An Imperfect Match: Take These Steps When You Learn that an Employee's Name

You sit down at your desk, ready to tackle the items on your “to do” list for the day and notice that your company has received a letter from the U.S. Social Security Administration (SSA). The letter states that the Social Security number you have on file for one of your employees doesn’t match his number on file with the SSA.

You have heard from colleagues that these “mismatch letters” are being received all over the country. You had hoped this type of letter wouldn’t land on your desk, but it has.

Little wonder. In the past, the SSA issued “mismatch letters” only if 10 percent or more of an employer’s workforce had a mismatch. But under a new policy, effective this year, letters are being sent to employers who have even a single mismatch.

If misery loves company, knowing this may ease your mind. However, it still doesn’t address the nagging question in your brain: What do I do now?

You might be tempted to immediately terminate the employee mentioned in the letter. At first glance, such a strategy might seem perfectly reasonable. After all, if the employee has given you a false Social Security number, he isn’t qualified to work, right? He could he an illegal alien, and by employing him you could be violating federal immigration law. Or the employee could have assumed someone else’s identity to land a job.

It’s true that either of the above scenarios are possible. However, it would be unwise to make a hasty assumption.

An Honest Mistake?

The immediate concern for employers who receive a mismatch letter is that mismatched employees may not be authorized to work in the United States. However, employers should not automatically assume that the letter makes any sort of statement about the employee’s immigration status.

Further, employers should not infer that the employee mentioned in a mismatch letter intentionally provided incorrect information. Reasons for a mismatch may include an unreported name change, a change in marital status, a stolen identity or a clerical error on your part (while processing the employee’s paperwork) or even at the SSA.

Nevertheless, the receipt of an SSA mismatch letter should prompt an employer to take some action to ensure compliance with the SSA, the Immigration and Naturalization Service (INS) and the Internal Revenue Service (IRS).

When faced with this situation, here’s what you should do.

Step No. 1

First, review any documents you prepared or provided when the employee was hired. Review the employee’s completed employment application (if any) and the IRS W4 Form to be sure that the data is consistent with other information provided by the employee.

For example, ensure that you correctly filled out the employee’s 1-9 Form, which establishes the employee’s eligibility for employment. Under the Immigration Reform and Control Act (RCA), employees must fill out an I-9 form the first day on the job, arid must provide documentation proving their employment eligibility and identity within three business days of starting work.

The law does not require employers to file I-9 forms with any government agency. As a result, only you have immediate access to this information and only you can tell if the information submitted for an I-9 matches the information an employee provided on other forms.

If your review shows that these documents are incomplete or incorrect, you have a duty to investigate. Be sure to give the employee an opportunity to present acceptable documents and amend the I-9 Form.

If, however, the employee cannot present acceptable documents, you may have to terminate him. Under the IRCA, employers can be legally liable for the “knowing” employment of unauthorized aliens.

Note: Even though I-9 forms are not submitted to federal agencies, they still can provide evidence that an employer intentionally hired an illegal alien. Each year the INS performs more than 60,000 audits of I-9 forms.

Further, the number of I-9 Form audits is likely to increase, for two reasons:

The INS is being restructured to split the agency into two divisions: benefits and enforcement. This split is likely to invigorate the enforcement arm of the INS.
The INS is self-funded through fines levied on employers, so there is an incentive for increased enforcement.

What’s more, the danger of an improperly completed I-9 Form may not go away in the short term. Under the IRCA, when an employee leaves or is terminated, employers must retain I-9 forms for at least three years from the date of hire or one year after termination, whichever is longer.

Step No. 2

Second, employers are required to report accurate information to the IRS. Once an employer finds out that an incorrect Social Security number has appeared on a W-2 form, the employer should correct the information by preparing and filing a W-2C with the correct information.

As long as the incorrect Social Security number was provided inadvertently on the W-2, no penalty should be imposed on the employer.

Providing accurate information also is in the best interest of the employee. This is because the SSA maintains records of the reported earnings of individuals. These reported earnings are used to determine an employee’s eligibility for entitlement to retirement, survivor and disability benefits.

The reported earnings that match an individual’s name and Social Security number are posted to the individual’s record. The reported earnings that cannot be matched with an individual’s name are posted separately into an “Earnings Suspense File.”

A mismatch could result in employees not receiving proper credit for wages they earned. In 2000, the SSA reported that approximately $4.3 trillion in wages was posted–and approximately $58.5 billion remained unposted as a result of the mismatches.

Step No. 3

Third, employers should take adequate steps to document that they have complied with the SSA’s request for information. The employer should notify the employee, preferably in writing, of a Social Security mismatch and advise the employee to correct the problem with the employer or, if necessary, to visit an SSA office to correct the information.

And be sure to explain the reasons why employees stand to benefit from clearing up any confusion regarding the use of their Social Security numbers. When they realize that their future income could potentially be at stake, they will be more likely to take immediate action.