Reviving No-Match Letters

Summary

DHS can permit, and indeed can incentivize, employers around the country to dismiss alien workers en masse whose unlawful work in the United States has first been flagged by Social Security Administration “no-match” letters. 

• The Immigration Reform and Control Act of 1986 established “employer sanctions”, making it unlawful for an employer to hire or continue to employ an alien “knowing the alien” to be unauthorized to work. IRCA also requires employers to complete an employment eligibility verification process, reviewing specified documents provided by new hires to demonstrate their identity and employment eligibility. Unfortunately, the easy availability of counterfeit documents has largely undermined the effectiveness of IRCA’s employer sanctions.
• SSA has in the past issued “no-match” letters to employers informing them of employee names and Social Security numbers the employers have provided to SSA “that do not match” SSA records. As DHS has explained, “[t]here can be many causes for a mismatch, including … the submission of information for an alien who is not authorized to work … and who may be using a false SSN or an SSN assigned to someone else…. [A] no-match letter places an employer on notice of the possibility that some of its employees … may be unauthorized to work”.
• An employer can be found to have hired or continued to employ an alien “knowing the alien is an unauthorized alien” through “constructive knowledge”. In 2007, DHS published regulations providing that “an employer’s failure to take reasonable steps in response to … receiv[ing]” a no-match letter “may lead to a finding that [it] had … constructive knowledge” that “the employee referred … was an alien not authorized to work”, and thus that the employer was violating IRCA’s prohibitions. In the regulations, DHS set forth “safe-harbor” procedures employers could follow to “be certain that DHS will not find that [they] had [such] constructive knowledge”. In 2008, DHS issued revised regulations, but they were then rescinded by the Obama administration.
• DHS can repromulgate its regulations without the need for any new legislation. Doing so has the potential to demagnetize the job magnet for illegal immigration and encourage illegal aliens’ voluntary departure from the U.S. to an extent approaching the impact of a statutory mandate for employer participation in E-Verify.

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Introduction

The Department of Homeland Security (DHS) can permit, and indeed incentivize, employers to dismiss alien workers en masse whose unlawful work in the United States is first identified through Social Security Administration (SSA) “no-match” letters. Such action has the potential to demagnetize the job magnet for illegal immigration and encourage illegal aliens’ voluntary departure from the U.S. to an extent approaching that of a statutory mandate for employer participation in E-Verify. DHS can take such action without the need for any new legislation – it merely has to repromulgate its 2008 “no-match” regulations that were later rescinded by the Obama administration.

Employer Sanctions

The Select Commission on Immigration and Refugee Policy, established by Congress in 1978 and chaired by Rev. Theodore Hesburgh, then president of the University of Notre Dame and former chair of the U.S. Commission on Civil Rights, concluded in its final report in 1981 that:

The vast majority of undocumented/illegal aliens are attracted to this country by employment opportunities…. As long as the possibility of employment exists, men and woman seeking economic opportunities will continue to take great risks to come to the United States, and curing illegal immigration will be extremely difficult. … [T]he success of any campaign to curb illegal migration is dependent on the introduction of new forms of economic deterrents.

Without an enforcement tool to make the hiring of undocumented workers unprofitable, efforts to prevent the[ir] participation … in the labor market will continue to meet with failure. Indeed, the absence of such a law serves as an enticement for foreign workers…. [S]ome form of employer sanctions is necessary if illegal migration is to be curtailed.

The following year, the Supreme Court expressed similar sentiments in Plyler v. Doe, a seminal decision written by liberal icon William Brennan, Jr., barring states (at least without clear congressional authorization) from denying a public education to illegal alien children or requiring them to pay tuition:

Sheer incapability or lax enforcement of the laws barring entry into this country, coupled with the failure to establish an effective bar to the employment of undocumented aliens, has resulted in the creation of a substantial “shadow population” of illegal migrants — numbering in the millions — within our borders. This situation raises the specter of a permanent caste of undocumented resident aliens, encouraged by some to remain here as a source of cheap labor.

. . .

The dominant incentive for illegal entry … is the availability of employment …. [W]e think it clear that “[charging] tuition to undocumented children constitutes a ludicrously ineffectual attempt to stem the tide of illegal immigration,” at least when compared with the alternative of prohibiting the employment of illegal aliens.

In 1986, the House Judiciary Committee similarly argued in the lead-up to the enactment of federal employer sanctions that:

The principal means of … curtailing future illegal immigration … is through employer sanctions…. Employment is the magnet that attracts aliens here illegally. … Employers will be deterred by … penalties … from hiring unauthorized aliens and this, in turn, will deter aliens from entering illegally or violating their status in search of employment. The logic of this approach has been recognized and backed by the past four administrations, and by the Select Commission. … [E]mployer sanctions is the most humane, credible and effective way to respond to the large-scale influx of undocumented aliens. [H.R. Rep. No. 99-682, pt. 1, at 46 (1986).]

