It Pays to Be Prepared: SSA No-Match Letters, Form I-9 Compliance, And Immigration Clauses In Construction Contracts

By Tiffany Harrod, Attorney at Munsch Hardt Kopf & Harr P.C., Houston, Texas

Chair-Elect, the Construction Law Section of the Houston Bar Association

             In March 2019, the Social Security Administration (SSA) resurrected "Employer Correction Request Notices" or "No-Match" letters used to notify employers that an employee's name and social security number combination on a filed W-2 do not match SSA records.[1]  According to the SSA, if you receive a no-match letter, you should:[2]
  1. Check your records to see if there is a discrepancy in the records submitted to SSA and notify the SSA of corrections on a Form W-2C within 60 days of receipt of the no-match letter;
  2. Instruct the employee to contact the SSA to resolve the discrepancy if the information was reported correctly, and provide the employee a reasonable amount of time to resolve the discrepancy; and
  3. Document your efforts to resolve the matter. 
Employers should carefully document their response to a No-Match letter because it is likely the U.S. Department of Homeland Security (DHS) will use the information from no-match letters to perform Form I-9 audits on employers.  The United States Immigration and Customs Enforcement (ICE) is the main investigative arm of the DHS and was established to assist the DHS with its mission of ensuring that the U.S. is safe, secure, and protected against terrorism.  According to its website, ICE's mission is "to protect America from the cross-border crime and illegal immigration that threaten national security and public safety.[3]"
In the last few years, ICE has dramatically increased Form I-9 audits of employers to deter the hiring of undocumented workers.  During an audit, ICE identifies statutory violations, assesses monetary penalties, and decides whether or not to prosecute employers for criminal violations.  A routine request in every Form I‑9 audit is for the production of any no‑match letters received by the employer with regard to current employees and previous employees.  While the SSA warns against making inferences about an employee's immigration status after the receipt of a no-match letter, many ICE offices consider an employer's receipt of no-match letters to be an indication that an employer might have questionable hiring and record-keeping practices.  An employer's failure to show specific action in response to a no‑match letter could, therefore, be considered by ICE as a significant negative factor when determining if enforcement actions, including fines and criminal prosecution, should be taken. 
The Realities: Escalating Fines, Labor Shortages & Possible Delay Damages
Regardless of politics and the availability of labor, knowingly or unknowingly hiring undocumented workers has become costly since ICE has increased fines.  Knowingly hiring undocumented workers carries fines between $539 and $4,313 per worker on a first offense.  Failing to properly complete the Form I-9 carries a fine of $216 to $2,156 per document.  Employers found to engage in a pattern or practice of hiring or recruiting undocumented workers may be penalized up to $3,000 per undocumented worker and receive six months in jail. 
In the construction industry, immigrant labor represents a significant portion of the workforce.  Statistics indicate that foreign born workers represent 30% of the construction trades.[4]  The reality for construction employers is that without an adequate visa system in place to meet labor shortages, employers in certain industries are left with little to no options when it comes to finding documented workers.  The Associated General Contractors of America has long been pushing for an overhaul of the U.S. immigration system in order to help contractors supplement their workforces with temporary workers from abroad.  Recent proposed legislation seeks to create an immigrant visa system for non-farm workers which would establish the first-ever visa program for less-skilled construction labor. 
            Current immigration law requires employers to ensure that employment eligibility documents appear to be valid, while federal law prohibits employers from requiring specific types of identification from workers.  Currently, employers are required by law to maintain for inspection original Employment Eligibility Verification Forms or I-9 Forms for all current employees.[5]  In the case of former employees, employers are required to retain all I-9 Forms for at least three years from the date of hire or one year after termination, whichever is longer.  Being unprepared for a Form I-9 audit could prove costly and interfere with existing construction contracts, resulting in costly delays.  When dealing with an I-9 audit, preparation and an experienced employment and immigration attorney are key. 
Form I-9 Compliance Program
Compliance is about making sure to follow the I-9 directions and making sure your business is not letting applicants get by with shoddy documentation, no documentation, or requiring extra proof if they suspect someone is undocumented; while at the same time, not imposing requirements above and beyond what the I-9 requires, which can result in a lawsuit by the government or an applicant.
To protect against these issues, funnel I-9 documentation and retention through one person within your organization and make sure that person is trained to properly complete I-9s.  The government finds, on average, five errors in each I-9 when it does an audit and each error can result in a fine.  Create and maintain an internal I-9 compliance policy and mandate that it be followed by all hiring supervisors to ensure consistency in handling I-9s.  Note, there was a new I-9 form issued in 2017.  Be sure it is used with all new hires.  Also, employers must mandate the re-verification of temporary employment authorizations.

Conduct an I-9 self-audit once a year.
It is wise for business owners to conduct an I-9 self-audit annually to be sure their records are in top shape for an audit. This is especially true for business owners who delegate the responsibility to complete I-9s to another employee.  A second review will usually find some errors.
In addition to examining each form to be sure it is correctly filled out, employers should check whether I-9s on former employees are properly retained, how no-match communication from the government has been handled, and whether re-verification procedures are on schedule.  If you find any errors, initiate correction procedures immediately. 
Be Prepared for a Form I-9 Audit
Audits are conducted both by ICE and, on a cursory level, by the Department of Labor.  In either case, employers are entitled to three days' notice before an I-9 audit.  If you receive notice of an audit, immediately contact your employment or immigration lawyer.  They will protect you from inadvertently making mistakes with the auditor.  Then work with your lawyer to conduct an I-9 audit immediately and correct any errors before the audit begins.
If ICE appears for a raid, immediately contact counsel and ask them to come to the site. ICE will not wait for your lawyer to arrive if they have a search warrant, so it will be necessary to examine the warrant yourself.  If you observe agents exceeding the warrant authority, ask to speak to the agent in charge and raise the issue.  If you do not stand up for your rights, you may lose the opportunity.
Construction Contracts & Immigration Issues
General contractors should always be aware of applicable provisions in their prime contracts with owners relating to liability associated with delays caused to a project for any reason.  General contractors should also be vigilant to protect against liability associated with delays resulting from disruptions caused by a lack of labor due to immigration issues caused by subcontractors and their workforce. General contractors may attempt to draft accordingly within their prime contracts to remove liability in the event of immigration issues being the sole cause of a labor impact and related delay.  Additionally, general contractors should contractually require subcontractors to accept as much of the responsibility as possible for labor immigration issues. 
In reviewing contract terms, subcontractors should make every effort to ensure immigration related delays are not a specifically enumerated breach or event of default.  Subcontractors should negotiate to have the ability to cure the impact of a diminished work force by quickly providing new labor, thus avoiding the possibility of termination or liquidated damages.  Since subcontractors typically contract with or employ the direct labor on a construction project, to the fullest extent possible they should contractually place the burden of providing accurate information of laborer citizenship status upon the actual laborers or employment agencies involved. 
[1] From 1993 through 2012, the SSA sent out no-match letters to employers (and third-party payroll companies) who submitted Form W-2s containing name and Social Security Number (SSN) combinations that did not match the agency's records.  The practice was stopped in 2012 due to various complaints and lawsuits from labor unions, immigrant advocates, and the business community. 

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