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New Rule Requires Federal Contractors To Use E-Verify System

September 2009

After September 8, 2009, all businesses that obtain contracts with the federal government in excess of $100,000 and a term of at least 120 days or longer will be required to use E-Verify to confirm its employees’ eligibility to work in the United States. This mandate is pursuant to a Federal Acquisition Regulation, published in November 2008, requiring that each federal contract contain a provision conditioning the contract on the federal contractor’s agreement to use the electronic employment verification system (E-Verify) designated by the Secretary of the Department of Homeland Security (DHS).

Federal contractors will be required to confirm via the E-Verify system that both newly hired employees and existing employees who provide services under the contract are eligible to work in the United States. As with other federal contractor obligations, a prime contractor will be required to include the same provision in all of its subcontracts of $3,000 or more, obligating its subcontractors to use the E-Verify system as well.

All employers who now obtain federal contracts will first be required to enter into a Memorandum of Understanding (MOU) with the DHS and Social Security Administration (SSA) that sets forth the features of the E-Verify system and the duties of each of the parties in using the E-Verify system. By entering into the MOU, the federal contractor agrees to complete the appropriate I-9 verification procedures and hire (or continue to employ) only lawfully authorized persons. In addition, the MOU requires the federal contractor to agree not to use E-Verify to support unlawful employment practices and not to discriminate against any individual based upon national origin or citizenship status. If an employer violates the terms of the MOU, its right to participate in E-Verify may be terminated, resulting in a loss of the federal contract.
An employer will have thirty (30) days from the date a qualifying government contract is awarded to enroll in E-Verify. Once enrolled, the employer has ninety (90) days from the date the contract is awarded to re-verify the eligibility of existing employees who have been assigned to provide services under the new federal contract through the system. Going forward, the federal contractor has three (3) days after hiring a new employee to enter the information from the employee’s Form I-9 into the E-Verify system.

The system is intended to be simple. After entering the individual’s information into E-Verify, the system will either (a) confirm that the employee is eligible for employment or (b) issue a Tentative Non-Confirmation (TNC). If a TNC is returned, the employer must immediately notify the employee, who then has the opportunity to contest the TNC within eight (8) days by presenting proper documentation to a local office of the SSA, or an office of the DHS if the employee is a non-citizen worker. The employer is prohibited from terminating employment during this 8-day period when the employee has the opportunity to challenge the TNC. If, however, the employee fails to take action within the 8-day period, a final TNC will be issued and the employer will be required to terminate the employee as ineligible to work in the United States. According to the DHS, approximately 97 percent of all queries are automatically confirmed as eligible for employment within 24 hours or less.

However, new users of E-Verify should be aware that relying solely on the results received from this system will not prohibit an employer from running afoul of federal immigration laws that prohibit an employer from knowingly hiring individuals who are not authorized to work in the United States. E-Verify cannot detect identity theft: it does not verify the identity of the employee but, rather, only that the identity presented matches information in the Social Security and Department of Homeland Security databases (i.e., the employee’s social security number or alien authorization documents). An employer will not be shielded from an Immigration and Customs Enforcement workplace raid if it relies solely on the results from the E-Verify system to verify an employee’s eligibility. A federal contractor is still required to follow the appropriate I-9 verification procedures, which require examining the original documents provided by the employee to verify that the documents: (1) are on the list of acceptable documents, (2) appear genuine and relate to the employee, and (3) evidence the employee's unexpired employment eligibility.

A federal contractor that fails to register to use the E-Verify system could lose its federal contract or, at the very least, be delayed in performing and, consequently, being paid under the contract. In these critical economic times, such a delay could prove to be quite costly. If your business provides goods or services pursuant to a federal contract and you have not yet registered to use E-Verify, you should do so immediately.
 

For more information, please contact:
Catherine P. Wells
Phone (973) 530-2051
Email cwells@wolffsamson.com

Denise J. Pipersburgh
Phone (973) 530-2090
Email dpipersburgh@wolffsamson.com