Update on New DHS Rules Regarding No-Match Letters

On August 31, a California federal district court issued a nationwide temporary restraining order (TRO) that enjoined the Department of Homeland Security (DHS) from implementing its final rule, "Safe Harbor Procedures for Employers Who Receive a No-Match Letter," which was scheduled to take effect on September 14. On October 10, the district court changed its ruling from a TRO to a preliminary injunction. The TRO and preliminary injunction halted the Social Security Administration (SSA) plan to mail no-match letters to approximately 138,000 employers in 2007, which would have affected as many as 9 million workers. The DHS final rule had provided that if an employer followed its "safe harbor" procedures (see related alert), the DHS would not use the no-match letter as evidence that the employer knowingly hired or retained illegal aliens.

The new DHS rule would have placed dramatic new obligations on employers because mere receipt of an SSA no-match letter would put employers on notice that an employee was potentially unauthorized to work in the United States. The DHS's apparent intent was to use these no-match letters and employers' failure to follow the new rule's "safe harbor" procedures to create a case that employers had "constructive knowledge" that they were employing illegal aliens.

Employers do not need to comply with the DHS rule and its safe harbor provisions until the preliminary injunction is vacated by the California district court or the DHS issues a modified no-match rule. Despite the court ruling, some employers are following the rule's 93-day time frame for resolving questions regarding social security number (SSN) mismatches. (See related alert regarding the rule's procedures/time frame). Other employers are doing nothing about old no-match letters or are maintaining their existing procedures while waiting to see how the DHS revises its no-match rule.

It is mere speculation at this point whether the DHS will arrive at some compromise that grandfathers-in existing employees while limiting application of the revised no-match rule to newly hired employees. It is also speculation as to what time frame the DHS will determine is reasonable for correcting SSN mismatches. Because the brevity of its 93-day time frame was one of the reasons the district court articulated in enjoining the DHS no-match rule, we anticipate that employers should be okay in using a longer time frame to correct (or have their employees correct) SSN errors than the enjoined rule's 93-day time period.