Date: Apr 12, 2011
The Social Security Administration (SSA) no-match issue is no "dead letter." The Administration has lifted its self-imposed suspension of the no-match letter program, effective March 22, 2011, and is sending information requests to employers (Form SSA-L4002-C1-3, Request for Employer Information) where the social security number reported in the employer's 2010 Wage and Tax Statement (W-2) for the named employee is incorrect and the W-2 either has no employee address or has an address that isn't in the Postal Services' database. See NL 00901.050, Decentralized Correspondence (Decor) Notice, https://secure.ssa.gov/poms.nsf/lnx/0900901050.
SSA had suspended employer DECOR notices for tax years 2007 through 2009 because of litigation surrounding a proposed Department of Homeland Security (DHS) regulation providing a safe harbor from civil and criminal liability for knowingly continuing to employ an unauthorized alien based on a prescribed method and time line for investigating and resolving SSA no-match notices. To obtain the safe harbor, employers were required to notify affected employees of the discrepancy, investigate the cause, and require the employee either to provide a clearance notice from the SSA or complete a new Form I-9 by the 93rd day following receipt of the no-match notice. The litigation was resolved when DHS withdrew the safe harbor rule in 2009. However, in its notice of rescission, DHS reported that SSA no-match letters have formed a basis for multiple criminal investigations and convictions based on harboring and tax fraud, resulting in substantial asset forfeitures and federal contractor debarments – a trend that is clearly continuing.
How Should Employers Respond to DECOR Notices?
Unfortunately, employers are receiving conflicting advice from federal regulators and enforcement personnel regarding the proper course of action to take upon receipt of a DECOR notice.
In Frequently Asked Questions about DECOR posted to the SSA website, SSA instructs its field personnel to advise employers to provide an employee with a reasonable amount of time to rectify the situation with SSA, since it may take two months or longer to get a new or replacement social security card. The Field Guidance advises that if an employer states that it is unable to resolve the mismatch because the employee is unable to provide a social security card, or may no longer work for the employer, the employer should document its efforts to obtain the corrected information and should retain this documentation for a period of four years. There is no mention of the need to terminate a worker who fails to resolve the discrepancy.
The SSA employer DECOR notice specifically instructs that the notice "is not a basis, in and of itself … to take any adverse action against the employee, such as laying off, suspending, firing, or discriminating against the individual," which could subject the employer to penalties under state and federal law for unlawful discrimination. The DECOR notice also states expressly that it makes no statement about the employee's immigration status. However, in the fine print at the end of the notice, SSA states that failure to respond to the notice may result in a referral to the IRS for tax administration purposes or to the Department of Justice for investigating and prosecuting violations of the Social Security Act.
The Office of Special Counsel (OSC), a section of the Civil Rights Division of the U.S. Department of Justice, recently published its own guidelines for employers in responding to SSA no-match letters, cautioning not to terminate a worker based solely on receipt of a DECOR notice. OSC further cautions employers not to attempt to re-verify the employee's work authorization by requesting completion of a new Form I-9. Instead, OSC advises that workers should be given a "reasonable period of time" to resolve the problem, noting that in the E-Verify context SSA can place a tentative non-confirmation into continuance for up to 120 days. See http://www.justice.gov/crt/about/osc/htm/SSA.php.
DHS Employer Handbook is Silent on How to Handle DECOR Notices
The newly revised DHS Employer Handbook, M-274 (Rev. 1/5/11) is silent on the question of no-match letters. However, Immigration and Customs Enforcement (ICE) routinely requests copies of SSA no-match letters during I-9 audits. At issue in the investigation is whether the employer took reasonable steps to investigate and resolve these SSA notices, and where appropriate, to terminate employees who fail to provide alternate acceptable documentation of identity and work eligibility within a reasonable time period. What constitutes a reasonable response time may vary, depending on the circumstances, but it is clear that employers can ill-afford to ignore the new DECOR letters and they should avoid actions that could be interpreted as a cover up or fraud.
The Bottom Line
Because of the confusing and inconsistent advice coming from different federal agencies on how to respond to the receipt of a DECOR notice, employers are well advised to seek legal counsel before settling on a course of action.
For more information about this and other employment matters, please contact Manesh K. Rath at 202-434-4182 or firstname.lastname@example.org.