Starting January 15, 2009, certain federal contractors and subcontractors will be required to begin using the E-Verify system administered by U.S. Citizenship and Immigration Services (USCIS) to verify the eligibility of their employees to legally work in the United States. The final rule implementing the requirement was published today in the Federal Register.

Background

On June 6, 2008, President George W. Bush issued an amendment to Executive Order 12989 requiring Executive departments and agencies to require, as a condition of each contract, that the contractor agree to use an electronic employment eligibility verification system (currently known as E-Verify) to verify the employment of all persons hired during the contract term and all persons assigned to perform work within the United States on the contract. A proposed rule to amend the Federal Acquisition Regulation (FAR) was published in the Federal Register on June 12. The Civil Agency Acquisition Council and the Defense Acquisition Regulations Council considered over 1,600 comments generated during the 60-day public comment period that ended on August 11 before finalizing the regulation. E-Verify is the Internet-based system operated by USCIS in partnership with the Social Security Administration that allows participating employers to electronically verify the employment eligibility of newly-hired employees. More than 92,000 employers have enrolled in E-Verify.

Summary of the Regulation

To summarize the key components of the regulation:

  • Federal contracts and solicitations issued on or after January 15, 2009 will include a clause requiring federal contractors to use E-Verify.
  • Prime contractors must include a clause requiring subcontractors to use E-Verify for any subcontract with a value over $3,000 for services or construction.
  • The following will be exempt from the E-Verify requirement:
    • Prime contracts for less than $100,000;
    • Contracts for commercially available off-the-shelf (COTS) items, which includes nearly all food and agricultural products; and
    • Contracts less than 120 days in duration.
  • Federal contractors subject to this requirement must enroll in E-Verify and use the system for all persons hired during the term of the contract (all new hires) and all existing employees assigned to the contract, other than employees hired before November 6, 1986. This requirement is in addition to the "normal" requirement placed on all employers within the United States to complete Form I-9 - Employment Eligibility Verification for all newly-hired employees.
  • Employers have 30 days from the date of the contract award to enroll in E-Verify and 90 days from the date of enrollment to initiate verification requests through the system. Employers that have already been enrolled in E-Verify for 90 days must complete the usual new hire verification process within three days and verify existing employees assigned to the contract within 90 days.

The regulation has the effect of making the voluntary E-Verify system mandatory for an estimated 168,000 federal contractors and subcontractors. (E-Verify is voluntary according to the terms of the statute creating it. Individual states have made it mandatory for certain employers and Arizona and Mississippi have enacted statutes that have made (or will make) E-Verify mandatory for all employers within their respective states.) E-Verify has previously been limited to verifying the employment eligibility of new hires. However, the new regulation requires federal contractors to use E-Verify for not only all future hires, but also for all persons assigned to perform work on the contract. This can create several complications. For example, a federal contractor may need to track which employees work on the contract to ensure the E-Verify process has been completed for them. In addition, a federal contractor may need to complete Form I-9 for the second time for existing employees working on the contract. Fortunately, one change made in the final regulation allows covered employers the option of using E-Verify for all employees, including existing employees not assigned to the contract. Some employers may find this simpler (or necessary) as opposed to tracking employee participation in the contract.

Additional Resources

The government press release regarding the new regulation can be found here and a FAQ sheet prepared by USCIS can be found here.