Cleaning, Maintenance, Facilities and Building Services Contractors Association

U.S. Department of Homeland Security Makes New Effort to Clarify “Safe Harbor” to No-Match Letters
The U.S. Department of Homeland Security (DHS) has released a Supplemental Proposed Rulemaking for the No-Match Rule previously issued on August 15, 2007 and now enjoined by the Northern District of California. That rule attempted to articulate how employers could avail themselves to a “Safe Harbor” if they received a No-Match letter from the Social Security Administration, or a “Notice of Suspect Documents” from the U.S. Immigration and Customs Enforcement (ICE).

The stated intention of the Supplemental Proposed Rulemaking is to provide a more detailed analysis of how DHS developed the No-Match policy and help responsible employers ensure that they are not employing unauthorized workers. It is also clear that DHS is positioning a final rule once it is clear of the current litigation.

Specifically, the new proposal attempts to clarify two aspects of the currently enjoined August 2007 Final Rule:

First, DHS proposes a new 5-day rule for responding to a No-Match letter: The August 2007 Final Rule instructs employers seeking the safe harbor that they must “promptly” notify an affected employee after the employer has completed its internal records checks and has been unable to resolve the mismatch. DHS believes that this obligation for prompt notice would ordinarily be satisfied if the employer contacts the employee within five (5) business days after the employer has completed its internal records review.

Second, DHS acknowledges existing “Grandfather Clause” for workers hired before November 6, 1986: When Congress enacted INA section 274A as part of the 1986 Immigration Reform and Control Act, it included a grandfather clause exempting workers hired before IRCA's date of enactment. Because those statutory bars against hiring or continuing to employ individuals without work authorization do not apply to workers within that grandfather clause, the August 2007 Final Rule, as published and as supplemented by this rulemaking, does not apply to any such workers that may be listed in an SSA no-match letter.”

It is important to note at this time that the rule does not create new legal obligations for businesses.

Legal experts anticipate that this Supplemental Rule will lead to a Supplemental Final Rule, which should be released sometime this summer. Employers should bear in mind that the No-Match Rule was originally due to take effect on September 14, 2007, but is currently enjoined from becoming effective by the U.S. District Court. Until the preliminary injunction is lifted, the “Safe Harbor” provisions as well as the rest of the Rule cannot take effect. In addition, the Social Security Administration (SSA) was instructed not to issue No-Match letters to employers until the injunction is lifted.

It is the position of DHS that the Proposed Supplemental Rule addresses the issues the U.S. District Court raised in its order granting the injunction. In DHS’ view, the Supplemental Proposed Rule sufficiently addresses the issues the Court raised, and the Agency will now ask the Court to “dissolve” the preliminary injunction.

It is observed by legal experts that many employers in the U.S. started implementing their own internal Social Security No-Match policies when the regulations were being drafted and throughout the litigation. Employers have taken action in response to the DHS rulemaking and a heightened awareness of the penalties and liabilities associated with hiring and continuing to employ unauthorized workers.

It is recommended by those engaged in compliance counseling that it is imperative for employers to think about internal compliance policies considering the benefits and costs of a Social Security No-Match policy. ICE is stepping up criminal enforcement actions as well as administrative reviews and I-9 audits. ICE is expected to aggressively pursue violators, particularly in identified critical infrastructure sites and targeted industries.

This decision is a huge win for employers, as this rule could have lead to the unjust firing of many thousands of legally authorized and workers.

Not only did Judge Breyer order a halt to the rule, his decision also bars the Social Security Administration from sending out about 141,000 no-match letters, covering more than eight million employees, which include notices from the Homeland Security Department explaining the new rule.
Lucas Guttentag, chief immigration lawyer for the American Civil Liberties Union, which helped represent the unions in a lawsuit challenging the rule, said the plan's fatal flaw is its reliance on error-filled Social Security records that could lead to the firings of hundreds of thousands of citizens and legal residents.

Judge Breyer also noted this fact. “There is a strong likelihood that employers may simply fire employees who are unable to resolve the discrepancy within 90 days,” even if they are legal, Judge Breyer wrote.

Yesterday, Judge Breyer ordered a halt to the rule until the court could reach a final decision in the case, which could take many months.

SAN FRANCISCO, California (AP) - The Social Security Administration cannot start sending out letters to employers next week that carry with them more serious penalties for knowingly hiring illegal immigrants, a federal judge ruled Friday.

Ruling on a lawsuit by the nation's largest federation of labor unions against the U.S. government, U.S. District Judge Maxine Chesney granted a temporary restraining order prohibiting the so-called "no-match" letters from going out as planned starting Tuesday.

The AFL-CIO lawsuit, filed this week, claims that new Department of Homeland Security rules outlined in accompanying letters threaten to violate workers' rights and unfairly burden employers. Chesney said the court needs "breathing room" before making any decision on the legality of new penalties aimed at cracking down on the hiring of illegal immigrants.

