On January 15, 2009, new rules become effective requiring federal contractors to use E-Verify, an electronic employment eligibility verification system designated and operated by the U.S. Department of Homeland Security (DHS). E-Verify (formerly known as the Basic Pilot/Employment Eligibility Verification Program) allows employers to electronically confirm the biographical data of newly hired employees pursuant to a Memorandum of Understanding (MOU) entered into between the employer, DHS and the Social Security Administration (SSA). The new rules implement President Bush’s Executive Order dated June 9, 2008. Approximately 90,000 employers across the United States are currently registered to use E-Verify.

The new rule will require future government contracts to 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 as well as all existing employees and federal subcontractors’ employees once they begin working on new federal government contracts. Exempt from this requirement are employees hired before November 6, 1986, employees working on contracts performed outside the United States, prime contracts valued at less than the simplified acquisition threshold of $100,000, subcontracts lasting for a duration of less than 120 days covering commercially available products (COTS items) and construction subcontracts valued at less than $3,000.

If the E-Verify system is unable to confirm the employee’s status, the worker will receive a “tentative nonconfirmation” notice and have eight days to resolve 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 if the MOU is terminated.

In the event your organization is required to register for E-Verify, please contact your Vedder Price attorney to assist in registering for E-Verify and executing the MOU with DHS and SSA.