The House Judiciary Committee later noted in 1996 that “The endorsement by the Select Commission in 1981 provided a strong impetus for the passage of … employer sanctions[, which] became a part of the Simpson-Mazzoli immigration reform bill, eventually enacted as the Immigration Reform and Control Act of 1986” (IRCA).

IRCA created a new section (§ 274A) of the Immigration and Nationality Act (INA), providing in part that it is unlawful for an employer to:

• hire … for employment in the United States … an alien knowing the alien is an unauthorized alien … with respect to such employment, or … an individual without complying with the requirements of [the new employment eligibility verification process, or]
• after hiring an alien for employment … to continue to employ the alien … knowing the alien is (or has become) an unauthorized alien with respect to such employment.

Specified Documents. Section 274A also sets forth the employment eligibility verification process, requiring employers to attest on an “I-9” form that it has reviewed specified documents provided by a new hire demonstrating identity and employment eligibility and that the documents reasonably appeared to be genuine and relate to the new hire. 

An employer must examine either a document establishing both employment authorization and identity, or both a document establishing employment authorization and one establishing identity. Documents establishing both employment authorization and identity include (not a complete list): 

• a U.S. passport,
• a Permanent Resident Card (a “green card”),
• a foreign passport (with a stamp or notation providing temporary evidence of lawful permanent residence), and
• a DHS Employment Authorization Document.

Documents establishing identity include (not a complete list):

• a state-issued driver’s license/identification card containing a photograph,
• a school identification card with a photograph,
• a voter registration card,
• a U.S. military card, and
• a Native American tribal document.

Documents establishing employment authorization include (not a complete list): 

• a Social Security card (other than one that that it does not authorize employment),
• an original or certified copy of a birth certificate issued by a State, county, or municipal authority bearing an official seal,
• a Native American tribal document, and
• a DHS-issued employment authorization document.

For employers who violate the knowing-hire or continued-employment prohibitions, section 274A provides for the issuance of orders requiring employers to cease and desist from committing violations and to pay civil penalties of— 

• not less than $250 and not more than $2,000 for each unauthorized alien with respect to whom a violation … occurred,
• not less than $2,000 and not more than $5,000 for each such alien in the case of a[n employer] previously subject to one order …, or
• not less than $3,000 and not more than $10,000 for each such alien in the case of a[n employer] previously subject to more than one order….

As to violations of the employment eligibility verification process (regardless of whether unauthorized aliens were hired or employed):

[T]he order … shall require the [employer] to pay a civil penalty in an amount of not less than $100 and not more than $1,000 for each individual with respect to whom such violation occurred. In determining the amount of the penalty, due consideration shall be given to the size of the business of the employer being charged, the good faith of the employer, the seriousness of the violation, whether or not the individual was an unauthorized alien, and the history of previous violations.

Federal law also provides for criminal penalties (as I have described elsewhere). Most basically, § 274A contains a penalty for a “pattern or practice” of violations of the knowing hire and continued employment prohibitions:

Any [employer] which engages in a pattern or practice of violations shall be fined not more than $3,000 for each unauthorized alien with respect to whom such a violation occurs, imprisoned for not more than six months for the entire pattern or practice, or both, notwithstanding the provisions of any other Federal law relating to fine levels.

Constructive Knowledge. An employer may be found to have hired or continued to employ an alien “knowing the alien is an unauthorized alien” through “constructive knowledge”. The 9^th Circuit ruled in 1990 in Mester Manufacturing Co. v. INS that constructive knowledge counts as knowledge in the context of employer sanctions, concluding that “[The employer] received specific information [from the then Immigration and Naturalization Service (INS)] that several of his employees were likely to be unauthorized. He made no further inquiry of the INS, and failed to take appropriate corrective action.” The U.S. District Court for the Eastern District of New York concluded in 1992 in Etuk v. Slattery that constructive knowledge is “what a reasonable and prudent employer should know”.

DHS regulations at 8 C.F.R. § 274a.a(l)(1) provide that:

The term knowing includes not only actual knowledge but also knowledge which may fairly be inferred through notice of certain facts and circumstances which would lead a person, through the exercise of reasonable care, to know about a certain condition. Constructive knowledge may include, but is not limited to, situations where an employer:

     (i) Fails to complete or improperly completes the … I–9;

     (ii) Has information available to it that would indicate that the alien is not authorized to work, such as Labor Certification and/or an Application for Prospective Employer; or

     (iii) Acts with reckless and wanton disregard for the legal consequences of permitting another individual to introduce an unauthorized alien into its work force or to act on its behalf.

