The Department of Defense (DOD), the General Services Administration (GSA) and the National Aeronautics and Space Administration (NASA) recently published a final regulation amending the Federal Acquisition Regulation (FAR) to require that certain federal contractors and subcontractors use the U.S. Citizenship and Immigration Services’ (USCIS) E-Verify system to verify that all their new hires and existing employees directly performing work under certain federal contracts are legally authorized to work in the United States.  

According to the final regulation, certain federal contracts awarded and solicitations issued after January 15, 2009 will include a clause committing government contractors to verify their employees’ eligibility to legally work in the United States. The same clause will also be required to be included by contractors in certain of their subcontracts.  

The E-Verify system is administered by USCIS in partnership with the Social Security Administration (SSA) and is a web-based program that allows employers to verify that their employees are authorized to legally work in the United States.  

Background. The final rule implements Executive Order (EO) 12989 (as amended) directing federal agencies and departments to require contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system designated by the Secretary of the Department of Homeland Security (DHS) to verify the employment eligibility of all persons hired during the contract term and for all persons performing work in the United States on the federal contract. DHS has designated the E-Verify system as the electronic employment eligibility verification system that certain federal contractors and subcontractors must use.

Procedure. Under the final regulation which becomes effective on January 15, 2009, employers are required to enroll in the E-Verify system if and when they are awarded certain federal contracts or subcontracts that require participation in E-Verify as a term of the contract. Contracts covered under the final regulation are prime federal contracts with a period of performance longer than 120 days and a value above the simplified acquisition threshold which is currently $100,000. Additionally, the final regulation only covers subcontractors if a prime contract includes the E-Verify clause and the services or construction to be performed has a value of over $3,000. The final regulation exempts contracts where all the work is performed outside the United States and contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services. The final regulation defines a COTS item as a commercial item that is sold in substantial quantities in the commercial market place and is offered to the government in the same form that is available in the commercial market place or with minor modifications.  

The final regulation also advises contracting officers to modify existing indefinite-delivery/indefinite-quantity contracts on bi-lateral basis to include the E-Verify requirement for future orders if the remaining period of performance extends at least six months after January 15, 2009, and the amount of work or number of orders expected under the remaining performance period is substantial. The final regulation does not define substantial.  

Enrollment and Verification Requirements. The final regulation requires that when a contractor wins a bid on a federal contract that contains the E-Verify clause, the contractor and covered subcontractors on the project are required to enroll in the E-Verify program within 30-calendar days of the contract or subcontract award date. If the contractor or subcontractor is a first time user of the E-Verify system, it will have 90 days from enrollment to begin using the system to verify new employees. After this 90 day phase-in, the contractor or subcontractor will be required to initiate verification of all newly hired employees (regardless of whether they are assigned to the federal contractor with the E-Verify clause) within three business days after their start dates. If the federal contractor or subcontractor has already been using the E-Verify system for more than 90 days prior to the contract award date, the contractor or subcontractor is required to continue to initiate verification of all newly hired employees within three business days of their start dates.  

Additionally, federal contractors or subcontractors will also have to verify the employment eligibility of all existing employees who are classified as “employees assigned to the contract.” The final regulation defines an “employees assigned to the federal contract” as any employee hired after November 6, 1986 who is directly performing work in the United States under a contract that includes the clause committing the contractor or subcontractor to use EVerify. The final regulation states that an employee is not considered to be directly performing 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. These federal contractors or subcontractors will have 90 days from the contract award date or 30 days from the assignment of the employees to the federal contract as described above, whichever is later, to begin using E-Verify for these existing employees.

Although the final regulation does not require federal contractors and subcontractors to retroactively verify the employment eligibility of existing employees not assigned to a federal contract, it does provide federal contractors and subcontractors with the option of verifying all employees, including any existing employees not assigned to a federal contract with the E-Verify clause. A contractor or subcontractor choosing to exercise this option must notify USCIS and must initiate verifications for the entire workforce within 180 days of such notice to USCIS.  

There are some limited exceptions to the E-Verify verification requirement for certain new hires and existing employees of federal contractors and subcontractors. First, institutions of higher education, student local governments, governments of federally recognized Indian tribes and sureties performing under a takeover agreement with a federal agency may choose to limit the E-Verify verification requirement to new employees specifically “assigned to the federal contract” and to existing employees “assigned to the federal contract,” as defined above. Second, employees who have an active federal agency HSPD-12 credential or who have been granted and hold an active U.S. government security clearance for access to confidential, secret or top secret information in accordance with the National Industrial Security Program Operating Manual do not need to be verified. Third, employees whose employment eligibility was previously confirmed through E-Verify by the same employer do not have to be re-verified through E-Verify in order to participate on the federal contract with the EVerify requirement. Finally, employees working outside the United States do not have to be verified through EVerify.  

General Information about E-Verify. As of the end of government’s fiscal year 2008 on September 30, 2008, more than 92,000 employers were enrolled in the E-Verify system. The USCIS announced that during fiscal year 2008, more than 6.6 million employment verification queries were run through the E-Verify system, representing one out of every eight hires made in the United States. The USCIS stated that approximately 96.1% of all cases queried through E-Verify are instantaneously found to be employment authorized. Individuals who are not instantaneously found to be employment authorized received a tentative non-confirmation of employment eligibility and are given the opportunity to correct their government records with DHS and SSA prior to a final determination being made on their employment eligibility.  

Enrolling in the E-Verify system does not provide guarantee of safe harbor from a worksite enforcement operation by Immigration Customs Enforcement (ICE). However, it creates a rebuttable presumption that a company has not knowingly hired a worker who does not have employment authorization.  

Additional information about the E-Verify system, including general requirements, enrollment information, and the requirements specific to federal contractors and subcontractors, is contained on the USCIS’ website at