addition to not immediately terminating, suspending, or taking other adverse action against an employee for whom the client has received a no-match letter, clients should be counseled not to:

1. Attempt to immediately reverify the employee’s employment eligibility requesting the completion of a new Form I-9;
2. Follow different or inconsistent procedures for certain employees based on apparent or perceived national-origin or citizenship status;
3. Require the affected employee to produce specific documents to address the nonmatch; or
4. Ask the affected employee to provide a written report from the SSA or any other agency verifying the employee’s SSN.

• Does a business client have to keep an employee on the payroll if he or she does not respond to a request to address a no-match letter or seems unable to obtain a satisfactory resolution of a no-match issue? Guidance from the SSA and the OSC requires that employers provide employees with a “reasonable period of time” to resolve issues related to a no-match letter. However, currently there is no definition as to what constitutes a reasonable period of time. For now, counsel should advise clients to consider providing employees with at least 120 days from the receipt of a no-match letter before taking any adverse action, because this period is specifically mentioned by the SSA and the OSC in their new guidance.

A more rapid adverse response might be justified for an employee who refuses to provide any documentation or credible explanation of good-faith efforts to correct reported problems with his or her SSN or SSA record. Any adverse action against a recalcitrant employee should be handled on a case-by-case basis and only after consultation with employment counsel. Certainly, an admission by an employee that he or she is not authorized to work in the United States, or the receipt of additional official information from the federal government stating such, is sufficient grounds to immediately terminate the employee – regardless of the time that has passed since the receipt of the no-match letter.

• What if a client’s employee comes back with a new SSN after the receipt of a no-match letter? If an employee provides a new SSN to address a reported problem with a previously reported SSN, consider advising the client to verify the new SSN with the SSA using the SSNVS described below. If the employee completed his or her Form I-9 using a Social Security card (as a List C document) that the SSN reported as a mismatch, the client could demand that the employee complete a new Form I-9, and the client could then attach the new Form I-9 to the employee’s original Form I-9, along with a written explanation for the new Form I-9.

As with any Form I-9 process, an employer cannot specify which documents from the list of acceptable documents the employee must present to complete the new Form I-9. This means that the employee may legally produce the new Social Security card during the Form I-9 reverification process. If it is determined that the employee originally obtained employment using fraudulent documents, counsel should normally advise termination of the employee. However, given the complexity of Form I-9 reverification, as well as the potential risks of claims of discrimination or unlawful termination, a client’s decision to terminate an employee should be made only after the lawyer carefully considers with the client the potential ramifications and complications of termination.

• Does the receipt of a no-match letter mean that your client has “constructive knowledge” that an employee is not authorized to work in the United States? Probably not, but you must caution the client that it cannot ignore the letter, either. For now, the receipt of a no-match letter does not, in and of itself, rise to the level of constructive knowledge that the affected employee is unauthorized to work in the United States. As noted above, both the SSA and the OSC specifically warn employers against concluding that an employee is unauthorized to work merely because of receipt of a no-match letter. However, ICE, when conducting a Form I-9 audit of an employer, routinely requests to see any no-match letters received regarding the employer’s current workforce. There are also several federal cases involving employers that were criminally prosecuted based on allegations of harboring illegal workers after receiving no-match letters, because either the employers turned a blind eye to the letters or they had advised affected employees of ways to engage in further unlawful employment so as to avoid more scrutiny. Employers therefore should work with their legal counsel to develop specific, consistent, and responsive nondiscriminatory practices and procedures to address the receipt of any no-match letters. An employer risks raising the suspicion and ire of ICE otherwise.

Clients Can Minimize Their Chances of Receiving No-match Letters

Given the pervasiveness of SSN fraud in the United States, as well as the number of errors in the SSA’s records and the numerous ways in which a no-match letter can be triggered even when there is no error in the SSA’s records, it may be impossible for some of your business clients to avoid ever receiving a no-match letter. Fortunately, there are many steps that clients can take to reduce the likelihood of receiving no-match letters. Specifically, clients may use the SSNVS to verify electronically employees’ names and SSNs against SSA records (see http://www.ssa.gov/employer/ssnv.htm), or they can enroll in the U.S. Citizenship and Immigration Services’ (USCIS) “E-Verify” program, which automatically checks a new hire’s SSN against SSA records.

Your business clients should also establish other procedures and internal training to ensure that the names and SSNs of current employees are correctly recorded in their business records. Employers can use the SSNVS at any time after hiring someone to verify the name and SSN combination of current or former employees for purposes of accurate wage reporting. Employers may not, however, use the SSNVS to attempt to verify an employee’s employment authorization status. The E-Verify program may only be used to verify work eligibility for employees hired after enrollment into the program, unless the employer is a qualified federal contractor. E-Verify cannot be used to screen potential employees.

Unfortunately, the SSNVS and the E-Verify system are unable to detect all instances of SSN fraud. Moreover, other events, such as an employee’s name change, may also cause the generation of a no-match letter. Employers therefore must not rely on either of the electronic verification systems as a failsafe. Instead, your business clients must have in place good record keeping practices and policies, in conjunction with either system, to reduce the likelihood of receiving no-match letters.

Wisconsin Lawyer