Keep in mind, however, that subsequent to Mester, the 9^th Circuit in 1991 concluded in Collins Foods Int’l v. U.S. that “the doctrine of constructive knowledge must be sparingly applied” in employer sanctions cases. The court explained that:

[T]he [administrative law judge] ALJ’s holding extends the constructive knowledge doctrine far beyond its permissible application in IRCA employer sanction cases. IRCA … is delicately balanced to serve the goal of preventing unauthorized alien employment while avoiding discrimination against citizens and authorized aliens. The doctrine of constructive knowledge has great potential to upset that balance, and it should not be expansively applied…. When the scope of liability is expanded by the doctrine of constructive knowledge, the employer is subject to penalties for a range of undefined acts that may result in knowledge being imputed to him. To guard against unknowing violations, the employer may … avoid hiring anyone with an appearance of alienage. To preserve Congress’ intent in passing the employer sanctions provisions of IRCA, then, the doctrine of constructive knowledge must be sparingly applied.

. . .

[A] finding of constructive knowledge … requires more than the ALJ found to exist here. Failure to compare the back of a Social Security card with the example in the INS handbook, when neither statute nor regulation requires the employer to do so, falls far short of the “willful blindness” found in Mester and [the 9^th Circuit’s 1992 decision in] New El Rey Sausage Co. v. INS.

[The employer here] did not have the kind of positive information that the INS had provided in Mester and New El Rey Sausage to support a finding of constructive knowledge. Neither the failure to verify documentation before offering employment, nor the failure to compare the back of the applicant’s Social Security card with the example in the INS manual, justifies such a finding. There is no support in the employer sanctions provisions of IRCA or in their legislative history to charge Collins Foods, on the basis of the facts relied on by the ALJ here, with constructive knowledge of … unauthorized status.

Document Fraud. The Achilles Heel of IRCA’s employer sanctions was and continues to be the verification mechanism. Lamar Smith, author of H.R. 2202, the House foundation for the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA), and then chairman of the House Judiciary Committee’s immigration subcommittee, explained (along with then subcommittee counsel Edward Grant) in 1997 that:

The enforcement centerpiece of the IRCA — sanctions against employers who hire illegal aliens — failed to include any system whereby employers could reasonably verify the status of their new employees. A booming market in fraudulent documents soon developed.

. . .

Unfortunately, the easy availability of counterfeit documents … has made a mockery of the law. Fake documents were produced in mass quantities.… As a result, even the vast majority of employers who wanted to obey the law had no reliable means of identifying illegal aliens.… At the other extreme, rogue employers could easily collude with illegal alien employees to avoid the provisions of IRCA … comfortable in the knowledge that they were presented with “genuine” documents.

The now Government Accountability Office (GAO) similarly noted in 1999 that “INS officials … stated that the widespread use of fraudulent documents made it difficult for INS to prove that an employer knowingly hired an unauthorized alien.” And in 2005, the GAO concluded that:

[T]he widespread use of counterfeit documents … make it difficult for ICE agents to prove employer violations.

. . .

ICE officials told us that employers who agents suspect of knowingly hiring unauthorized workers can claim that they were unaware that their workers presented false documents at the time of hire, making it difficult for agents to prove that the employer willfully violated IRCA.

Social Security Administration “No-Match” Letters

As DHS explained in 2008, it “and its predecessor agencies, ha[ve] been aware for many years … that a comparison of names and social security numbers [SSN] submitted by employers against SSA’s [the Social Security Administration’s] data provides an indicator of possible illegal employment”.

SSA has in the past issued “no-match” letters to employers informing them of “employee names and [SSNs] on the Wage and Tax Statements (Forms W-2) … that do not match our records” and that “when the information reported does not match our records, we cannot credit employees’ earnings to their Social Security records”, and “provid[ing employers with] useful information about free online wage reporting tools, including how to view and correct name and SSN mismatches”. In 2019, SSA issued approximately 803,000 no-match letters to employers. SSA under the Biden administration “discontinued mailing [no-match] letters effective April 2021”, claiming it “intend[ed] to implement a new modern software in December 2021 for electronic wage reporting, which informs the reporter of certain errors in real time as they upload wage reports.”

As DHS explained in 2008:

There can be many causes for a mismatch, including clerical error[,] name changes[, and] the submission of information for an alien who is not authorized to work in the United States and who may be using a false SSN or an SSN assigned to someone else…. [A] no-match letter places an employer on notice of the possibility that some of its employees whose SSNs are listed in the letter may not be who they claimed, and may be unauthorized to work in the United States.

