Generally an employer has a need to know an employee's Social Security number in two instances:
When an employee presents an original Social Security card to an employer for I-9 purposes, the employer need not investigate further if the card is an original document and appears genuine.
After hire, verification of a Social Security number can be achieved in two ways through the Social Security Administration:
To use either service, you must be a registered user. Registration and information is available at the Social Security Employer website, then select the "BSO" link.
Many employers have received letters from the SSA, advising them that the Social Security number being used by the employee does not match. If that occurs, an employer is put on official notice that the employee's eligibility to work may be in question. While there is no liability for the past as long as the employer acted in good faith and completed the I-9 Form, the employer cannot knowingly continue to employ an unauthorized worker. If you discover that an employee has been working without authorization, reverify work authorization by allowing the employee another opportunity to present acceptable documentation and complete a new Form I-9.
Do not take any action against an employee who attempts to update his/her Social Security number without first consulting employment or immigration counsel.
Employers have been surprised by an employee coming in with a new Social Security number. This may not raise a problem with continued employment for purposes of the I-9 eligibility to work, because now the right number belongs to the employee. As an employer, you may be concerned about other issues such as misrepresentation of employment information and falsification of employment records.
Beware, however, that under Labor Code section 1024.6, an employer may not discharge an employee or in any manner discriminate, retaliate, or take adverse action against an employee because the employee updates or attempts to update his or her personal information based on a lawful change of name, Social Security number or federal employment authorization document.
For instance, the Secretary of Homeland Security announced that certain people who came to the United States as children and meet several key guidelines may request consideration of deferred action (http://www.uscis.gov/humanitarian/consideration-deferred-action-childhood-arrivals-daca) for a period of two years, subject to renewal, and would then be eligible for work authorization. These individuals may attempt to update their Social Security numbers and may be protected under Labor Code section 1024.6, even if they were previously using false information.
In addition, for employers who use E-verify, you cannot take adverse action against employees when you receive notification of an E-verify mismatch (tentative non-confirmation letter or TNC) unless and until the program issues a Final Non-Confirmation. For specific procedures in handling a TNC, visit the USCIS’s website.
Remember also that California has strong protections for immigrants. Consultation with legal counsel is recommended.