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Jordan Schrader Business Alert!



Written by Ron Guerra, member of Jordan Schrader Ramis's Employment Law practice group. Ron can be reached at 503-598-5540.

On Wednesday, October 10, 2007, employers around the country breathed a sigh of relief when a federal judge in San Francisco stopped the Department of Homeland Security (DHS) from enforcing a new regulation that would use Social Security Administration (SSA) records for immigration enforcement purposes.

As a result of the preliminary injunction order, DHS will not be able to enforce the regulation until a trial is held to determine whether the rule is lawful. The court's ruling is not limited to just California where the lawsuit is pending but covers the entire country. Michael Chertoff, DHS Secretary, indicated that DHS was going to evaluate the court's preliminary injunction before deciding whether to appeal or take other actions.

The court process originated on August 10, 2007, when the DHS announced amended regulations for employers who receive a no-match letter from the SSA or a Notice of Suspect Documents letter from DHS. Under the new regulations employers have 90 days to clear up any discrepancies or terminate the employee in question. On Wednesday, August 29, 2007, a consortium of unions and business groups filed a lawsuit in the U.S. District Court for the Northern District of California challenging the amended SSA no-match letter regulation and seeking to stop the DHS from implementing the regulation. The court issued a temporary injunction on August 31, 2007, until a hearing could be heard on the plaintiffs' motion for a preliminary injunction.

The plaintiffs argued to the court in the preliminary injunction hearing on October 1, 2007, that a preliminary injunction was appropriate because they demonstrated a high probability of success on four theories: that the rule (1) contravenes the governing statute; (2) is arbitrary and capricious under the Administrative Procedure Act; (3) is an exercise of ultra vires authority by DHS and the SSA; and (4) was promulgated in violation of the Regulatory Flexibility Act. In its October 10, 2007, preliminary injunction order, the court found that "the balance of hardships tips sharply in plaintiffs' favor and that plaintiffs raised serious questions going to the merits."

Although the immediate threat is over, employers should remain vigilant in their review of recruitment and hiring practices to ensure that they employ only lawfully authorized individuals. DHS has made it clear that enforcement activities through its Immigration and Customs Enforcement (ICE) department will continue. As widely reported, SSA has 140,000 no-match letters ready to mail to employers for the tax year 2006, pertaining to approximately 8 million employees. The judge's order only enjoins the enforcement of the new regulation. It does not prohibit the SSA from mailing the no-match letters in the format used in past years. In its pleadings, the SSA indicated to the court that it would take about 30 days to revise and mail the letters. It is likely, therefore, that employers could start receiving the tax year 2006 letters before year-end. As was the case before the new regulation, if an employer receives a no-match letter, we recommend that the employer first verify its own records are correct. If the employers records are correct (i.e., no typographical or number error), the employer should then ask the employee to contact the SSA to clear up any discrepancies and report back in a reasonable period with the corrected information.

Jordan Schrader Ramis PC, Attorneys at Law ( was established in Oregon in 1963. The firm represents private and public clients throughout the western United States in business, government, and Dirt Law®, which is the term we coined to describe our real estate, land use, environmental, natural resources, and construction law practice.

Copyright © 2007 Jordan Schrader Ramis PC. All rights reserved.

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