The Verification of Employee Social Security Numbers: Yet another trap in the minefield of employment law!
The Verification of Employee Social Security Numbers:
Yet another trap in the minefield of employment law!
Oregon Lodging Association’s "Lodging News"
October 2005
Most employers in the lodging and hospitality industry are fairly well versed in the basic requirements relating to the employment of illegal aliens and the strict prohibitions relating to the same set forth in Federal law. Specifically, the Immigration Reform and Control Act of 1986 ("IRCA") plainly states that
It is unlawful for a person or other entity to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien with respect to such employment…
IRCA then establishes the employment verification system, more commonly known to employers as Form I-9, whereby employers must obtain evidence of identity and employment eligibility from employees within three days of hiring. Form I-9 contains a list of acceptable documents in this regard and employers are expressly forbidden from exercising any selectivity as to which documents the employer will accept as long as the documents produced reasonably appear on their face to be genuine and to relate to the person presenting them. See U.S. Citizenship and Immigration Services website, Frequently Asked Questions About Employment Eligibility. Unfortunately, this fairly loose standard with regards to document verification by employers can, and does, give rise to the use of fraudulent documents.
One problem that we have encountered when counseling employer clients relates to the use by employees of social security cards as evidence of employment eligibility. This form of identification is fairly easy to falsify. It can therefore be quite difficult for employers to detect the fraud. At first blush, this does not appear to be much of an issue. After all, the employer met its obligation under IRCA when it accepted what appeared to be a valid social security card which is specifically recognized as an acceptable form of identification on Form I-9. Moreover, Form I-9, both in the instructions and on the form itself, openly warns employers against claims of unlawful discrimination based upon national origin or citizenship status. This language is enough to spook even the most conscientious employer when reviewing documents presented by a new employee.
The problem arises when the IRS or Social Security Administration, after attempting to match a falsely provided social security number with the employee’s name, sends the employer a notice informing the employer of the mismatch. Under IRS regulations, an employer can be penalized for each incorrect number submitted to the IRS unless it can establish "reasonable cause." While establishing "reasonable cause" under the regulations is not altogether difficult, it does require the employer to notify the employee and to possibly provide for backup withholding until the employee can fix the problem. However, the bigger issue that many employers fail to consider is how such notice might affect the employer under the IRCA prohibition against knowingly continuing to employ so-called unauthorized aliens. This is a much stickier issue.
Like IRCA, IRS and Social Security Administration resources caution employers against engaging in unlawful employment discrimination on the basis of national origin or citizenship status. Yet the U.S. Ninth Circuit Court of Appeals, the Federal appellate court with jurisdiction over Oregon employers, has recognized that employers have "an affirmative duty to determine that their employees are authorized." New El Rey Sausage Company v. U.S. Immigration and Naturalization Service, 925 F.2d 1153, 1158 (9th Cir. 1991). The Court further when on to state that
This verification is done through the inspection of documents. Notice that these documents are incorrect places the employer in the position it would have been if the alien had failed to produce the documents in the first place: it has failed to adequately ensure that the alien is authorized.
The employer’s dilemma thus becomes whether the notice received from the IRS or Social Security Administration of a mismatch between the social security number provided and the employee’s name compels an employer to terminate the employee, or whether the employer has sufficiently met its burden under the various laws to avoid any penalties associated with the "knowing" employment of an unauthorized alien. On the one hand, termination of an employee on this basis could very well lead to a claim of unlawful discrimination on the basis of national origin if it is later determined that the employee is, in fact, authorized to work in the United States. On the other hand, retaining such an employee to avoid such a claim, particularly if the circumstances raise considerable doubt as to the employee’s employment status, could result in investigation and assertion of penalties by Federal immigration authorities.
Unfortunately, we cannot present any "bright-line" rule on this issue under the applicable statutes and case law. What we can say with certainty is that an employer cannot simply bury its head in the sand in hopes of presenting a good faith "I didn’t know" defense to the U.S. Attorney when he or she notifies the employer of an investigation into the employer’s past and current employment practices. The better approach is to establish a uniform written policy to guide the employer on how to deal with this issue. The policy should provide an opportunity for the employee to go to the Social Security Administration office to try to fix the problem and should be followed by the employer as strictly as possible.
Of course, any given situation could well result in the discovery of circumstances that make application of the policy difficult for one reason or another. For example, termination of a recently divorced Indonesian employee with poor language skills because the IRS could not match her name with her social security number and the employee was unable to correct the problem in a timely manner may not be warranted, despite the employer’s policy for terminating all employees whose social security numbers cannot be verified, particularly if the person has been an employee for several years without any prior IRS notice. Conversely, a newly hired employee with an invalid social security number who is unable to provide an explanation and/or fix the problem within a reasonable amount of time would likely be justifiably terminated under such a policy. The point is that this issue, as with most legal issues, is highly fact specific. The prudent employer will recognize this, follow a standardized policy to address these types of issues, and engage in an individualized assessment of each issue when it arises.
The concern over unauthorized workers in this country is at an all time high, both because of the apparent strains such workers place on our economy and because of heightened concerns over terrorism and domestic security. For these reasons, we believe that the concerns raised in this article are very important to consider and to address to minimize the risks to your business.