The U.S. Department of Homeland Security (DHS) released a supplemental proposed rulemaking regarding the Social Security Administration No-Match rule on March 21. The proposed rule, which was originally issued on August 14, 2007 to go into effect on September 14, 2007, has far-reaching consequences for employers whose employees use Social Security numbers that do not match their numbers on file. When first issued, the proposed rule was blocked by court-issued injunction. The new proposed rule attempts to address the court's concerns and, while it makes virtually no changes to the rule originally issued last August, it clarifies a point that was muddy in the original rule and does include one change regarding discrimination. It also serves as a clarion call to employers to put procedures into place to deal with situations in which there is a discrepancy in Social Security numbers on the part of employees.

Similar to the old rule, the new rule outlines steps an employer may take when it receives a letter from the SSA indicating that an employee's name does not match the Social Security number (SSN) on file at the company. If the new rule withstands court scrutiny and takes effect, a company following DHS's proposed rule would have safe harbor from the No-Match letter being used against it in a DHS or Immigration Customs Enforcement (ICE) action. The proposed rule still requires companies to take steps to ensure compliance with both SSA and Internal Revenue Service (IRS) regulations pertaining to the SSA No-Match letters and the submittal of SSA withholdings.

One difference between the old rule and the new rule: DHS agreed to remove from its form letter a reference that companies would not be subject to discrimination complaints and lawsuits based on following its SSA No-Match rule. DHS recognizes that a company can be subject to discrimination complaints and lawsuits based on the manner in which it handles an SSA No-Match letter, and that discrimination may need to be addressed by the Office of Special Counsel of Civil Rights Division of the Department of Justice, as well as the Equal Employment Opportunity Commission (EEOC) or state civil rights agencies. 

The rule provides the opportunity to clarify a major area of confusion in last year's rule, in which companies believed they had to terminate all employees subject to an SSA No-Match letter 90 days after receiving the letter. Although some employees will be terminated, the rule does not state that all employees must be terminated. Companies need to have procedures in place to address SSA No-Match letters. A flow chart that can assist employers with responding to No-Match letters is available here. The flow chart integrates the new DHS No-Match rule along with suggested strategies to assist a company regarding SSA and IRS requirements regarding SSA no-matches. Click here for a more detailed outline of the key sections of DHS's proposed SSA No-Match rule.

The new proposed rule underscores the need for companies to evaluate the procedures they have in place to (1) respond to SSA No-Match letters to ensure compliance with SSA and IRS requirements; and (2) to obtain a safe harbor from DHS and ICE enforcement actions regarding a company's receipt of an SSA No-Match letter.  There are other inquiries a company receives regarding potential discrepancies involving an employee's SSN. Companies should develop and implement procedures to respond to SSA discrepancies based on inquiries or information from government agencies, such as unemployment or welfare, mortgage companies, garnishment orders, child support orders or third-party complaints from individuals in the community that someone at the company is using their SSN. Companies also have the opportunity to submit public comment on the Supplemental Proposed Rulemaking for 30 days after its publication in the Federal Register.

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