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Mandatory E-Verify For Contractors

The repeatedly delayed rule requiring federal contractors to use E-Verify finally came into effect on September 8, 2009. Pursuant to the new rule, all federal contracts awarded and solicitations issued after September 8, 2009, will include a clause requiring contractors to enroll in E-Verify within 30 days of the contract award date. The same clause will also be required in federal contracts for services or construction over $3,000. Contracts exempt from the rule will include those that are for less than $100,000 and those that are for commercially available off-the-shelf items. Notably, contractors are required to use E-Verify on all new hires, as well as all current employees directly working on a federal contract. USCIS’s most recent FAQ is available here.

How It Started

On June 9, 2008, President Bush amended Executive Order 12989 to require all federal contractors (and subcontractors) to participate in E-Verify. Specifically, the amended Executive Order provides, “Executive departments and agencies that enter into contracts shall require, as a condition of each contract, that the contractor agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility of: (i) all persons hired during the contract term by the contractor to perform employment duties within the United States; and (ii) all persons assigned by the contractor to perform work within the United States on the Federal contract.” The final rule is available here.

What Happened Next

On December 23, 2008, the U.S. Chamber of Commerce and others filed suit seeking to block implementation of the final rule requiring federal contractors to enroll in E-Verify. On January 9, 2009, the parties to the suit agreed the government would suspend applicability of the rule until February 20, 2009. On January 28, 2009, the parties agreed to extend the applicability date to May 21, 2009. The parties further agreed to ask the court to stay the proceedings to allow President Obama’s Administration an opportunity to review the rule. (On January 20, 2009, Rahm Emanuel, President Obama’s Chief of Staff, issued a memorandum encouraging agency heads to “[c]onsider extending for 60 days the effective date of regulations that have been published in the Federal Register but not yet taken effect.”). On April 16, 2009, the Obama Administration announced that implementation of the rule would be further delayed to June 30, 2009. On June 5, 2009, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (collectively, the Federal Acquisitions Regulatory Councils) published an amendment in the Federal Register delaying the final rule until September 8, 2009.

DHS Abandons No-Match and Supports E-Verify

On July 8, 2009, Department of Homeland Security (DHS) Secretary Janet Napolitano announced that DHS was rescinding its hotly contested “No-Match” regulation and instead throwing its support behind mandatory E-Verify participation for federal contractors. “E-Verify is a smart, simple and effective tool that reflects our continued commitment to working with employers to maintain a legal workforce,” said Secretary Napolitano. “Requiring those who seek federal contracts to use this system will create a more reliable and legal workforce. The rule complements our Department’s continued efforts to strengthen immigration law enforcement and protect critical employment opportunities. As Senator Schumer and others have recognized, we need to continue to work to improve E-Verify, and we will.”

The E-Verify Program

Although the amended Executive Order does not identify the program by name, the “electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility” is E-Verify. The E-Verify program—previously known as the “Employment Eligibility Verification program” and before that the “Basic Pilot” program—is a product of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (“IIRIRA”). See IIRIRA, Pub. L. 104-208, 110 Stat. 3009, Title IV, Subtitle A. 

For an overview of the E-Verify Program, you may find the following useful:

• The E-Verify User’s Manual;
• The E-Verify Memorandum of Understanding; and
• The E-Verify Process Flow by the GAO (excerpted from GAO’s congressional testimony).

Contractors and Subcontractors

It is important to note that the 1996 version of E.O. 12989, signed by President Clinton in 1996, provides that the term “contractor” has the meaning assigned in subpart 9.4 of the Federal Acquisition Regulation. Exec. Order No. 12,989, at Sec. 2., 61 Fed. Reg. 6091 (Feb. 12, 1996). Section 9.403 of the Federal Acquisition Regulation, in turn, defines “Contractor” to be any individual or other legal entity that

(1) Directly or indirectly (e.g., through an affiliate), submits offers for or is awarded, or reasonably may be expected to submit offers for or be awarded, a Government contract, including a contract for carriage under Government or commercial bills of lading, or a subcontract under a Government contract; or
(2) Conducts business, or reasonably may be expected to conduct business, with the Government as an agent or representative of another contractor.

48 C.F.R. § 9.403.

As a result, references to “contractor” in the Amended Executive Order 12989 should be understood to include federal subcontractors, as well as contractors.

Discrimination Concerns

Misunderstandings regarding an employer’s actual obligations with respect to immigration compliance can create considerable exposure for alleged discrimination in violation of Title VII, Section 1981, and the Immigration Reform and Control Act. This is particularly true given the acknowleded 4.1% error rate found in the Social Security Administration’s database. For a discussion of potential discrimination issues related to E-Verify (and the related off-again, on-again DHS Social Security No Match Rule), please see Boulette & Golden’s May 2008 Social Security No Match Paper.

Questions

The foregoing is not intended as legal advice. If you would like guidance on E-Verify or have questions regarding Executive Order 12989, please contact one of our attorneys.