On Wednesday, October 10, U.S. District Judge Charles Breyer issued a preliminary injunction against a new Department of Homeland Security regulation that would force companies to either resolve within 90 days discrepancies between a worker’s name and Social Security number or fire the employee.

Breyer’s ruling freezes a mailing of so-called “no-match” packets that were to be sent in September to 140,000 employers and would have affected 8 million employees.

In addition to the normal Social Security Administration no-match letter, the mailing was to include guidance from DHS explaining that under the new regulation, a company’s failure to act on a no-match letter could be construed as a violation of immigration law.
On the other hand, if a company follows the no-match rule in good faith, the letter would not be used as evidence in an enforcement action.

Companies currently aren’t compelled to clear up inconsistencies. Mismatches occur in about 4 percent of the 250 million earnings reports submitted annually to the Social Security Administration.
Business and labor groups filed a lawsuit against the DHS rule in late August, which led to a temporary restraining order in early September.

The plaintiffs persuaded Breyer, who serves on the federal district court for Northern California, that the DHS rule would cause significant harm to employers and workers.

They argued that DHS did not calculate the compliance costs that would be foisted on businesses. They also asserted that millions of mistakes in the Social Security database would create havoc in the labor market and lead to discrimination against immigrants—even legal ones.

“As demonstrated by the plaintiffs, the government’s proposal to disseminate no-match letters affecting more than eight million workers will, under the mandated time line, result in the termination of employment to lawfully employed workers,” Breyer wrote in his opinion.

“The new rule presents employers with the Hobson’s choice of complying with DHS’s ‘safe harbor’ procedures or confronting liability for knowingly employing unauthorized workers,” Breyer wrote. “Presented with that choice, it is certain that many employers represented by the organizational plaintiffs will be forced to develop systems for resolving no-match letters within the new 90-day timeframe.”

DHS Secretary Michael Chertoff said that the government would consider appealing the decision and vowed to maintain work-site crackdowns.

“We will continue to aggressively enforce our immigration laws while reviewing all legal options available to us in response to this ruling,” Chertoff said in a statement.

In the meantime, business advocates believe that their case will hold up in court.

“We have a strong chance of success on the merits,” says Laura Foote Reiff, a partner at Greenberg Traurig in Washington and co-chair of the Essential Worker Immigration Coalition.
Her confidence stems from the fact that Breyer agreed with the business community that DHS failed to conduct a proper review of the impact of the no-match regulation.

 “They did not do an economic analysis to see what the burden would be on business,” Reiff says.

DHS asserts it was just providing clearer guidance through the rule on what to do if a company receives a no-match letter. Social Security has been issuing the letters for years.

In addition to forcing companies to absorb big compliance costs, the no-match rule would create a no-win situation when the clock runs out on the 90-day time limit, says Lynda Zengerle, the partner in charge of the immigration group at Steptoe & Johnson in Washington.

“It’s draconian,” she says. “It puts employers in an impossible position. They will be firing U.S. citizens and permanent resident aliens. The burden on the employer is too great.”

But Chertoff said that companies must do their part to combat illegal immigration. “Ultimately, employer diligence will make it more difficult for illegal aliens to use a fraudulent Social Security number to get a job.”

In their proposal to Breyer on Friday, the business groups will ask that the no-match rule be sent through a review process that could take nine months to a year.

“Hopefully, we’ll never see this rule implemented,” Reiff says.
What could happen, though, is a prolonged legal battle that ends up in the Supreme Court.

“Whoever loses at each level will take it to the next level,” Zengerle says. “I don’t see the government backing away and I don’t see unions and business backing away.”

—Mark Schoeff Jr.