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• Representing a Creditor in an Assignment for the Benefit of Creditors
• Dealing With Social Security Number "No-Match" Letters
• The New Illinois Equal Pay Act
• Illinois Law Requires Nursing Mothers to Be Accommodated

Dealing With Social Security Number "No-Match" Letters

What a "No-Match" Letter Means

The Social Security Administration ("SSA") issues "Employer Correction Request" letters when it discovers a discrepancy between its records and employer submissions. If the problem is not resolved, it is likely that a letter from the Internal Reve-nue Service ("IRS") will follow, given that the W-2 information is likely incorrect. The letter used by the IRS is its Form 972CG, the same letter issued with respect to problematic Form 1099s.

These discrepancies might mean that an individual is not lawfully authorized to work in the United States, and is using the Social Security Number ("SSN") of a deceased person, a fic-titious person or of a child. However, a SSN may be incorrect for reasons unrelated to immigration status. Employer submis-sions, for example, can result in a mismatch notification if they include typographical errors, misspelled names, the use of nicknames or titles, failure to properly enter hyphenated names or improper formatting.

What Not To Do When a "No-Match" Letter Arrives

Companies should not immediately fire the employees whose SSNs are listed on the letter. Do not discuss discharge at all at that time. They will only invite one or more charges alleg-ing national origin discrimination. A potentially invalid SSN is not "proof-positive" that an individual is not lawfully em-ployed.

Furthermore, there must be no discipline, harassment, in-timidation or any changes to in an employee's terms or condi-tions of employment. These actions can also invite a discrimi-nation claim.

SSA Penalties

There are none for mismatches! However-

IRS Penalties

The IRS can impose a $50 penalty for each incorrect information return. See  26 C.F.R. § 301.6721-1. An "information return" is any form that a business is required to file with the IRS. The current maximum annual penalty is $250,000.

The IRS will not automatically penalize a business that receives a letter from the SSA; the IRS acts separate and apart from the SSA. The $50 fine may be avoided if the employer can show that it had reasonable cause to believe that the SSN pro-vided was correct. At this point, the IRS has not issued regu-lations specifically concerning W-2 penalties. Rather, it is relying on the regulations addressing incorrect SSNs on Form 1099s. The IRS General Counsel has been asked to update the agency's 1099 materials to include references to the W-2 issue.

The current IRS approach appears to be education, rather than enforcement, with respect to all but the most egregious violators. The IRS does not presently expect to step up its enforcement efforts until 2005, giving businesses plenty of time to get their paperwork and practices in order.

IRCA Penalties

A SSN mismatch may (as opposed to does) mean that an em-ployee is illegally working in the United States. That is why everyone gets anxious when notified of a possibly incorrect SSN, and why it is prudent to include this discussion in this arti-cle. The Immigration Reform and Control Act ("IRCA") fines firms for knowingly employing illegal aliens. For a first vio-lation, a civil fine of between $250 - $2,000 for each unauthor-ized alien will be levied. For a second violation, fines in-crease to $2,000 - $5,000; after that, they increase to $3,000 - $10,000. The law also provides for criminal sanctions.

What to Do Before A "No-Match" Letter Arrives -
(1) Employee Completion of Paperwork

Employers should not enter new employees into their payroll systems until they have received both (1) a signed IRS Form W-4, and (2) a completed INS Form I-9. If the individual does not provide the Form W-4, the employer should give him a memo asking him to complete the accompanying W-4, and place a copy of the memo in his personnel file. If the employee fails to provide the form, the business can show the IRS that it acted responsi-bly by requesting the form in writing. The IRS is then unlikely to fine the employer.

The good news is that companies are not engaging in unlaw-ful conduct if they do not have a completed W-4 for each em-ployee. The bad news is that it is a different story with re-spect to the I-9.

With respect to new hires, an individual must present pa-perwork verifying identity and eligibility to work in the United States within three working days of his start date. There are a variety of documents that an employee can offer to an employer. An employer cannot, however, require an individual to present a specific document, such as a SSA card or a driver's license.

There are three lists of relevant documents for I-9 completion [http://www.immigration.gov/graphics/formsfee/forms/- files/i_9.pdf]. List A contains documents which establish both identity and employment authorization; an employee need only present one document from List A. Or, he may present one List B document which shows identity only, and one List C document, which shows employment authorization.