The DHS “No-Match Letter” Regulations

DHS’s 2006 Proposed “No-Match Letter” Rule and 2007 Final Rule. In June 2006, DHS published proposed regulations providing that “an employer’s failure to take reasonable steps in response to … receiv[ing]” a no-match letter “may lead to a finding that [it] had … constructive knowledge” that “the employee referred to in the letter was an alien not authorized to work in the United States”, and thus that the employer was in violation of § 274A’s prohibition against the knowing continued employment of unauthorized aliens. 

DHS set forth in the proposed regulations “‘safe-harbor’ procedures that the employer can follow … [to] be certain that DHS will not find that [it] had constructive knowledge”. DHS stated in the subsequent final rule (promulgated in August 2007) that:

An employer who receives written notice from [SSA] … will be considered by [DHS] to have taken reasonable steps—and receipt of the written notice will therefore not be used as evidence of constructive knowledge—if the employer takes the following actions…. 

The first action was that “[t]he employer must check its records to determine whether the discrepancy results from a typographical, transcription, or similar clerical error.” If it did, “the employer must correct the error and inform [SSA] of the correct information” and “verify with [SSA] that the employee’s name and [SSN], as corrected, match [SSA] records.” 

Second: 

If the employer determines that the discrepancy is not due to an error in its own records, the employer must promptly request that the employee confirm that the name and [SSN] in the employer’s records are correct. If the employee states that the employer’s records are incorrect, the employer must correct, inform, verify, and make a record…. If the employee confirms that its records are correct, the employer must promptly request that the employee resolve the discrepancy with [SSA]….

Third, “[i]f the employer is unable to verify with [SSA] … that the employee’s name and [SSN] matches [SSA’s] records, the employer must again verify the employee’s employment authorization and identity”. The verification procedure required “[t]he employer [to] complete[] a new Form I–9 for the employee”, during which “[t]he employer must not accept any document referenced in [the no-match letter], [or] any document that contains a disputed [SSN] or alien number referenced in [the no-match letter] … to establish employment authorization or identity or both”. Additionally, [t]he employee must present a document that contains a photograph”.

DHS set forth in the preamble to the proposed regulations the consequences to an employer of not taking advantage of the safe harbor:

If the discrepancy referred to in the no-match letter is not resolved, and if the employee’s identity and work authorization cannot be verified … then the employer must choose between taking action to terminate the employee or facing the risk that DHS may find that the employer had constructive knowledge that the employee was an unauthorized alien….

The final rule would have modified 8 C.F.R. § 274a.a(l)(1), making clear that the risk to an employer was that DHS might, in the “totality of the circumstances”, find that it had constructive knowledge – not that constructive knowledge would be found in every instance:

Examples of situations where the employer may, depending on the totality of relevant circumstances, have constructive knowledge that an employee is an unauthorized alien include, but are not limited to, situations where the employer … [f]ails to take reasonable steps after receiving information indicating that the employee may be an alien who is not employment authorized, such as … [w]ritten notice to the employer from the [SSA] reporting earnings on a Form W–2 that employees’ names and corresponding [SSNs] fail to match [SSA] records…. [Emphasis added.]

The regulations apparently memorialized a process that DHS had already been utilizing. The Department of Justice’s (DOJ) Executive Office of Immigration Review’s Office of the Chief Administrative Hearing Officer (OCAHO) explained in 2012 in United States v. Associated Painters, Inc. that:

INS sent [the employer] a letter … advising that [SSA] records could not confirm the accuracy of certain information that had been entered in … the I-9 forms of 34 of its employees…. The letter advised that while this did not necessarily mean that the employees were unauthorized continuing to employ an individual after receiving such a notice could subject the employer to penalties for a knowing hire violation if the employer does not resolve the discrepancy and the individual is not work authorized. The letter set out a series of steps INS recommended in order to reverify the status of the listed employees.

The DHS Regulations and the INA’s Prohibition Against Unfair Immigration-Related Employment Practices. Section 274B sets forth a prohibition against unfair immigration-related employment practices:

It is an unfair immigration-related employment practice for a person or other entity to discriminate against any individual (other than an unauthorized alien …) with respect to the hiring, or recruitment or referral for a fee, of the individual for employment or the discharging of the individual from employment— 

     (A) because of such individual’s national origin, or 

     (B) in the case of a protected individual [such as a U.S. citizen, refugee, or asylee], because of such individual’s citizenship status.

Additionally, regarding an employer’s examination of documents during the I-9 process, § 274A provides that:

A[n employer] has complied with the requirements … if the document reasonably appears on its face to be genuine. If an individual provides a document or combination of documents that reasonably appears on its face to be genuine and that is sufficient to meet the [documentary] requirements … this paragraph shall [not] be construed as requiring the [employer] to solicit the production of any other document or as requiring the individual to produce such another document.

