Government's Stance on Social Security Administration "No-Match" Letters Uncertain

October 23, 2007

A federal judge has issued a nationwide preliminary injunction against enforcement of the Department of Homeland Security's ("DHS") new rule entitled "Safe Harbor Procedures for Employers who Receive a ‘No- Match' Letter." The rule was scheduled to go into effect on September 14, 2007. It contained a safe harbor provision that outlined several steps that employers could take to avoid having social security "No-Match" letters used against them as evidence that they knowingly employed unauthorized aliens.

Before the new rule could be enforced, a group of unions and businesses sued DHS on several grounds, claiming that the new rule is not supported by the applicable immigration statutes, is arbitrary and capricious, is an Ultra Vires act and, was issued in violation of the Regulatory Flexibility Act.

In a 22 page order, the Court stated that there was no apparent reason for DHS' change of position that "No-Match" letters were insufficient to place employers on notice for knowingly employing unauthorized aliens. As such, the Court determined that the new rule could not be enforced until the Court decided whether (1) in issuing the rule DHS acted in an "arbitrary and capricious" manner because it failed to articulate a reasoned analysis of how receipt of a "No-Match" letter could actually put an employer on notice that one of its workers was unauthorized; (2) whether DHS exceeded its legal authority in assuming responsibility for enforcing anti-discrimination laws; and (3) whether DHS failed to properly take the rules potential impact on small businesses into account before using it.

The new DHS "No-Match" rule may not be enforced until the Court decides the merits of the case. It is not yet known when a trial on this matter will be completed. Notwithstanding the merits of this case, DHS will likely continue to aggressively enforce immigration laws that impact the workplace.

Please contact Brandon Davis at brandon.davis@phelps.com for more assistance with the issues raised in this alert.

Source: American Federation of Labor, et al v. Michael Chertoff, et al, C.A. No. 07-04472.

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