Federal law requires that all employers verify the identity and employment eligibility of all new employees within three days of hire. As part of this process, employees are required to complete Form I-9 and provide employers with documentation establishing their identity and authorization to work in the United States.

What is E-Verify?

E-Verify is a voluntary electronic system established by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA) to help employers verify work authorization of new hires by matching Social Security numbers and other Form I-9 information. E-Verify is a free, Internet-based system that most often returns initial verification results within seconds.

The initial result will be either a confirmation or a tentative nonconfirmation of employment eligibility. If a tentative nonconfirmation, the employer must follow certain procedures in notifying the employee, providing a referral letter so the employee can contest the result with the SSA or DHS, and obtaining the final result which will be either a confirmation or a final nonconfirmation.

To enroll in E-Verify, an employer must execute a “Memorandum of Understanding” with the DHS and SSA. The employer designates the job sites that will be enrolled in the program. The employer must then use E-Verify at those job sites unless it terminates its participation in the program. (Employers using E-Verify are still required to use Form I-9 for every new hire.) Although E-Verify is scheduled to sunset in November, Congress is considering various bills to continue the system.

Are Employers Required to Use E-Verify?

President Bush recently signed an Executive Order requiring federal contractors to use E-Verify, but this requirement will not take effect until after a final regulation on it is issued. Congress is also considering whether to require other employers to use E-Verify.

In addition, the use of E-Verify is or will soon be mandatory in some states. All employers are or will soon be required to use E-Verify in Arizona, Mississippi and South Carolina, with the caveat that South Carolina employers may, in the alternative, employ only workers who possess or are eligible to obtain a valid South

Carolina driver’s license or identification card or who possess an equivalent from another state. Certain employers (e.g., employers contracting with the state) are or will soon be required to use E-Verify in Colorado, Georgia, Minnesota, Missouri, Rhode Island, Utah and possibly Oklahoma. In Oklahoma, a federal district court issued a preliminary injunction stopping the E-Verify and employer sanctions provisions of Oklahoma’s immigration law from taking effect as scheduled on July 1.

Other states also are considering bills that would require the use of E-Verify. Contrary to this trend, however, Illinois passed a law effectively prohibiting the use of E-Verify unless otherwise required by federal law, but it has agreed not to enforce this law pending litigation over it. The California Assembly also has approved a bill that would prohibit the state from using E-Verify unless otherwise required by federal law, prohibit local governments from requiring the use of E-Verify and discourage private employers from using E-Verify. The California Senate is now considering this bill.

What Are the Pros and Cons of E-Verify?

Some advantages to using E-Verify include that the system is designed to quickly verify employment eligibility and that participation should significantly reduce the likelihood of getting Social Security “No-Match” letters. Also, an employer that verifies work authorization through E-Verify enjoys a legal presumption that the employer did not knowingly hire an unauthorized worker. Employers in some states may be able to pursue certain types of business (e.g., state contracts) or may benefit from legal presumptions or defenses by using E-Verify. Finally, participation is required by an employer that wants to help secure a 17-month extension for a student with an F-1 visa who has a science, technology, engineering or mathematics degree and who is performing post-graduation “Optional Practical Training.”

Some disadvantages to using E-Verify include the requirement that participating employers allow the SSA and DHS to perform periodic audits. Also of great significance, E-Verify has been known to have mismatch problems, thereby carrying a risk of erroneous nonconfirmations that expose an employer to legal action either for wrongful termination or for hiring an unauthorized worker. The mismatch rate is higher with respect to foreign-born employees, making E-Verify less appropriate for companies that employ many legal foreign workers. However, DHS announced improvements in May that should help reduce the mismatch rate. In addition, an employer must make an administrative commitment to the program including the designation and training of program administrators and the diligent and timely management of the program. Program administrators who improperly use E-Verify for pre-employment screening or to re-verify current employees expose employers to liability. Finally, it is uncertain whether the technical capacity of E-Verify can handle a heavy load and whether the SSA is capable of quickly resolving numerous confirmation issues.

Bottom Line

Whether it makes sense for an employer to enroll in E-Verify depends on the particular circumstances of that employer. An employer should consider the states in which it conducts business, examine its current employment verification procedures, and balance the pros and cons of E-Verify. Prior to enrolling in E-Verify, employers should consult with counsel and conduct a thorough internal I-9 audit.