The Department of Homeland Security (DHS) will rescind a controversial rule that outlined the steps employers should take when they receive a “no-match” letter indicating the information submitted for an employee fails to match government records.

DHS Chief Janet Napolitano says the agency will publish a rule to rescind the No-Match rule.

The Social Security Administration informs thousands of employers every year via "no-match" letters that certain employees' names and corresponding Social Security numbers provided on the employers' Form W-2 wage reports do not match SSA's records. As many as 4 percent of approximately 250 million wage reports the SSA receives each year belong to employees whose names and corresponding Social Security numbers do not match SSA records.

In 2007, DHS proposed the No-Match Rule, which detailed steps employers may take when they receive a "no match" letter and guarantees that U.S. Immigration and Customs Enforcement (ICE) would consider employers who follow those steps to have acted reasonably. If an employer followed the safe harbor procedures in good faith, ICE wouldn't use the employer's receipt of a no-match letter as evidence to find that the employer violated the employment provisions of the Immigration and Nationality Act by knowingly employing unauthorized workers.

However, a federal court issued a preliminary injunction blocking implementation of the No-Match Rule. Under the Bush administration, DHS continued to push the No-Match Rule, publishing a supplemental rule aiming to address the court's concerns and vowing to have the injunction lifted. By contrast, the Obama administration is dropping the rule and will focus on encouraging employers to use the E-Verify system.

E-Verify is a web-based system that allows participating employers to verify electronically the employment eligibility of newly-hired employees. E-Verify evolved from the Basic Pilot/Employment Eligibility Verification Program which was originally developed in 1997 and was made available to employers as a web-based program in 2004. USCIS operates the program in partnership with the Social Security Administration.

“The no-match letters most often inform an employer many months or even a year later that an employee's name and Social Security Number provided for a W-2 earnings report do not match SSA records--often due to typographical errors or unreported name changes,” says Napolitano.  “E-Verify addresses data inaccuracies that can result in no-match letters in a more timely manner and provides a more robust tool for identifying unauthorized individuals and combating illegal employment.”

Napolitano says the DHS will go ahead with a rule to require federal contractors and subcontractors to use E-Verify to check the employment eligibility of their employees.The rule has been put on hold 4 times, but Napolitano says the administration will push ahead with full implementation of the rule. Napolitano says the rule will go into effect September 8, 2009.