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How False Social Security Cards Can Impact Benefits

by Josie Gonzalez, Esq.

The recent court decision of Farmers Brothers Coffee v. Workers’ Compensation Appeal Board and Ruiz, wherein the California Court of Appeals held that Ruiz remained an "employee" under California Labor Code section 3351 despite the use of fraudulent work authorization documents, prompts one to examine an employer’s responsibilities when it discovers that employees have used false documents. This article will also discuss Immigration and Customs Enforcement (ICE) initiatives directed at the worksite, and how such initiatives will place even more attention on the widespread use of fraudulent documents to secure employment.

After the Workers’ Compensation Judge held that Ruiz was an "employee" and entitled to benefits, the employer filed a petition for review asserting that such a ruling violated federal preemption because the employment of unauthorized aliens is prohibited by the Immigration Reform and Control Act of 1986 (IRCA). IRCA mandates that an employer refrain from knowingly hiring or knowingly continuing the employment of unauthorized workers. Farmers also argued that by using a false green card and social security card, Ruiz obtained employment fraudulently in violation of Insurance Code, section 1871.4a. A claimant who is convicted of a violation of section 1871.4a is precluded from receiving workers’ compensation benefits. The Court of Appeal rejected both arguments. It held:

"California law has expressly declared immigration status irrelevant to the issue of liability to pay compensation to an injured employee. (§ 1171.5.) Were it otherwise, unscrupulous employers would be encouraged to hire aliens unauthorized to work in the U.S., by taking the chance that the federal authorities would accept their claims of good faith reliance upon immigration and work authorization documents that appear to be genuine.”

Section 1171.5 was enacted by the California Legislature in response to IRCA and to Hoffman Plastic’s prohibition on remedies involving reinstatement for unauthorized workers. (Hoffman Plastic Compounds, Inc. v. Nat’l Labor Relations Bd., 535 U.S. 137, 140 (2002.) The Legislature avoided conflict with IRCA by precluding reinstatement. 
The Court summarily dismissed Farmers’ contention that the use of fraudulent documents precluded recovery since there was no conviction for fraud under Insurance Code, section 1871.4.

The Farmers’ decision is consistent with another Court of Appeal decision on the topic of Workers’ Compensation benefits, In Foodmaker, Inc., v. Workers’ Compensation Appeals Board and Margalise Ortega-Ruiz, 98 Daily Journal D.A.R. 1061 7, Foodmaker was willing to accommodate work restrictions and offer a modified job until it learned that its employee was undocumented. The employee then made a claim for vocational benefits; however, a similarly situated employee would not have been eligible for rehabilitation if a modified job had been offered. The Court held that employers need not provide costly vocational rehabilitation for workers injured on the job who can’t return to work because their illegal immigration status has been discovered. Ms. Ortega-Ruiz was not denied the portion of workers’ compensation benefits that provided for her physical rehabilitation; the issue of vocational rehabilitation was the sole focus.

"No Match" precludes re-instatement
In Anica v. Wal-Mart Stores, Inc. et al., (Wash. App.2004) 84 P.3d 1231, Wal-Mart fired Lorena Anica when she returned to work after recovering from her on-the-job injury. Anica alleged wrongful termination but Wal-Mart countered that the termination was based solely on the employee’s inability to correct a SSN discrepancy contained in a Social Security "no-match" letter. The Social Security No-Match letters are sent by SSA to employers who report wages that do not correspond to SSA records.

These letters, called Code V, No-Match Letters, have been the source of great confusion. The confusion stems from SSA’s admonition that the letter does not imply that the employee has used false documents and is not a basis by itself to terminate the worker. While it is clear that a termination based solely on the letter itself is problematic, most experts feel that the appropriate course of conduct is to provide the employee with a reasonable period of time to correct the discrepancy. If the employee fails to take corrective action, the continued employment of the worker might subject one to liability under IRCA for continuing to employ an unauthorized alien under the "constructive knowledge" standard in section 274a.1(l)(1).

In Anica, when the employer received its first SSA No-Match letter listing the employee’s suspect social security number, it brought the matter to Lorena’s attention. She merely provided a fee agreement from an attorney hired to resolve the matter. Wal-Mart received two more SSA notices. In the interim, Wal-Mart continued to pay workers’ compensation benefits.

The Court held that Wal-Mart acted reasonably in discharging Anica after her failure to provide a valid number. The SSA notice had put the employer on notice that the documents presented at the time of hire and used for completion of the new hire I-9 were invalid, and that the continued employment of the worker could subject the employer to IRCA liability.

Unions sue based on "No Match"
Various unions have sought re-instatement of employees who have been terminated after the employer’s receipt of SSA no-match letters and the workers’ failure to provided corrected documentation. In American Bottling Co. (Dr. Pepper) and Intl. Brotherhood of Teamsters, Local 744, 05-2 Lab.Arb.Awards (CCH) P 3206, the arbitrator held that an employer "may reasonably decide, for its own legal protection, not to ignore convincing information that some of its employees are not authorized to work in this country."

Expansion of worksite enforcement 

The Department of Homeland Security Appropriations Act 2006, includes enhanced enforcement of civil immigration violations and $9 million for 100 Immigration Enforcement Agents (IEAs). The Cornyn-Kyl bill (S.1438) also includes substantial new enforcement provisions, including authorization for the hiring of 10,000 new agents and increased penalties for employers.


Once hired and injured on the job, many state legislatures have adopted a public policy in favor of the injured worker. As the Farmers’ court stated: "The purpose of the California Workers’ Compensation Act is to furnish, expeditiously and inexpensively, treatment and compensation for persons suffering workplace injury, irrespective of the fault of any party, and to secure workplace safety. It is remedial and humanitarian."

When IRCA was enacted in 1986, Congress authorized a pilot program that enables employers to verify the validity of work authorization cards. California employers were allowed to participate in the program. Recently, Congress expanded the program to all fifty states. In December 2005 the House passed a bill mandating new hire verification; the bill moves to the Senate in spring 2006. Meanwhile, the SSA has expanded its Web site to enable employers to register online and verify up to ten new hire social security numbers. (

Although current laws only mandate the completion of the new hire I-9 form and the acceptance and recordation of documents that appear reasonably genuine, many employers are participating in new hire verification programs. By taking this extra step, the employer avoids the predicament of discovering after a worksite injury, or after receipt of an SSA no-match letter, that an employee’s documents are bogus.

About The Author

Josie Gonzalez, Esq. is the managing attorney of Gonzalez & Harris, a Los Angeles based immigration law firm that represents employers in all aspects of immigration law. She has testified twice in Washington, D.C. regarding the impact of U.S. immigration laws on the business community, and is a frequent commentator on agency regulatory activities. She served for nearly ten years on AILA's Board of Governors; has contributed as Chair, Co-Chair & member of various national liaison committees; has authored numerous articles for legal and trade journals; and served as Editor-in Chief for the David Stanton Manual on Labor Certification (1998). In 1999, she was recognized by AILA for "Excellence in Advancing the Practice of Immigration Law". Ms. Gonzalez is a frequent guest speaker to many trade and business organizations including PIHRA, the California Restaurant Association, the Employers Group, and the Employer Advisory Council. Ms. Gonzalez has been selected by her peers for inclusion in the inaugural issue of Southern California Super Lawyers®, and for over 10 years in The Best Lawyers in America.

The opinions expressed in this article do not necessarily reflect the opinion of ILW.COM.