On July 8, 2009 Department of Homeland Security (DHS) Secretary Janet Napolitano announced DHS will amend the Federal Acquisition Regulation (FAR) by implementing a regulation that will award federal contracts only to employers who use E-Verify to check employees’ work authorization. The final rule, which was previously suspended four times, is the subject of a lawsuit brought by the US Chamber of Commerce and others. In a related development, on July 13 the US District Court for the District of Maryland lifted its stay of the lawsuit. The court will hold a hearing on August 27 that may determine the fate of the regulation. If the government prevails in the hearing, the court could clear the way for the regulation to take effect on September 8. For more details on the history of the lawsuit and the rule’s suspensions, please see our May 2009 Immigration Alert and June 2009 Government Contracts Alert.

E-Verify, a web-based system operated by DHS in partnership with the Social Security Administration (SSA), compares information from the Employment Eligibility Verification Form I-9 against federal government databases to verify workers’ employment eligibility to help employers comply with federal immigration law and avoid employing unauthorized workers. Under the rule, all federal solicitations issued on or after September 8, 2009 for contracts having a performance period of more than 120 days and a value above the simplified acquisition threshold of US$100,000 must include the new E-Verify clause at FAR §52.222-54. The clause requires government contractors and subcontractors to use E-Verify for all new hires and all existing employees "assigned to the contract" or directly performing work under the contract. Our December 2008 Immigration Alert describes the federal contractor rule, as well as exemptions and limitations, in more detail.

Along with the announcement regarding E-Verify, DHS announced it will be proposing a new regulation rescinding the Social Security No-Match Rule issued in 2007 but blocked by a court order shortly thereafter. The No-Match Rule, which has never taken effect, established procedures that employers could follow if they received SSA No-Match letters or notices from DHS that called into question work eligibility information provided by employees.

The No-Match Rule would have expanded the regulatory definition of "constructive knowledge" and permitted DHS to use an employer's receipt of a No-Match letter as conclusive evidence that the employer violated the employment provisions of the Immigration and Nationality Act by knowingly employing unauthorized workers. Upon publication, the Final Rule was quickly challenged and the District Court for the Northern District of California issued an injunction prohibiting its implementation, which has been in effect since October 2007. More information about the No-Match Rule can be found in our October 2007 Labor & Employment Alert and November 2008 Immigration Alert.

DHS stated it is rescinding the No-Match Rule because E-Verify addresses data inaccuracies that can result in No-Match letters in a more timely manner and provides a more robust tool for identifying unauthorized workers and combating illegal employment.

While DHS has decided to rescind this Rule, the Social Security No-Match conundrum faced by employers may still linger. Just recently, the Senate passed the FY10 Homeland Security Appropriations Bill (HR 2892) with immigration-related amendments that included a provision which, if passed into law, could force the administration’s hand and require implementation of a No-Match Rule. In addition, should the SSA resume issuing Social Security No-Match letters, employers should establish procedures to address the receipt of such letters in a consistent and nondiscriminatory manner. Employers that ignore such letters, do so at their peril. The rescission of the No-Match Rule does not prevent DHS from using the No-Match letter in conjunction with other evidence, to support a charge of knowingly employing unauthorized workers through "constructive knowledge." In addition, the DHS No-Match Rule did not alter employers’ information reporting requirements, with regard to employee Social Security numbers, or the penalties as governed by the Internal Revenue Code.