Monthly Archives: May 2019

Avoiding Errors in the Match Game: Responding to the Rising Number of “No-Match” Letters

Starting late last year and continuing on the heels of tax season, the Social Security Administration (SSA) has been sending employers Employer Correction Request Notices, also known as EDCOR notices or “no-match” letters. An example “no-match” letter is available at the SSA’s website. These “no-match” letters notify an employer that the information submitted on an employee’s W-2, such as the Social Security Number or SSN, does not match the SSA’s records. Even though it’s not conclusive evidence that an employee is not authorized to work in the United States, it can put an employer on notice of a possible issue, which can lead to potential compliance issues and liability under federal law. See our previous discussion here and here on recent Form I-9 compliance issues.

Of course, common discrepancies can also trigger a “no-match” letter, such as  unreported name changes, typos or input errors by the SSA, reporting errors by an employer or employee, errors in recognizing multiple last names or hyphenated last names, or identity theft.

In other words, “no-match” letters can arise because of simple administrative errors. Employers should not presume the “no-match” letter conveys information about an employee’s immigration status or authorization to work within the United States. Still, the “no-match” letters may also indicate that an individual provided false identification.

Employers must be cautious when dealing with a “no-match” letter. An overreaction—such as requesting excessive or unnecessary documentation from employees—can violate the anti-discrimination provisions in federal law, which generally prohibit discriminatory employment practices because an employee’s national origin, citizenship, or immigration status. Thus, an employer should not attempt to do any of the following after receiving a “no-match” letter:

  • Take any adverse employment action against an employee subject to a “no-match” letter, including—but not limited to—firing, demoting, cutting hours, reducing the wages of, or writing up such an employee;
  • Follow different procedures for different classes of employees based on the employees’ respective national origin or citizenship status;
  • Require the employee immediately provide a written report that the SSA verified the requisite information (primarily because the SSA may not ever provide such a report);
  • Immediately reverify the employee’s eligibility to work by requesting a new Form I-9 based solely on the “no-match” letter; or
  • Require an employee produce any specific I-9 documents, such as a Social Security card, to address the no-match issue.

The question then becomes: How should employer respond to a “no-match” letter?

Unfortunately, the letters usually do not identify the employees for whom the SSA finds there is a “no-match” issue. To determine which employees’ information is at issue, an employer must first register with the SSA’s Business Service Online website. Through that website, an employer can then compare the employee names and SSN information in its files against the SSA’s records to make sure the information was correctly submitted, and no typographical error occurred. If an employer determines it misreported the information, it can issue a correction through an updated IRS Form W-2C. An employer generally has 60 days from receipt of the “no-match” letter to issue a Form W-2C to make corrections if that is the cause of the “no-match.”

Should an employer determine that it properly reported the information, then the employer will need to further investigate and may want to seek guidance from counsel before taking further action.

John C. Getty
jgetty@williamsparker.com
(941) 329-6622

Once More, With Feeling: Proposed Increase to Minimum Salary for Highly Compensated Employees

As previously reported, the U.S. Department of Labor issued a proposed rule addressing exemptions for bona fide executive, administrative, professional, and outside sales employees (the “white-collar” exemptions”) under the Fair Labor Standards Act. Presuming the rule goes into effect, the new minimum salary threshold for these employees will be $35,308 per year (or $679 per week).

Beyond changing the minimum salary threshold for the “white-collar” exempt employees, the DOL also proposed increasing the exemption threshold for a smaller category of employees: “highly-compensated” employees. Previously, any employee whose primary duty was performing office or non-manual work and who customarily and regularly performed at least one duty or had at least responsibility of a bona fide executive, administrative, or professional employee could be exempt–if the employee made at least $100,000 a year and received at least $455 each week on a salary or fee basis. In essence, the “highly-compensated” employees exemption combines a high compensation requirement with a less-stringent, more-flexible duties test in comparison to those used under the “white-collar” exemptions.

Like the DOL’s proposed changes to the “white-collar” exemption, the DOL’s proposed changes to the “highly-compensated” exemption does not alter the duties requirements. Rather, the DOL proposes an increase to the annual and weekly salary thresholds. But in this instance, the increase is substantial. The proposed new threshold jumps from $100,000 under the current rules up to $147,414, of which $679 must be paid weekly on a salary or fee basis. That is an approximate 50 percent increase, and it is about $13,000 higher than what had been previously proposed when changes were considered in 2016.

Now, despite the change raising eyebrows, one could question whether it would have significant impacts because most workers paid $100,000 or more often already fall into one or more of the other exemptions. The DOL itself acknowledges in the proposed rulemaking that it estimates only about 201,100 workers nationwide would become eligible for overtime due to this salary increase. In comparison, the DOL expects the “white-collar” salary change will impact approximately 1.1 million workers nationwide.

The common view remains that the new minimum salary thresholds will likely go into place later this year (2019) but likely no later than January 1, 2020. Although that later date is almost seven months away, that deadline is rapidly approaching. Hence, it is worth reiterating that employers should begin evaluating their staff to determine who, if anyone, may be affected and determine how to proceed. Similarly, this rule change provides employers an opportunity to audit all of their employees (even those unaffected by the proposed rule changes) to make sure each one is properly classified. And if they are not, employers can time any reclassifications with those made to meet the new rule changes to possibly minimize bringing attention to and potential liability for any past misclassifications.

In the meantime, the DOL will accept comments from interested parties until May 21, 2019 at 11:59 PM ET. The public will be able to provide electronic comments at regulations.gov (after searching for RIN no. 1235-AA20) or via mail to the address below (identifying in the written comment (1) the Wage and Hour Division, United States Department of Labor; and (2) RIN no. 1235-AA20).

Division of Regulations, Legislation, and Interpretation
Wage and Hour Division
U.S. Department of Labor, Room S-3502
200 Constitution Avenue, N.W.
Washington, D.C. 20210

John C. Getty
jgetty@williamsparker.com
(941) 329-6622