On Aug. 14, 2006, NRCA submitted comments to the Department of Homeland Security
(DHS) in response to its proposed rule "Safe Harbor Procedures for Employers Who
Receive a No-Match Letter." NRCA's comments follow.
Aug. 14, 2006
Director, Regulatory Management Division
U.S. Citizenship and Immigration Services
Department of Homeland Security
111 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20529
Sent via Electronic Mail
Re: DHS Docket No. ICEB-2006-0004, regarding "Safe Harbor Procedures for Employers
Who Receive a No-Match Letter"
Dear Director:
On behalf of the National Roofing Contractors Association ("NRCA"), thank you for
the opportunity to provide comments on the Department of Homeland Security's ("DHS")
proposed rule cited above.
Established in 1886, NRCA is one of the construction industry's oldest trade associations
and the voice of professional roofing contractors worldwide. NRCA is an association
of roofing, roof deck, and waterproofing contractors; industry-related associate
members, including manufacturers, distributors, architects, consultants, engineers,
and city, state, and government agencies; and international members. NRCA has approximately
4,000 members from all 50 states and 54 countries and is affiliated with 105 local,
state, regional and international roofing contractor associations.
Background
NRCA submits these comments in response to the June 14, 2006,
Federal Register
notice published by DHS, in which the Department proposes to alter existing regulations
on how employers are expected to respond to "no-match letters" from the Social Security
Administration ("SSA") or DHS.
DHS has signaled that it intends to prosecute employers for immigration violations
through gaining greater access to the records of SSA and for failure of employers
to terminate employees who are the subject of SSA "no-match" letters that are not
resolved. The proposed regulation would, in effect, require employers to terminate
workers who are the subject of SSA "no-match" letters if the discrepancy was not
resolved within 60 days after the employer's receipt of the "no-match" letter.
When the information contained on a W-2 form does not match SSA's records, SSA issues
"no-match" letters so that workers may be properly credited with Social Security
earnings. SSA letters are not intended for immigration enforcement purposes, and
SSA data currently is not shared with DHS. At the present time, federal immigration
regulations do not require employers to take specific actions when receiving a SSA
"no-match" letter.
While stating that whether an employer would be found to have constructive knowledge
in particular cases depends on the "totality of the relevant circumstances," the
regulation proposed by DHS on June 14, 2006, describes specific steps that an employer
should take upon receipt of a SSA "no-match" letter or DHS communication to avoid
a finding that the employer had constructive knowledge of employing an illegal alien.
If the employer failed to follow the "safe-harbor" procedures prescribed in the
proposed regulation and an employee, who was the subject of a "no-match" letter,
was found to be an unauthorized alien, the employer may be found to have constructive
knowledge of the employee's unauthorized status and would be liable for an immigration
violation. NRCA understands that an employer may take the following steps to avoid
a potential finding that it possessed constructive knowledge:
- Upon receiving a no-match letter from SSA, the employer should check its records
promptly to determine whether the discrepancy is due to a typographical, transcribing
or similar clerical error in the employer's records or in its communication to SSA.
If there is such an error, the employer would correct its records, inform SSA, verify
that the corrected information resolves the issue with SSA, and make a record of
the manner, date and time of the verification. The employer is to take these steps
within 14 days of receipt of the "no-match" letter.
- If step (1) above does not resolve the discrepancy, the employer is to request the
employee to confirm that the employer's records are correct. If correction is required,
the employer would make the correction, inform SSA, verify the corrected records
with SSA; the employer should also make a record of the manner, date and time of
any such verification as SSA may not provide any documentation. If the employee
states that the employer's records are correct, the employer is to request the employee
to resolve the discrepancy directly with SSA. Again, the employer is to take these
steps within 14 days of receipt of the "no-match" letter.
- Within 60 days of receipt of the "no-match" letter, the employer is to verify with
SSA that the employee's name and Social Security Number ("SSN") matches SSA's records.
If the employer has not verified with SSA that the discrepancy has been resolved,
but the employee maintains he is authorized to work, the employer must, within no
more than a total of 63 days after receiving the "no-match" letter, re-verify the
employee's identity and work authorization by following a modified version of the
I-9 procedure. No document containing the SSN that was the subject of the "no-match"
letter can be used, and no document without a photograph may be used to establish
identity.
