New York Labor and Employment Law Report Blog Posting: Department of Homeland Security Rescinds No-Match Letter Regulation

October 7, 2009

By: Subhash Viswanathan

In a final rule published today in the Federal Register, the Department of Homeland Security (“DHS”), has rescinded its controversial “no-match” letter regulation promulgated during the Bush administration. The action has been anticipated ever since it was initially announced in July, and completes a process which commenced with the publication of a proposed rule on August 19, 2009. The Bush era regulation never went into effect because its enforcement was preliminarily enjoined by a federal district court.  The significance of the rescission is explained below.

A no-match letter can be generated by the Social Security Administration (“SSA”) when a combination of employee name and Social Security Number (“SSN”) on a W-2 form does not match SSA records. This can occur for a variety of entirely innocent reasons, but can also occur when someone not authorized to work in the U.S. uses a false SSN or someone else’s SSN. The Bush era regulation would have required employers receiving such letters to take particular actions to resolve the discrepancy and verify the individual’s employment eligibility or face potential liability for employing an unauthorized alien.

Rescission of the regulation does not mean that SSA will stop issuing no-match letters. Moreover, in the text addressing public comments on the rescission, DHS has made it clear that receipt of a no-match letter will continue to count in a totality of the circumstances determination of whether an employer knowingly hired or continued to employ an unauthorized alien. As a result, employers that receive such letters should continue to investigate them with the employees to whom they apply. DHS states that the prudent employer will: check its own records for errors; ask the employee to review the information; and allow the employee a reasonable amount of time to resolve the no-match with SSA.

In order to avoid potential liability under the anti-discrimination provisions of 8 U.S.C.§ 1324b, employers who receive a no-match letter should also refrain from taking precipitous action against the affected employee. DHS states unequivocally that employers should not use a no-match letter alone as a basis for firing an employee. The Justice Department’s Civil Rights Division provides guidance to employers on how to respond to a no-match letter without engaging in prohibited discrimination.