As discussed in our June 12, 2008 Legal Alert entitled “Executive Order Requires Federal Contractors to Verify Employment Eligibility Electronically,” President Bush amended Executive Order 12989 to require most federal contractors to check the eligibility of new hires and certain existing employees to work in the United States by using the E-Verify system, an electronic database jointly administered by the Department of Homeland Security and the Social Security Administration. Federal regulations implementing this requirement were originally scheduled to go into effect on January 30, 2009, but the Bush Administration postponed that effective date by a month after the U.S. Chamber of Commerce filed a lawsuit challenging the validity of the E-Verify requirement. After President Obama took office, his Administration twice postponed the effective date of the regulations implementing the revised Executive Order 12989 to give the Administration an opportunity to consider the E-Verify requirement.

The Obama Administration has now announced its third postponement of the implementation of the E-Verify requirement for federal contractors. Attributing its latest postponement to the need to focus on an “unrelated and unforeseen matter of national importance,” the Administration has announced September 8, 2009 as the new effective date for the regulations implementing the E-Verify requirement.

Although federal contracts entered into or amended before the effective date of the regulations implementing the revisions to Executive Order 12989 will not contain provisions requiring the use of E-Verify, employers in the United States may voluntarily elect to participate in the E-Verify program at any time. Participation in the E-Verify program can help identify undocumented aliens who have presented forged or fraudulent identity documents to an employer, but the system can also create headaches for employers by occasionally failing to verify the employment eligibility of individuals who are lawfully authorized to work in the United States. Although federal law will not mandate E-Verify use by federal contractors until at least September 8, 2009, employers should be aware that a number of states -- including Arizona, Colorado, Georgia, Minnesota, Mississippi, Missouri, Nebraska, Oklahoma, Rhode Island, and Utah -- have adopted laws requiring at least certain employers in those states (usually those with state contracts) to use the E-Verify system to check the employment eligibility of new hires, although not all of these laws are currently in effect and several of them are the subject of pending legal challenges. With the law regarding the mandatory use of the E-Verify system in flux, employers should continue to monitor this area to ensure that they have the most up-to-date information on their legal obligations.