Onerous “No-Match” Rule Revisited

On March 26, 2008, the Department of Homeland Security (DHS) published a Supplemental Proposed Rulemaking (SPRM). The supplement is intended to address the concerns of the U.S. District Court that issued an injunction last August. The rulemaking provides a 30-day comment period which closes on April 25, 2008. After this comment period, we expect DHS to go back to the Court and ask that the injunction on the final no-match rule adopted last year be lifted.

However, the new supplemental rulemaking makes absolutely no regulatory changes to the 2007 “no-match” rule. The supplement provides guidance on how “promptly” an employer should respond to a letter. In addition, DHS poorly attempts to address its failure to complete an economic analysis on how the new rule would impact small businesses. The IFA and the Essential Worker Immigrant Coalition (EWIC) feel the department drastically underestimates the financial impact to small business.

BACKGROUND

In August 2007, the International Franchise Association said the federal government’s drastic new requirement that businesses fire workers whose Social Security information cannot be matched with government records could create turmoil in the nation’s workforce and worsen employee shortages in many industries.

The requirement, originally published on August 15, 2007, was legally challenged by IFA and other leading business groups, as well as the AFL-CIO and ACLU. On August 31, the U.S. District Court issued an order preventing the final rule from going into effect. As you may recall, the new rule provided strict guidance for employers when they receive notice from the Social Security Administration that an employee’s name and social security number do not match. Failure to clear up a discrepancy might require employers to fire an employee or expose employers to charges of immigration law violations.

Employers often receive “no match” letters for undocumented workers, because these workers frequently use fake social security numbers. “No matches,” however, also frequently occur for very legitimate reasons, such as clerical errors, or failure to register a change of name after marriage. According to the Cato Institute, the Social Security database has an error rate of 4.1 percent. This translates to one in every 25 new hires would receive a no-match letter causing the employer to terminate them.

IFA and a number of national business and trade associations have joined efforts for comprehensive reform through the EWIC, a broad-based group concerned with the shortage of both semi-skilled and unskilled “essential workers.” The coalition supports policies that facilitate the employment of essential workers by U.S. companies that are unable to find American workers.

NO-MATCH NEWS

IFA Comments on No-Match Supplemental Proposed Rulemaking - April 25,2008

Federal Government Concedes to IFA and other Plaintiffs in "No Match" Case
In October, a U.S. District Court blocked the federal government from implementing its new Final Rule requiring increased employer action in response to “no match” letters. In August, the IFA joined a lawsuit against the federal government to stop the mailing of 140,000 “no match” letters to America’s employers. IFA joined the AFL-CIO, the U.S. Chamber of Commerce and others in the suit against the Department of Homeland Security (DHS) after the agency published a new rule that increases employer burdens and penalties in responding to DHS “no match” letters. The federal court issued the preliminary injunction against DHS after conducting a hearing on the lawsuit in October. Most recently, on November 23, the federal government filed a motion with the Federal District Court in San Francisco requesting that the case be stayed on it's merits -- essentially admitting that the rule is flawed and an appeal or a hearing on the case's merits would serve no purpose.

Published by DHS, the Rule provided strict guidance for employers when they receive notice from the Social Security Administration that an employee’s name and social security number do not match (i.e. a “no match” letter). Failure to clear up a discrepancy would require employers to fire an employee or expose employers to serious charges of immigration law violations. Employers often receive “no match” letters for undocumented workers, because these workers frequently use fake social security numbers. “No matches,” however, also frequently occur for very legitimate reasons, such as clerical errors, or failure to register a change of name after marriage. Under the no-match regulation, employers would be required to act promptly upon receipt of a no-match notice. While the rule provided for a safe harbor procedure for employers, the new requirements would have greatly expanded legal uncertainty for employers. Employers would also need to shoulder the cost of compliance for training and new paperwork obligations related to inquiries from federal agencies. Employers would suffer lost employee hours because employees will need to take time off to try to rectify the no-match discrepancy. IFA is critical of the rule, which also contains other notable immigration reforms including a proposed increase in civil fines by approximately 25 percent, the expansion of criminal investigations and the expansion of the E-Verify program to all federal government contractors.

**IFA/Plaintiffs Reply to DHS "No Match" Response, September 26, 2007

Department of Homeland Security Issues Final "No Match" Rule, August 15, 2007

IFA RESOURCES

IFA Comments on No-Match Supplemental Proposed Rulemaking- April 25,2008

For more information, please contact Jason Straczewski, Director of Government Relations at (202) 662-0797.