No-match letter from the Social Security Administration? Maybe not

By Charles M. (Chip) Cain, Jonathan E. Motley and B. David Joffe, courtesy of Boult, Cummings, Conners & Berry, PLC

In June 2006, the Department of Homeland Security (DHS) issued a proposed rule regarding the actions employers should take when they receive a "no-match letter." For those unfamiliar with the term, a no-match letter is a letter from the Social Security Administration (SSA) stating that the Social Security number reported (typically by filing a Form W-2) for an employee does not match the SSA's records. Under the DHS-proposed rule, employers were provided with a safe harbor method for attempting to resolve discrepancies identified by a no-match letter. Under the proposed rule, if an employer followed the safe harbor and could not resolve the discrepancy, the employer had 90 days to terminate the affected employee. Although the new rule was scheduled to go into effect on Sept. 14, 2007, a federal district court in California granted a preliminary injunction blocking the implementation of the proposed rule.

The court's ruling makes it unclear when, or if, the proposed rule will become effective. Until the court's ruling, employers must continue to abide by current laws regarding the I-9 process. Taking action against an employee solely because the employee was reported to the employer on a no-match letter would create significant risk for the employer. Specifically, the Immigration Reform and Control Act provides a cause of action for citizenship discrimination for individuals who are, in fact, authorized to be employed if an employer asks for too many documents or takes an employment action against them believing that they are "illegal." Instead, an employer should first ensure that its records are correct and, if so, then request that the employee visit a SSA office to address the apparent discrepancy. Absent some other actual or constructive knowledge of an employee's unauthorized status, in most cases this is where an employer's actions should stop for purposes of federal law.

However, a new Tennessee law (Tenn. Code Ann. § 50-1-103) prohibiting Tennessee businesses from "knowingly" employing illegal aliens also took effect on Jan. 1, 2008. If employers "knowingly" employ an illegal alien, such employers are subject to loss of their business licenses. Generally, if employers properly follow the Form I-9 procedures and do not have actual knowledge that an employee is an illegal alien, the employers have met the requirements of the Tennessee law. However, the Tennessee law provides an additional safe harbor method of verification that is not required through the I-9 process. If employers use the internet-based E-Verify system operated by DHS and receive confirmation through E-Verify that an employee is eligible to work in the United States, the employers will be deemed to have met the requirements under the Tennessee law.

Although many Tennessee employers may choose to utilize the E-Verify system to comply with the safe harbor under Tennessee law, most employers will simply need to ensure that their I-9 procedures are correct and continue to follow them for all employees. Taking steps beyond those required for the Form I-9 and/or the E-Verify system could subject employers to claims of discrimination. If employers have further concerns, it would advisable to review the I-9 requirements with those employees that are responsible for I-9 completion and to contact outside counsel for further advice.