As a result of a court ruling this week, most Federal contractors can expect to be subject to the federal government’s “E-Verify” employee verification program under a federal regulation that will take effect on September 8th – one day after Labor Day.

Last November, the Administration published a regulation requiring businesses contracting with the Federal government (“Federal contractors”) to "verify the employment eligibility of: (1) all persons hired during the contract term by the contractor to perform employment duties within the United States; and (2) all persons assigned by the contractor to perform work within the United States on the Federal contract."

In December, the U.S. Chamber of Commerce and other representative organizations filed a federal lawsuit against the government over its Federal contractor E-Verify program. Because of this lawsuit, the Bush Administration agreed to delay the applicability date of the regulation. The incoming Obama Administration agreed to further delay implementing the regulation while the lawsuit was pending, but indicated that it intended to go live with the regulation on September 8 (unless the federal court intervened). On Wednesday, the Administration prevailed in the lawsuit filed by the Chamber of Commerce, with the court rejecting the Chamber's challenges to the regulation.

So what does this mean for employers? Here are answers to some frequently asked questions about this E-Verify rule.

I am a current Federal Contractor. How will the regulation affect me?

Once effective, this new regulation affects employers entering into future federal contracts with Executive Branch agencies and departments:

  • for prime contracts longer than 120 days and valued above $100,000, and
  • for subcontracts for services and construction over $3,000 if the prime contract contains the E-Verify clause.

Federal contractors will be obligated to participate in E-Verify and electronically verify the employment eligibility of (1) all of the employer's new hires across-the-board (regardless of whether those new hires perform work pursuant to the federal contract), and (2) all employees (meaning both new hires and current employees) directly performing work under the contract.

Will Some contractors have lesser requirements under the E-Verify clause?

Institutions of higher learning, state or local governments or the government of a federally recognized Indian tribe, or a surety performing under a takeover agreement may choose to verify only those employees assigned to the contract, whether they are existing employees or new hires. Therefore, these organizations will not be required to use E-Verify for all new hires.

Are there any contracts that are exempt from this regulation?

Yes, prime contracts are exempt from the E-Verify rule if:

  • the contract is for a period of less than 120 days; or
  • the contract is valued at less than $100,000; or
  • the contract is only for commercially available off-the-shelf items (or with minor modifications) and related services; or
  • all work performed under the contract is performed outside the United States.

As a Federal contractor, when must I begin participating in E-Verify after the implementation date?

The timing of the contractor's obligation to comply with the verification requirements depends on when the contractor enrolls in E-Verify. For contractors not enrolled at the time of the contract award, the contractor has 30 days to enroll and 90 days from enrollment to initiate verification of employees already on staff who will be working on the contract and to begin using the system to verify newly hired employees. For contractors already enrolled in E-Verify for more than 90 days at the time of the contract award, the contractor must initiate verification of new hires within 3 days and will have 90 days to initiate verification of each employee already on staff who is or will be assigned to the contract.

Must I use E-Verify to confirm the employment eligibility of current employees?

You must initiate an E-Verify query if current employees will be assigned to the contract, meaning that the employee will be directly performing work under the contract. Under this regulation, an employee is not considered assigned to the contract if the employee normally performs support work and does not perform any substantial duties applicable to the contract. Federal contractors and subcontractors also have the option of verifying their entire workforce, both new hires and existing employees – including those not assigned to a federal contract – but this entire workforce verification is not required.

What if I cannot identify or predict who will work on the federal contract?

You may want to consider electing the “entire workforce” option and perform an E-Verify check for all new hires and all current employees for whom an I-9 is required (meaning employees hired after November 6, 1986). If an employer decides to perform an E-Verify check on its entire workforce, the employer will have 180 days to perform E-Verify checks, starting from the time it enrolls in the E-Verify program or notifies E-Verify of its decision to exercise this option to verify the entire workforce. This option eliminates the risk of failing to perform an E-Verify check on an employee who may later be assigned to a federal contract. Also, once an employee's work authorization has been verified in the E-Verify system, the employer need not re-verify that employee if the employee moves from one contract to another.