How do these two provisions relate to each other? Section 274B provides that:

A[n employer’s] request, for purposes of satisfying the [I-9 process’] requirements …, for more or different documents than are required … or refusing to honor documents tendered that on their face reasonably appear to be genuine shall be treated as an unfair immigration-related employment practice if made for the purpose or with the intent of discriminating against an individual [on the basis of national origin or citizenship status, as set forth above].

Consequently, 8 CFR § 274a.1(l)’s definition of the knowing hiring or continued employment of unauthorized aliens provides that “[n]othing in this definition should be interpreted as permitting an employer to request more or different documents than are required … or to refuse to honor documents tendered that on their face reasonably appear to be genuine and to relate to the individual.”

DHS’s proposed no-match regulation would have amended the regulatory definition to “clarif[y that while] this language applies to employers who receive no-match letters … employers who follow the safe harbor procedures … will not be found to have violated” the prohibition against unfair immigration-related employment practices. DHS explained in the final rule that:

The safe-harbor procedure … does not concern the employment verification requirements … of the INA [regarding hiring]. Instead, it relates to … whether an employer’s actions in response to a no-match letter will lead to a finding that the employer knowingly continued to employ unauthorized aliens. Unlike employers who are conducting an initial Form I–9 verification at the time of hire … employers performing a Form I–9 verification … as part of the safe-harbor procedure will be determining whether they may continue to employ an individual after receiving notification from SSA … of a problem that remains unresolved. Also, any document presented that contained a suspect SSN or alien registration number would not be facially valid.

The Court Injunction. In 2007, in AFL-CIO v. Chertoff, the United States District Court for the Northern District of California enjoined implementation of the final rule. The court concluded that:

[P]laintiffs[] … have raised serious questions whether: (1) the rule is arbitrary and capricious because DHS failed to supply a reasoned analysis for the agency’s new position that a no-match letter is sufficient, by itself, to put an employer on notice of an employee’s unauthorized status; (2) DHS exceeded its authority by interpreting [the INA’s] anti-discrimination provision; and (3) DHS violated the Regulatory Flexibility Act by not conducting a final flexibility analysis.

As to arbitrariness and capriciousness, the court concluded that:

Although the safe harbor rule represents a change in DHS’s historical position that no-match letters cannot, by themselves, put an employer on notice, DHS did not supply a reasoned analysis for the change. Accordingly, plaintiffs have raised a serious question whether the rule is arbitrary and capricious and therefore a violation of the Administrative Procedures [sic] Act, 5 U.S.C. § 706(2)(A).

As to DHS exceeding its authority, the court concluded that:

Congress delegated to DOJ – through its Office of Special Counsel for Immigration-Related Unfair Employment Practices … the responsibility of enforcing the anti-discrimination provisions of § [274B]…. The government has failed to cite to any authority that enables DHS to make the determination whether to sue an employer for violating [this] anti-discrimination provision. There is therefore a serious question whether DHS has impermissibly exceeded its authority – and encroached on the authority of the Special Counsel – by interpreting [the] anti-discrimination provisions to preclude enforcement where employers follow the safe-harbor framework. [Emphasis in original.]

As to the Regulatory Flexibility Act, the court concluded that:

The business plaintiffs argue that the safe harbor rule was promulgated in violation of the Regulatory Flexibility Act (RFA) because DHS failed to conduct a final flexibility analysis even though the rule will have a significant impact on small businesses. 

The RFA requires agencies, when promulgating a final rule, to prepare a regulatory flexibility analysis that describes, among other things, “a summary of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a summary of the assessment of the agency of such issues,” and “the steps the agency has taken to minimize the significant economic impact on small entities.” 5 U.S.C. § 604(a). 

The RFA has an exception, however, that relieves an agency from its obligation … if the agency “certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.”… § 605(b). The certification must include “a statement providing the factual basis for” the agency’s determination….

. . .

Plaintiffs have raised serious doubts about the veracity of DHS’s prediction that the safe harbor rule will “not impose any new or additional costs” on employers.

The court granted the plaintiffs’ motion for a preliminary injunction against DHS’s no-match rule “[b]ecause the balance of harms tips sharply in favor of plaintiffs and plaintiffs have raised serious questions going to the merits”. However, it is important to keep in mind that the court also found that:

A discrepancy in the SSA database is not a tell-tale sign of ineligibility, but because ineligibility is one reason why discrepancies occur, it is rational for DHS to use no-match letters as an “indicator[] of a potential problem.”… Accordingly, DHS has sufficiently articulated a rational connection between the facts found and the choice made. [Emphasis added throughout.]

. . .

