About | Contact | JOIN

NRCA issues comments about DHS' Supplemental Proposed Rule on Safe-Harbor Procedures for Employers Who Receive a No-Match Letter, April 2008

On April 25 NRCA submitted comments to the Department of Homeland Security's U.S. Citizenship and Immigration Services about its Supplemental Proposed Rule on Safe-Harbor Procedures for Employers Who Receive a No-Match Letter, as published in the Federal Register March 26. NRCA's comments follow.

April 25, 2008

Regulatory Management Division
U.S. Citizenship and Immigration Services
Department of Homeland Security
425 I Street, NW, Suite 1000
Washington, DC 20536

RE: DHS Docket No. ICEB-2006-0004—Rulemaking Proceedings on Safe-Harbor Procedures for Employers Who Receive a No-Match Letter—Clarification; Initial Regulatory Flexibility Analysis

Dear Director:

On behalf of the National Roofing Contractors Association (NRCA), I am providing comments on the Department of Homeland Security's (DHS) Supplemental Proposed Rule on Safe-Harbor Procedures for Employers Who Receive a No-Match Letter, as published in the Federal Register on March 26, 2008.

Established in 1886, NRCA is one of the nation's oldest trade associations and the voice of professional roofing contractors worldwide. It 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 more than 4,600 members from all 50 states and 54 countries and is affiliated with 105 local, state, regional and international roofing contractor associations. NRCA contractors typically are small, privately held companies, and the average member employs 35 people in peak season, with sales of just over $3 million per year.

NRCA and its members are committed to full compliance with the law and recognize the need for improved enforcement of immigration laws. NRCA has strongly advocated for comprehensive reform of our nation's immigration laws, including enhanced worksite enforcement measures, for many years, and continues to work toward this objective. However, NRCA firmly believes that the proposed supplemental rule is fundamentally flawed and is deeply concerned about the adverse impact that implementation of the rule will likely have on both employers and employees in the roofing industry. Moreover, we do not believe the supplemental proposed rule will achieve the stated goal of improving worksite enforcement of immigration laws, and, in fact, may even significantly exacerbate the problem of illegal immigration.

NRCA notes that the supplemental proposed rule, by DHS's own admission, contains no substantive changes from the agency's final rule published in August, 2007, and later blocked by an injunction issued by the United States District Court for the Northern District of California in AFL-CIO et al. v. Chertoff. As a litigant in the suit filed against the original final rule, and given that no substantive changes have been made to the supplemental proposed rule, NRCA does not believe that DHS's latest effort addresses the concerns of the District Court that led to the injunction.

NRCA has numerous serious concerns with the DHS supplemental proposed rule and therefore strongly urges DHS to not move forward with implementation of the proposal. The major reasons for NRCA's strong opposition are outlined below.

Inaccuracy of the Social Security Administration Database

It is a well-known fact that the Social Security Administration (SSA) database used to generate no-match letters contains many inaccuracies, a significant problem that has been amply documented by government auditors. According to a report by the U.S. Government Accountability Office issued in July, 2006, the SSA database "contains data that are incomplete and outdated," and that "information in the files can also be misleading." In December, 2006, the SSA's Office of Inspector General estimated that the agency's database used for the no-match letters has an error rate of 4.1 percent, and that 70 percent of these errors involve native-born U.S. citizens. As such, no-match letters often result from name changes and clerical errors, such as transposed numbers or other honest mistakes. For the construction industry, and the roofing sector in particular, this problem is severe, as workers who identify themselves as being Latino or Hispanic represent fully one-third of the workforce. Name-matching problems with SSA are common among this community due to the multiple surnames of individuals.

NRCA's members are deeply concerned that the DHS no-match rule will result in the termination of employees who are legitimately authorized to work, but who are unable to obtain resolution of a no-match problem that occurs because of corrupt or erroneous data in the SSA database. If the system does not meet a 99.5 percent accuracy test, DHS should not use the SSA database for immigration enforcement purposes, until such a level of accuracy can be achieved and maintained.

