By Clarice C. Liu, Esq., Published on May 30, 2019

In recent months, many employers have received “no-match” letters sent by the Social Security Administration (“SSA”) after a 7-year hiatus.  A no-match letter is a written notice issued by the SSA to an employer, usually in response to an employee wage report, indicating that the name or Social Security number (SSN) reported by the employer for one or more employees does not “match” a name or SSN combination reflected in SSA’s records.  This resurgence of the no-match letter has come after the letters were last sent in 2012 under the Obama administration.  In this new version, the no-match letters are entitled “Employer Correction Request.”

Employers receiving a no-match letter often tread a fine line in navigating between two competing interests.  On the one hand, employers who fail to resolve the discrepancy and continue to file inaccurate wage statements are at risk and subject to penalties.  On the other hand, employers who take undue action against an affected employee could face discrimination and wrongful termination claims.  Therefore, an employer receiving a no-match letter should proceed with caution.  This article discusses the manner in which employers should proceed with their employees upon the receipt of a no-match letter.

The 2019 No-Match Letter Adopts A New Format.

As background, no-match letters were first sent by the Social Security Administration in 1993 and were discontinued in 2012 when the Obama administration suspended their use after multiple challenges and litigation.  Thus, since 2012 until recently, the Social Security Administration stopped notifying employers about Social Security number mismatches.

In the Spring of 2019, the Social Security Administration resumed sending no-match letters to employers who appeared to have an incorrect Social Security Number for their employees.  The new letter, now called Employer Correction Request, has a new format.  With the new version, the no-match letters do not provide the names of the employees with the alleged mismatched Social Security Number.  Instead, the letter indicates only the total number of employees whose records do not match the SSA’s records.  In order to obtain the names of the employees, an employer is required to register with the Social Security Administration’s Business Services Online (BSO) which could entail cumbersome authentication requirements.

Employers Are Prohibited From Retaliation.

It is important for employers not to use the no-match letter or other no-match notice by itself as the reason for taking any adverse employment action against the referenced employee. The letter cautions employers against taking any adverse employment action against a referenced employee based solely on receipt of the letter, and explicitly states that the letter makes no statement about the referenced employee’s immigration status.

Thus, an employer receiving a no-match letter should not assume that the employees at issue have provided fraudulent information or that they are undocumented or unauthorized to work.  There are many reasons for a no-match notice, including but not limited to: (1) an unreported name change due to marriage, divorce or naturalization; (2) input errors by SSA staff; (3) reporting errors by an employer or employee; (4) identity theft; (5) errors in reporting proper culturally based hyphenated or multiple surnames; and (6) fraud.

An employer should, therefore, not take any adverse personnel action against the employee at issue without proper verification.  The premature termination of an employee could give rise to a cause of action under various anti-discrimination statutes.  In fact, the no-match letter from the Social Security Administration contains this express warning to employers:

“IMPORTANT: This letter does not imply that you or your employee intentionally gave the government wrong information about the employee’s name or SSN. This letter does not address your employee’s work authorization or immigration status. You should not use this letter to take any adverse action against an employee, such as laying off, suspending, firing, or discriminating against that individual, just because his or her SSN or name does not match our records. Any of those actions could, in fact, violate State or Federal law and subject you to legal consequences.”

In addition to the adverse personnel actions described above, retaliation in this context would include, but are not limited to, the following prohibited actions against the employee:

• Immediately require the affected employee to complete a new Form I-9 based solely on the receipt of a no-match letter in an attempt to reverify the information contained therein;
• Apply inconsistent procedures for certain employees based on apparent or perceived national origin or citizenship status;
• Require the employee at issue to produce specific form I-9 documents to address the no-match letter; or
• Ask the affected employee to provide a written report from the SSA or any other federal agency verifying the employee’s SSN.

Again, a precarious reaction in taking adverse personnel action against an employee could result in a finding of liability under the anti-discrimination provisions on various grounds, including discrimination on the basis of national origin, ancestry, or citizenship.

Employers Must Provide a “Reasonable Period of Time” For Employees To Resolve The Issue.

The Department of Justice indicates that an employer must provide an employee with a “reasonable period of time” to resolve issues related to a no-match letter. The term “reasonable period of time” is not precisely defined and may depend on the totality of the circumstances.  However, a time frame of 90 to 120 days is deemed prudent, computing from the date receipt of a no-match letter. An employer may consider granting additional time to an affected employee if it appears that the employee is attempting in good faith to correct the reported discrepancy. An employer should monitor the progress and document the employee’s good-faith efforts and any other justifications for providing the employee additional time.

