Employers bracing for fallout from new ‘no match’ rules for immigrant workers

Companies are bracing for the impact of new rules placing greater responsibility on them to identify – and, if necessary, fire – undocumented workers.
On Sept. 14, the U.S. Department of Homeland Security was scheduled to put into effect amended regulations requiring employers to take action if the Social Security number provided by an employee doesn’t match the information in the Social Security Administration files.
But on Aug. 31, a U.S. District Court in California granted a temporary restraining order to several immigrant rights organizations that oppose the new regulations. The court set an Oct. 1 hearing date to hear the groups’ request for a permanent injunction.
Although the action is a temporary setback for DHS and the Bush Administration, employment and immigration lawyers say it’s too early for employers to take comfort in the recent turn of events.
“DHS has made it clear that enforcement activities will continue,” said Ron Guerra, an attorney at Jordan Schrader in Portland, Ore. “To avoid potential liability, employers must continue to be vigilant in their review of recruitment and hiring practices to ensure that they employ only lawfully authorized individuals.”

New provisions
After receiving a “no match” letter, the new provisions would give employers 90 days to rectify inconsistency between the Social Security number given by the employee and that on file with the government.
By responding, employers would enter a “safe harbor” from prosecution. But if the numbers can’t be reconciled, they could face an increased risk of civil and criminal liability if they continue to employer worker.
Penalties can include fines of up to $10,000 and prison sentences of up to six months, and Homeland Security says it’s serious about meting out those sanctions.
Lawyers predict that if the rules are upheld, they will lead to an increase in discrimination suits.
“Some employers might respond by saying, ‘I’ll just fire these guys,’” said Jacob J. Sapochnick, who practices immigration law at The Law Offices of Jacob J. Sapochnick in San Diego. “But that’s not the right answer.”
Guerra agreed.
“Unfortunately, not every employer is going to react in a positive way to the amended regulations, and some will take adverse employment actions against employees for whom a ‘no match’ letter is received,” he said.
The result, said Guerra, could be “an increase in the number of administrative complaints or lawsuits filed for wrongful termination or discrimination.”
A rash of firings could “increase the perception that employers are separating people out by race or national origin,” agreed Michael A. Moore, of counsel at Russell Krafft & Gruber in Lancaster, Pa.
Moore, who focuses on labor and employee relations for business management, contends the pending regulations could create a “perfect storm” for employers.
By the most common estimate, some 12 million illegal workers hold jobs in the U.S. The new rules could drive them further underground or out of the country, and many businesses will be economically hard hit by the labor loss, Moore said.
At the same time, he noted, unions will mobilize and organize around immigration issues, and the Department of Justice’s Office of Special Counsel for Immigration-Related Unfair Employment Practices is poised to act on discrimination complaints.
“Employers will be whipsawed by worker shortages, immigration sanctions for hiring illegal workers, discrimination claims by fired workers who lack documentation and employee-relations issues, including unionization,” Moore predicted.

Recent history
Every year, employers are required to file wage reports listing employee names and Social Security numbers with the Social Security Administration.
According to Guerra, about 4 percent of the 250 million wage reports contain discrepancies, resulting in “no-match” letters.
Sapochnick, who represents employers in the hotel and restaurant industries, said fines for mismatched numbers have been relatively modest – so much so that they were considered a tolerable cost of doing business.
“They’d rather pay the fine than get rid of Mexican restaurant workers making $7 an hour,” he said. “But now you can go to jail.”
The pending regulations state that mismatch notifications will only be issued to companies when they occur on more than 10 W-2 forms, and only if the number of mismatching forms is more than one half of one percent of the total forms presented by the employer.
But Guerra said that doesn’t mean that smaller employees are immune.
“Even in the absence of the no-match letter, an employer could be liable for employing undocumented workers if [the government] conducts an enforcement action and determines the employer had actual or constructive knowledge its employees were undocumented,” he said.
And for companies that receive the “no-match” letters, merely following the rules necessary to enter the “safe harbor” wouldn’t be a guarantee of safety, he said. If an employer has good reason to believe an employee is undocumented, he possesses actual or constructive knowledge of the employee’s status and could be held liable.
Sapochnick said he tells his clients they should create an immigrant-worker policy, complete with a manual, spelling out the federal government’s rules and how it intends to comply.
He cautioned, “Whatever you do, you’ve got to do for everyone. You can’t just check Jose or Luis.”
Guerra said he is providing his clients with a point-by-point list to follow if the new rules go into effect: