Dealing With No-Match Letters: Legal Advice For Small Business Owners

When you hire a foreign worker, federal law mandates you check if the person is eligible to work in the United States. As part of this process, you must complete and keep an I-9 form for every employee before you send the person's W-2 form to the IRS. If the IRS or the Social Security Administration (SSA) cannot match the employee's details in their databases, the department will send you a no-match letter. To make sure you don't fall foul of the law, you must take prompt action when you receive one of these letters.

The purpose of no-match letters

No-match letters aim to warn employers that their employee records are inaccurate or incomplete. These notifications give employers and workers the chance to update personal information.

There are several reasons why you may receive a no-match letter. Common problems include:

  • Unreported employee name changes through marriage or divorce
  • SSA or IRS staff input errors
  • Employee errors when filling out paperwork
  • Problems recording hyphenated and multiple surnames

In some instances, problems can occur due to identity theft or fraud, but you should always treat a no-match letter without prejudice. Never assume the employee has, in some way, attempted to give incorrect information.

Protecting your employee's rights

The Immigration and Nationality Act (INA) includes strict anti-discrimination laws that aim to stop employers treating foreign workers unfairly. Quite often, employers wrongfully assume a no-match letter proves an employee does not have the right to work legally in the United States. You should not take action against the employee without carefully checking the relevant facts.

You could face severe penalties if you wrongfully dismiss an employee because you received a no-match letter. Indeed, these no-match letters normally warn employers not to take any adverse employment action based on the communication. Such action could include suspending, firing or even accusing an employee unfairly.

Steps you should take with a no-match letter

Make sure your payroll staff members have the right process in place to act upon no-match letters promptly. First, check your payroll details and employee records carefully to look for any obvious input errors. Ask your employee to make certain that he or she gave all the right information during his or her job application. If you identify the error at this stage, contact the SSA or IRS to pass on the correct details.

If you cannot find a discrepancy, ask the employee to go to the local SSA office to discuss the matter further, but you must allow a reasonable amount of time for your employee to resolve the issue. This period could reasonably reach 120 days.

Tips to make sure you act lawfully

Document every step you and your employees take carefully. This will show the authorities that you have acted promptly and reasonably. Keep details of emails sent and make sure you record minutes from any meetings that you hold with employees.

If an employee no longer works for you, you should still take reasonable steps to make contact. Record details of any letters or emails you send, and use registered postal services to confirm receipt of these communications.

Additionally, document a clear company policy that outlines how you deal with no-match letters. You can suspend or terminate an employee if he or she fails to deal with the problem, but you must treat all staff members consistently. Remember that many American-born employees receive no-match letters too.

Finally, minimize no-match letters by using SSA services to check employees' details. The Social Security Number Verification Service allows registered users to check employees' names and social security numbers online. A telephone-based service also exists.

A no-match letter does not mean that an employee is unable to work legally in the United States. If you receive one of these letters, take immediate action, but make sure you treat employees fairly, or you could face stiff legal penalties. A law firm specializing in employment regulations can help you navigate this process.