Courtesy of:
Monty Partners, LLP
August 13, 2007

The government’s recent stepped-up immigration efforts include the introduction of new regulations related to SSA mismatch letters.

IN THE NEWS

Immigrations and Customs Enforcement (“ICE”) stepped up their enforcement efforts and introduced a new regulation related to Social Security Administration (“SSA”) mismatch letters. The regulation significantly increases the responsibilities an employer has to ensure that all employees hired are legally authorized to work in the United States. It is essential that all employers familiarize themselves with the new rules and understand the impact the rules will have on their business. The regulation will be effective 30 days from August 10, 2007.

Receipt of a mismatch letter can now be used as evidence against an employer to show that it had “constructive knowledge” that the person it hired is unauthorized to work in the U.S. This could make an employer liable for severe fines and possibly criminal liability.

BEFORE AND AFTER

Under the previous rules, if an employer received a mismatch letter, the letter did not constitute notice to an employer that the employee is unauthorized to work. An employer was only recommended by the SSA to compare the company’s employment records to the W-2 forms. If the W-2’s did not match, the employer was to submit the corrected information on the W-2. If the W-2’s matched the employment records, the employer was to ask the employee in writing to check his/her Social Security card and to inform the company of any difference between the card and the company’s information. If the employee’s Social Security card matched the employer's records, the employee was asked to contact the local SSA office to resolve the issue.

Under the new rules, receipt of a mismatch letter can now constitute constructive knowledge that the employer knew that the employee was unauthorized to work in the U.S. The rule also provides a “safe harbor” from penalties to employers who take specific actions following the receipt of a mismatch notice.

THE LAW

The Immigration and Naturalization Act (“INA”), prohibits an employer from “knowingly” hiring or continuing to employ foreign nationals without employment authorization. “Knowledge” means not only actual knowledge, but also constructive knowledge. Constructive knowledge means knowledge which a reasonable person would know about certain facts and circumstances if they used reasonable care.

Examples of constructive knowledge include situations where an employer:

Fails to complete or improperly completes the Employment Eligibility Verification Form I-9 (e.g., the employer fails to get the employee to sign the I-9);
Fails to take reasonable steps after receiving information from the SSA that the combination of name and SSN does not match SSA records;
Fails to take reasonable steps after receiving written notice from DHS that the immigration document, or employment authorization document, presented by an employee was assigned to another person or that there is no agency record that the document was assigned to anyone.

SAFE HARBOR PROVISION

Much stricter guidelines have now been set forth under the new regulation. Unless employers follow the “safe harbor,” steps below, they could be considered to have constructive knowledge of hiring illegal workers and could be subject to fines and penalties.

An employer who follows the safe harbor procedure will be considered to have taken all reasonable steps in response to the notice and the employer’s receipt of the written notice will there not be used as evidence of constructive knowledge. But if other independent knowledge exists that an employer had constructive knowledge, the employer is not protected.

The final rule provides the following steps for employers to follow upon receipt of a no-match letter from SSA:

WITHIN 30 DAYS OF RECEIPT OF THE NO-MATCH LETTER: The employer must check its records to determine whether the discrepancy results from a typographical, transcription or similar clerical error. If the discrepancy is caused by such an error the employer must correct the error with SSA and verify that the employee’s name and social security number now match the agency’s records.

Employers are strongly advised to make a record of the manner, date, and time of such verification and retain the record with the employee’s I-9 form. If the discrepancy was not caused by an error in the employer’s own records, the employer should promptly confirm with the employee that the name and social security number in the employer’s records are correct. If the employee indicates that the employer’s records are incorrect, then the employer should correct its records and verify that the employee’s name and social security number now match SSA’s records. If the employee confirms that the employer’s records are correct, the employer should promptly request that the employee resolve the discrepancy with SSA.

Upon receipt of the notice of discrepancy from DHS, the employer must contact the local DHS office in accordance with the notice's instructions and attempt to resolve the question raised by DHS about the immigration status document or employment authorization document. Note that the specific instructions in the notice may provide less than 30 days for the employer to respond.

WITHIN 90 DAYS OF RECEIPT OF THE NO-MATCH LETTER: The employee should be advised that he or she must resolve the discrepancy with SSA within ninety days of the date the employer received the notice from SSA.

WITHIN 93 DAYS OF RECEIPT OF THE NO-MATCH LETTER: If the employee is unable to resolve the discrepancy with SSA within ninety days of receipt of the notice, the employer must again verify the employee’s employment authorization and identity by completing a new I-9 form. The same procedures should be used to complete the new I-9 form as were used when the original I-9 form was completed at the time of hire, with certain exceptions:

The employee must complete section one and the employer must complete section two of the new I-9 form within 93 days of receipt of the notice from either SSA or DHS.
The employer cannot accept any document (or receipt for such a document) referenced in the DHS notification or any document (or receipt) that contains a social security number that is the subject of the SSA no-match letter to establish employment authorization or identity.
The employee must present a document that contains a photograph in order to establish identity or both identity and employment authorization.
The new I-9 form should be retained with the original I-9 form(s).

