A no-match letter simply says the employee's information didn't match government records, and it isn't necessarily an indication that the employee is ineligible to work in the United States. You must give the employee another 90 days to confirm that the information provided on the I-9 and W-2 is correct, and to make sure that no clerical errors were made.

New rules laid down by the U.S. Department of Homeland Security (DHS) will give employers 30 days to respond to a notice of a discrepancy regarding an employee's legal working status, or “no-match” letter. The rules are an attempt to crack down on businesses that employ illegal immigrants.

During the rulemaking process, the National Federation of Independent Business (NFIB) argued that DHS should allow small businesses to continue appealing a discrepancy if they miss the 30-day deadline.

The NFIB said that most small businesses lack human resources departments or immigration expertise, "which makes the quick turnaround burdensome and could lead to mistakes." DHS adopted a safe-harbor provision supported by NFIB which will protect employers from penalties if they follow the procedures set forth in the new rule.

When you send an employee's W-2 form to the Social Security Administration, the employee's name and Social Security number are checked against SSA records. U.S. Immigration and Customs Enforcement will also verify the accuracy of information on I-9 forms. If either (or both) SSA or ICE can't verify employee information, a no-match letter will be sent to the employer indicating that the employee's name or Social Security number didn't match government records. Employers then have 30 days to try to correct any errors.

The NFIB says that, if you get a no-match letter, "you should avoid taking immediate action against your employee. A no-match letter simply says the employee's information didn't match government records, and it isn't necessarily an indication that the employee is ineligible to work in the United States. You must give the employee another 90 days to confirm that the information provided on the I-9 and W-2 is correct, and to make sure that no clerical errors were made."

If the discrepancy can't be explained, the employee must be terminated. Failure to terminate the employee will cause the government to assume you are knowingly employing illegal workers and may issue a fine of up to $10,000 per incident.

Lawyers representing the AFL-CIO, the National Immigration Law Center and the American Civil Liberties Union filed suit and a U.S. District judge granted a temporary restraining order to stop implementation of these rules.

The order prevents any implementation until the court makes a final ruling after trial.

U.S. District Court Judge Charles R. Breyer found that "the government’s proposal to disseminate no-match letters affecting more than eight million workers will, under the mandated time line, result in the termination of lawfully employed workers…" The judge also found that "if allowed to proceed, the mailing of no-match letters, accompanied by DHS’s guidance letter, would result in irreparable harm to innocent workers and employers."

The lawsuit charges that the misguided rule violates the law and workers' rights, imposes burdensome obligations on employers, and will cause discrimination against workers who are perceived to be immigrants.

The district court had temporarily halted the DHS rule shortly after the lawsuit was filed and blocked the government from sending notices of the new regulation to approximately 140,000 employers across the country.

For years, the SSA has sent "no match" letters to employers if the name and social security information reported by a worker on a W-2 form does not match up with the information contained in SSA databases. The "no match" letters were never considered reason to believe that an employee did not have permission to work in the U.S., and currently employers who receive "no match" letters are not required to take any action. In fact, there are many innocent reasons for such discrepancies such as clerical mistakes, name changes due to marriage and divorce, and the use of multiple surnames that are common in many parts of the world.

"The judge saw the need to fully examine the wisdom of placing employees’ jobs in jeopardy because of the mess in our social security database, which is rife with errors," said Scott Kronland of Altshuler Berzon LLP, who argued the case.

Under the new DHS rule, employers receiving "no match" letters might be required to fire employees whose SSA discrepancies are not resolved within 93 days after the "no match" letter is received. If the employer does not respond to a "no match" letter, DHS may conclude that the employer had "constructive knowledge" that an employee was not authorized to work in the U.S. and prosecute the employer accordingly.