New Regulations Will Require Over 168,000 Federal Contractors to Use E-Verify

New rules were scheduled to go into effect on January 15, 2009 to require most federal government contractors to use E-Verify, an electronic employment eligibility verification system operated by the U.S. Department of Homeland Security. E-Verify (formerly known as the Basic Pilot/Employment Eligibility Verification Program) allows employers to electronically confirm the biographical data of employees pursuant to a Memorandum of Understanding (“MOU”) entered into between the employer, the U.S. Department of Homeland Security (“DHS”) and the Social Security Administration (“SSA”). The government is delaying the effective date of these regulations until February 20, 2009 due to a lawsuit filed by the U.S. Chamber of Commerce, the American Council on International Personnel, the New Regulations Will Require Over 168,000 Federal Contractors to Use E-Verify Society for Human Resources, the H.R. Policy Association, and the Associated Builders and Contractors.

The new rules will require that all future prime government contracts contain a clause requiring companies to register for E-Verify within 30 days of the contract award, and to verify the status of new and existing hires through E-Verify within 90 days of enrollment in E-Verify. The rule will apply to all future contract employees, and all existing employees and federal subcontractors once they begin working on new federal government contracts. Exempt from this requirement are employees working on contracts performed outside the United States; those employees hired before November 6, 1986; subcontracts valued at less than $3,000; contracts lasting for less than 120 days; and contracts covering commercially available products (COTS items).

If the E-Verify system is unable to confirm the employee’s status, the worker will receive a “tentative nonconfirmation” notice and will have eight days to settle the discrepancy with DHS or SSA. In the event that the discrepancy cannot be resolved, the employee may be terminated. The Federal Acquisition Regulations provide federal officials with the authority to terminate a federal contract or to recommend suspension or debarment proceedings for companies that knowingly hire undocumented workers. The new rules also require DHS and SSA to refer the contractor to a suspension or debarment official in the event the MOU is terminated.