November 18, 2008
On June 6, 2008, the President amended Executive Order 12989 to require federal government contractors to "agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security," which Secretary Chertoff designated to be the "E-Verify" system. E-Verify is a system operated by DHS in partnership with the Social Security Administration (SSA) that allows employers to use their own computers and Internet connections to verify electronically the employment eligibility of their newly hired employees. There is no fee for use of this service. DHS reports that more than 69,000 employers have voluntarily adopted the E-Verify system in response to increasing focus on employment eligibility verification requirements.
On November 14, 2008, the Department of Defense, the General Services Administration, and NASA jointly issued a final rule, effective January 15, 2009, that has significant effects on federal contractors. Whereas E-Verify was previously voluntary for federal contractors, now all federal contracts and solicitations issued on or after January 15, 2009 will require federal contractors to use E-Verify, and all 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 final rule noted that this change will affect approximately 168,000 contractors and subcontractors. The principal exemptions are for: (a) prime contracts for less than $100,000; (b) contracts for commercially available off-the-shelf (COTS) items (including nearly all food and agricultural products), and (c) prime contracts with performance terms less than 120 days in duration.
The rule provides:
Federal contractors already enrolled in E-Verify at time of contract award must:
- Begin the E-Verify process for each "employee assigned to the contract" within 90 calendar days after date of contract award or within 30 calendar days after assignment to the contract, whichever is later. ("Employee assigned to the contract" does not include those who perform support work, such as indirect or overhead functions, or those who do not perform any substantial duties under the contract.)
- Within 90 calendar days of enrollment in E-Verify, begin the E-Verify process for all new hires within three business days of the date of hire. This applies to all personnel hired by the company after the date of enrollment in E-Verify, including those who do not perform duties under the contract and those who perform indirect or overhead functions.
Federal contractors not already enrolled in E-Verify at time of contract award must:
- Enroll in E-Verify within 30 calendar days of contract award.
- Begin the E-Verify process for each employee assigned to the contract within 90 calendar days of the date of enrollment or within 30 days of the employee’s assignment to the contract, whichever is later.
- Within 90 calendar days of enrollment in E-Verify, begin the E-Verify process for all new hires within three business days of the date of hire. This applies to all personnel hired by the company after the date of enrollment in E-Verify, including those who do not perform duties under the contract and those who perform indirect or overhead functions.
Option to verify all employees:
- Instead of only verifying employees assigned to the contract and other new hires, the contractor may elect to verify all employees. To utilize this option, the employer must verify every employee within 180 calendar days of (1) enrollment in E-Verify; or (2) notifying E-Verify Operations of the contractor’s decision to exercise this option.
- This may be desirable for contractors that would find it difficult or burdensome to track which employees are assigned to a contract.
(Also note that verification does not apply to employees hired before November 6, 1986.)
Summary of E-Verify system: For those unfamiliar with the E-Verify system, it operates as follows. Upon hiring a new employee and completing the Form I-9 to ensure employment authorization (required for all new hires regardless of E-Verify participation), the employer submits information over the Internet taken from the Form I-9, including: the employee’s name and date of birth, Social Security Number (SSN), citizenship status declared by the employee, and other information from documents submitted by the employee. (In addition, in 2007, E-Verify introduced its Photo Screening Tool that allows the employer to compare the photographs on documents presented by certain non-citizen employees against photographs stored in DHS immigration databases, which are shown on the employer’s computer screen.)
The E-Verify query will establish that an employee is authorized to work, or the employer will receive a "tentative non-confirmation" (TNC). The employee must be notified of the TNC and given an opportunity to contest it with the SSA or DHS. Non-contesting employees may not continue to work. Contesting employees may continue to work until the employer receives final confirmation from E-Verify regarding the employee’s authorization status. According to DHS, employers ran more than four million queries from January to June 2008. Of those queries, DHS reports that 99.5 percent of qualified employees have been cleared automatically by E-Verify.
In addition to use of E-Verify required by the new rule, employers should ensure they are in full compliance with the Immigration Reform and Control Act and associated regulations. Worksite inspections by Immigration and Customs Enforcement (ICE) have increased in frequency, resulting in criminal and civil enforcement proceedings. At the same time, employers need to be careful to avoid overzealous efforts that might lead to claims of unlawful employment discrimination based on citizenship status or national origin, which can be pursued by the Equal Employment Opportunity Commission and the U.S. Department of Justice Office of Special Counsel for Immigration-Related Unfair Employment Practices.
Gibson, Dunn & Crutcher lawyers have significant experience counseling employers to ensure compliance with employment authorization laws and regulations and in responding to governmental audits and investigations. If you would like to discuss these or other labor and employment law or government contracting issues, please contact the Gibson Dunn attorney with whom you work;
Labor & Employment partners
Jason C. Schwartz (202-955-8242, jschwartz@gibsondunn.com),
Eugene Scalia (Practice Group Chair) (202-955-8206, escalia@gibsondunn.com),
William Claster (949-451-3804, wclaster@gibsondunn.com), or
Christopher Martin (650-849-5305, cjmartin@gibsondunn.com); or
Government & Commercial Contracts partners
Diana Richard (202-887-3572, dgrichard@gibsondunn.com) or
Joseph D. West (Practice Group Chair) (202-955-8658, jwest@gibsondunn.com).
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