In April 2021, the Social Security Administration (“SSA”) notified the public of its intention to no longer issue Employer Correction Request Notices (“no-match letters”) to employers. SSA no-match letters advise employers that corrective action needs to be taken to resolve a discrepancy between SSA records and the information provided on one or more Forms W-2 (the wage reporting form filed by an employer with the Internal Revenue Service). Discrepancies may include, for example, typographical errors that resulted in incorrect social security numbers. But they also include intentional mismatches between an employee’s name and social security number, which may trigger an obligation by the employer to investigate whether the employee who presented the information at their time of hire was the true identity holder or had produced suspect documents.
The SSA’s practice of sending no-match letters began in 1993. In 2012, the agency halted the no-match letter program due to complaints and lawsuits that largely perceived the program as discriminatory against foreign national workers. While the SSA had started issuing no-match letters again in March 2019, the program took another pause during the early months of the COVID-19 pandemic. The program resumed by the end of 2020, but in April, the agency posted the following on its website:
At present, we are discontinuing [no-match] letters to focus on making it a better, easier, more convenient experience for employers to report wages electronically. We also will continue to seek out new opportunities to educate employers.
Employers should be receptive to the discontinuance of no-match letters. These letters came with a heavy administrative burden and perceived risk. By issuing a no-match letter, the SSA required employers to provide corrections to discrepancies within sixty days. Alternatively, evidence of inaction may have be deemed as constructive knowledge of employing unauthorized workers. Should the employer have undergone an investigation by Immigration and Customs Enforcement (ICE), the employer faced the risk of penalty for knowingly employing unauthorized workers. A number of penalties may have resulted from such a finding, ranging from thousands of dollars in civil fines to imprisonment for identified patterns of unlawful employment practices.
Still, employers had to be cautious in taking responsive action because punishing workers solely based on the no-match letter may have led to discrimination lawsuits. As a result, no-match letters required employers to walk a fine line between taking no action and taking inappropriate action. Employers who received no-match letters and did not take action were potentially subject to the range of penalties, should ICE have commenced an investigation and found employment of unauthorized workers. But employers who took inappropriate action, such as terminating employees without proper investigation, were potentially subject to discrimination claims by the employee.
Despite the new policy, employers must continue to be vigilant and implement the appropriate controls to shield their enterprises from the employment of unauthorized workers, particularly those in the food and beverage, agriculture, and manufacturing industries. In the event that an employer uncovers a situation where an employee’s identity conflicts with government databases or information otherwise provided by the employee on his employment application or employment eligibility verification documents, the employer should take the followings actions.
- Confirm whether a clerical error was made.
- If no clerical error was made, notify the employee of the discrepancy, in writing, and request confirmation of the correct information within a specific time period.
- If the information provided to the SSA by the employer is correct, direct the employee to contact the SSA to update the agency’s records.
- If these solutions do not resolve the discrepancy, seek counsel to ensure the appropriate remedial measures are taken.
As mentioned above, when instituting a program to address these discrepancies, employers should be mindful of the anti-discrimination provisions of US immigration law.
Though the SSA has not yet announced any potential solutions or improvements to its wage reporting system, we are monitoring SSA announcements to provide further guidance on any employer obligations that are announced or anti-discrimination trends that surface.