Article contributed by Mitchell F. Borger and Stephania Sanon, Ellenoff Grossman & Schole LLP
Have you recently received a bunch of “no-match” letters from the Social Security Administration (SSA)?
Beginning March 2019, SSA revived an old practice of issuing “no-match” letters which notify employers that an employee’s name and social security number (SSN) as reported on W-2 records do not match SSA’s record of the employee and his/her SSN. According to SSA, the purpose of the “no-match” letter is to advise employers that corrections are needed so SSA can ensure the accuracy of earnings records that are used to determine Social Security benefits. Since March 2019, SSA has issued over 550,000 of these letters.
What should you do if you receive one of these letters?
First, do not panic and fire the employee because you assume the employee is an undocumented worker. In fact, the “no-match” form letter specifically states that you should not discipline or fire an employee based solely upon receipt of a “no-match” letter. There are a number of legitimate reasons why reported names and SSNs may not align with SSA’s records, such as typographical errors, unreported name changes, and inaccurate or incomplete employer records, so employers are not supposed to jump to conclusions.
Employers must be pro-active upon receipt of “no-match” letters because under the Immigration Reform and Control Act (IRCA), employers are obligated to ensure that they employ only those workers authorized to work in the United States. A “no-match” letter can expose an employer to liability under IRCA for knowingly continuing to employ an individual who is not authorized to work in the United States. The liability may be based upon actual knowledge (i.e., the employee admits he/she is unauthorized to work in the U.S.) or constructive knowledge (i.e., through the exercise of reasonable care, the employer would have learned of the employee’s unauthorized status).
If it is discovered that an employer knowingly hired and/or continued to employ an individual not authorized to work in the United States, the employer may be subject to penalties such as fines ranging from $573 to $4,586 for a first offense, to incarceration (typically involving repeated offenses). In addition, employers may face exposure under the anti-discrimination provision of IRCA and federal, state and city anti-discriminatory laws. For example, treating the receipt of a “no-match” letter as reason alone to terminate an individual’s employment may violate laws which prohibit discrimination on the basis of a person’s national origin.
Upon receiving a “no-match” letter, employers should take the following steps:
1) Follow the instructions in the “no-match” letter to register an account with SSA’s Business Services Online to determine which employee’s information needs to be reconciled.
2) Compare your records to the social security number SSA has for the employee.
3) If there is a discrepancy between the employer’s records and SSA’s records, advise the employee of the discrepancy, ask the employee to check his/her records and confirm the name and number that the employee originally provided.
a. Please note that SSA advises that the employee check his/her records and then respond to the employer’s inquiry instead of asking the employee to bring in his/her social security card – this practice will help avoid claims of discriminatory actions (i.e., an employer pursuing/investigating this more aggressively because of the individual’s nationality).
4) If the action referred to above does not resolve the issue, the employer should send a letter to the employee. The letter should state there is a discrepancy and ask the employee to resolve the issue by going to his/her local SSA office.
5) Give the employee reasonable time to fix the error (i.e., 90 days).
6) If the employee is still unable to provide a valid social security number, consult with counsel before proceeding with any adverse employment action (i.e., termination or discipline).
In light of the current tight labor market and increased immigration enforcement such as the uptick in U.S. Immigration and Customs Enforcement (“ICE”) raids, many restaurants are reluctant to follow up with employees regarding “no-match” letters. It is well-known that restaurants rely heavily on immigrant workers to fulfill their labor needs, some of whom are undocumented. Restaurants that follow up with employees regarding “no match” letters, as recommended, run the risk that employees will abandon their jobs or that they will ultimately have to fire employees.
Given the already tight labor market and high turnover in the industry, there is a legitimate concern that restaurants will not be able to meet their staffing needs if they confront employees about “no match” letters. Yet, ignoring “no match” letters and failing to follow up with employees may subject restaurants to stiff penalties.
Thus, restaurants who receive “no-match” letters are in a bind:
- Comply and risk their businesses; or
- Fail to comply and risk being subject to violations and fines.
Restaurant employers must carefully weigh these risks before making a decision about how to address “no match” letters.
In short, employers must tread carefully in addressing “no-match” letters. Acting too hastily, such as firing an employee, can subject an employer to a charge of discrimination. However, ignoring a “no-match” letter may lead to a finding that an employer knowingly continued to employ an individual not authorized to work in the U.S.
Mitchell F. Borger is a Partner in the Labor and Employment group of Ellenoff Grossman & Schole LLP (“EGS”) and has more than twenty-seven years of experience practicing Employment Law. Mr. Borger advises clients about their legal rights and responsibilities, drafts employment agreements, severance and release documents, handbooks, and policies, is well versed in alternative dispute resolution (with an emphasis on mediation and arbitration programs), and performs employment-related corporate due diligence. Mr. Borger is current chair of the New York State Bar Association’s (“NYSBA”) Corporate Counsel Section, served as its 2005 Chair and is a twenty-year member of its Executive Committee.
Stephania C. Sanon is an Associate in the Labor and Employment group of EGS. Stephania represents and advises clients in a variety of labor and employment matters. In addition to handling a broad range of cases in federal and state court and before administrate agencies, she routinely assists restaurant clients in complying with federal, state and local employment and wage and hour regulations.
Mitchell F. Borger (mborger@egsllp.com) and Stephania C. Sanon (ssanon@egsllp.com) can be reached via phone at 212-370-1300.
