After several delays, Homeland Secretary Janet Napolitano announced on July 8, 2009, that the E-Verify final rule will go into effect on September 8, 2009. As a result, a significant number of federal contractors and subcontractors will be required to use the E-Verify system to verify that their employees are eligible to work in the United States. In a related matter, the U.S. Chamber of Commerce's case that was filed in December 2008 to challenge the E-Verify rule is still pending.

Contracts Covered

The final rule will require contracting officers to include in solicitations and contracts a clause (Part 52.222-54)that will commit federal contractors to use the E-Verify system. The clause will be required in prime contracts that have a value of $100,000 or more. The E-Verify requirement will also apply to Indefinite Delivery/Indefinite Quality (IDIQ) contracts where the period of performance extends six months beyond the final rule's effective date (January 15, 2009). Such IDIQ contracts will be modified to include the E-Verify clause. The final rule will apply to subcontracts where the prime flows the clause down and will apply to subcontracts over $3,000 for construction and services subcontracts. The E-Verify clause will not be applied to commercial-off-the-shelf (COTS) items (or minor modifications to COTS items) contracts or where all the work is outside the United States.

Employees Covered and Time Lines

As a general rule, contractors will be required to verify all employees assigned to a covered contract and all of the contractors' new hires working in the United States during the contract period. Employees assigned to a covered contract means employees hired after November 6, 1986, "who [are] directly performing work, in the United States, under a contract that is required to include the [E-Verify] clause . . . ." The final rule excludes from this definition employees who normally perform support work (such as indirect or overhead functions) and who do not perform substantial work on the contract. Institutions of higher learning, state or local governments, federally recognized Indian tribes and sureties performing under a takeover agreement entered into with a federal agency pursuant to a performance bond only need to verify employees assigned to a federal contract. In addition, contractors will not be required to verify employees holding active security clearances or Homeland Security Presidential Directive-12 issued credentials. The final rule also provides employers with the option of verifying all employees of the contractor, including any existing employees not assigned to the federal contract.

The chart below outlines the timing requirements under the final rule.