September 8, 2009
Last year, President Bush signed Executive Order 13,465, requiring federal government contractors to "agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security," and the Secretary designated the "E-Verify" system, described in more detail below, for this purpose. The Department of Defense, the General Services Administration, and NASA then jointly issued a final rule to implement the Executive Order, that was to be effective January 15, 2009.
On December 23, 2008, however, the U.S. Chamber of Commerce and several other industry groups filed a suit seeking to invalidate the rule. The parties agreed to delay the date of implementation to provide the new Administration time to review the rule. Then, on July 8, 2009, DHS Secretary Napolitano announced that DHS would not withdraw the rule, and instead–if the rule was upheld–DHS would begin enforcement of the rule on September 8, 2009. Secretary Napolitano declared E-Verify to be a "smart, simple and effective tool that reflects our continued commitment to working with employers to maintain a legal workforce."
On August 26, 2009, the United States District Court for the District of Maryland allowed DHS to proceed with enforcement of its new rule, granting the agency summary judgment, and finding that none of the reasons asserted by the plaintiffs precluded mandatory use of E-Verify by federal contractors. In brief, the court relied heavily on the logic of American Federation of Labor & Congress of Industrial Organizations. v. Kahn, 618 F.2d 784 (D.C. Cir. 1979), that as long as an Executive Order is consistent with the Procurement Act and reasonably related to its purposes, it will be upheld. As a result of the court’s order, the new rule requiring federal contractors to use E-Verify will go into effect today with respect to contracts or solicitations issued on or after September 8, 2009. (The plaintiffs filed a motion in the Fourth Circuit on September 4, 2009 to enjoin enforcement of the rule; the motion has not yet been ruled upon.)
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 138,000 employers have voluntarily adopted the E-Verify system in response to increasing focus on employment eligibility verification requirements, and that about 1,000 employers enroll in E-Verify each week. As of August 1, 2009, more than six million queries had been run through the system in FY 2009.
Whereas E-Verify was previously voluntary for federal contractors, now all federal contracts and solicitations issued on or after September 8, 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). (E-Verify automatically flags inconsistent data as it is entered, and allows employers to double-check inconsistent data entered into E-Verify before issuing a tentative non-confirmation.) 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, a recent independent evaluation completed in December 2008 found that approximately 96.9% of cases queried through E-Verify were instantly found to be work-authorized. Of the remaining 3.1% of cases that resulted in a mismatch with information in SSA or DHS databases, only 0.3% were successfully contested. The remaining 2.8 % either did not contest the determination, were unsuccessful in contesting, or were found unauthorized to work at the secondary verification stage.
USCIS reports that it is continuing to implement improvements to E-Verify to minimize errors. In 2008, E-Verify added the Integrated Border Inspection System (IBIS) real time arrival and departure information for non-citizens to its databases, reducing mismatches that had resulted from data entry delays, and allowing newly arriving workers to start working immediately. In February 2009, USCIS began incorporating Department of State passport data into E-Verify, reducing the number of mismatches for citizens who did not personally complete the naturalization process, but derived citizenship from their parents. And in FY 2010, USCIS plans to incorporate ICE’s Student and Exchange Visitors Information System (SEVIS) data into E-Verify, which will improve the system’s ability to automatically verify international students and exchange visitors.
USCIS is offering free webinars on Form I-9 and the E-Verify program, including E-Verify requirements for federal contractors. To learn more or register, call 1-888-464-4218 or email [email protected] with your name, company’s name, city and state, phone number, preferred session date and time, and the number of call-in telephone lines needed. For a full list of dates and times, or for more information, please click here. USCIS also has a web page containing Frequently Asked Questions about the new rule, available here.
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, or any of the following attorneys:
Labor and Employment Practice Group
Jason C. Schwartz – Washington, D.C. (202-955-8242, [email protected])
William J. Kilberg P.C. – Washington, D.C. (202-955-8573, [email protected])
Eugene Scalia – Practice Co-Chair, Washington, D.C. (202-955-8206, [email protected])
William D. Claster – Practice Co-Chair, Orange County (949-451-3804, [email protected])
Christopher J. Martin – Palo Alto (650-849-5305, [email protected])
Government Contracts Practice Group
Karen L. Manos – Practice Co-Chair, Washington, D.C. (202-955-8536, [email protected])
Joseph D. West – Practice Co-Chair, Washington, D.C. (202-955-8658, [email protected])
Diana G. Richard – Washington, D.C. (202-887-3572, [email protected])
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