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LABOR & EMPLOYMENT LAW — 5/14/08

SSA will not send "no-match" letters to employers for TY 2007

While US District Court Judge Charles Breyer of the Northern District of California issued a preliminary injunction in October 2007 (AFL-CIO v Chertoff, NDCal, No 3:07-cv-04472-CRB) stopping the Department of Homeland Security (DHS) from implementing its "no-match" regulation, which included mailing or otherwise sending to employers Social Security Administration (SSA) no-match letters that have DHS inserts explaining the regulation, the injunction never precluded the SSA from sending out its traditional no-match letters to employers, which help to improve the accuracy of its wage reporting. However, the SSA has decided that just like Tax Year (TY) 2006, it will not sent no-match letters to employers for TY 2007, said Dorothy Clark, spokesperson for the agency, in a May 7, 2008, interview with CCH.

Background. Each year, employers submit employee wages to the SSA on the Form W-2 -- Wage and Tax Statements. When the SSA is unable to match an employee's name and Social Security number (SSN) from the W-2 with its own records, that employee's earnings are posted to the SSA's Earnings Suspense File until they can be matched with SSA records. Clark indicated that as many as 8 to 9 million employees each year provide incorrect Social Security data. Since 1994, the SSA, whose role is to "improve the accuracy of wage reporting data," has attempted to correct mismatched records by sending out around 138,000 no-match letters to employers requesting corrected information. According to Clark, the SSA has sent no-match letters to employees since 1979. The no-match letters to employers are usually sent in bunches starting in March or April, she said.

No-match letters were not sent to employers for TY 2006 because of the insert. DHS's regulation required the SSA to revise its no-match letters to employers, and by the time the preliminary injunction was granted in October, it was too late in the year to revise the letters again to send them out for TY 2006. The DHS insert outlined the safe harbor procedures, embodied in the regulation, that employers should take to resolve the mismatch consistent with the employer's obligations under US immigration law or face civil and criminal sanctions.

Supplemental rule. On March 26, 2008, DHS published a supplemental proposed rulemaking in the Federal Register addressing the concerns raised by Judge Breyer when he enjoined the release of the agency's no-match regulation in October 2007. The supplemental rulemaking does not alter any of the steps or time frames, called safe harbor procedures, employers can take in response to receiving a no-match letter, but instead: (1) clarified DHS s policy on no-match letters; (2) altered the regulations anti-discrimination language; and (3) provided an initial regulatory flexibility analysis. Upon publication, DHS will seek to have Breyer's preliminary injunction dissolved. Interested parties were invited to submit comments on the rulemaking by no later than April 25. The supplemental rulemaking can be found at the following website.

In an April 25 interview with CCH, Laura Keehner, spokesperson for DHS, said that after the agency completes its review of the comments received on the supplemental rule and finalizes the regulation it will simultaneously asked Judge Breyer to vacate the preliminary injunction. Keehner expects the process to take a few months.

Due to the continuing legal challenges, Clark said that the SSA has decided not to send out no-match letters to employers for TY 2007. Clark would not speculate on whether the SSA would change its plans should a resolution occur in the lawsuit. 8-9 million employees will receive no-match letters for TY 2007.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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