Employer’s Proper Response to Address The Purported Mismatch.

As the first step in addressing the no-match letter, the employer should confirm that a reporting or input error is not the cause of a no-match.  The employer should confirm that the name and the Social Security Number reported accurately reflect the referenced employee’s name and Social Security Number. If no error is revealed, the employer should then advise the referenced employee to contact the local Social Security Administration office to address the reported no-match.

If the employee is unable to resolve the discrepancy within the reasonable period of 90 to 120 days, the employer will need to consider the next step, which might depend on the employee’s progress in addressing the mismatch with the following possible scenarios.

Scenario 1.  If the referenced employee refuses to undertake any good faith effort to address the reported discrepancy, then an employer may be justified in taking adverse action against the employee. An employer should, however, seek legal counsel prior to taking an adverse action such as termination.

Scenario 2.  If the affected employee is unable to provide a satisfactory resolution within the reasonable period of 90 to 120 days, but indicates that more time is necessary, the employer will have to determine whether to provide an extension to the employee, to reverify the employee, or to terminate the employee.  Because such a scenario will depend on the specific circumstances, it should be handled with caution, on a case-by-case basis.  Again, the employer should consult with an attorney before taking the adverse personnel action, and only after proper documentation of the efforts in urging the employee’s resolution of the matter.

Scenario 3.  If an employee provides a new Social Security Number to the employer, that is a potential red flag.  Accepting a new Social Security Number from an employee without further inquiry regarding the reasons for the new number may put an employer at risk.  In that event, the employer should require the employee to complete a new Form I-9 and attach the new Form I-9 to the original Form I-9, along with a written explanation of the difference. As with any Form I-9 process, an employer may not specify what particular documents from the current List of Acceptable Documents the employee submits to complete the new Form I-9.  However, an employer should not during the reverification process re-accept the same Social Security card document which gave rise to the no-match letter in the first place.

If the employer ascertains that the employee originally obtained employment through the intentional use of fraudulent documents, the employer may consider termination.  This course of action would be strengthened if the company has a provision in its Employee Handbook prohibiting employees’ dishonesty either during their employment or in the I-9 verification process.  However, in light of the potential risks for claims of discrimination or unlawful termination, the decision to terminate should only be made after carefully considering the potential legal ramifications.

Practical Considerations.

With the renewed issuance of no-match letters, employers should have a sound and consistent action plan in place, so that they will be prepared in the event of receiving a no-match letter.  Some of the action items for consideration include:

(1)   Review the Employee Handbook to add, if appropriate, provisions prohibiting dishonesty during employment and the I-9 verification process, and indicating that an employee’s dishonesty may lead to adverse personnel action, including termination.

(2)   Ensure a sound and consistent I-9 verification process for new hires.

(3)   Prepare procedures in handling no-match letters that are consistent and non-discriminatory, including steps such as the following:

• Review the employee’s personnel information including I-9 form, W-4 form, and other documents that contain the employee’s Social Security Number.
• Review internally the personnel records for clerical error.
• If the employer finds any internal error, notify the SSA regarding the error and to correct the error.
• Immediately notify the employee and issue a letter in writing to the employee regarding the SSA letter concerning the employee’s mismatch. (The written notice to the employee will be useful if/when documenting efforts to appropriately respond to the no-match letter.)
• Advise the employee that a refusal to provide any documentation or credible explanation of good-faith efforts to correct any inaccuracies in the SSA’s records could be grounds for termination.
• Provide the employee a reasonable period of time to resolve the mismatch with the Social Security Administration.
• Follow up with the employee regularly during the time frame regarding the employee’s progress in resolving the issue.
• Follow up with the Social Security Administration upon resolution or the lack thereof upon the expiration of the reasonable time period.

In light of the Social Security Administration’s latest issuance of no-match letters, it is important for employers to consult legal counsel to develop effective policies and best practices in treading the fine line towards compliance.

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The information provided in this article is intended for a general discussion of the subject matter and should not be construed as legal advice. For your specific circumstance, or inquiry about the issues addressed in this article or other employment law matters, please contact attorney Clarice Liu at (415) 288-8622 or [email protected].