- If the discrepancy in the "no-match" letter is not resolved within 60 days, and
if the employee's identify and work authorization cannot be verified as prescribed
in step (3) above, then, according to the DHS proposal, the employer must choose
between terminating the employee or facing the risk that DHS may find that the employer
had constructive knowledge that the employee was an unauthorized alien, and the
employer violated the law by continuing to employ the individual.
The proposed regulation acknowledges that there may be other procedures an employer
could follow in response to a "no-match" letter that DHS might consider reasonable
depending upon the totality of relevant circumstances. However, DHS warns that an
employer who follows a procedure other than the safe-harbor procedures described
in the proposed regulation would face the risk that DHS may not agree. Employers
are to follow the procedures in the regulations uniformly to all employees who are
the subject of "no-match" letters; otherwise, DHS cautions, the employer may violate
applicable anti-discrimination laws.
Concerns with the DHS Proposal
NRCA is concerned about the negative impact this proposal may have on the association's
members. NRCA and its members are committed to full compliance with the law and
have long advocated a comprehensive overhaul of our nation's immigration system.
But for the reasons outlined below, we believe this proposed regulation is the wrong
rule at the wrong time.
I. Proposed Regulation Usurps the Legislative Process
NRCA strongly believes the underlying issue DHS aims to address should be handled
through the legislative process. Further, we are of the opinion that the timing
of the proposed rule is premature, as both chambers of Congress have passed immigration
reform legislation within the last year that includes new employment eligibility
systems and enforcement mechanisms. It is important to note that both the Senate
bill (S. 2611) and the House bill (H.R. 4437) specifically address employer obligations
in those instances when an employer receives a "no-match" letter from the SSA or
DHS.
Given the two chambers presently are attempting to reconcile the differences between
the pieces of legislation, and the White House is actively engaged in helping Congress
fashion a comprehensive package acceptable to both chambers, NRCA urges DHS to withdraw
the proposed regulation until the legislative process has run its course. The probable
disruption to the economy and lives of those workers fueling the nation's economic
growth suggests that the disadvantages of DHS moving in piecemeal fashion before
Congress has acted grossly outweigh any perceived benefits of penalizing employers
who are forced to contend with our nation's dysfunctional immigration system. Short
of that, NRCA requests that DHS give careful consideration to the concerns outlined
below.
II. Accuracy of SSA Records
The SSA database is notoriously inaccurate. Frequently, "no-match" notices result
from name changes and clerical errors, such as transposed numbers or other honest
mistakes. For the construction industry, and specifically the roofing sector, the
mismatch problem is exceptionally severe as workers who identify themselves as being
Latino or Hispanic represent fully one-third of the construction workforce. Name-matching
problems with SSA are common among this community due to multiple surnames of individuals,
rather than the traditional first-middle-last name pattern of most native-born Americans.
According to a July 11, 2006, Government Accountability Office ("GAO") report, the
SSA database contains incomplete and outdated data. NRCA and its members are deeply
concerned with the prospect of terminating employees who are legitimately authorized
to work, but who have been unable to obtain a resolution within the allotted 60-day
period due to corrupt data. It is particularly troubling, given that the GAO has
confirmed that the database, which DHS suggests should be used to determine work
eligibility, is rife with inaccurate data.
III. Insufficient Resolution Timeline
The proposed timeframes in the June 14 proposal are impractical. The 14-day and
60-day periods are not viable timeframes in which to rectify data problems simply
due to the problems attendant to erroneous and incomplete records in the SSA system.
Assuming an employer, after receiving a "no-match" notice, informs the employee
of a discrepancy within the 14-day period, the employer is allotted 60 days, from
the date of receipt, to verify with SSA that the discrepancy has been resolved.
Accordingly, an employee who is the subject of a "no-match" letter would have less
than two months to resolve any errors with SSA. Presumably, the employer would be
forced into a situation of having to terminate a worker's employment, even if the
employee had not yet exhausted the appeals process. It is not clear that the 60-day
time period is an adequate amount of time in the current enforcement environment,
let alone in a new era in which DHS ramps up efforts to identify the estimated 12
million undocumented immigrants in the U.S. economy. There is every reason to believe
SSA's resources and infrastructure will be stretched beyond capacity if DHS moves
forward with this proposal, and regrettably, honest employers and lawfully-employed
workers will be harmed in the process.
