The Social Security Administration (SSA) has revised its policies concerning employers who submit reports containing erroneous or "mismatched" information, i.e., where employees' names and social security numbers do not match the SSA's information. Previously, the SSA would not notify employers of errors or require any corrective measures unless the employer's wage reports contained a mismatch rate of at least 10%. Now, the SSA states that it will notify employers if they send in reports containing one or more mismatches. Obviously, this means that many more employers will receive "mismatch letters" and will have to address the issues. It is important to resolve these problems promptly to minimize the possibility of the IRS's imposing a $50 penalty for each incorrect submission. It is also important to understand what the SSA's mismatch letter may and may not mean about an employee's immigration status.
SSA's Mismatch Letters
The SSA's mismatch letter explains that employees' names and social security numbers (SSN) reported on the employer's Wage and Tax Statements (Forms W-2) do not match the SSA's records. The letter notes that if the data does not match, the SSA will not be able to credit the proper account with the payments. The letter outlines corrective steps for employers, including checking for typographical errors, incomplete submissions, or name changes. The letter also cautions employers that the mismatch letter is not in and of itself a basis for taking any adverse action against an employee and that taking adverse action because of the letter alone may violate federal or state law.
The letter suggests that the employer check for simple errors in the W-2 and if there are none, to ask the employee to check his or her SSN and notify the employer of the correct number. If these steps do not resolve the issue, the letter instructs the employer to have the employee contact any Social Security office to resolve the issue and inform the employer of any corrections that need to be made.
The employer is instructed to provide correct information to the SSA within 60 days. An employer may be fined $50 by the IRS for each time incorrect information is provided. The IRS may also levy a $50 fine on any employee who does not furnish a correct SSN to his or her employer.
The Immigration Implications
The SSA letter states that it is "mak[ing] no statement about [an] employee's immigration status" and notes that the mismatch may arise from a simple typographical error or other quite innocent circumstances; e.g., an employee may have changed his or her name. Immigration issues may, however, arise during the employer's investigation into the basis for the mismatch.
If the employer has investigated its own records and finds no explanation for the mismatch, the next step is to ask the employee to verify his or her SSN. The SSA letter suggests asking the employee to confirm the number, while a 1999 letter from the then-INS General Counsel suggests that employers verify the SSN by asking the employee for his or her Social Security card. (Bear in mind that this would be proper only if all employees who are in a similar situation are asked to provide their cards and only if the action is taken solely to verify the SSN, not to verify employment authorization. Federal law bars asking employees for particular documents to verify employment authorization.)
If those steps fail to identify the error, the employer should send the employee to the SSA to attempt to resolve the discrepancy. An employee's failure to provide a correction or a satisfactory explanation within a reasonable period of time may suggest that the employee cannot supply an accurate SSN because he or she does not actually have a SSN and is not, in fact, authorized to work.
If the circumstances suggest that an employee is not authorized to work, an employer's failure to take steps to reverify the employee's employment authorization on INS Form I-9 could lead the INS to conclude that the employer had knowingly continued the employment of an unauthorized alien. This would, of course, violate IRCA, the Immigration Reform and Control Act of 1986, and subject the employer to penalties ranging from $250 to $10,000, depending upon the circumstances.
There is inevitable tension between the various issues that arise for employers wrestling with how to respond to the SSA's mismatch letter. On one hand, the immigration laws require employers to verify their employees' employment authorization and penalize employers for employing unauthorized aliens. On the other hand, the immigration laws provide that employers cannot demand a particular form of documentation to verify employment authorization nor can they discriminate on the basis of national origin or citizenship.
Given these important rules, it is vital that employers receiving an SSA mismatch letter work methodically to identify the source of the error before taking any adverse action against any employee. If the circumstances indicate that an employee may not be authorized to work, the employer should ask the employee to reverify his employment authorization by completing a new I-9 form or updating an existing I-9 form. If the employee cannot provide proper documentation, the employer should terminate the employee's employment. In all cases, the employer should follow a standard procedure and apply the procedure to all similarly situated employees to avoid claims of discrimination.
Undertaking this investigation may uncover employees who have been working under false SSN's. Some of these employees may subsequently provide legitimate SSN's so that their earnings can be properly credited to their SSA accounts. Employers confronted with this situation must evaluate how to treat such employees. It is likely that these employees have knowingly made false statements in completing their original I-9 Employment Eligibility Verification forms. As a 1997 INS letter from the then-INS General Counsel states, "[k]nowing false statements on the Form I-9, or the use of false documents to obtain employment, are felonies that are not excused by subsequent grants of work authorization or lawful status."
Obviously, at a minimum, an employer confronted with this situation must see that a new I-9 form is completed and that the false or incorrect I-9 form is retained to document that the employer attempted to comply with the verification requirements at the time of hire. The employer should also consider how to treat such deception and fraud in the workplace and should evenhandedly enforce the policy it has or develops.