The Social Security Administration ("SSA") sends "no-match" letters to employers reporting employee social security numbers that do not match the agency's records.  The stated goal of these letters is not to detect unauthorized workers or fraudulent social security numbers, but rather to protect employees and avoid paperwork errors relating to the SSA and the IRS.  If your company receives a "no-match" letter from the SSA:

Employers who knowingly submit or continue to use invalid social security numbers on employee W-2 forms after notification are liable for penalties of $50 or more per incorrect form.  Fines may be waived in the presence of positive mitigating factors, including actions taken in response to "nomatch" letters.  Therefore, it is important to establish and enforce a consistent company policy.

• Do not take immediate adverse employment action against any listed
  employee(s).
• Review the social security numbers and names in the letter.  If the names or numbers in the letter are not the same as those in your records, it could be an agency mistake.  Notify the SSA and request a correction in the agency's records.
• If the name/number is the same in the letter as it appears in company records, notify the affected employees individually regarding the letter and inquire whether the company's records are correct.  If not, correct the name/number on the I-9 and W-2 records and notify the SSA (form corrections must be initialed and dated by the employee and employer).
• If the employee indicates that the information in company records is correct, provide the employee a specified period to resolve the matter directly with the SSA.
• When the specified time has passed, confirm with the employee(s) that the matter has been resolved and update I-9 and W-2 forms.
• If the matter has not been resolved, apply company policy in a uniform, non-discriminatory manner to suspend or terminate the employee until the matter is resolved.
• If other issues arise, consult with counsel, as there are penalties for knowingly hiring or continuing to employ unauthorized workers.