Texas Governor Rick Perry issued an Executive Order mandating the use of the E-Verify system by all contractors performing services to Texas agencies under the oversight of the governor. The order was announced on December 3, 2014, during a press conference by Governor Perry addressing border security.

The Executive Order imposes two requirements as a condition of all state contracts with agencies under the direction of governor. First, the order requires that contractors use the E-Verify system to determine the eligibility of all persons employed during the contract term to perform duties within Texas. Second, the order requires contractors use the E-Verify system to determine the eligibility of all persons, including subcontractors, assigned by the contractors to perform work pursuant to the contract. The order encourages agencies not under the direction of the governor to implement use of E-verify and mandate use by contractors, as well. The Executive Order is effective immediately.

E-Verify is an electronic program administered by the U.S. Department of Homeland Security (DHS) and the Social Security Administration (SSA). The system allows employers to electronically verify the employment eligibility of newly hired employees. Once an employer has enrolled in the program, participation in the program is mandatory for all new hires. The program has been criticized because of the additional administrative burden and liability placed on employers.

The impact of the order is far reaching and affects employers beyond contracts with Texas state agencies. Once enrolled in the E-verify system, an employer must use E-verify uniformly on all new hires. This means that contractors subject to Texas agency contracts will need use the system on all new hires, regardless of whether new hires will perform work pursuant to Texas agency contracts.

The order also reaches beyond the permissible scope of the E-Verify and Employer Eligibility Verification programs. The order requires contractors to verify the eligibility of subcontractors and any other person performing work on a contract. E-Verify may only be used to verify the employment eligibility of employees. An employer may not use the E-Verify system to confirm the employment eligibility of independent contractors or subcontractor employees. Employers may be able to resolve this conflict by adopting the standard set out for federal contractors in the Federal Acquisition Regulation (FAR) E-Verify clause, which requires a federal contractor to contractually obligate and oversee certain subcontractors’ participation in the E-Verify program.

Registration in the E-Verify program can take several days. Once enrolled in the program, an employer may reverify the employment eligibility of its entire workforce. Employers utilizing the services of independent contractors and subcontractors may need to draft new contracting language to ensure compliance with the Executive Order.

Texas state contractors subject to the order should consider obtaining legal counsel to assist with implementation of E-Verify. E-Verify may only be used for new hires and must be used in a uniform fashion. When the E-Verify system cannot verify employee information, strict procedures must be followed to allow an employee to supplement and correct information. An employer’s failure to use E-Verify in a uniform way may expose the employer for liability for employment discrimination or wrongful termination.