Hold off on Uncorking the Champagne

On October 10, 2007, the U.S. District Court for the Northern District of California granted plaintiffs’ motion for preliminary injunction preventing implementation of the Department of Homeland Security’s final rule concerning actions to be taken by employers who receive Social Security Administration (SSA) No-Match letters. American Federation of Labor, et al. v. Michael Chertoff, et al. (N.D., CA, No. C 07-04472-CRB, Oct. 10, 2007).

Plaintiffs, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the American Civil Liberties Union (ACLU), the National Immigration Law Center (NILC), and the Central Labor Council of Alameda County, along with other local labor movements, originally filed an application for a Temporary Restraining Order (TRO) on August 29, 2007, with the U.S. District Court in California. The application was granted by the court on August 31, 2007, for a period of 30 days, and on October 1, 2007, was extended by the court for an additional 10-day period.

The final rule, entitled ‘Safe-Harbor Procedures for Employers Who Receive a No-Match Letter”, set forth procedures to be followed by employers in responding to a no-match letter issued by the Social Security Administration (SSA) identifying a discrepancy between name and social security number (SSN) information contained in SSA’s database and name and SSN information being used by an employer for tax and payroll purposes.

Under the final rule, employers would be given 90 days from receipt of a no-match letter (the “safe haven” period) in which to follow certain proscribed procedures to address the discrepancy, by either resolving and correcting the discrepancy, re-verifying the employee’s work authorization, or terminating the employee if the discrepancy cannot be resolved. Employers failing to follow the procedures contained in the final rule, would be subject to civil and criminal penalties and could also be charged with having had knowledge or “constructive knowledge” of the employee lacking work authorization (an allegation that, according to language contained in the final rule, would not be leveled against employers responding to SSA no-match letters within the proscribed 90-day safe haven period). On the other hand, employers electing under pressure to terminate employees within the 90-day safe harbor period, in order to avoid possible prosecution under the final rule, would also have been exposed to liability and charges of wrongful termination and employment discrimination by those workers terminated.

In criticizing the rule, the National Immigration Law Center, in a press release dated October 1, 2007, stressed that employers who currently receive SSA no-match letters are not required to take any action, and that such letters have never been construed as evidence of an employee not having permission to work in the U.S. As noted in the press release, “there are many innocent reasons for such discrepancies such as clerical mistakes, name changes due to marriage and divorce, and the use of multiple surnames that are common in many parts of the world”.

In granting plaintiffs’ motion for a preliminary injunction, the court voiced its own concerns regarding the likelihood of harm, not only to the plaintiffs, but to U.S. workers and employers generally, stating the following:

“As demonstrated by plaintiffs, the government’s proposal to disseminate no-match letters affecting more than eight million workers will, under the mandated time line, result in the termination of employment to lawfully employed workers. This is so because, as the government recognizes, the no-match letters are based on SSA records that include numerous errors. Moreover, the threat of criminal prosecution, (under the guise of a safe-harbor provision), reinforced by a directive that the employer who receives a no-match letter must follow the safe harbor procedures or expose themselves to criminal and civil liability, reflects a major change in DHS policy”.

District Court Judge Charles Breyer concluded that the regulation, if enforced, would have required an immediate and significant change in plaintiffs’ conduct which, given the number of no-match letters SSA was planning to mail out (approximately 140,000 such notices, pertaining to approximately 8 million employees), necessitated further consideration of the final rule prior to implementation.

While this is good news, employers should recognize that DHS and Immigration & Customs Enforcement (ICE) still have plenty of civil and criminal law enforcement tools to encourage compliance with the rules against unlawful hiring, even without relying on the enjoined no-match rule. The best advice is to review your employment-based immigration compliance practices and take whatever corrective action is necessary. Call Paparelli & Partners LLP if you need any help.

Additional updated information on the preliminary injunction may be obtained on the National Immigration Law Center’s website. The link to the website is: http://www.nilc.org/index.htm