Failure to Perform Regulatory Analysis Required By Law

NRCA questions DHS's determination that the supplemental proposed rule "is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Act of 1996" because it "has not been found to be likely to result in an annual effect on the economy of $100 million or more." This certification is disputed in an analysis of DHS's IRFA by Richard B. Belzer, Ph.D., entitled "Comments on DHS' Safe-Harbor Interim Regulatory Flexibility Analysis," which has been filed in the docket. Belzer's analysis, based on DHS's raw numbers in the IRFA, finds that "the aggregate costs to employers alone from the proposed rule will range from $1 billion to $1.6 billion per year." This conclusion is based on DHS's own estimate of the cost of complying with the safe harbor procedures for employers who receive no-match letters. In addition, Belzer's analysis of data in the IRFA also concludes that there would be substantial economic and social costs to legally authorized employees who cannot resolve no-match problems with the SSA.

Belzer's analysis also concludes that the DHS data in the IRFA "show that the proposed safe-harbor rule is economically significant under Executive Order 12,866 and major under the Congressional Review Act." Thus, DHS is required to perform a formal Regulatory Impact Analysis on the proposed rule under current law, and must do so before moving forward with implementation of the rule.

Clearly, Belzer's analysis of the DHS data shows that the proposed rule would have a major economic impact on the economy. It is imperative that a more complete analysis of the anticipated costs to employers and employees be fully ascertained in accord with all federal statutes and administrative procedures.

Small Businesses Disproportionately Burdened

NRCA believes that the DHS supplemental proposed rule will adversely impact small businesses disproportionately. Comments filed in the docket by the U.S. Small Business Administration's Office of Advocacy supports this conclusion. The Office of Advocacy comments state:

    Advocacy believes that the supplemental proposed "No-Match" rule, if finalized, will have a significant economic impact on a substantial number of small entities. As such, DHS should prepare and publish with any final rule a Final Regulatory Impact Analysis (FRFA) under the RFA. Advocacy notes that the FRFA must include, in addition to the economic analysis of the rule, a summary of issues raised in public comments on the IRFA, the agency's response to them, and a statement of the changes the agency has taken to minimize the impact on small entities.
The construction industry, and the roofing sector in particular, which are dominated by small firms, will be disproportionately impacted by the supplemental proposed rule. In 2005, 92% of all construction firms had fewer than 20 employees. Small businesses often have little or no administrative staff, and the bulk of their employees (including management) work outside of their home offices most of the time. The administrative burden of having to comply with the complex regulations in the supplemental rule will certainly add to the growing paperwork burden that already threatens the viability of many small businesses in the construction industry.

On February, 28, 2008, NRCA President Robert P. Daly, Jr., delivered testimony before the House Small Business Committee which described an already alarming regulatory paperwork burden on small businesses, and the need for Congress and the Bush administration to address this issue in a manner that reduces paperwork burdens on small businesses. Clearly, the DHS no-match rule would increase the already burdensome paperwork requirements imposed on small businesses by government regulation.

Additional paperwork burdens can least be borne by small businesses in times of economic uncertainty, such as that which many small firms face in today's economy. Richard Belzer's analysis of the DHS IRFA (cited above) indicates that DHS and the Office of Management and Budget may be in violation of the Paperwork Reduction Act for failing to account for potential increased paperwork requirements for small firms that will result from the no-match rule, and have not provided the requisite public comment periods required by the Act.

In addition to the administrative hardships this proposal would impose on small businesses, smaller firms would also be disproportionately impacted because they have greater difficulty in absorbing shocks to the size of their labor forces compared with larger firms. This is especially true in the construction industry, which operates under very low margins and unique demands, such as weather restrictions, performance and bonding requirements, and strict timetables for delivery of goods and services. Absorbing labor shortages in the middle of projects is potentially disastrous for small construction firms, 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.