If the individual cannot present this documentation at that time, he must give the employer a receipt showing he applied for a replacement document. He must then present the replacement document within ninety days of hire. The business should docu-ment that the employee failed to present the documentation and that he was advised concerning how to proceed. If the employee fails to meet the criteria, discharge should be considered. Otherwise, the company can be fined for knowingly employing an unauthorized alien.

Can the discharged employee file a national origin dis-crimination charge with th appropriate federal, state or local agency? Of course; it costs nothing to file a charge. The company's documentation, and evidence of its consistent applica-tion of uniform practices, should serve as a defense to any charge filed.

(2) Employer Completion of Paperwork

Employers should complete the employer's portion of the I-9 form. All that is required is the entry of the information pre-sented by the employee, a signature and a date. We also recom-mend photocopying the documents provided by the employee and stapling them to the I-9.

(3) Additional Tips

When completing information to be provided to the SSA and IRS, do not include titles, suffixes or prefixes to a person's name unless that information is specifically requested; it rarely is. A compound name requires a hyphen; Jim A. Smith Jones must be entered as "Jim A. Smith-Jones."

The government also provides an internet-based system where an employer can verify an individual's SSN http://www.ssa.gov/ employer/ssnv.htm. To avoid discrimination claims (whether based on national origin, age, sex or any other protected ba-sis), a firm should use this system for all new hires, as op-posed to a discrete few.

There are conflicting opinions about whether an employer can reverify, on the I-9 form, an employee's identity and eligi-bility to work in the United States if the mismatch is not cor-rected. One side argues that verification is to be done only at the time of hire. Yet, the I-9 form contains a section for reverification. It is the Department of Justice's position that an employer need consider the totality of the circumstances, including (but not standing alone) notification of an incorrect SSN, before seeking reverification. Other factors which might support reverification include the employee's failure to fix the problem. If the incorrect SSN was used for I-9 purposes, the employer may have a duty to reverify.

What to Do When a "No-Match" Letter Arrives

The first sign of a potential problem will be the SSA let-ter. A company should immediately check that the SSN that ap-pears on its payroll reports matches the SSN on other forms it uses. It is possible that an error was made.

If this does not solve the problem, the employer should tell the employee about the letter and ask to see his SSA card. If the SSA card the employee provides matches the SSN in the firm's records, the firm should provide him with a reasonable time to contact the SSA to fix the situation.3 If necessary, communications should be in the employee's native language as well as English.

³  At least two weeks would be nice; the National Immigration Law Center reports that the SSA has advised employees that it takes seven or more days to correct mistakes.

If the employee is able to fix the problem, the employer should report the correct information to the SSA or IRS. "Fixes" include the employee returning with a different SSN.

What if there is no fix? That means that the firm will likely receive a letter from the IRS. The employer then must solicit the proper SSN from the employee no later than December 31. If solicited by mail, the letter must advise the employee that he must provide his proper SSA or be subject to a $50 pen-alty by the IRS. The letter should also contain a Form W-9 for the employee to complete and a pre-paid envelope to return the Form W-9 to the employer.

The employer can also solicit the information by telephone. The call must be with an adult member of the household, include a request for the SSN and advise the employee (or his family member) of the penalty. The employer must maintain records of the solicitation, whether made by mail or telephone.

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The New Illinois Equal Pay Act

The Illinois Equal Pay Act ("IEPA"), Public Act 93-0006, was recently signed into law. It essentially codifies the provisions provided for in the federal Equal Pay Act ("EPA"), which makes it illegal to pay a member of one gender different wages than those paid to a member of the opposite sex "for the same or similar work on jobs the performance of which requires equal skill, effort, and responsibility, and which are performed under similar working conditions...." There is no unlawful discrimination where the wage differential results from a system based on seniority, merit or production quality or quantity, or from a factor other than sex or any other impermissible discriminatory basis under the Illinois Human Rights Act ("IHRA").

Following is a brief overview comparing four current state and federal laws under which an Illinois employee could bring a cause of action alleging unequal pay. It is important to remember that a finding of liability under the IEPA or EPA is not conclusive of liability of the broader discrimination laws (i.e., Title VII of the Civil Rights Act ("Title VII")), or vice versa.

