DHS Issues Safe Harbor Clarification

In August of 2007, the Department of Homeland Security (DHS) published a regulation that for the first time used an employer's receipt of notice from the Social Security Administration (SSA) of an employee's mismatched Social Security Number to show that the employer had knowledge that an employee lacked legal authorization to work in the United States. Essentially, the regulation informed employers that they must terminate an employee who does not correct a mismatch within 90 days, or they could be found to have knowledge of that worker's lack of legal authorization. By following the step by step procedure laid out in the regulation, the employer could find "safe harbor" from immigration violations. A number of groups representing both workers and employers sued to block the regulation, and a federal court blocked implementation of the regulation while the lawsuit was pending. DHS appealed the decision blocking implementation while the lawsuit was pending, and in the meantime, promised to issue a revised regulation that would address the court's concerns and allow the regulation to take effect. The court stayed the case until March 28, 2008 in order for the DHS to rewrite the regulation.

Late on Friday, March 21, 2008, DHS released a new document regarding the so-called "safe harbor" regulation. The document does not rewrite the rule, rather, it addresses some of the concerns raised by the court. DHS explained that it was not conceding to the court, and that it did not agree with the court's position, but felt that it had to address some of the issues raised in the order blocking the regulation. DHS explained that worksite enforcement is a critical component of immigration enforcement, and that the agency's believes that mismatched Social Security numbers are a possible indicator of illegal employment. According to DHS, there is a clear connection between mismatched Social Security numbers and a lack of work authorization. DHS explained that despite employers' awareness that a mismatch notice may indicate lack of legal status, mismatch letters do not deter employers from hiring undocumented immigrants. DHS also observed that while some employers retained employees who were included in mismatch notifications because of a lack of concern about immigration violations, others retained them because they were unclear regarding their legal obligations with respect to mismatch notifications.

DHS explained that the "safe harbor" regulation was designed to address these issues by providing clear steps for employers to follow after receiving no match letters. Those who were unsure of what to do would now have a direction to follow, and those who chose to ignore the regulation would do so at their peril. DHS went on to address the court's specific concerns.

First, the court felt that DHS had failed to provide a reasoned analysis to support a change in enforcement position. Historically, the law recognized that there are a number of issues unrelated to immigration status that could trigger a Social Security mismatch, and no-match letters had never been used as a basis for immigration violations. DHS now explains that it does not feel that it has changed position, as it has always taken the position that employers cannot ignore mismatch letters, and must take reasonable steps to correct mismatches. According to DHS, even if it has changed position, such a change is justified.

DHS emphasized the need for clarification of the steps that employers must take when they receive a no match letter. According to DHS, there was a great deal of ambiguity in this area because the law had essentially been established by the issuance of guidance letters from the federal government in response to employer inquiries. DHS felt that there needed to be a clear and authoritative rule establishing an employer's obligations with respect to no match letters. DHS explained that many law abiding employers felt stuck between their obligations under immigration laws and the risk of discrimination charges, and chose to retain workers with unresolved mismatches as a result. In short, the agency wanted to provide clear guidance to employers regarding the significance of the no match letters for immigration purposes and employer obligations once such a letter is received. According to DHS, the rule embraces the common understanding that a mismatch letter likely has a connection to an employee's legal status.

Second, the court felt that DHS exceeded its authority by interpreting the anti-discrimination provisions of immigration laws to conclude that the greater scrutiny in the regulations for employees with mismatches would not expose an employer to discrimination charges. DHS explained that it does recognize the authority of the Department of Justice to interpret and enforce the anti-discrimination rules, but pointed out that the safe harbor regulation was reviewed by a number of agencies. DHS also explained that it does not feel that an expression of opinion regarding laws outside of its jurisdiction is equivalent to overstepping its regulatory authority. Ultimately, DHS withdrew all statements to the effect that employers following the safe harbor rules would not face liability for discrimination.

Third, the court felt that DHS did not follow proper regulatory procedures in drafting the regulation. Specifically, certain regulations require an Initial Regulatory Flexibility Analysis to ensure that the agency has considered all regulatory alternatives that will minimize the economic impact of the regulation on smaller entities. Without conceding that the additional regulatory analysis expected by the court was required, DHS agreed to publish the analysis in order to satisfy the court's concerns, and provided an explanation of the impact of the rule on small entities, and the alternatives that were considered to minimize that impact. Ultimately, DHS concluded that the rule was necessary for immigration enforcement, and that any economic impact on small entities could not be avoided.

Finally, DHS provided some clarification of the safe harbor procedures. The first step in the procedure is for the employer to check for clerical errors. DHS explained that the employer should notify the employee within five days of completing its records check, but emphasized that the employer does not need to wait until it has finished checking for internal errors to notify the employee. Also, DHS explained that the safe harbor procedures do not apply to workers who were protected by the grandfather clause of the Immigration Reform and Control Act of 1986 (IRCA). Accordingly, workers who have been continuously employed since before IRCA may not be subject to the safe harbor procedure. Employers should consult with legal counsel regarding such workers.

COUNSEL TO MANAGEMENT:

While many observers expected a rewrite of the regulation, DHS has instead left the regulation intact as written. Instead, DHS has amended its explanation of the regulation to address the concerns raised by the court. The stay of the lawsuit will expire on March 28, 2008, and employers should monitor progress closely to ensure that they are prepared to implement appropriate protocols if the regulation takes effect. Protocols are available at http://www.srlaborlaw.com/.

The goal of this article is to provide employers with current labor and employment law information. The contents should not be interpreted or construed as legal advice or opinion. For individual responses to questions or concerns regarding any given situation, the reader should consult with Saqui & Raimondo at (831) 443-7100 in Salinas, or (916) 782-8555 in Sacramento.

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