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Employment Eligibility Verification: Are You Up on the New Rules?

Employment Eligibility Verification: Are You Up on the New Rules?

SML Perspectives
(July 5, 2011)

In April 2011, U.S. Citizenship and Immigration Services issued a final rule regarding the changes put in place with the 2009 Form I-9. The principal changes include new document requirements that all employers need to be aware of. The Social Security Administration also resumed sending "no-match" letters, and has also issued new guidance for how to respond to these letters.

There is much confusion in the workplace when it comes to immigration laws and how they affect US employers—even those who do not sponsor foreign nationals for temporary (nonimmigrant) or permanent (immigrant) visas. It can be hard to determine which rules apply and how to apply them, and the rules of the game change frequently. Employment eligibility verification is an issue that affects every employer in the United States. All employers need to be aware of and comply with federal employment eligibility rules and regulations, including special rules for federal contractors. In addition, some states have imposed additional verification burdens on employers. Therefore, employers must review their potential status as federal contractors, as well as state law, before finalizing the employment verification process. Employers must also be aware that the Social Security Administration resumed sending “no-match” letters on April 6, 2011.

Final Rule for Employment EligibilityVerification (I-9 Forms)

Only individuals authorized to work in the United States may be hired by US employers. The federal government requires specific proof of employment eligibility through the use of the I-9 Employment Eligibility Verification Form. Pursuant to the Immigration Reform and Control Act of 1986 (“IRCA”), an I-9 form must be completed for ALL employees hired after November 6, 1986. This form verifies the identity and work authorization status of all new employees on or before their first day of work, including U.S. Citizens. The forms must be maintained for all current employees and for a specified period after termination of employment.

On April 14, 2011, USCIS issued a final rule regarding the changes put in place with the 2009 I-9 Form. The principal changes include requiring that all documents presented be unexpired, revising the list of documents that an employer may accept when completing the form, and adding documents relating specifically to citizens of the Republic of the Marshall Islands and the Federated States of Micronesia. Employers should use I-9 forms dated 02/02/2009 or 08/07/2009 until new forms are issued. Earlier editions of the form are not acceptable. Employers should also check periodically for updated I-9 forms to make sure that the most current form is in use. Any new I-9 form must be used on a going-forward basis from the date of issuance but should not be completed for existing employees who have gone through the I-9 process.

Graph on Types of Penalties For I-9 Errors

Penalties for technical and substantive errors on I-9 Forms, even if made inadvertently, can be substantial. Therefore, it is critical to have specific, uniform I-9 policies and procedures in place to address potential errors and to respond to audits by U.S. Immigration and Customs Enforcement (“ICE”). An external audit and training of those company representatives who are responsible for completion of the I-9 forms are recommended.

Social Security Administration No-Match Letters

Many employers remember receiving Code V “no-match” letters from the Social Security Administration (“SSA”). These letters informed the employer that social security numbers being used by employees did not match numbers in the SSA database and asked that the matter be resolved. Once resolved, the employer was to provide updated information to the SSA. The stated goal of these letters was not to detect unauthorized workers or fraudulent social security numbers, but rather to protect employees and avoid paperwork errors relating to the SSA and the IRS.

The SSA has not sent no-match letters to employers since 2007, due in large part to litigation involving the Department of Homeland Security’s proposed “safe harbor” regulation. However, on April 6, 2011, the SSA announced that it has resumed sending no-match letters to employers.

Unlike the previous no-match letters, which provided a list of employees and numbers, each new no-match letter will list only one employee for verification. It is anticipated that over one million workers in the United States will be named in the new no-match letters. In addition to the above change, the new letter states: “We may give this information to the Internal Revenue Service for tax administration purposes or to the Department of Justice for investigating and prosecuting violations of the Social Security Act.”

Despite this, the new no-match letter, like the previous version, states that no adverse action should be taken against an employee on the basis of receipt of a no-match letter and reiterates that the letter is not an indication of wrongdoing on the part of the employee. An employer may not suspend, fire or discriminate against the named employee on the basis of the no-match letter alone. According to the SSA Office of the Inspector General, more than 70 percent of the 17.8 million discrepancies in SSA’s database relate to individuals who are U.S. citizens by birth.

New guidance from the SSA indicates that, upon receipt of a no-match letter, an employer should check its records to determine whether the company information matches the information in the no-match letter. The employer should also request that the employee check to make certain that he or she provided the correct full name and social security number to the employer. If this resolves the matter, the employer should notify the SSA. If these steps do not resolve the discrepancy, the employer should ask the employee to visit the local SSA office to resolve the discrepancy. The employer should provide a “reasonable” amount of time for the employee to resolve the matter with SSA (official guidance on a reasonable time period ranges from 30 to 120 days).

The employer should not try to re-verify the employee’s work eligibility through completion of a new I-9 form. If the named employee is no longer employed by the company, the employer should document its efforts to find the corrected information. If the employee still works for the company, the employer should document the efforts made to resolve the issue. When the specified time has passed, the employer should confirm with the employee(s) that the matter has been resolved and update I-9 and W-2 forms. If the matter has not been resolved, apply company policy in a uniform, non-discriminatory manner to suspend the employee until the matter is resolved, or terminate the employee.

Employers who knowingly submit or continue to use invalid social security numbers on employee W-2 forms after notification are liable for penalties under the Internal Revenue Code of a minimum of $50 per incorrect form. Fines may be waived in the presence of positive mitigating factors, including actions taken in response to “no-match” letters. Therefore, it is important to establish and enforce a consistent company policy.
These are just two of the employment eligibility verification matters for which all US employers are responsible. There are a number of overlapping federal and state requirements and laws relating to employment verification, and failure to comply can be costly in terms of employees, time, and money. Therefore, it is in the interest of every employer to make sure that its I-9s are correct, that a compliance policy is in place, and that the responsible company representative stays up to date on the applicable regulations.

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Laura Deddish Burton
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