BY Felix Digilov and Kevin Troutman, Fisher Phillips
In 2019, the Social Security Administration (SSA) revived its practice of issuing employers Employer Correction Request notices – also known as “no-match letters.” Over a half-million employers, including many in the healthcare industry, received no-match letters informing them that one or more of their 2018 employee W-2s contained names and Social Security numbers (SSN) that did not match the SSA’s records. These letters instructed employers to register for the SSA’s Business Services 
Online and correct the mismatch within 60 days.
While this request may sound simple enough, complying with no-match letter requirements is fraught with potential legal pitfalls. Further, though the stated purpose of the no-match letter is to track employee benefits – as opposed to verifying employee immigration status — these letters have caused employers great anxiety and raised a host of I-9 compliance implications. Even though an estimated 11 million undocumented individuals live in the United States and ICE has ramped up its work-site enforcement efforts, employers should be cautious not to jump to the conclusion that a no-match letter means they are employing undocumented workers.
Instead, employers should follow these steps to comply with SSA no-match letters and consider some additional factors if they are inclined to initiate an I-9 compliance review.
Step 1: Understand the Contents of No-Match Letter
The letter usually begins by informing the employer that one or more employee W-2s contain a mismatch between the employee’s name and the SSN associated with that name. The no-match letter also provides: (a) the number of alleged mismatches and (b) the tax year at issue.
The letter asks employers to provide corrected name and SSN information so the SSA can properly match the employee’s earnings to his or her Social Security records. The letter states that the SSA simply wants employees to get the benefits they are entitled to receive.
As explained in the letter, there are many possible reasons for SSN/name mismatches, including relatively innocuous causes such as typographical errors, unreported name changes, or inaccurate input of the SSN on the W-2. There are other, more serious reasons for a possible mismatch, including identity theft, domestic violence, and witness protection status.
The no-match letter asks employers to log onto and register on a website called Business Services Online (BSO) to learn the names of employees who have been identified as no-matches and provide the SSA with necessary corrections to Form W-2C within 60 days. Employers should make every effort to retrieve these BSO error reports.
The no-match letter is not a notification that the SSA believes the employer or the named employee intentionally submitted the wrong name or SSN. Nor does it call into question any employees’ immigration status or work authorization. Indeed, the letter warns that employers are not to take any adverse employment action against any employee because of the letter. Adverse actions would include terminating, suspending or discriminating against any individual “just because his or her SSN or name does not match our records.”
Step 2: Review Your Employee Records
Before notifying employees of a no-match letter, employers should compare personnel and payroll records with the BSO error report. Specifically, be sure to examine the names provided by employees and the SSNs provided on their W-4 Forms, then compare them to the information provided to the SSA for the year in question. Look for typos, name changes, transposed digits, missing middle initials, or other simple mistakes. This will help determine whether the issues are truly clerical or potentially problematic. Employers should document their personnel records review.
Employers should not use the no-match letter to demand new I-9 forms from employees. Statistically, about 70 percent of no-match letters issued by the SSA involve employees who were not born in the United States. However, requiring employees identified in the letter to fill out new I-9s increases the risk of discrimination claims and lawsuits.
Step 3: Determine What Employee Handbook or Other Policies Might Apply
While some no-matches may be due to clerical errors, some may not. Although a no-match does not mean that the employee is not authorized to work legally in the United States, it does mean that the employee – willfully or not – may have provided the employer with false information. Such actions may trigger workplace policies involving honesty. Employers also should review their Social Security number mismatch policy, if they have one.
Prior to implementing any discipline, employers should review how those policies have been enforced in recent, similar episodes. If, for example, an employee provided false information about his or her prior job experience, degree, date of birth or any other similar information, what discipline, if any, did the company issue? As with any workplace policy, consistent application of discipline and policies helps avoid allegations of discrimination.
Step 4: Employee Notification
Once the above steps have been completed, employers should begin notifying identified employees about the no-match letter. Employers should continue to remit payroll taxes for all identified employees, regardless of the no-match notice. The following protocols are helpful when notifying affected employees:
- Meet individually with each employee in a private meeting space with at least two representatives of HR/management present (ideally not the employee’s supervisor or anyone in his or her direct chain of command).
