What Happened?
On June 6, 2008, President Bush signed an amendment to Executive Order 12989, which now requires federal contractors to use the E-Verify employment verification system to confirm the employment eligibility of all new employees hired during a contract term and all existing employees assigned to work on a federal contract. Until now, private employers were invited to use the E-Verify system, but enrollment was voluntary.
Depending on the number of government contracts issued in the coming years, Department of Homeland Security ("DHS") Secretary Michael Chertoff stated that this executive order could potentially affect as many as 1 million workers.
What Does It Mean?
All federal contractors should familiarize themselves with E-Verify requirements and begin preparations to implement the system. According to the Executive Order, assigning federal contract work to illegal aliens "imposes a direct risk of disruption, delay, and increased expense in Federal contracting" because such contractors are less dependable procurement sources, "even if they do not knowingly hire or knowingly continue to employ unauthorized workers." The federal government currently uses E-Verify to confirm employment eligibility of newly-hired employees and now seeks to impose the same standards on private employers who choose to contract with it. Contractors who fail to comply with the Executive Order will likely face debarment by the head of the contracting agency.
E-Verify is a free, Internet-based service operated by DHS in conjunction with the Social Security Administration ("SSA"). The program enables employers to verify the employment eligibility of employees almost instantaneously.
To use the E-Verify system, the employee must complete a Form I-9. The employer then inputs the employee's name, date of birth, social security number, citizenship status and type of document provided on Form I-9 to establish work authorization, and proof of the employee's identity with an expiration date into the portal. E-Verify searches and compares the information provided against more than 480 million records in DHS and SSA databases to confirm that the employee is in fact eligible to work in the United States. Results are generally returned within seconds, and current statistics evidence that 99.5% of employees authorized to work are automatically cleared through the system.
Some other information about E-Verify:
- Employers must post a notice informing employees of their
use of E-Verify;
- E-Verify may only be used after the employee is hired and
following completion of Form I-9. Employers are prohibited
from pre-screening applicants;
- If an employee receives a notice of mismatch, the
employer must promptly provide the employee with information
about how to challenge the mismatch, including a written
notice generated by the E-Verify system;
- If the employee wishes to challenge the mismatch, the
employer must provide a referral letter generated by E-Verify
with specific instructions that must be followed;
- Employers are prohibited from taking adverse action
against the employee for contesting the mismatch; and
- The Employee must be given up to eight federal government
work days to contact the appropriate agency to challenge the
mismatch.
Approximately 69,000 employers currently use E-Verify. This figure translates to more than 4 million queries in the first six months of 2008. In connection with the release of the amended Executive Order, Chertoff announced that approximately 1,000 new employers enroll in E-Verify each week. He also touted the program as a "tremendous success" and expressed confidence that the current system could sustain the added demands.
A number of questions were left open by the amended Executive Order. First and most significantly, the amended Executive Order does not include a date by which federal contractors must begin utilizing E-Verify. Rather, the Executive Order authorizes DHS to issue rules and regulations to administer the new requirement. Second, the Executive Order creates an inconsistency with E-Verify program guidelines. It mandates that contractors use E-Verify to confirm the employment eligibility of existing employees assigned to work on a federal contract. The E-Verify program guidelines state, however, that the system is only to be used for new hires and not for existing employees. Third, the amendments to the Executive Order fail to address whether the new E-Verify requirement applies solely to federal contracts awarded in the future or if it applies to contractors staffing current contracts. Finally, the Executive Order does not address whether subcontractors will also be required to implement E-Verify.
On June 12, 2008, proposed rules to implement the amendments to Executive Order 12989 were published in the Federal Register, opening the 60-day comment period. While not carrying the force of law until codified in the federal regulations, the proposed rules evidence a broad reading of the Executive Order and address nearly all of the open questions.
The proposed rules require that all federal contractors performing work within the United States enroll in E-Verify within 30 days of the contract award. Contractors then have 30 additional days to use the program to verify the employment eligibility of employees assigned to the federal contract. Following enrollment, contractors must use E-Verify for all new hires and for all currently-employed employees who are subsequently assigned to work on the contract. Contractors must complete the electronic verification process within three business days from the date of hire or assignment to the contract. The proposed rules, however, exempt employees hired before November 6, 1986 because they were not subject to employment eligibility verification under the Immigration and Naturalization Act.
The proposed rules acknowledge the inconsistency with E-Verify program guidelines regarding verification of existing employees. In response, the rules suggest that verifying the employment eligibility of existing employees assigned to federal contracts "will most effectively ensure that the Federal Government does not indirectly exploit an illegal labor force." The E-Verify guidelines will be revised to reflect this change, which applies only to federal contractors. Non-contractors will still be prohibited from using E-Verify to re-verify the employment eligibility of existing employees.
The E-Verify requirement will apply to all solicitations issued and contracts awarded after the effective date of the final rule. Moreover, existing indefinite-delivery/indefinite-quantity contracts must include the clause requiring the use of E-Verify for future orders if the remaining period of performance extends at least six months after the rules go into effect and there is a substantial amount of work or number of orders remaining under the contract. Finally, the proposed rules also require subcontractors providing commercial or noncommercial services or construction in excess of $3,000 to enroll in E-Verify to confirm the employment eligibility of its employees in the same manner as prime contractors.
While federal contractors need not switch to E-Verify immediately, the proposed rules suggest that once the comment period closes, final rules will be implemented shortly thereafter. In preparation, contractors must familiarize themselves with the E-Verify requirements. Importantly, contractors should thoroughly review the Memorandum of Understanding ("MOU") that must be signed as part of the enrollment process, which allows, among other things, broad government access to company records. Contractors should also begin training personnel on how to use the E-Verify system to confirm employment eligibility and the detailed procedures that must be followed in the event of a "tentative non-confirmation." More information about the E-Verify program can be found at the U.S. Citizenship and Immigration Services website.
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