[T]his Court cannot agree with plaintiffs’ fundamental premise that a no-match letter can never trigger constructive knowledge, regardless of the circumstances. Accordingly, there is no serious question whether DHS’s rule improperly alters the meaning of “knowing” as used in § [274A].

DHS’s 2008 Proposed and Final Regulations. In March 2008, DHS published a new supplemental proposed rule “to address the issues raised by the court”, after which “DHS w[ould] seek to have the preliminary injunction dissolved”, and in October 2008 it published a supplemental final rule. 

In the new final rule, DHS “reaffirm[ed] the text of the [2007] final rule without substantive change and ma[de] one typographical correction”. DHS did, “[i]n light of comments that identified plausible regulatory alternatives or areas needing further clarification or adjustments in the economic model underlying” the proposed rule’s initial regulatory flexibility analysis, “revise[] the analysis and assemble[]” a final regulatory flexibility analysis.

DHS also addressed the court’s concern about the department exceeding its authority:

[DHS] rescind[ed] the statements in the preamble of the … 2007 Final Rule describing employers’ obligations under anti-discrimination law or discussing the potential for anti-discrimination liability faced by employers that follow the safe-harbor procedures…. For example, DHS … rescind[ed] conclusive statements from the preamble … such as ‘‘employers who follow the safe harbor procedures * * * will not be found to have engaged in unlawful discrimination.”

. . .

DHS agrees that guidance on anti-discrimination compliance is important to the successful implementation of the safe harbor procedures…. DHS believes that the commenters’ concerns are addressed in the anti-discrimination guidance from the DOJ Office of Special Counsel published in today’s edition of the Federal Register.

DOJ explained that was publishing its notice to “clarify when [it] … may find reasonable cause to believe that employers following the safe-harbor procedures have engaged in unlawful discrimination in violation of the antidiscrimination provisions of the INA”. The notice stated that:

An employer that receives an SSA no-match letter and terminates employees without attempting to resolve the mismatches, or who treats employees differently or otherwise acts with the purpose or intent to discriminate based upon national origin or other prohibited characteristics, may be found by OSC to have engaged in unlawful discrimination. However, if an employer follows all of the safe-harbor procedures outlined in DHS’s no-match rule but cannot determine that an employee is authorized to work in the United States, and therefore terminates that employee, and if that employer applied the same procedures to all employees referenced in the no-match letter(s) uniformly and without the purpose or intent to discriminate on the basis of actual or perceived citizenship status or national origin, then OSC will not find reasonable cause to believe that the employer has violated section [274B]’s antidiscrimination provision, and that employer will not be subject to suit by the United States under that provision. 

Unfortunately, on August 19, 2009, DHS under the Obama administration proposed to rescind the no-match regulations, which it did on October 7, 2009. DHS attempted to justify its planned rescission by stating that:

DHS has determined that improvements in … E-Verify … along with other DHS programs, provide better tools for employers to reduce incidences of unauthorized employment and to better detect and deter the use of fraudulent identity documents by employees…. [R]escinding the [no-match rule] will better achieve DHS’s regulatory and enforcement goals.

. . .

DHS has determined that a more appropriate utilization of DHS resources would be to focus enforcement/community outreach efforts on increased compliance through improved verification, including increased participation in … E-Verify … and other programs.

And in the final recision, DHS added that it had “decided to focus on more universal means of encouraging employer compliance than the narrowly focused and reactive process of granting a safe harbor for following specific steps in response to a no-match letter.”

However, E-Verify is by statute voluntary for most employers. As my colleague Elizabeth Jacobs has written, it is a wonderful tool for those employers who want to do the right thing and ensure that they are not hiring illegal aliens. But bad actors who want to hire illegal aliens obviously have no reason to participate in E-Verify. The fact that DHS’s no-match regulation applied to good and bad actor employers alike was key its ability to fulfill the promise of IRCA’s employer sanctions.

In any event, DHS clarified in its final recision that it “has not changed its position as to the merits of the 2007 and 2008 [no-match] rules” and reaffirmed that “[r]eceipt of a No-Match letter, when considered with other probative evidence, is a factor that may be considered in the totality of the circumstances and may in certain situations support a finding of ‘constructive knowledge’.”

Federal Courts on Constructive Knowledge and No-Match Letters

Federal circuit courts have issued two important decisions regarding constructive knowledge in the context of no-match letters. The first was a 9^th Circuit decision in 2008 in Aramark Facility Servs. v. SEIU, Local 1877, issued after DHS’s initial no-match regulation had been enjoined, but before DHS had issued its second final regulation, and addressing conduct that in any event took place before the effective date of the no-match regulation. The second was a 10^th Circuit decision in 2017 in Split Rail Fence Co. v. United States.

