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New "No Match" Rule Creates Millions of New "Independent Contractors" Does Nothing to Solve Immigration Problem DHS and ICE are changing the rules and making a bad situation worse. Their new "No Match" rule is an effort to appear tough on immigration enforcement. Any employer receiving a "no-match" letter from the Social Security Administration (indicating a failure to match an employee's name and social security number) must fire the "no-match" employee if he or she cannot cure the "no-match" problem within 90 days of receiving the "no-match" letter. ICE's thinking is that the majority of these "no-match" employees are illegal immigrants. They are probably right, but ICE has not considered the unintended consequences of the 90-day rule. These "no-match" employees work for employers who keep good records and do their best to abide by the law. They have proper I-9s. They withhold taxes. Many of them pay benefits and provide workers compensation insurance for their employees. The "no-match" letters warn them that they cannot take any action against the employee based on the letter. Today many employers are receiving no-match letters for 30% up to 50% of their workforce. Like a lightning strike, ICE is now preparing to tell them they will lose 30% to 50% of their workforce virtually overnight. What will happen? One thing is clear, those "no-match" workers will not leave the United States. Here is what millions of them will do. Consider the example of Joe Perez. Joe has been employed by the XYZ Drywall Company for the last 14 years. He makes $16.50 per hour, because he is a "crew leader." With overtime Joe made $42,000 last year. Joe also received a $500 bonus because his crew had no lost-time workers compensation claims. XYZ provides a 401(k) with a 1 to 2 match, so Joe has accumulated $28,000 in his 401(k). XYZ also provides group health and life insurance. For 2006, Joe paid about $3,200 in Social Security and Medicare taxes and $1,000 in withholding taxes. Of course XYZ matched the SS/MC taxes, so the U.S. government received $7,400 in tax revenue for Joe Perez. Joe's wife does domestic work and is paid in cash. She never obtained a SS card like Joe's and has only done domestic work. She makes about $18,000 but pays no taxes. They have two children, both born in the U.S., so their children are citizens. Joe did not report his wife's income, because he does not file an income tax return. Joe is afraid to file with the IRS because he knows that the SS card he bought at the flea market is a fake. He says he had no choice because the HR department at XYZ demanded he have a SS number to complete the I-9 before he could go to work. With the "No Match" rule implemented, XYZ's HR department calls Joe in for a meeting. "Joe," explains Nancy Neatly, "if you cannot give us a valid SS number, we are going to have to let you go!" The next morning Nancy Neatly explains to her boss, Mr Drivet, President and CEO of XYZ, why she has just terminated one of his most productive employees. Mr. Drivet has just signed a new contract to do the drywall in a new high school. The contract includes substantial per diem liquidated damages if the school is not finished by August 15th. Mr. Drivet makes a phone call and arranges to meet with Joe Perez. "Joe, we can no longer employee you, but if you can put a crew together, we will pay you 50 cents a square foot to frame, hang, and finish the drywall for that high school job! We will hire you and your crew as a subcontractor!" Suddenly Joe Perez is an independent contractor! XYZ's project manager explains to Joe that he will need furnish a tax ID number, sign a contract, and furnish an insurance certificate. For the tax ID, he heads to the flea market that made his fake SS card. Joe soon finds out he has three options. He can pay the same guys for a fake tax ID number. Second, he can "borrow" Harry Smith's name and SS number, and get a tax ID number assigned to Perez Drywall. Third, he can simply get a valid SS card for first born Joe Perez Jr. and obtain a tax ID number for Perez Drywall. Joe also finds out that his insurance costs are based on payroll records. The flea market consultants refer Joe to insurance man Billy Bob. Billy Bob is a solicitor for Border Watch Insurance Agency. The BWI solicitor explains to Joe why he should underestimate his payroll, and suggests to Joe that he "sub it all out." That makes his insurance affordable! All of his workers will be INDEPENDENT CONTRACTORS! Great! Joe recruits a crew made up of former XYZ employees. Soon Joe realizes that if he works by the square foot, faster is better! He certainly does not have time for safety meetings! Production is the only name of the game! So, what did the "No Match" rule accomplish? First, it reduced the number of illegal immigrants currently paying taxes and working with benefits. Second, it increased the number of immigrants working for cash without medical benefits or any kind of insurance. Third, it reduced the tax revenue the U.S. government takes in currently from employers who employ these "no-match" workers. Fourth, it jeopardized the jobs of millions of legal citizens employed by companies who have, through no fault of their own, large percentages of "no-match" employees. Fifth, it failed to send one illegal immigrant back home. Does this sound like a good idea? The "No Match" rule will only make things worse. Norman E. Adams Co-founder TxSIP www.txsip.com |
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Political Advertisement Paid by "Texans for Sensible Immigration Policy" P.O. Box 7011 · Houston, Texas 77248-7011 · 713.869.8346 · info@tsiponline.com |
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