What Employers Need to Know to Avoid Legal Trouble and Fines
Posted By Bob Dunlevey and Nadia A. Klarr of Taft Law, Thursday, July 11, 2019
In March, the Social Security Administration (“SSA”) resurrected a past practice of issuing “Employer Correction Request” letters, commonly referred to as “no-match letters,” to employers that have at least one employee whose name and social security number do not match on W-2 records or other tax-related filings. While the stated purpose of these notifications is seemingly innocuous – to maintain the accuracy of earnings records used to determine benefit amounts so that employees obtain the benefits earned – make no mistake about it that receipt of a no-match letter has serious legal ramifications for an employer.
Although employee fraud is certainly a possible reason to receive a no-match letter, there are a number of other reasons for mismatches to occur, including typographical errors, unreported name changes, and incomplete or inaccurate employer records. Because the cause is unknown at the time the employer receives a no-match letter, it is very important that employers do not automatically assume that the no-match letter relates to an employee’s immigration status or employment eligibility. To that end, the letter should not be used as the sole basis for termination or other adverse action against the employee at issue. However, because the no-match could certainly be the result of employee fraud and could be related to the employment of unauthorized workers, employers must take immediate action upon receipt of a no-match letter.
First, the employer should review the no-match information from the SSA and compare against its personnel records to confirm they accurately entered the information provided to SSA. If the no-match is the result of a typographical error, the employer can provide SSA necessary corrections on Form W2-C, which can be done by utilizing the W-2C online and through the Employer Report Status within the Business Services Online portal. Necessary corrections must be provided to SSA within 60 days of receiving the no-match letter.
If the discrepancy cannot be resolved by the employer, then the employer must alert the employee to the no-match letter and ask the employee to confirm his or her legal name and social security number. If the information is the same, and therefore the discrepancy with SSA still exists, advise the employee to consult the SSA to correct the information, and provide the employee with a reasonable period of time to do so. Because corrections to SSA are required within 60 days of receiving the no-match letter, a reasonable period of time to provide the employee to consult the SSA to correct the information is approximately 30 days.
Be advised that an employer’s failure to investigate and/or respond to a no-match letter issued by the SSA may lead to serious consequences for the employer. Immigration and Customs Enforcement (“ICE”) may consider receipt of a no-match letter as evidence of the employer’s constructive knowledge that it was employing individuals not authorized to work in the United States, which can lead to a host of legal compliance issues and fines. Although the current position of the SSA is that it will not share information related to no-match findings with the Department of Homeland Security (“DHS”) or ICE, it is important to note that the information is available to both DHS and ICE upon request or during an investigation. Interestingly, and probably not coincidentally, I-9 audits have substantially increased over the last two years. In fact, fiscal year 2018 resulted in a nearly 440% increase in Form I-9 audits than the previous year, so employers cannot expect to fly under the radar when it comes to I-9 compliance, particularly if they have received a no-match letter. During an investigation or audit of an employer’s Forms I-9, ICE will issue a Notice of Inspection that requests information related to the employer’s receipt of any no-match letters from the SSA. ICE will also request evidence from the employer concerning how the employer responded to the no-match letter, including any internal investigation conducted and any formal response to the SSA.
Thus, prudent employers should immediately take action upon receiving a no-match letter from the SSA. Additionally, prudent employers who receive such no-match notifications should consider conducting their own I-9 self-audit to ensure compliance and to take any corrective action necessary to maintain compliance. If an employer takes these steps and complies with the SSA’s process in responding to no-match letters, the employer will likely enjoy a rebuttable presumption that it has followed the law and is properly employing its workforce.
For additional information on no-match letters or maintaining Form I-9 compliance, use your Legal Services Plan and contact labor and employment law attorney Nadia A. Klarr at (937) 641-2055 or email firstname.lastname@example.org.