• New Developments on Verifying Employees' Work Authorizations
  • August 31, 2009 | Author: Kirstin E. Muller
  • Law Firms: Curiale Hirschfeld Kraemer LLP - San Francisco Office; Curiale Hirschfeld Kraemer LLP - Santa Monica Office
  • Every seasoned employer knows that it is unlawful to hire someone who is not authorized to work in the United States.  However, the intricacies of employers’ obligations are vague and unclear.  For example, if an employer receives a “no-match letter” from the Social Security Administration (“SSA”), does that indicate a certain employee is not authorized to work in the U.S.?  Or more importantly, will an employer who does not take certain actions upon receiving such a letter be found to have “knowingly” employed an unauthorized employee?  The answer is “possibly,” under new regulations from the Department of Homeland Security (“DHS”).

    Established Law On Employee Verification

    As you know, under the Immigration Reform and Control Act (“IRCA”), every employer is required to verify that each employee is authorized to work in the United States within three days of employment, through the familiar process of filling out the “Employment Eligibility Form,” commonly known as the “I-9.”  Section two of the I-9 requires an employer to ask each employee to document his or her identity and authorization to work, and the back of the form lists the documents that may be used to establish this.  The employer is required to examine each document and confirm that the document appears genuine on its face, without committing “document abuse.”  An employer commits document abuse when it scrutinizes employees’ documents too closely or asks employees for particular or different documents than those required by the I-9 form.

    An Employer Cannot “Knowingly” Employ An Unauthorized Employee

    Caselaw has established a broad definition of what it means to “knowingly” employ an unauthorized employee, including when the employer fails to fill out an I-9, when an employer has received notification from the DHS (either written or oral notification) that an employee is unauthorized, or when an employer has been apprised of information indicating ineligibility to work in the U.S., such as cases where an employee asks the employer to help him get a work visa and discloses that he does not currently possess one.
     
    Employers found to have knowingly employed unauthorized employee are subject to civil and criminal penalties, ranging from $250 to $11,000 per unauthorized employee and up to six months of jail time for the employer.

    The DHS’s New No-Match Regulations

    The new regulations enacted by the DHS and originally scheduled for rollout in September 2007, expand the definition of what constitutes constructive knowledge of employing an unauthorized employee.  In issuing these regulations, the DHS teamed up with the SSA to enforce immigration laws. 

    No-match letters are issued by the SSA when the information submitted by an employer in its W-2 earnings reports does not match the information in the SSA database.  Prior to the enactment of the new DHS regulations, the letters had no legal significance to employers.  However, under the new regulations, employers who fail to follow the outlined “safe harbor” steps might be found to have knowingly employed unauthorized employees.  The steps include (1) ensuring within 30 days of receipt of the letter that the mismatch was not a typographical or clerical error by the employer, (2) asking the employee to confirm the information, also within 30 days of receipt of the letter, to again ensure there were no typographical or clerical errors, and (3) advising the employee to resolve the discrepancy with the SSA within 90 days of receipt of the letter.  If the discrepancy cannot be resolved within 90 days, the employer must then complete a new I-9 form for the employee, but the employer cannot accept any document that contains the disputed social security number.  

    Upon enacting the regulations, the DHS and the SSA planned to send out over 140,000 no-match letters, which would have included an insert from the DHS explaining the new regulations.  The plan was halted by a lawsuit filed in California by the AFL-CIO. 

    The Preliminary Injunction Halting Enforcement Of The Regulations 

    The AFL-CIO and ACLU, surprisingly joined by the San Francisco Chamber of Commerce, brought suit to restrain the DHS and SSA from sending the no-match letters and otherwise enforcing the regulations.  Brought on a variety of grounds, the key theme of this suit was that actions under the regulations would affect more than eight million employees and would result in the termination of employees lawfully entitled to work in the U.S. whose information mistakenly triggered a no-match letter.  In October, the federal district court in San Francisco issued a preliminary injunction, finding that irreparable harm would be caused if the DHS was permitted to proceed with enforcing the regulations.  The injunction prohibits the government agencies from “giving any effect to or otherwise taking any action to implement” the new regulations, including a prohibition on mailing no-match letter packets that include or reference the DHS guidance concerning the regulations.  This injunction does not, however, preclude the SSA from sending its traditional no-match letters.

    The injunction will remain in place until the government agencies appeal the ruling or until a final judgment on the merits of the case is issued, which could take a substantial amount of time.  Accordingly, until further notice, the regulations cannot be enforced.

    What Should You Do Upon Receipt Of A No-Match Letter
     
    The regulations and injunction leave employers stuck between a rock and a hard place: they face a charge for employing unauthorized employees under the constructive knowledge theory if they ignore the no-match letters, yet they face claims of discrimination and document abuse of they take zealous actions in response to no-match letters.  For the time being, we recommend that employers follow the first three steps of the regulations, but on a more flexible time schedule, such as six months for that laid out in step three of the regulations, as it is unlikely that the SSA will be able to resolve all the no-match issues within 90 days.  Again, the three steps include (1) checking internal administration to see if the mismatch was the result of a typographical or clerical error by the employer, (2) asking the employee to confirm the information to again ensure there were no typographical or clerical errors, and (3) advising the employee to resolve the discrepancy with the SSA.

    Importantly, an employer should treat all employees the same in dealing with responses to no-match letters.  That is, even if an employer is absolutely certain an employee is authorized to work in the U.S. (say, for example, you employ your brother whom you know is a U.S. citizen born in Fresno), this employee must be terminated if he fails to resolve a no-match issue with the SSA, just like any other employee with a no-match issue who may be foreign born or have a foreign-sounding name.  Through consistency and established practices, an employer can best protect itself from any kind of discrimination claim. 

    The E-Verify System

    Another option for employers to use in ensuring valid work authorization is enrollment in the DHS’s “Employment Eligibility Verification System,” “EEVS,” or “E-Verify” program.  It is a voluntary program by which an employer can submit a newly hired employee’s information and instantly receive verification of the employee’s right to work in the United States. 

    Although this program may seem like a simple way to avoid penalties under IRCA, it is fraught with landmines -- primarily because the system is not completely accurate.  As with any extensive database, there are errors in which the DHS is unable to verify employment authorization for employees who are actually authorized to work in the United States.  Conversely, it may verify authorization for unauthorized employees who have committed identity theft or otherwise obtained fraudulent documents.  Some also believe that use of the system puts employers “on the radar” of the DHS.

    Although generally voluntary, several states, such as Arizona and Oklahoma, have recently passed laws requiring employers to use E-Verify or a similar verification system.  Conversely, states such as Illinois have passed laws prohibiting employers from using the system, due to its unreliability.  The recently enacted laws in Arizona, Oklahoma and Illinois are currently being challenged in their respective court systems.  Certain cities and counties have also passed ordinances to this effect, so employers should check with employment counsel before enrolling in the program.  To date, the State of California has taken no action regarding the E-Verify system.