Update: Developments Regarding I-9 Compliance and Social Security No-Match Letters

The Department of Homeland Security (DHS) announced in a Federal Register notice dated November 26, 2007, that employers must transition to a revised Employment Eligibility Verification Form (I-9) no later than December 26, 2007. In a separate but related matter, the Bush administration announced that it will abandon its efforts to challenge a federal court decision suspending implementation of the so-called Social Security No-Match regulation. The new I-9 rules were reported on in an earlier Immigration Alert
 (http://www.morganlewis.com/pubs/ImmAlert_RevisedFormI9Available-9nov07.pdf). The proposed Social Security No-Match rule was the subject of a Morgan Lewis White Paper
(http://www.morganlewis.com/pubs/SocialSecurityNo-MatchLetters_WhitePaper.pdf) as well as a related electronic Immigration Alert
(http://www.morganlewis.com/pubs/ImmigrationAlert_TemporaryInjunctionSS_11oct07.pdf).

Employers Must Use New Form I-9 by December 26, 2007

On November 26, 2007, U.S. Citizenship and Immigration Services (USCIS) announced that employers must begin using the revised Form I-9 by December 26, 2007. All employers are required to complete a Form I-9 for each employee hired in the United States. The new Form I-9 bears a revision date of “06/05/07” in the lower right corner of the form. Both the revised form and the Handbook for Employers, Instructions for Completing the Form I-9 are available online at www.uscis.gov.

The new Form I-9 contains a revised list of documents that are acceptable for identification purposes. On the new form, employers are told they may not accept a Certificate of U.S. Citizenship (Form N-560 or N-570), a Certificate of Naturalization (Form N-550 or N-570), an Alien Registration Receipt Card (Form I-151), an unexpired Reentry Permit (Form I-327), or an unexpired Refugee Travel Document (Form I-571). In addition, the new Handbook for Employers instructs that providing a Social Security number is voluntary for all employees unless the employer participates in the USCIS E-Verify Program, which requires an employee’s Social Security number for employment eligibility verification.

How This Affects Employers

Employers must ensure that they are using the new Form I-9 as of December 26, 2007. Failure to use the new I-9 form for new hires on or after December 26, 2007 may subject an employer to administrative penalties.

Social Security No-Match Regulation to Be Revised

Rather than mount a legal defense in support of the so-called Social Security No-Match regulation, the Bush administration plans to revise the original rule and issue a new regulation in March 2008.

In August, U.S. Immigration & Customs Enforcement (ICE), an agency within DHS, published a rule covering Social Security Administration (SSA) “no match” letters, which SSA issues when there is a discrepancy between its records and the data submitted with an employer’s payroll withholding. The rule outlined a process that an employer could follow once it received a no-match letter. Failure to follow the procedure could lead to a finding that the employer had knowledge that a worker was not lawfully employed, exposing the employer to possible civil and criminal liability. An employer that followed the procedure would qualify for safe-harbor protection, even if the worker was subsequently found to be unauthorized to work in the United States.

The rule was scheduled to go into effect September 14, but a group of unions and business groups succeeded in a federal court effort to block implementation of the rule, arguing successfully that the Bush administration failed to follow procedures set forth in the Administrative Procedures Act as well as other Congressional mandates. In papers filed with the U.S. District Court in San Francisco, the administration indicated that it would try to issue a revised rule by late March 2008.

The government’s temporary abandonment of the Social Security No-Match regulation creates an area of uncertainty. Prior to issuance of the proposed regulation in August 2007, employers that received no-match letters were left to wonder how they should respond. Most employers felt a heightened duty to inquire further into an individual’s employment eligibility, yet were fearful of triggering an allegation of unfair immigration-related employment practices. While seen by many as over-reaching, the new regulation nonetheless had the effect of demystifying a murky area of employer responsibility.

The regulation defined the circumstances under which an employer would be deemed to have “knowledge” that an employee was unauthorized, and went on to describe a procedure that would be viewed as a “reasonable” response by an employer to a no-match letter. In many cases, employers would have been forced to terminate employees who were unable to resolve the Social Security discrepancy within 93 days. Without this regulation, there is no formal guidance to explain the legal impact of the receipt of a Social Security no-match letter on an employer. Similarly, there is no official direction on what steps an employer might take to ensure that it is seen as responding “reasonably” to such a letter.

How This Affects Employers

In the absence of any controlling regulations, employers are once again left to grapple with what it means to have “knowledge” or to be acting “reasonably.” For some employers, this ambiguity is welcome, as it relieves them of an onerous obligation that could have resulted in far-reaching and potentially unfair consequences. Other employers remain anxious to identify a course of action that mitigates risk and creates the most defensible position in the event of a government investigation.

Those employers that are seeking the most conservative approach should consider following the procedures described in the original ICE regulation, even if the rule as originally issued does not carry the force of law. The rationale for this approach is that the original regulation, though not enforceable per se, nonetheless informs employers as to the administration’s point of view on what constitutes “knowledge” and what actions by an employer in response to a no-match letter will be seen as “reasonable.” Presumably ICE and the Department of Justice will choose to focus their resources on those employers whose actions are not seen as “reasonable,” and will exercise their investigative and prosecutorial discretion accordingly. Therefore, until a new regulation is proposed, employers may find that the safest course is to follow the procedures outlined in the blocked regulation. Employers that prefer an alternative approach should nonetheless ensure that they are taking what they believe to be reasonable steps in response to a no-match letter. Under no circumstances should employers view these recent developments as tacit authority to ignore a Social Security no-match letter.

We will continue to monitor this process and will update you with any new information.