DHS Bolsters Enforcement of Employers With No-Match Rule

Major immigration reform legislation may be dormant, but the regulatory process is about to bloom with new—and potentially costly—demands on employers to ensure that their workforces are legal.

Under a pending rule from the Department of Homeland Security, companies will have to take steps upon notice from the government to resolve discrepancies in workers’ tax information that they previously could ignore.

The clock would start ticking when companies receive a letter from the Social Security Administration indicating that employees’ names or Social Security numbers on tax forms don’t match federal records.

If work authorization or identity can’t be confirmed within about two months, companies would have to fire employees or face steep fines.

Currently, an employer is not compelled to do anything with what are called “no-match” letters. The document states explicitly that no assumption should be made about a person’s legal standing.

In 2005, 8.1 million letters were sent to workers and 1.5 million to employers if a home address couldn’t be found for the employee.

In the new approach, which could be implemented within months, a company’s failure to act on a no-match letter is effectively a violation of immigration law.

“They’ve turned the presumption completely around,” says William Manning, a partner at Jackson Lewis in White Plains, New York.

The agency has taken another step in its renewed efforts to crack down on illegal employment. Although the rule was proposed more than a year ago, it is being put into effect now that immigration legislation has died on Capitol Hill.

“It’s a strong tool to use when they’re conducting an audit or they’re undertaking a work-site enforcement action,” says Montserrat Miller, a lawyer at Greenberg Traurig in Washington.

The agency uses the same metaphor but says that it is giving companies a tool to better understand no-match procedures. It also intends to hold them accountable for hiring practices.

“If they continue to choose not to follow the law, there will be sincere and severe penalties,” says Laura Keehner, a DHS spokeswoman.

One problem with the DHS initiative, according to employer advocates, is flawed government databases. Discrepancies occur in about 4 percent of the 250 million earnings reports that businesses send annually to the Social Security agency, according to the Government Accountability Office.

About 5 percent to 10 percent of the U.S. workforce could get caught in the net, including legal workers, Manning says.

“If the government goes around disenfranchising those people, you could have a recession or depression,” he says.

Food services and processing and the hospitality and construction industries would be hit hard, industry representatives say.

John Gay, senior vice president for government affairs and public policy at the National Restaurant Association, says that millions of workers could be removed from the labor market.

“You could see doors closing on businesses,” he says.

The homeland department is not seeking to cause economic disruption, but it does want to shut off the “jobs magnet” that fosters illegal immigration—a move called for by many members of Congress.

“It’s part of the administration’s effort to show they’re willing to enforce the laws we currently have,” says Lynn Shotwell, executive director of the American Council on International Personnel.

Under failed immigration proposals, bitter crackdown medicine would have been sweetened by establishing legal channels for bringing in foreign workers.

“We warned against doing this—enforcement without reform,” Gay says.

—Mark Schoeff Jr.