One of the greatest potential costs faced by employers as a result of this rulemaking is the increased likelihood of discrimination lawsuits brought about by the required termination of employees who cannot resolve SSA "mismatches." The need to defend against even meritless claims brought by terminated employees will result in significant legal expenses for employers. The DHS instructions for employers in the supplemental proposed rule that reference Department of Justice information on this subject are inadequate.

Insufficient Safe Harbor for Employers

The regulation defines what constitutes a "reasonable response" by an employer to a no-match letter and mandates specific steps to be taken by the employer within defined periods of time. The regulation's preamble suggests that taking such measures may allow the employer to avoid liability and mitigate or eliminate potential penalties, but still leaves many questions unanswered. A true safe harbor would provide protection from all worksite enforcement actions taken in relation to the no-match guidance.

Out of fear of non-compliance with DHS's proposed rule, employers may become extra vigilant in trying to verify an employee's identity and eligibility to work in the U.S. However, there is an extremely fine line for the employer between ensuring that your workforce is legal and violating existing anti-discriminations laws. For example, an employee may present documents other than a Social Security card when completing the I-9 Form. If a no-match letter is subsequently issued, the employer may then confront the employee and request to see the employee's Social Security card. This type of situation would likely present an issue regarding anti-discrimination laws already in effect. DHS should provide clarification on how an employer should respond to such a situation and provide a safe harbor that ensures protection from liability with respect to anti-discrimination laws. As previously stated, the instructions for employers in the supplemental proposed rule that reference Department of Justice information on this subject are inadequate.

Another problem is that the regulation would significantly increase the scope of what is considered "constructive knowledge" under existing federal immigration statutes. It states that "the employer's obligations under current law, which is that if the employer fails to take reasonable steps after receiving such information, and if the employee is in fact an unauthorized alien, the employer may be found to have had constructive knowledge of that fact." NRCA questions whether this expansion of the definition of constructive knowledge is justified in existing law.

One of the ways by which an employer can be put on notice is by receiving a written notification from DHS. Unlike SSA, DHS does not have a mechanism in place that regularly checks and reports mismatched immigration documents. Rather, DHS generally is made aware of mismatched immigration documents in the context of an I-9 Forms audit. As noted in the proposed regulation, if an employer receives a letter from DHS, the employer is expected to resolve the issue by "tak[ing] reasonable steps, within 14 days of receiving the notice, to attempt to resolve the question raised by DHS about the immigration status document or the employment authorization document." However, DHS provides no specific guidance as to what those steps should be and what an employer should do to rectify the situation. DHS should clearly explain what steps it expects employers to take in this situation, and opportunity for further public comment should be provided.

Termination of Lawfully Documented Workers

According to information in the DHS IRFA, the supplemental proposed rule will result in between 37,000 and 165,000 legally authorized workers losing their jobs because they are unable to rectify no-match problems with SSA. Some authorized workers who cannot resolve no-match problems may be forced into long-term unemployment. The social and economic costs of this outcome would be staggering. Richard Belzer estimates the aggregate social welfare costs to authorized workers who cannot resolve no-match problems will be between $8 billion and $37 billion depending on the percentage of no-matches that are authorized vs. unauthorized workers.

In addition to causing many authorized workers to lose their jobs because of unresolved no-match problems, it is highly likely that the DHS proposed rule will result in substantial numbers of legally authorized workers being terminated when an employer receives a no-match letter before the employee can even begin the process of attempting to resolve the problem with SSA. Given the high degree of complexity in the supplemental proposed rule and the uncertainty associated with attempting to implement the rule's "safe harbor" procedures, many employers will simply 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 problem. Out of caution, panic and confusion surrounding the intricacies of the rule, 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 by firing these employees.

As a result, it is highly likely that many native-born U.S. citizens and lawfully documented immigrants will face termination if the supplemental proposed rule is implemented. The social costs of this regrettable but virtually inevitable outcome of DHS's proposal are extraordinarily high. This is terrible public policy and NRCA again wishes to register its strong opposition to DHS moving forward with this rule.

