Ninth Circuit Holds That A No-Match Letter Does Not Constitute “Constructive Knowledge”

On June 16, 2008, the Ninth Circuit held in Aramark Facility Services v. SEIU (Aramark) that a no-match letter from the Social Security Administration (SSA) does not place an employer on notice that it is employing an undocumented worker. The court reasoned that the main purpose of the no-match letters is not immigration-related, but merely to notify the named employees that, due to the mismatch, his or her earnings are not being posted to their account. In fact, the SSA tells employers that the information it provides does not make any statement about the named employee’s immigration status. The Court further reasoned that without more information, the letters do not provide employers with constructive knowledge of any immigration violation.

However, businesses should be aware that, under the Immigration Reform and Control Act of 1986 (IRCA), employers are subject to civil and criminal liability if they knowingly employ workers who are not authorized to work in the U.S. Under the regulations, this standard can be met if an employer has constructive knowledge of a worker’s lack of work authorization. Constructive knowledge includes what a reasonable person should infer from the totality of the circumstances. Under a rule published by the Department of Homeland Security (DHS), employers would qualify for a “safe harbor,” from a positive finding of constructive knowledge based upon receipt of a no-match letter, and thereby avoid liability, provided that they asked employees to provide further documentation from the SSA within 90 days of the employer receiving the no-match letter. That rule is the subject of litigation and is currently enjoined from taking effect (AFL-CIO v. Chertoff). This case did not involve the no-match rule or the surrounding litigation. In the instant case, the employer received no-match letters from the SSA, and gave the affected employees three days in which to return with correct documents showing that they were authorized to work in the U.S. When they could not, they were terminated. The workers brought suit, claiming that the employer had no basis to infer that they were not authorized to work in the U.S. based solely on the receipt of the no-match letter. The Ninth Circuit held that the employees were wrongfully terminated and found that the no-match letter was in fact not sufficient for the employer to conclude that the workers were unauthorized.

The Aramark case highlights the quandary employers face upon receipt of a no-match letter; balancing the potential liability for employing an unauthorized worker with the possibility of a wrongful termination.

GT will continue to provide updates on the SSA No-Match letters and the litigation surrounding them as events develop.

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