Controversial 'No-Match' Regulation Rescinded

On October 7, 2009, the Department of Homeland Security (DHS) rescinded its controversial “no-match” regulation by publishing a final rule in the Federal Register. The final rule became effective November 6, 2009.

Under the No-Match Rule, the Social Security Administration (SSA) issued a letter notifying an employer that the Social Security information submitted by the employer for certain employees did not match the information in the SSA's databases. The DHS No-Match regulation also expanded the concept of "constructive knowledge" by holding employers liable for knowingly employing unauthorized workers if, after receiving a No-Match SSA letter, the employer failed to take sufficient steps to resolve a social security mismatch. However, the regulations also provided employers with "safe-harbor" procedures, which, if strictly followed, would absolve employers from liability after receipt of the No-Match SSA letter.

The Bush administration originally issued the No-Match Rule in 2007, but before taking effect, the rule was challenged by a civil rights coalition and subsequently enjoined by the U.S. District Court for the Northern District of California in October 2007. In response to the shift brought by the Obama administration, the DHS announced its intention to rescind the rule in July 2009. The Department commented: “After further review, DHS has determined to focus its enforcement efforts relating to the employment of aliens not authorized to work in the United States on increased compliance through improved verification, including participation in E-Verify, ICE Mutual Agreement Between Government and Employers (IMAGE), and other programs.”

Nevertheless, employers continue to face the same dilemma: How should companies respond to No-Match SSA letters they receive in the future? The final regulation fails to indicate when the SSA will resume sending No-Match letters to employers. It also fails to provide guidance on how employers should respond. Moreover, despite the rescission of the No-Match regulation, the government still believes that the receipt of a No-Match letter may be a factor considered in the "totality of circumstances" when determining whether or not an employer had constructive knowledge that its employees were not authorized to work.

In additional to SS No-Match letters, employers are receiving Social Security information from health insurance companies, retirement funds, payroll providers, identity theft reports, garnishment programs as well as numerous other places. Not having a policy in place can be dangerous and problematic in terms of treating employees consistently as well as dealing with the issue the No-Match brings up. Employers need to ensure procedures are implemented to resolve any future No-Match discrepancies. Please consult with your GT attorney if faced with any type of Social Security no-match issues.

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