The International Franchise Association has joined a group of national trade associations to intervene in an AFL-CIO lawsuit in the Northern District of California over the new Department of Homeland Security "No-Match" Rule. On Aug. 31, a federal judge blocked the agency from mailing Social Security "no-match letters" to an estimated 140,000 employers until following an Oct. 1 preliminary hearing. The letters were the first wave of notices for businesses that workers failing to resolve discrepancies in their records within 90 days must be fired, or else employers face potential fines and even criminal liability for hiring illegal immigrants.
The lawsuit challenges the federal government under the Administrative Procedures Act and the Regulatory Flexibility Act. These laws generally require federal agencies to contemplate the impact of regulation on small businesses before new rules can take effect and prove that there was no less burdensome alternative available. This review did not take place in the development of the "No-Match" Rule.
A "no-match" occurs whenever there is a discrepancy between an employee's name and Social Security Number in the SSA database. The SSA has acknowledged that its database contains more than 17 million errors, and up to 10 percent of the U.S. workforce might be burdened with a "no-match" letter. Many are due to benign causes such as change of name following marriage or clerical error. Failure by an employer to follow these procedures outlined by the DHS when a Social Security "no-match" letter is received could result in the assumption by DHS that the employer had "constructive knowledge" that an employee was an undocumented worker.
The IFA is concerned that the new Department of Homeland Security regulation on Social Security "no-match" letters will impose a significant cost on employers, particularly small businesses, through training costs, lost productivity and reductions in the available workforce. DHS did not adequately or realistically consider the impact on small business which is required by the Regulatory Flexibility Act and the Small Business Regulatory...