The Social Security Administration has sent out "no-match" letters for more than two decades warning employers of discrepancies in the information the government has on their workers. Employers often brushed aside the letters, and the small fines that sometimes were incurred, as a cost of doing business.

But this year, those letters are to be accompanied by notices from the Department of Homeland Security outlining strict new requirements for employers to resolve those discrepancies within 90 days or face fines or criminal prosecution if they're deemed to have knowingly hired illegal immigrants.

BSCAI Member Alert - DHS Set to Finalize New Verification Requirements for Employees
Following the defeat of comprehensive immigration reform legislation in the U.S. Senate, the Department of Homeland Security has indicated that it will likely finalize rules regarding new verification procedures for employers that receive no-match letters from the Social Security Administration (SSA). The rules, proposed last June, would require employers to take affirmative steps to verify workers' identities if they receive notice from SSA regarding a mismatched Social Security Number, and for the first time would require employers to fire employees or risk enforcement action. These rules were initial summarized last year by the Government Affairs team, and BSCAI filed comments with the Department of Homeland Security opposing the rules in their draft form. From our discussions with other business groups, and contacts in Washington, we anticipate that the final rules will offer a longer period for verifying identity (perhaps up to 90 days), but will nevertheless require BSCAI members to request new documentation from their employees in many instances.

A copy of the rule can be secured from the BSCAI Web site, and a summary follows below. While this summary reflects the draft rules containing a 63-day deadline for resolving discrepancies, we nevertheless expect that time frame to be lengthened in the final rule.

The proposed DHS rule would amend the definition of “knowing” in 8 CFR 274a.1(l)(1), in the portion relating to “constructive knowledge.” Under the proposed rule, when an employer receives a no match letter, they can take advantage of a safe harbor by taking the following steps:

1) Review internal records within 14 days to determine whether the discrepancy is clerical -- i.e., the records were improperly transcribed, misspelled, or other similar error occurred, and advise either SSA or DHS of the mistake.

2) In the event that there is no clerical discrepancy, an employer should request that the employee confirm that the employer's records are correct, and if not, contact the appropriate agency to resolve any inaccuracies or provide corrected documents or records to the relevant agency. A discrepancy will be considered "resolved" under the proposed rule once the employer verifies with the SSA or DHS that the corrected records have been verified. Under the proposed regulation, an employer should complete this process within 14 days.

3) Completing and submitting a new I-9 within 63 days of receiving the no match letter, so long as:

In the event that the discrepancy cannot be resolved within 60 days, and a new I-9 cannot be completed within 63 days, an employer must elect to either terminate the employee or face the risk that DHS will assert that the employer had constructive knowledge that the individual was an unauthorized alien.

The proposed regulation makes clear that this safe harbor does not apply in circumstances where the employer has actual knowledge that the employee is unauthorized or is complicit in falsifying documents.

BSCAI Legislative Update - Immigration Reform and Employee Free Choice Take Center Stage in Senate
As Congress begins its final legislative push prior to the July 4 recess, two issues of importance to BSCAI members will be on the Senate agenda in the coming week. Beginning this week, the Senate will revive debate on comprehensive immigration reform legislation, with a number of amendments, including amendments to the workforce verification provisions (Title III) anticipated. In addition, Senators are expected to consider the Employee Free Choice Act this week, a bill that contains provisions that could affect how BSCAI members manage their contracts with property owners. While the outcome of both bills is highly uncertain, BSCAI members should be aware of developments, and reach out for the Government Affairs team if they have questions about either of these legislative proposals.

Immigration Reform Bill Returns
After failing to secure agreement with respect to the scope of potential amendments to the immigration bill, Senate Majority Leader Harry Reid (D-NV) attempted to force a vote on the bill two weeks ago. This effort failed to secure the 60 votes needed to end debate on the bill. Majority Leader Reid then pulled the legislation from further consideration, but left open the possibility that further debate on the bill could occur at a future date if there was an agreement on limiting amendments and completing the bill in a reasonable amount of time. At this point, we anticipate that the Senate will return to consideration of the Immigration bill in the next week, and expect that a significant effort will be mounted to make substantial changes to the worker verification requirements contained in the current bill.

BSCAI remains an active member of the Electronic Verification Steering Committee in cooperation with the US Chamber of Commerce and other leading industry groups to advance proposals that are rationale, fair and workable for large and small BSCAI members alike.

Employee Free Choice Act
After passing the House of Representatives earlier this year, the Employee Free Choice Act will likely see Senate consideration prior to the July 4 recess. Also known as the “card check” bill, the proposed legislation would allow unions to be recognized on the basis of card check elections, rather than by secret ballot. The bill would also impose new requirements on employers during an initial bargaining discussion for a first union contract - including a mandatory arbitration clause that could restrict an employer’s ability to halt negotiations and risk a strike by the union.