In Aramark, the 9^th Circuit went beyond its careful ruling in Collins, whose scope had been “limited to the facts relied on by the ALJ”. In Aramark, the court proclaimed that constructive knowledge “requires positive information of a worker’s undocumented status”, and further that no-match letters “are not intended by the SSA to contain [such] ‘positive information’[”]. The court noted that the letters “merely indicate that the worker’s earnings were not being properly credited, one explanation of which is fraudulent SSNs”, and that “[t]his falls short of the ‘positive information’ from the government that was held to provide constructive notice in Mester and New El Rey and held lacking in Collins.”

The court distinguished New El Rey Sausage Co. and Mester on account of those cases involving situations where “the INS specifically visited the employer and notified it that its employees were suspected unlawful aliens and should be terminated if inspection of their documents did not allay the concerns.”

The 9^th Circuit in Aramark concluded that:

Given the narrow scope of the constructive knowledge doctrine, the “no-match” letters themselves could not have put [the employer] on constructive notice that any particular employee mentioned was undocumented…. [A]n SSN discrepancy does not automatically mean that an employee is undocumented or lacks proper work authorization.

. . .

Without more, the letters did not provide constructive notice of any immigration violations. [Emphasis added.]

However, the DHS no-match regulations were not being litigated in Aramark and the decision does not necessarily portend that the 9^th Circuit would rule against the regulations. 

DHS never contended that a no-match letter put an employer “on constructive notice that any particular employee … was undocumented.” (Emphasis added.) Rather, DHS believed that a no-match letter was “an indicator of possible illegal employment” that “places an employer on notice of the possibility that some of its employees … may be unauthorized to work”. (Emphasis added.) The court in Aramark acknowledged DHS’s stance:

In June 2006, DHS proposed [and then promulgated a regulation] to include receipt of no-match letters in [8 C.F.R. § 274a.l’s] discussion of “constructive knowledge.”…

[T]he [enjoined] DHS regulations … would not treat the no-match letter by itself as creating constructive knowledge of an immigration violation. Instead, the regulations would look further to “the totality of the circumstances” and whether the employer took reasonable steps after receiving the no-match letter.

The 9^th Circuit seems to imply here that the DHS regulations would indeed pass muster under its analysis in Aramark. Additionally, under DHS’s no-match regulations, just as in New El Rey Sausage Co. and Mester, an employer would have been specifically “notified that its employees were suspected unlawful aliens and should be terminated if inspection of their documents did not allay the concerns.”

The court in Aramark also explained that:

[The employer] maintains that constructive notice resulted from the fired workers’ reactions to the no-match letters and [the employer’s] directive to return quickly with documents from the SSA. It argues that it provided the employees a reasonable time in which to correct their SSN discrepancies, and that their failure to do so is sufficiently probative of their immigration status to rise to the level of “constructive notice” that they were undocumented.

The court disagreed with the employer’s contention, but it acknowledged that “the question is a close one”. Further, the “two considerations” that the court found to “weigh against a finding of constructive notice” are absent with the DHS no-match regulations.

First, Aramark involved an arbitrator’s findings, including the finding that “there was no ‘convincing information’ that any of the fired workers were undocumented”, and “the courts cannot second-guess [an] arbitrator’s [factual] findings”.

Second, Aramark involved an “extremely short time period in which the workers were told they should respond before they would be fired”. The court wrote that:

[W]orkers were told they had three days from the postmark of a letter from [their employer] to return with further documentation – either a new social security card, or a “verification form” from SSA that a new card was being processed….

This adds up to an extremely demanding policy…. [I]n these [few] days, the workers were expected to gather information that would prove to SSA that they were entitled to a [SSN], perhaps obtain legal representation, and navigate their way to a SSA office during business hours while still attending to whatever work and family obligations they had. It seems entirely possible – even likely – that many of the … employees concluded they could not meet the initial deadline, and then simply stopped trying. 

The court then contrasted this “extremely demanding policy” with the terms of the DHS no-match regulations:

Notably … [the employer’s] reverification policy was significantly more accelerated than the one envisioned by [DHS’s] regulations…. [under which] employers would qualify for the safe-harbor … so long as they asked the employees to provide further documentation from the SSA within 90 days of the date the employer received the no-match letter…. Moreover, even if the employee cannot resolve the discrepancy within 90 days, the employer can still qualify for the safe-harbor if it completes a new Form I-9 for the employee (using documents that do not depend on the disputed [SSN])…. Had the safe-harbor provision been in effect, [the employer here] could easily still have qualified for it when it fired the … employees. This weighs strongly against constructive notice here.

Implicitly, the more relaxed standards of DHS’s regulations would not weigh strongly against a finding of constructive notice.

