DHS Rehashes No-Match Rule

March 26, 2008

On Monday, March 24 the Department of Homeland Security (DHS) re-issued their rule regarding no-match letters. This latest move is DHS’s response to court orders based on a lawsuit filed against the original rule, which was proposed as a final rule without comment period. The supplemental proposed rule unveiled this week includes clarification on, and an Initial Regulatory Flexibility Analysis (IRFA) of the initial rule, and states DHS’s plan to proceed with their rule unchanged.

The rule would implement new procedures for the Social Security Administration’s (SSA) no-match letters, and increase employers’ culpability in employee verification. Initially proposed in August of 2007, the rule was halted due to a lawsuit filed by the AFL-CIO, American Civil Liberties Union (ACLU) and the U.S. Chamber of Commerce. In early December, Federal Judge Charles Breyer, the presiding judge in the lawsuit over the proposed no-match rules, issued a suspension on trial proceedings. The suspension prohibited the rule from going into effect, and gave DHS until the end of March to analyze and re-write the rule.

DHS was specifically criticized for their failure to conduct a full Regulatory Fairness Act (RFA) analysis or consider the impact of the rule on small-business owners as mandated by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA)--legislation NSBA was instrumental in getting passed.

The rule would require employers who receive no-match letters from the Social Security Administration (SSA) to follow a set of procedures in order to be considered compliant. Employers would have a maximum of 90 days within receiving the no-match letter to resolve the discrepancy in the employee’s records and verify the legal work-status of that individual. If the legal status couldn’t be verified, the employer would have to fire that employee or face up to $10,000 fines.

DHS’s proposal would expand, under this rule, the definition of “constructive knowledge” by establishing that an employer’s no-match letter could be evidence that there may be a violation of immigration law. That constructive knowledge could be used against the employer in future legal and civil court cases.

The supplemental proposed rule has been highly criticized due to DHS’s failure to address several of Breyer’s concerns in his ruling against DHS. The safe-harbor provisions, constructive knowledge liability for employers, and expected small-business burden all remain unchanged according to DHS’s supplemental rule.

Regarding DHS’s failure to conduct the RFA analysis, the new rule disagreed with Breyer’s conclusion that mandated costs to small businesses were likely. DHS stated that the rule “would not have a significant economic impact on a substantial number of small entities." Although they did conduct an IRFA—something that wasn’t done previously—DHS maintains their belief that the minimal impact on small business exempts them from completing a full RFA analysis.

DHS is accepting comments on the supplemental rule and the IRFA through April 25. To view the supplemental proposed rule, please click here.