As many HR professionals already know, there may be many reasons why an employer might receive a 'No-Match' letter from the Social Security Administration. When filing a new employee's W-2 form, sometimes a typographical error is made - or perhaps the employee recently changed her name and the SSN does not 'match' the person identified in the W-2 form. Maybe the database is erroneous.
As immigration has come under increased scrutiny, the federal government has taken the position that it might be evidence that an employer has knowingly hired an illegal alien. (It is, of course, against the law to knowingly hire an illegal alien.)
A mismatched social security number may be proof that a document has been forged or an SSN stolen. Accordingly, in 2007 and 2008, a federal rule was amended to, in effect, create a presumption that receipt of a 'No-Match' letter was notice to the employer that an employee was unauthorized to work in the U.S. - unless an employer took certain steps to prove that an employee was not an illegal alien (called a 'safe harbor').
Before the rule took effect, an injunction was granted by a Federal Court preventing the implementation of the 'No-Match' amended rule.
Then, last Wednesday the Obama adminstration rescinded the 'No-Match' amended rule. Effective November 6, 2009, an employer will not be obligated to follow the 'safe harbor' steps to avoid the presumption of having knowingly hired an illegal alien.
That being said, the receipt of a 'No-Match' letter from the Social Security Administration is still something that should be dealt with cautiously - because it still might mean that you have unwittingly hired an illegal alien.