Issue: Requirement that claim be filed with agency first

Issue: Statute of limitations

Issue: Threshold number of employees required

Issue: Prohibition of retaliation

Issue: Ability to proceed in state or federal court

*Proposed legislation would permit this in limited circumstances

Issue: Ability to sue individual supervisor

Issue: Right to a jury trial

*Proposed legislation would permit this in limited circumstances

Issue: Ability to recover attorneys' fees and costs

Issue: Ability to recover compensatory damages

Issue: Ability to recover punitive damages

Issue: Ability to recover liquidated damages

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Illinois Law - Nursing Mothers to Be Accommodated

A new law effective July 12, 2001 requires covered employers to provide nursing mothers with unpaid break time to express breast milk. The Nursing Mothers in the Workplace Act, P.A. 92-0068, SB0542, ¹  applies to all employers, including public employers, that employ six or more "employees," exclusive of immediate family members. The definition of "employee" includes former employees who have separated within the previous year as well as employees on a leave of absence, so those individuals must be considered in determining whether an employer is covered by the Act.

"Reasonable" unpaid break time must be provided to a nursing mother who needs to express milk. The Act mandates that the break time run concurrently if possible with any break time already provided to the employee. The Act does not define "reasonable." However,

many mothers who return to work find that they need to pump about as often as the baby would be nursing if the mother were home. That often works out during an eight-hour workday to morning break, lunch, afternoon break. Since time is in such short supply for a working mother, pumping with a pump that allows her to do both breasts at the same time is a real help. By double pumping mothers keep their prolactin (hormonal) levels up, and they are also able to finish in 10-15 minutes. Many mothers find that double pumping, ideally three times a day during the first few months, gives them enough milk to leave for their caregiver for the next day, and human milk is all their baby gets. ²

Many Illinois employees are entitled to a statutory twenty-minute lunch break. The Illinois Department of Labor has not taken a position concerning whether requiring pumping during a meal break is contrary to the purpose of the meal break provision of the One Day Rest in Seven Act. ³

The Act exempts an employer from providing break time if doing so "would unduly disrupt" its operations. No standards or examples are provided as to what constitutes an undue disruption. Given the hurdles employers face in establishing "undue hardship" under the Americans with Disabilities Act and "substantial and grievous economic injury" under the Family and Medical Leave Act, it is unlikely many claims of "undue disruption" will succeed.

The Act also provides that employers:

shall make reasonable efforts to provide a room or other location, in close proximity to the work area, other than a toilet stall where an employee...can express her milk in privacy.

The Act is significantly different from otherwise nearly identical laws enacted in Tennessee ⁴  and Minnesota ⁵  in this regard. The laws of both of those states contain a provision holding an employer harmless from liability if reasonable efforts to provide a room or other location have been made. A "harmless" clause was deleted from an earlier version of the Illinois law.

The Act does not address private rights of actions, penalties, administration or enforcement. In its present form, it appears to be the first, albeit a small, step towards addressing breast-feeding in the workplace in Illinois.

At the federal level, the Breastfeeding Promotion Act, H.R. 285 ⁶  seeks, among other things, to a mend Title VII's prohibitions against pregnancy discrimination. Essentially, it seeks to amend the meaning of "because of sex" ⁷  to include "lactation." The Senate's version, S256, seeks to the same result, but using the word "breastfeeding." Both bills are currently before Committees.

H.R. 285 also seeks to introduce a tax credit for firms that incur expenses as a result of promoting and supporting employees who breastfeed. Tax credits had been proposed as part of the Illinois law.

¹  You can find a copy of the Act at http://www.legis.state.-il.us/publicacts/pubact92/acts/92-0068.html.

²  Information downloaded from the La Leche League website 7/17/2001, http://www.lalecheleague.com/FAQ/FAQpumpfreq.html.

³  820 ILCS 140/3 (1999). It is interesting that another bill, SB202, contained the provisions of the Nursing Mothers in the Workplace Act as a new section of the One Day Rest in Seven Act.

⁴  TENN. CODE ANN. § 5013a (1999).

⁵  MINN. STAT. § 181.939 (2000).

⁶  You can locate a copy of the bill at http://thomas.loc.gov.

⁷  42 U.S.C. § 2000e(k).

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