In Split Rail Fence Co., the 10^th Circuit concluded that:

Collins involved a knowing-hire violation, not, as here, a knowing-continue-to-employ violation. The Collins opinion highlighted this key difference and specifically distinguished Mester and New El Rey, which were knowing-continue-to-employ violations. The court explained that the employers in Mester and New El Rey had inadequately responded to “positive information”—that is, Warning Notices—from the INS that certain employees were unauthorized, which equated to “willful blindness,” or constructive knowledge…. [Here, the employer’s] citation to Collins is unpersuasive for the same reason. Like Mester and New El Rey, [this case] … involves a knowing-continue-to-employ violation, and [the employer] received “positive information” in the form of two NSDs [Notice of Suspect Documents].

I am not sure that the 9^th Circuit in Collins understood the distinction between knowing-hire and knowing-continue-to-employ to be especially important. But, in any event, the 10^th Circuit, unlike the 9^th Circuit, believed that governmental notice to an employer that certain employees are suspected of being unauthorized does constitute “positive notice”. And, of course, no-match letters provide just such kind of notice.

At an administrative adjudication level, OCAHO has issued a number of relevant decisions in the context of determining appropriate civil fine levels for employers found to have committed employer sanctions violations. Its 2012 decision in Associated Painters involved the INS having informed an employer that “[SSA] records could not confirm the accuracy of certain information that had been entered in … the I-9 forms of 34 of its employees”. OCAHO concluded that:

Aramark warns us that the concept of constructive knowledge must be narrowly construed and sparingly applied…. Collins, too, cautions us against taking too expansive a view of constructive knowledge…. Considering those admonitions as well as the thrust of OCAHO case law, liability may not be found on this record…. [T]he bare facts in evidence … do not support a conclusion that [the employer] actually knew of any suspicious circumstances at the time of hire and deliberately chose to look the other way. There is no circumstantial or other evidence to support an inference that the employer or agents of the employer acted with a level of culpability sufficient to support a finding of constructive knowledge.

. . .

In order to support a finding of constructive knowledge, the evidence must demonstrate that the employer or its agents acted with a higher degree of culpability than has been established on this record.

In 2016, OCAHO concluded in United States v. SKZ Harvesting that a “social security mismatch alone is not evidence that an employee is unauthorized to work in the United States.” Again, DHS never contended that a mismatch alone is evidence that an employee is unauthorized, only that it is evidence that an employee may be unauthorized.

In its 2022 decision in United States v. R&SL Inc., D/B/A Total Employment and Management, OCAHO cited its conclusion in SKZ Harvesting, concluding that DHS “did not establish that [the employer] knowingly hired or continued to employ the … employee”. OCAHO stated that:

A … mismatch … does not serve to establish that a particular individual is unauthorized for employment. A NSD is not sufficient in itself to establish a worker’s unauthorized status either. [citing its 2014 decision in United States v. Romans Racing Stables, Inc.] It is for this reason that our case law has generally approached the question of a worker’s status cautiously when there is no evidence that the individual was provided with notice and given an opportunity to present alternative employment verification documents. See [OCAHO’s 2015 decisions in United States v. PM Packaging, Inc. and United States v. Liberty Packaging, Inc.]. [Emphasis added.]

But, of course, under DHS’s regulation, an employee who was the subject of a no-match letter is provided with notice and given an opportunity to present alternative employment verification documents. And, as the 9^th Circuit concluded in Aramark, the DHS regulations did “not treat the no-match letter by itself as creating constructive knowledge”, but “would look further to ‘the totality of the circumstances’ and whether the employer took reasonable steps after receiving the no-match letter.”

SSA and DOJ

Should DHS decide to repromulgate its 2008 final regulations, SSA would need to commit to reinstitute its issuance of no-match letters (which it had earlier reinstituted during President Trump’s first term). But, in addition, SSA would need to redraft its no-match letter to strike the language informing recipient employers that the letter “does not address your employee’s work authorization or immigration status”. SSA should also clarify that the no-match letter’s warning to employers that “tak[ing] adverse action against an employee … just because this letter identifies a mismatch…. could violate state or federal law” is not applicable after the employers follow the safe harbor procedures set forth in DHS’s regulations.

Additionally, should DHS decide to repromulgate its regulations, DOJ would need to republish its Federal Register notice clarifying that it would not find an employer to have engaged in unlawful discrimination based on the employer having followed the regulations’ safe-harbor procedures. As with SSA, DOJ would need to clarify the language on its website currently stating that “an employer should not assume that an employee referenced in a no-match letter is not work authorized, and should not take adverse action against the … employee based on that assumption” because “[s]uch action could subject the employer to liability under the antidiscrimination provision of the [INA].”