Under a new rule issued Friday, August 10, by the Department of Homeland Security, companies will have to resolve within 90 days discrepancies between workers’ names and Social Security numbers on tax forms and those contained in government databases.

If work authorization or identity can’t be confirmed, companies would have to fire the employees. Currently, employers are not compelled to do anything.

Discrepancies occur in about 4 percent of the 250 million earnings reports that businesses send annually to the Social Security Administration.

The change is being promulgated in order to give employers clear guidance on how to handle so-called “no-match” letters from the Social Security Administration that alert them to inconsistencies with federal records, according to Bush administration officials.

“This regulation lays out a clear path to doing the right thing,” Homeland Security Secretary Michael Chertoff said in a Washington press briefing Friday. “What the company cannot do is ignore the problem.”

The new rule is part of an array of initiatives announced by the Bush administration to crack down on immigration violations within existing law now that comprehensive immigration reform has stalled in Congress.

Other steps include raising civil fines for illegal employment by 25 percent, taking steps toward requiring federal contractors to use a government-run electronic verification system and reducing the number of worker identity documents that employers can accept.

Chertoff emphasized that if companies follow the procedures laid out in the no-match rule, they will avoid trouble.

“We’re not looking to punish people for honest mistakes,” he said. “The person who does their best in good faith has nothing to fear from us.”

The agency will continue its stepped-up efforts to pursue criminal investigations of egregious violations. In the current fiscal year, it has filed 742 criminal charges, compared with 24 in fiscal year 1999.

“We’re going to clamp down on employers who knowingly and willfully violate the law,” Chertoff said.

The business community, however, doesn’t take a benign view of the no-match regulation because it could lead to massive disruptions in the labor market.

“The potential termination of many hundreds of thousands of workers … is a critical concern as it threatens to destabilize the workforce and worsen current shortages in many industries,” said the Essential Worker Immigration Coalition, an employer group.

In an attempt to address such criticism, the administration says it is working to reform existing temporary worker programs that help industries such as agriculture, landscaping and hospitality.

“We do not have the workers we need to keep our economy growing each year,” Commerce Secretary Carlos Gutierrez said. “There are jobs that Americans are not willing to do or Americans are not available to do.”

But Chertoff is intent on keeping illegal employees out of the workforce. In the new approach on no-match letters, which goes into effect in September, a company’s failure to act is effectively a violation of immigration law.

“They’ve turned the presumption completely around,” says William Manning, a partner at Jackson Lewis in White Plains, New York.

Although the homeland agency is prevented from knowing when the Social Security Administration sends no-match letters to companies, it can utilize the letters it finds during investigations to prosecute companies.

“It’s a strong tool to use when they’re conducting an audit or they’re undertaking a work-site enforcement action,” says Montserrat Miller, a lawyer at Greenberg Traurig in Washington.

One potential problem with the DHS initiative is flawed government databases. About 5 percent to 10 percent of the U.S. workforce could get caught in the net, including legal workers, Manning says.

“If the government goes around disenfranchising those people, you could have a recession or depression,” he says.

Food services and processing and the hospitality and construction industries would be hit hard, industry representatives say.

John Gay, senior vice president for government affairs and public policy at the National Restaurant Association, says that millions of workers could be removed from the labor market.

“You could see doors closing on businesses,” he says.

The homeland department is not seeking to cause economic disruption, but it does want to shut off the “jobs magnet” that fosters illegal immigration—a move called for by many members of Congress.

“It’s part of the administration’s effort to show they’re willing to enforce the laws we currently have,” says Lynn Shotwell, executive director of the American Council on International Personnel.

Under failed immigration proposals, bitter crackdown medicine would have been sweetened by establishing legal channels for bringing in foreign workers.

“We warned against doing this—enforcement without reform,” Gay says.