Social Security Administration Regulatory Mechanisms Spell Trouble for Companies that Employ Unauthorized Workers

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By David Spaulding, Esq.
Compliance and Regulatory Enforcement Counsel, Green and Spiegel LLC.

When we talk about immigration enforcement, we are usually talking about the three “sister” agencies: United States Citizenship and Immigration Services (USCIS), Customs and Border Protection (CBP), and Immigration and Customs Enforcement (ICE).  We may not easily see the role that agencies like the Social Security Administration (SSA) play in immigration enforcement; yet, the Trump Administration is enforcing a wide field of laws in ways that will likely impact potentially undocumented immigrants and, by extension, their employers.

To understand how immigration-related SSA regulatory instruments affect corporate immigration compliance, we need to place them within an immigration context.  Central to this is the government’s overarching goal of reducing corporate reliance upon unauthorized workers, many of whom are undocumented foreign nationals.  To accomplish this, it appears that the Administration is applying several related mechanisms: SSA Request for Employer Information, colloquially known as “no-match letters” (“No Match Letters”), the SSA Electronic Consent Based Social Security Number Verification (eCBSV) Service (“ECBSV”), ICE Form I-9, Employment Eligibility Verification audits (“I-9 Audits”), a surge of worksite immigration “raids,” and prosecutions of employer agents and document vendors.

Employers will not be equally affected by this application of regulatory mechanisms of course.  Companies with strong onboarding policies and procedures and the ability to manage compensation in a way that places no pressure on them to hire unauthorized workers will be in a good place to address any reporting that flows from those programs.  However, employers with a high turnover of low-skilled workers are particularly vulnerable to enforcement actions rising from reporting and audits.

For many employers, the first hint that there is a problem with worker authorization has been the No Match Letters.  Designed to notify employers that there is a discrepancy between SSA records and employer reported biographic information and Social Security Numbers (“SSN”), the No Match Letters ostensibly let employees know that SSA records need correction.  However, worker notification often leads to an exodus of employees whose names appear on that list, likely because they are using someone else’s identity and/or SSN.

Going forward though, the first hint of a workforce problem may come from the ECBSV.  This is because the ECBSV, implemented pursuant to the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law (PL) 115-174, lets enrolled companies determine creditability through biographic data and SSN provided to potential creditors, not employers.  The ECBSV rollout of the first ten private companies which will use and fund its implementation presents a substantial challenge for businesses which struggle to find authorized workers.  As a practical matter, ECBSV implementation cuts those whose SSNs do not match their biographic identity in creditor’s records off from obtaining credit.  As applied, it could have dramatic effects on banking and associated services for persons without lawful SSNs.

Employers of unauthorized workers may find it difficult to pay their workers through the common mechanisms that regulating agencies expect (direct deposit and paychecks).  Since one of the factors which features heavily in the ICE Form I-9, Employment Eligibility Verification audits is “[l]ists of any individuals who have worked for the business during the last three (3) years who are not on the employee list, the independent contractor list, or temporary employees list,” undocumented work compensation represents a serious risk to company, principals, managers, and supervisors.  If found to be employing unauthorized workers, corporations face substantial fines and regulatory oversite.  If found to knowingly employ unauthorized workers, company agents face criminal prosecution.

The simplest remedy is to employ only authorized workers.  This can be more challenging than it seems.  For some companies their onboarding policies and procedures have never been professionally reviewed or analyzed.  If the company grew in an organic way, from a small “mom-and-pop” enterprise to a multi-faceted organization, there may not even been any policies or procedures to make sure that Form I-9s are properly executed and stored or that immigration visa filings comport to the underlying roles.  It is common, for example, for asset purchases to import serious immigration liabilities because they were not assessed when the company was being purchased.

In other cases, the sheer scope of an enterprise makes employee reverification a daunting task.  Couple this with the management suspicion that many employees are unauthorized workers and the temptation to put the task off is great.  It is these corporations which have the most to lose by doing so though since their size and scope make them prime targets for worksite enforcement actions, from which flow prosecutions.

The federal government’s fiscal year begins on October 1, 2019.  This year’s Form I-9 Audit notices have all gone out but the next one is right around the corner and this short hiatus may be the only opportunity employers will have to get their houses in order before receiving a notice.  Once that happens, most adversely affected employers assume a defensive posture.  It is better to help our clients face their liabilities on their own than to address them in the context of a regulatory enforcement action.