Government Contracts Monitor

E-Verify Rule to Take Effect September 8, 2009

August 31, 2009

By: Eric Whytsell

The last hurdle before the implementation of a rule requiring federal government contractors to verify employees’ employment eligibility has been cleared. 

On August 25^th, the U.S. District Court for Maryland rejected the U.S. Chamber of Commerce’s challenge to a regulation mandating the use of E-Verify – the Department of Homeland Security’s internet-based system that checks employment documentation against federal databases (for background on this case, see our previous post). The regulation requires all contracts awarded after September 8, 2009 to contain a clause requiring the use of E-Verify for:

• All persons hired during the contract term by the contractor; and 
• Existing employees assigned to the contract.

• Contracts valued at above the simplified acquisition threshold (currently $100,000); (contracts for Commercial Off-The-Shelf (COTS) items are exempt); and
• Subcontractors for over $3000 for services and construction.

After several delays, the District Court ruling clears the way for the roll-out of the program on September 8^th. For contracts awarded after that day:

• Effected employers will have 30 days from contract award to enroll in E-Verify and 90 days from the enrollment date to initiate verification queries for employees already on staff who will be working on the contract and for new hires. After the 90 day phase-in period, these contractors will have 3 business days to use E-Verify for all new employees hired by the contractor;

• Companies that have been enrolled in E-Verify for more than 90 days must continue to initiate verification of newly hired employees within 3 business days of their start date. However, these employers also have (i) 90 days from the contract award date to begin using E-Verify for each employee already on staff who is “assigned to the contract”; or (ii) timely electing to verify “all employees” and then verifying all employees working in the U.S. who were hired after November 6, 1986 within 180 days of notifying DHS of its election.

Employers who choose to verify only new hires and existing employees assigned to federal contracts will need to develop systems to identify which employees are working on the effected contract(s). This determination can be complicated. For example, employees who normally perform support work or indirect or overhead functions are generally excluded from the rule’s coverage, but an analysis of their “substantial duties” may be necessary. 

Federal agencies are increasingly using suspension and debarment as a tool for enforcing immigration law.  The potentially severe penalties for E-Verify noncompliance make it imperative for employers to be aware of E-Verify’s requirements and to plan accordingly. 

The E-Verify rule implements a policy originally proposed in 1996 and recently endorsed by the Obama Administration. The E-Verify program is due to expire at the end of the fiscal year on September 30, 2009, though it is expected to be extended under the final version of the FY 2010 Homeland Security Appropriations bill. The Senate has already passed an amendment introduced by Senator Jeff Sessions (R-AL) that would permanently reauthorize the program.

For our previous posts on this issue see: Government Contractors will be Required to use E-Verify to Confirm the Employment Eligibility of all Employees and all New Hires,  USCIS Pushes Back Start Date for Mandatory E-Verify Use, E-Verify On Hold, Again, E-Verify Contractor Rule Postponed for Third Time – Until June 30, 2009, E-Verify Contractor Rule Postponed Yet Again - Until September 8, 2009, Obama Steps Up to the Plate for E-Verify, Confirms 9/8/09 Start-Date.

For more information, please contact Eric Whytsell at (202) 973-0227.

Drafted by Eric Whytsell and Samuel Jack