New Dept. of Homeland Security rules cracking down on businesses that hire illegal immigrants are likely to cause administrative headaches for employers, industry sources say.

DHS was expected to publish a final regulation on Aug. 15 requiring employers who receive "no-match" letters, indicating that an employee's documents do not correspond with Social Security Administration records, have 90 days to resolve the discrepancy. If companies are unable to reconcile the employee's documentation with official records by then, they must terminate the worker. Employers who fail to comply could face criminal prosecution, jail time and hefty fines. The new regulation takes effect 30 days after it it appears in the Federal Register.

DHS Secretary Michael Chertoff insists that the new rule is not intended to punish employers who try to follow the law in good faith. "We're not trying to punish people for honest mistakes and clerical errors," Chertoff said at an Aug. 10 news conference. Instead, he said the targets will be companies that "willfully and consciously" violate the law.

Commerce Sec-retary Carlos Gutierrez said the regulation clearly outlines steps businesses must take to make sure that their employees are legal. "We have heard from employers consistently that they did not have the tools" to ensure that they are following hiring requirements and proper procedures when they receive a no-match letter, he said.

Freeman Smith, the American Subcontractors Association's government relations manager, acknowledges that the rule will be helpful for employers because "it basically outlines several steps that they can take to avoid potential liability." But he notes, "It's going to be a nightmare for employers who have large businesses who are now going to have to deal with resolving all these discrepancies."

Jenna Hamilton, the National Association of Home Builders' assistant staff vice president for government affairs, says it is unclear whether the new rule will really address the problem it is trying to solve. She says that a firm may hire, train and invest in an employee, then receive a no-match letter months later. When confronted, the worker may simply "never show up for work again," she says.

Moreover, Hamilton says that the regulation may result in more delays in getting answers from the Social Security Administration as more companies seek information about workers.