- Tell the employee the company has been notified that the SSN the employee has on file does not match the employee’s name. Instruct the employee to resolve the issue with the Social Security Administration and to report back as to their progress within 30 days.
- Confirm instructions in writing and give the employee a letter recapping the points covered in the meeting. Attach a copy of applicable policies and refer to them in the letter. Have the employee sign and date a copy of the letter for their personnel file.
- Be prepared to take action. Take detailed notes in the meeting, especially of the employee’s response to the notification. If an employee admits to being undocumented or otherwise admits that he or she may not lawfully work in the United States, be prepared to terminate his or her employment immediately.
- The costs of knowingly employing a person who is not lawfully permitted to work in the United States can include monetary penalties ranging from $573 to $22,927 per undocumented employee, loss of government contracts, loss of a business license and even potential jail time of six months to 10 years.
- Track the dates of the employee meetings and when each employee received notice about the no-match letter. Follow up with those who have not reported back by the 30-day mark. Keep good records as to what each employee says about his or her efforts to resolve the issue.
- If the employee continues to delay reporting progress towards a resolution or seems to be taking an inordinate time to resolve the matter, consider sending reminders to the employee’s home address. The reminder should refer to the date of the initial notification (include a copy of the original notice) and any subsequent communications with them about the issue.
- If the issue has not been resolved after a reasonable time, and the employee does not appear to be making efforts to resolve the issue, confer with counsel to discuss next steps. If the employer has received additional information from any other source that the individual may not be authorized to work in the United States, ask legal counsel to review the information and the employee’s I-9 form to determine if further action is required.
Upon hiring new employees, employers may consider verifying employee names and SSNs through free online government resources such as Social Security Number Verification Service or E-Verify.
Step 5: Respond to The Social Security Administration
After an employer has reviewed the no-matches on the BSO website and taken action to address them, employers should submit any corrections to employees’ names and SSNs via form W-2C.
For employees whose correct names and SSNs cannot be identified, employers may still need to send a letter to the SSA addressing the status of the remaining identified employees. For example, the employee may no longer be employed; may have stated that the SSN is correct; or may have stated that he or she is consulting with the SSA to address issue.
No-match letters by themselves carry limited weight with respect to immigration issues. Receiving the no-match letter and learning that an employee was working under a non-matching names and SSN does not constitute “constructive knowledge” that an employee is not authorized to work in the United States. Failing to take “reasonable steps” to investigate the discrepancy, however, may expose the employer to liability under the Immigration and Nationality Act.
Step 6: Assess Your I-9 Compliance
While there is no indication that the Administration’s issuing of a no-match letter will trigger an automatic ICE I-9 audit or that ICE will be able to access SSA data, ICE regularly asks about receipt of no-match letters as part of an I-9 audit. Employers therefore may be well-advised to conduct a compliance review of a random sampling of I-9s to determine whether a full review is needed. If so, work with legal counsel to address and correct errors (to the extent they are correctable). The receipt of a no-match letter is a good reminder to get a handle on potential liability and address any related issues.
Employers also should review whether their I-9 policies are actually being followed. Does every employee hired after November 6, 1986, have an I-9? Who is responsible for processing I-9s, and have those employees been trained? Are all the required sections filled out? Were the forms completed on time? Are I-9s for terminated employees being purged in a timely manner? Is now the time to switch to E-Verify, if the employer has not done so already? These are just a few questions employers should ask about their I-9 records and processes.
Conclusion
The SSA’s decision to re-start issuance of no-match letters should serve as a catalyst for employers to take proactive steps to ensure that names and SSNs of new hires match at the time of hiring. Moving forward, well before getting a Social Security Administration no-match letter, employers should review their I-9s to gauge whether there is potential exposure and audit their policies and procedures. The review should encompass verifying the accuracy of new hires’ I-9s, considering the use of E-Verify for new hires and considering the use of the Social Security Number Verification Service for payroll reporting purposes. Using this approach, employers can seize upon no-match letters as an opportunity to ensure compliance and avoid future headaches and liability.