At present, the legislation is the subject of an unconditional veto threat by President Bush, and its future in the Senate is very uncertain. Under Senate procedural rules, 60 votes will be required to begin debate on the bill - and given the opposition of a significant number of Republicans to this proposal it may fail to secure the votes necessary for any Senate debate. Nevertheless, this issue, which we highlighted in our opening Government Affairs update this year, is one that the Government Affairs team is carefully watching. Our team is engaging directly with key Republicans, along with the National Federation of Independent Business, to block consideration of this bill.

The U.S. House of Representatives and U.S. Senate have adjourned until June 4 for the Memorial Day recess. The last several weeks of Congressional session included significant legislative activity on issues of critical importance to BSCAI members, including an increase to the federal minimum wage, and Senate consideration of a comprehensive immigration reform bill. BSCAI's Government Affairs team has been actively engaged in these efforts, and expects to be working throughout the coming weeks with coalition partners to ensure that BSCAI's voice is heard on these key debates.

Minimum Wage
In an effort to secure sufficient bipartisan support for the Iraq spending bill, Democrats included provisions in the legislation that would increase the minimum wage to $7.25 between now and 2009. This legislation passed the House and Senate last night, and is expected to be signed into law in short order by the President. Under the new minimum wage provisions, the federal minimum wage will increase to $5.85 per hour effective in late July 2007. In July 2008, the minimum wage will increase again to $6.55 per hour, with a final increase to $7.25 per hour in July 2009. In addition to the minimum wage increase, the Iraq spending bill also contained a series of small business tax incentives, including:

Immigration Reform
The Senate has again begun the process of debating legislation to reform the U.S. immigration system, including the creation of a temporary guest worker program, and provisions for the legalization of many immigrants already in the U.S. In addition, Title III of the proposed bill would impose new requirements on all employers, including BSCAI members, to verify the eligibility of their workforce using the Electronic Employment Verification System (EEVS, or Basic Private Pilot). Title III would also require all employers to verify that any subcontractors with whom they maintain a business relationship are themselves registered with EEVS.

The current draft of Title III contains a number of provisions that would create the potential for administrative and regulatory burdens on BSCAI members both large and small, including additional training and certification requirements, and the potential for open-ended rulemaking by the Department of Homeland Security. BSCAI's Government Affairs team is actively working with other business groups and key Senators to develop amendments to improve these aspects of the bill and ensure that any new verification requirements are fair, workable, and effective. The Government Affairs team met at length with lead staff for Senate Majority Leader Harry Reid last week to outline the concerns of BSCAI members, and the challenges that BSCAI members face in accurately verifying their workers without exposing themselves to legal liability for discrimination. We will continue these meetings and will offer amendments to the bill when the Senate returns to debate on June 4.

As you may be aware, the US Department of Homeland Security (DHS), in coordination with the Social Security Administration (SSA), proposed changes to the current process for issuing "no-match" letters on employees, as well as changes to employer responses to these letters. Chief among the changes would be new deadlines that would require employers to resolve any discrepancies identified by DHS or SSA within 63 days of receiving a no-match letter, and the involvement of DHS in the no-match process. A number of industry groups, as well as BSCAI members, expressed concerns that the proposed regulation would create significant and unnecessary burdens on our industry, for both large and smaller employers alike. These burdens include recordkeeping, communicating with employees about their status, and communicating with federal agencies to resolve any discrepancies.

BSCAI's Government Affairs team prepared formal comments to the proposed rule that were submitted to DHS outlining our concerns. Click here to see a copy of these comments and click here to see a copy of the proposed rule. As DHS considers all comments to the rule, we would strongly encourage you to contact your Congressman and Senators to highlight the negative impacts of the proposed rule, and encourage them to reach out for the agency to request that they consider (1) further extending the comment period to allow for the collection of additional data; (2) delay any further consideration of the rule until revisions to U.S. immigration law can be completed by Congress; and (3) enact rules that do not impose unwarranted burdens on America's businesses.
To identify your Senators, visit www.senate.gov, and to identify your Representative, visit www.house.gov (where you can enter your zip code and identify your Member of Congress.

A number of states modify their sales tax laws once every legislative session, while others are fairly static. In order to close budget gaps and harmonize state tax policy, a number of states have begun to look at sales taxes on services as a source of revenue. These tax changes can and do have a significant impact on BSCAI members, and accordingly the Government Affairs team has surveyed the states to identify current tax rates, as well as pending regulatory or legislative changes to the current classification for services.

In order to provide information on trends in services taxation, we have included historical data on each state, as well as identified the various types of building services that may be taxed in each state. This information is intended to serve BSCAI members as a resource as they conduct business, explore opportunities in other markets or states, or develop new pricing proposals and structures.