Insufficient Time for Resolution

The current timeframes established by the DHS supplemental rule for resolving no-match problems are insufficient. Both large and small employers will be faced with challenges to meet the 90-day standard set forth by the rule. The employer has only 90 days, from the date of receipt of the letter or notice, to ensure and confirm that the discrepancy has been rectified. Thus, an employee has less than three months to work out a resolution with the SSA bureaucracy, which will most often be an insufficient amount of time. It is well known that efforts to rectify data problems with SSA can, and often do, take significantly longer than 90 days under existing conditions. This problem will only be exacerbated by the exponential increase in volume that SSA offices will experience if the DHS no-match rule is implemented.

To reiterate, by DHS's own estimates, the failure by employees to resolve no-match problems within the 90-day allotment will result in the termination of thousands of lawfully authorized workers, despite good faith efforts to correct the problems.

Impact on Illegal Immigration

The DHS proposed regulation will effectively apply only to employers who are making good faith efforts to comply with the law, and therefore does not address the problem of "bad actor" employers who operate in the underground economy, do not complete the required I-9 Form and pay workers "under the table" in order to avoid federal law. By not addressing the bad actor employers and only proposing increased regulations on those employers trying to act in accordance with the law, the DHS proposed rule will merely increase incentives for employers and employees to enter the underground economy. Workers in the underground economy do not pay taxes and remain in the shadows, and employers are not held accountable.

Thus, the regulation is likely to have little discernable affect on reducing illegal immigration and in fact could seriously exacerbate the problem by increasing incentives for both employers and workers to operate in the underground economy. This will also be harmful to employers who are now attempting to operate within the law since it will increase the competitive advantage that bad actor employers have in the marketplace.

Creating further incentives for employers and employees to operate in the underground economy is neither sound economic policy nor in our national security interest. As Richard Belzer's analysis points out, the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) recently estimated that H.R. 4088, the Secure America Through Verification and Enforcement Act of 2007 (SAVE Act) by Rep. Heath Shuler (D-NC), which would mandate the use of the government's E-Verify system among all employers, would reduce tax collections by an estimated $770 million per year because unauthorized workers would go underground. The DHS no-match proposal, by creating incentives for employers to enter the underground economy, would have a similar impact on tax receipts as predicted by CBO and JCT regarding H.R. 4088.

By focusing its regulatory efforts on employers who are attempting to comply with the law, NRCA believes that DHS is misallocating scarce resources which could be put to better use targeting those employers that deliberately evade the law. DHS should be targeting employers who willfully evade the law, yet the regulation gives them a free pass.


The issues outlined above are by no means an exhaustive list of NRCA's concerns with the supplemental proposed rule, as we continue to review the proposal and the IRFA. NRCA urges an extension of the public comment period to allow for a more in-depth review of the proposal by employers and their representatives. A 30-day response time for public comments is not sufficient to review the entire supplemental proposed rule and the Initial Regulatory Flexibility Analysis (IRFA) contained therein. The initial proposed rule, which did not contain such an analysis, provided for a 60-day comment period. This supplemental proposed rulemaking should thus provide for at least an equal comment period, and due to the complexity of the IRFA, NRCA urges DHS to provide a 90-day comment period for the supplemental proposed rule.

NRCA strongly urges DHS to not move forward with this proposal because it will not achieve the stated goal of reducing illegal immigration, while it will have substantial negative impacts on our nation from both an economic and national security perspective. The supplemental proposed rule could have severe negative impacts on millions of both native born and immigrant workers who are in fact authorized to work in the U.S. by depriving them of the right to work and earn a living for themselves and their families. NRCA urges DHS to instead focus its immigration enforcement efforts on areas which will be truly productive in curbing illegal immigration, such as focusing on employers who willfully evade the law.

Respectfully submitted,

Duane L. Musser
Senior Director, Federal Affairs

Roofing industry news

[ More news ]


Find a contractor

Roof type

ZIP Code

Find roofing contractors by state

Sponsored link