Risk & Compliance

New Employer Immigration Rule on Hold

Some 140,000 letters from the Department of Homeland Security sit unmailed as critics fight a rule that would hold companies accountable for bad so...
Kate PlourdSeptember 14, 2007

A new initiative from the Bush Administration to hold employers liable for violations of federal immigration laws, intended to kick off this week, is instead at a standstill.

A U.S. district judge in San Francisco issued a temporary restraining order last month to stop the government from imposing the new rule, which would make employers who receive a “no match” letter from the Social Security Administration liable for possible civil and criminal penalties if they could not prove within 90 days of receiving the letter that the employee in question has legal authorization to work in the United States.

The initiative was announced by Department of Homeland Security Secretary Michael Chertoff on August 10 and was supposed to be enacted on September 14. Representatives of the Social Security Administration and DHS told CFO.com that the agencies will not send out letters until the litigation is resolved. Nearly 140,000 letters were set to be sent to employers across the country this week.

A hearing on the regulation, requested by the AFL-CIO, the American Civil Liberties Union, the National Immigration Law Center, and the Central Labor Council of Alameda County (the same groups that filed the restraining order), is scheduled for October 1 before U.S. District Court Judge Charles Breyer.

“We’re very disappointed by the delay and expect to prevail by the benefit of law,” DHS spokesperson Veronica Nur Valdes told CFO.com. “And we will use every tool and authority within our power to enforce the rule of law in this case.”

The Social Security Administration currently sends a “no match” letter to an employer if any of the W-2 forms the employer submits contains a name and social security number that don’t match. If the new rule were to go into effect, “no match” letters for W-2 forms filed for tax year 2006 would be accompanied by an additional letter from DHS, notifying employers of the steps they must take to avoid penalties.

According to a sample letter from the DHS, employers must begin working to resolve the mismatch within 30 days of receiving the letter. The steps include checking records to make sure there was not an error on the employer’s part, asking the employee to confirm the accuracy of records, or asking the employee to resolve the issue with the Social Security Administration. If the issue isn’t resolved within 90 days, the employer would have to complete a new I-9 form — the Employee Eligibility Verification form — as if the employee were being hired again. If no steps are taken or the letter is disregarded, employers could be considered to have violated federal immigration law by “knowingly continuing to employ unauthorized persons,” which could lead to civil and criminal sanctions, according to the DHS letter.

Critics, such as the Essential Workers Immigration Coalition, argue that the time and administrative costs required by such provisions would represent an undue burden for employers, particularly small businesses. “The regulation also jeopardizes vital U.S. industries and the U.S. economy as a whole by needlessly creating uncertainties, disruptions, and dislocations throughout broad swaths of the workforce,” said the EWIC in a letter sent to Chertoff and the commissioner of the Social Security Administration in late August.

Just this week, Sen. John Kerry (D-Mass.), who chairs the Committee on Small Business and Entrepreneurship, condemned the implementation of the rule. He called for the DHS to conduct a “complete economic analysis” before it goes into effect.

“There’s a right way and a wrong way to enforce our immigration laws and relying on a Social Security database that’s famous for its inaccuracies is the wrong way,” said Kerry in a statement. “Penalizing small business owners and legal employees over clerical errors will undermine the very business of creating jobs and driving our economy.”