If at the end of this process the employee’s work eligibility cannot be re-verified, the employer will need to terminate the employment of the worker or risk the possibility that DHS may seek to impose penalties on the employer for knowingly employing an unauthorized alien in violation of the law.

Given the heightened focus in worksite-related enforcement by DHS, it is imperative that employers ensure that they have clear and thorough procedures to follow up promptly and to resolve no-match letter issues, as part of their overall I-9 compliance policies. Given the publication of this final rule, it is expected that DHS will take even more aggressive steps against employers whom they consider not to have followed up promptly and appropriately after receiving social security mismatch letters.

WHAT CAN I DO TO PROTECT MY BUSINESS?

DO NOT ignore SSA mismatch letters. Investigate and resolve the problem quickly, following each step laid out in the new regulations and in a timely matter.

Make sure you have a properly completed Form I-9 for each employee. This is required of U.S. employers as verification that every employee is authorized to work in the United States.

When completing I-9s for new employees, use the most up-to-date version of the Form I-9.
“Form I-9 (Rev. 05/31/05) Y” will be printed at the bottom left-hand corner of the document.

Allow you new employees to select which documents they wish to use for I-9 purposes, as you cannot make that choice for them. Remember, it is illegal to ask for more documents or different documents than Form I-9 allows. Either a Document A OR a Document B & C.

Store old Form I-9s for three years, or for one year after the employee’s termination, whichever is later.

Be proactive. Carry out an Audit of your company’s I-9s. Find you mistakes before the government does.

Be proactive. Know where you company stands with respect to previous SSA mismatch letters it has received. Find out how many mismatch letters your company has received and what steps you took to correct any discrepancies.

Ask about the benefits of signing up for the Basic Pilot Program and other government-developed efforts to build a stable, legal workforce. Determine if such programs are a right fit for your company.

Consult legal counsel, such as Monty Partners, LLP, who specializes in employment and immigration laws, for legal guidance to aid you in ensuring your company is complying with the law.
Monty Partners LLP is Houston’s largest Hispanic-owned employment and immigration law firm, established in 1998. The Firm is passionate about representing the interests of companies with large Hispanic workforces. The firm offers a range of corporate legal services to Fortune 1000, publicly-traded companies, major industry associations and governmental agencies (notably serving as Immigration Counsel for the agencies). Monty Partners is also Immigration Counsel for the New York Yankees baseball franchise and Outside Counsel for the Mexican Consulate in Houston. The Firm represents employers in investigations and audits conducted by the National Labor Relations Board (NLRB), Department of Labor (DOL), Bureau of Citizenship and Immigration Service (BCIS), Occupational Safety and Health Administration (OSHA) and Equal Employment Opportunity Commission (EEOC). The Firm has also worked with the White House and the Senate Majority Leader to urge a comprehensive Immigration Bill.
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This article is for informational purposes only and provides general information concerning employment and immigration law to help you identify when you may need additional advice. It is not an exhaustive treatment of the statutes, case law or regulations that are involved with the subject. Please recognize that the law is developing rapidly in this area and you will want to obtain current legal advice on your specific situation before taking action. Employment and Immigration law liabilities are often highly dependent on the particular facts and circumstances of the individual case or situation. As such, employers should seek the advice of counsel prior to making their determinations. Monty Partners, LLP is available to answer any employment or immigration related issue(s) with your Company. Monty Partners, LLP, 8845 Long Point Rd., Suite A, Houston, Texas 77055, Telephone: 281.493.5529; Fax: 281.493.5983.

After NHTSA issued its controversial final tire pressure monitoring system (TPMS) regulations in April, a court challenge was certainly anticipated. How it all went down wasn’t, though.

Four tire companies – acting separate from the RMA – joined TIA and consumer group Public Citizen to file suit against NHTSA, seeking to overturn FMVSS 138 – its TPMS regs – claiming the agency’s decision “adopting this rule was arbitrary and capricious.”

That places NHTSA in the position of having to defend its reasons for setting the TPMS inflation pressure trigger point at 25% below recommended cold inflation pressure; allowing indirect TPMSs, which experts claim are technologically inferior to direct systems; and allowing a 20-minute warm-up period before a TPMS would have to function.

The action was filed on June 7 in U.S. District Court of Appeals for the District of Columbia. Because FMVSS 138 was set to take effect by September, it is expected the court will take action soon.

Tire makers joining forces in filing the suit were Bridgestone/Firestone North American Tire, Goodyear Tire & Rubber Co., Cooper Tire & Rubber Co. and Pirelli Tire North America. At press time, there was no word if other U.S.-based manufacturers or marketers would join the suit.