Though 14 days may sound reasonable in theory, as a practical matter, the allotted
time by which an employer must respond to a "no-match" is not a reasonable period
of time. Both large and small employers will be severely challenged to meet this
standard. Large employers may receive several "no-match" letters simultaneously
— each containing multiple names, magnifying the difficulty of resolving all
of the discrepancies within the prescribed timeframe. Regarding smaller firms, they
often do not have a full-time administrative staff to address these issues. Small
business owners often have to run the business, oversee bookkeeping, supervise its
employees and perform administrative duties. The construction industry would be
particularly hard hit by this requirement, as most firms are small and operate outside
of a conventional office environment. Employers in the construction industry spend
the bulk of their time at job sites, not an office; they are frequently not even
near a computer, let alone hard copies of their employment records. For these reasons,
the 14-day period for the initial response is unreasonable and will be unduly burdensome
for employers. NRCA therefore requests that this requirement be amended to a 45-day
period.
IV. Small Business Disproportionately Burdened
For the reasons noted above, this proposal will impact small business negatively
and disproportionately. The average construction company is a small business, with
a lean administrative staff and the bulk of its workforce (including management)
outside of the home office. But aside from the administrative hardship this proposal
would present small business, smaller firms can ill afford shocks to the size of
their labor forces, whereas a larger firm possesses a stronger capacity for absorbing
such disruptions. This is especially true in construction. Our industry operates
under unique demands such as weather restrictions, performance and bonding requirements
in contracts, and strict timetables for delivery of the construction product and
service. Absorbing labor shortages in the middle of projects is potentially disastrous
for small construction companies, as failure to meet timetables can result in non-payment
by the building owner or general contractor. Further, worker shortages disproportionately
impact smaller construction companies because it jeopardizes their ability to bid
for future contracts. NRCA requests that DHS carefully consider the economic and
administrative dislocation for small business.
V. Solvency of the Proposal and Growth of the Underground Economy
The fundamental test of sound policy is for the problem being addressed to be solved.
But the proposed regulation will have no discernible impact on undocumented immigration
and actually threatens to exacerbate the problems attendant to illegal immigration.
NRCA believes the DHS proposal will fail this simple test for three reasons.
First, those undocumented workers faced with the prospect of termination will simply
enter the unregulated, underground cash economy and end up working in marginal jobs
with poorer working conditions. Workers in the underground economy do not pay taxes
and are in a deeper state of anonymity than those undocumented immigrants working
under the stewardship of legitimate employers. Second, the proposed regulation targets
the wrong employers. It addresses employers who are attempting to comply with the
law, but it fails to address those underground employers who do not comply with
the law, do not fill out Form I-9, pay cash off the books and can be fairly characterized
as "bad actor" employers. And third, by not addressing this true underground economy
and only proposing increased regulations on those employers trying to act in accordance
with the law, there is an unintended incentive created for employers to revert to
working in the underground economy. Otherwise honest employers may choose not to
follow the safe-harbor procedures outlined in the proposed regulation. Faced with
the prospect of closing their doors, many employers may decide to take a different
approach after considering the totality of the circumstances. There will be instances
in which employers opt for an informed business decision, rather than electing to
adhere to the "safe harbor" guidance. This is not sound economic policy, nor is
it in America's national security interest to push people deeper into the shadows.
The consequences of such a policy failure are staggering. As employers and employees
go "off the books," billions of dollars will be lost in federal, state and local
tax revenues. Unfair competitive practices will flourish as those employers straining
under the new system lose market share to those employers who increasingly work
off the books. And exploitation of workers by unscrupulous employers will rise,
as those employers will take advantage of the daily fear of apprehension and deportation
by undocumented immigrants.
