by Katharine Field

On March 21, 2008, the Department of Homeland Security (DHS) issued a supplemental proposed rule related to its controversial “Safe Harbor” regulations issued in August 2007. The August 2007 final rule expanded the legal definition of “constructive knowledge” by creating new legal obligations for employers upon receiving a Social Security Administration (SSA) “no-match” letter. (For a more detailed summary of the August 2007 final rule, please see our prior story, Safe Harbor Regulations Regarding No-Match Letters.) The Safe Harbor regulations were blocked from enforcement on October 10, 2007, by a federal injunction issued by Judge Charles Breyer of the Northern District of California in October 2007.

The supplemental rule seeks to address three issues cited in Judge Breyer’s opinion. Specifically, the court questioned whether DHS had supplied a reasoned analysis to justify the department’s change in position regarding the sufficiency of no-match letter to put an employer on notice that an employee may not be authorized to work in the U.S. Additionally, the court questioned whether DHS had exceeded its authority by interpreting the anti-discrimination provisions of the Immigration Reform and Control Act of 1986 (IRCA) and whether it had violated the Regulatory Flexibility Act by failing to conduct a regulatory flexibility analysis.

In the proposed rule, DHS disagrees that it changed its position regarding no-match letters, but states that even if a change was identified, DHS had “strong reasons for adopting the change in agency policy . . . to eliminate ambiguity regarding an employer’s responsibilities upon receipt of a no-match letter.” DHS additionally argued that its interpretations of IRCA’s anti-discrimination provisions were developed as part of an interagency process, but stated that it would rescind the provisions and refer employers to the Department of Justice website for guidance on anti-discrimination. Finally, DHS disagreed that it had violated the Regulatory Flexibility Act, but stated that it would provide an initial regulatory flexibility analysis in response to the court’s objection.

The supplemental rule does not change the final rule’s provisions, but it does add some additional clarifcations. First, with respect to the requirement that employers “promptly” notify employees who have been listed in a no-match letter, the rule defines “prompt” notification as being either immediately upon receipt of the no-match letter or within 5 business days of the employer completing the internal review. Second, the proposed supplemental rule states that the 2007 final rule does not apply to workers hired before November 6, 1986. Finally, it states that the 2007 final rule does not require employers to make or retain any new documentation or records should employers choose to follow the “safe-harbor” steps laid out in the rule.

The supplemental proposed rule was published in the Federal Register on March 26, 2008. The proposed rule is subject to a 30-day public notice and comment period. Comments are due by April 25, 2008.