Calling NHTSA’s TPMS ruling “fatally flawed,” TIA Executive Vice President Roy Littlefield said: “Congress charged NHTSA with creating a rule that would keep the motoring public safe. This rule does not do that, which is why we have joined in this lawsuit.”

“We are afraid that this rule, if it is allowed to stand, will make consumers more apathetic to their tires, and our tire retailers, manufacturers and technicians more vulnerable to lawsuits in the future,” said TIA President Dick Gust.

A joint statement issued by the four tire companies said: “Safety is our highest priority. We have taken this significant step - along with Public Citizen and the Tire Industry Association - against NHTSA because we strongly believe the current TPMS rule is fundamentally flawed and, as such, does not fulfill the spirit of the TREADAct.

“While we support TPMS as a way to increase safety, the current NHTSA rule does not go far enough. There is technology available to provide faster, more accurate information to motorists, and it should be required by this rule rather than settling for systems which are less accurate,” the statement said.

In the weeks following NHTSA’s issuance of the TPMS regulations, petitions for reconsideration were filed by TIA, RMA and SEMA, among others. Also, claiming the RMA did not provide sufficient data to support its request, NHTSA rejected RMA’s petition to establish recommended cold inflation pressures using a tire pressure reserve so that tires could carry the maximum load of a vehicle past the TPMS trigger point.

Recently, a notice was published concerning the proposed settlement of a class action lawsuit brought against Jiffy Lube International on behalf of a nationwide consumer class, other than residents of New York, in the District Court for Cherokee County, Oklahoma. The notice highlights some troubling issues that surround consumer class action litigation.

According to the notice, Jiffy Lube was accused of charging consumers unjustified “environmental surcharges” ranging from 80 cents to $1.25 per oil change. Under the proposed settlement, consumers who fill out and submit claim forms will receive $5.00 coupons good for one year against the cost of an oil change at any Jiffy Lube location. Subject to court approval, the attorneys representing the consumer class will receive $2,750,000. And, as an afterthought (although this isn’t in the notice), the two named plaintiffs will receive a bonus of $500 each.

The whole thing seems a little illogical. The alleged injury suffered by any consumer is extremely trivial, slightly less than a dollar to slightly over a dollar. The “recovery” to the consumer class is an invitation to participate in what Jiffy Lube could well view to be a promotional campaign because the coupons can only be used toward the purchase of Jiffy Lube services. The plaintiff lawyers are the only clear winners with their projected $2,750,000 in fees. Small wonder such lawsuits and the lawyers who bring them are often excoriated for supposedly inciting unnecessary litigation by those seeking litigation reform.

But there is another side to the coin. In its standards and guidelines, the National Association of Consumer Advocates sets forth the rationale it uses to justify such lawsuits.

Frequently, many consumers are harmed by the same wrongful practice, yet individual actions are usually impracticable because the individual recovery would be insufficient to justify the expense of bringing a separate lawsuit. Without class actions, wrongdoing businesses would be able to profit from their misconduct and retain their illgotten gains. Class actions by consumers aggregate their power, enable them to take on economically powerful institutions, and make wrongful conduct less profitable. The Association cites as a positive illustration of consumer class action litigation the resolution of lawsuits brought against two California banks for allegedly overcharging individual account holders. Because individual recoveries would have only ranged from $3.00 to $50.00, no practical remedy would have existed other than a class action law suit. Total damages of almost $10,000,000 were recovered, 65% of which was distributed directly to consumer and an additional 33% of which went to consumer organizations. Less than 2% of the settlement fund went to the plaintiffs’ attorneys.

Whether detrimental or beneficial, consumer class action suits are not likely to go away. Most states have broadly-worded consumer protection statutes, and class counsel are very adept at locating local courts with a favorable track record for granting class action status and approving class action settlements, no matter where the defendants are located. In Madison County, Illinois, for example, class action filing increased a whopping 1850% between 1998 and 2000. Eighty-one percent of those suits alleged a nation-wide class, and no defendant was actually based in the county. Many consumer class action cases, like the Jiffy Lube case, revolve around allegedly phony fees or overcharges made to consumers. Fee and overcharge situations are grist for the class action mill because of their uniform application in a multitude of transactions. Individually they may be small, but collectively they add up, creating a tempting target to class action counsel.

Not only large national corporations like Jiffy Lube are vulnerable to suit. Car dealers have been hit for allegedly adding bogus fees to the sales price of new and used cars. Recently, for example, a New Jersey car dealership group agreed to a $14,000,000 class settlement payable part in cash and part through coupons.

Obviously, there is significant potential risk to retailers who sell any significant volume of product. A local dealer may be small potatoes to a big-time class action lawyer with a national practice. But he has many local brethren who will be attracted not only by the aggregation of damages afforded by class action treatment, but also by consumer protection statutes that routinely require the defendant to pay a successful plaintiff’s attorneys fees. The bottom line is that consumer class actions can pose a real damage. A merchant of any significant size must ensure that any fees or add-ons that it charges are in compliance with often obscure state consumer protection laws.