A business owner from Illinois called me the other day and told me that she just received a No Match Letter from the Social Security Administration (SSA). Given the potential legal and operational implications for her company, I offered the following sequential advice to her.

Content of the Letter

In most cases, the No Match Letter informs employers that the SSA has received multiple W-2 Forms that don’t match the employee’s social security number in the SSA database. This inconsistency may affect employee benefits and could be due to: typographical errors, identity theft, misspelling, marriage, divorce, etc. It is important to note that the No Match Letter represents a payroll tax issue, not an immigration issue.

The names of affected employees are not listed on the No Match Letter. To that end, the employer is directed to register an account on the SSA’s Business Services Online (BSO) website which identifies said employees to the employer. Employers are requested to make necessary corrections to the affected employees on Form W2C within 60 days of receiving the No Match Letter.

To be clear, the No Match Letter explicitly states: “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.” In that same breadth, employers are forthrightly admonished to NOT take any adverse action (e.g., termination, suspension, discrimination) against any identified employee on the No Match List, in that such action could lead to legal violations based on national origin, citizenship, or protected class discrimination.

Document Review

Given the premise of the No Match Letter, employers should conduct a thorough review of all employee records by verifying their social security numbers on various documents (e.g., I-9 Forms, W4 Forms) to ensure clerical accuracy. Employers are also encouraged to validate that their Employee Handbook contains a policy prohibiting employees from submitting false information (e.g., resume’, investigation, timekeeping, payroll) to the company at any time.

Meet with the Employee

With the background work completed, it is advised that the employer meet with each employee on the No Match List, in a private session with the employee’s direct supervisor not attending. During this meeting, the employer may suggest that the employee address this issue on his/her personal time with the SSA and report back to company management within a reasonable timeframe (i.e., 30 days). The SSA website provides a sample letter to help employees address this issue. While the employee is not required to take action on this issue, it is well-advised that the employer document each step of this process, with every affected employee, thereby demonstrating a potential “safe-harbor” effort, and store all pertinent documentation in the employee’s personnel file.

It is understood that the employer is prevented from taking any unilateral adverse action. However, if the affected employee admits to any illegality, that employee should be terminated immediately. At that point in time, the employer now has personal knowledge of the employee’s unauthorized work status; continuing to employ an unauthorized person confronts the employer with possible fines up to $22,363, loss of his/her business license, and potential jail time.

Staying with that delicate point, while employers are staunchly prohibited from taking adverse action against the employee based on any suspicion, hunch, or gossip, if the employer uncovers corroborative evidence regarding the employee’s unauthorized status from other sources (e.g., IRS, law enforcement, 401k provider, medical insurance vendors), the employee should be terminated immediately.

Best Practices Procedures

Aside from the process outlined above, receiving a No Match Letter certainly suggests increased vigilance regarding the company’s administrative procedures (e.g., policies, documentation, personnel training). For example, it is fundamentally obvious that recipient employers should establish formal, written I-9 procedures clarifying roles and responsibilities. These procedures should include proper form completion, documentation, storage, and lawful purging of terminated employees’ I-9 Forms. Employers are also encouraged to implement self-imposed internal I-9 audit procedures (e.g., Office Manager, legal counsel, Human Resources consultant) on an annual basis. Additionally, where state law permits, employers could investigate the adoption of using the E-Verify system which significantly reduces the likelihood of receiving future No Match Letters.

If you have any questions regarding the above-mentioned content or any other human resources topic, simply call me at (760) 685-3800.