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-2006-0004Rulemaking Proceedings on Safe-Harbor Procedures
for Employers Who Receive a No-Match LetterClarification; Initial Regulatory
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
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
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
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
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
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.