This Management Alert is being issued to provide further insight into the requirements, obligations, and options facing federal government contractors in connection with the use of E-Verify for current employees.

Effective January 15, 2009, federal contractors and subcontractors must begin using the Department of Homeland Security (DHS) and the Social Security Administration’s (SSA) E-Verify system to verify their employees’ eligibility to work in the United States. The final rule appears in the November 14, 2008 issue of the Federal Register.

Overview

The new rule implements Executive Order 12989, as amended by President George W. Bush on June 6, 2008. This Executive Order directs federal agencies to require that federal contractors agree to verify the employment eligibility of their employees using E-Verify. The new rule requires federal contractors to agree, through language inserted into their federal contracts, to use E-Verify to confirm the employment eligibility of all persons hired during a contract term. In addition, the new rule requires federal contractors to confirm the employment eligibility of current employees who are “assigned to the federal contract” within the United States, which includes the 50 states and the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands.

Existing Employees

The rule defines an employee “assigned to the federal contract” as any employee hired after November 6, 1986, who directly performs work in the United States under a contract that includes the E-Verify clause. An employee does not directly perform work under the contract if the employee normally performs support work, such as indirect or overhead functions, and does not perform any substantial duties under the contract. While employers will be required to use E-Verify for current employees assigned to the federal contract, they are prohibited from using E-Verify for current employees not assigned to the federal contract unless they opt to utilize E-Verify for their entire workforce, as discussed below.

It may be difficult for some employers to determine which employees are and which are not affected by the new rule. For this reason, the final rule provides contractors the option of using E-Verify for all employees of the contractor, including any existing employees not assigned to a federal government contract. A contractor that chooses to exercise this option must notify DHS and must initiate verifications for the contractor’s entire workforce within 180 days of such notice to DHS.

Subcontractors and Exceptions

Federal contracts awarded and solicitations issued after January 15, 2009, with limited exceptions, will include a clause requiring government contractors to use E-Verify. The same clause will also be required in subcontracts valued at over $3,000 for services or construction. The following contracts are exempt from the new rule: contracts valued at less than $100,000; those for commercially available, off-the-shelf (COTS) items; contracts lasting less than 120 days; and contracts under which all work will be performed outside of the United States.

The new rule does not apply retroactively to contracts entered into before the January 15, 2009 effective date. However, existing contracts with the federal government that are renewed on or after the effective date will have the E-Verify clause inserted into the renewal documents.

Deadlines

Under the new rule, federal contractors must register for E-Verify within 30 days of the contract award date. Within 90 days of registration they must begin using the E-Verify system to confirm that all new hires, as well as all current employees directly working on the federal contract, are authorized to work in the United States.

Already Registered?

Employers who have already registered for and are using E-Verify will be required to update their registration to indicate their federal government contractor status. This will distinguish them from other employers in the system and will allow them to lawfully utilize E-Verify to run queries for current employees.