VI. DHS Should Focus Enforcement on "Bad Actors"
DHS should focus its limited resources on firms that employ undocumented workers
in large numbers and build the practice into their business models. By concentrating
its attention on employers that have demonstrated a pattern of deliberately skirting
the law, DHS would channel scarce resources more efficiently than it would by proceeding
with enforcement actions against firms receiving few "no-match" notices. NRCA urges
DHS to consider establishing a threshold of "no-match" hits before an employer is
targeted for enforcement. For instance, DHS could create a safe harbor for companies
with fewer than 10 "no-match" letters in any given calendar year. Such a policy
would signal a sensitivity for the small business community by helping level the
playing field for companies with fewer employees and administrative resources.
VII. Firing of Workers
An unfortunate, yet certain, consequence of the DHS proposal is that if an employer
receives a "no-match" letter, many employees will simply be fired. Given the complexity
of the proposed rule, many employers will make a "business decision" to endure the
economic disruption associated with losing a valued employee, rather than risk legal
liability by attempting to remedy the "no-match" notice. Out of caution, panic and
confusion surrounding the intricacies of the rule, and unfortunately ethnic profiling
as well, many employers will select the safe legal route by shedding the potential
legal liability associated with workers who are the subject of "no-match" notices.
Once again, the integrity of the SSA database comes into play, as U.S. citizens
and legally-authorized immigrants will undoubtedly face termination. Unquestionably,
wrongful terminations are not DHS' intent, but DHS should bear in mind its culpability
in such terminations should it proceed with the rule.
VIII. Proposal Threatens to Damage the U.S. Economy
The proposed regulations fail to account for the economic and social realities that
U.S. employers confront — current domestic demographic trends, coupled with
inadequate channels for legal immigration, present the business community with a
chronic shortage of available workers.
Put simply, America faces a demographic time bomb. The native-born workforce is
growing older and will soon begin to contract. According to United Nations estimates
released in February 2005, the fertility rate in the U.S. is projected to fall below
"replacement" level by 2015, declining to 1.9 children per couple. Meanwhile, two
incompatible trends are emerging. First, the labor force continues to age. The U.S.
Department of Labor's Bureau of Labor Statistics ("BLS") projects the annual growth
rate of the 55-and-older group to grow at four times the rate of the overall labor
force the next decade. This group will cycle out of the labor force at escalating
rates. By contrast, the annual growth rate of the 16-to-54 year age group will be
more or less flat. Second, the U.S. economy keeps generating high labor demand at
the lower rungs of the occupational ladder. BLS reports that 98 percent of projected
employment growth between 2002 and 2012 will be in industries characterized by jobs
that do not require high levels of education. Construction is one of these industries.
BLS also expects employment in all occupations to rise by 21 million jobs between
2002 and 2012. But because of changing demographics and worker retirements, there
will be 56 million job openings during the decade, or an average 2.6 job openings
for each net additional job.
Exacerbating these disturbing trends by imposing additional hardships on employers
struggling to provide the products and services Americans demand will jeopardize
many of the foundation industries in the U.S. economy. Construction is one of these
industries, representing more than 9 percent of the Gross Domestic Product and more
than 12 percent of America's employers. Over the last decade, construction employment
grew 52 percent. By comparison, overall employment growth was 20 percent during
the same period. Today, there are 7.2 million employees in the industry, and BLS
reports that another 792,000 new construction jobs will be created between 2004
and 2014. BLS also projects the roofing industry alone will need 70,000 new workers
during the next decade just to keep pace with the demand for professional roofing
services. These growth trends underscore the importance of DHS taking into account
the economic costs of this proposal.
Conclusion
NRCA urges DHS to withdraw this proposal and allow Congress to finish the work it
has begun. Though DHS intends to focus on one narrow aspect of its enforcement portfolio,
the implications of DHS moving forward with the proposed rule is much broader. The
economic and national security needs of America will not be advanced if DHS proceeds.
Millions of workers in the U.S. economy — authorized and unauthorized —
will see their livelihoods jeopardized. At the same time, the proposal will damage
national security and stretch scarce enforcement dollars further, as workers descend
deeper into the shadows.
NRCA appreciates the opportunity to submit these comments and thanks DHS in advance
for giving careful consideration to the views of the U.S. business community on
this important subject.
Respectfully submitted,
R. Craig Silvertooth
Director of Federal Affairs