The controversial rule that will require most federal construction contractors to use E-Verify to check the work eligibility of their employees officially went into effect on September 8, 2009. This rule, originally issued in November 2008, had been delayed for several months pending review. In July, Department of Homeland Security (DHS) Secretary Janet Napolitano announced that the new administration would move forward with implementation, meaning that thousands of federal contractors will soon be obligated to enroll in and use the government's E-Verify system.
What Is E-Verify?
E-Verify is an Internet-based system operated by the DHS in partnership with the Social Security Administration (SSA). It allows employers to electronically verify the work authorization status of their employees by comparing the information provided by the employees during the Form I-9 process with information contained in the DHS and SSA databases. An employer's use of E-Verify does not replace its Form I-9 obligations, but is designed to supplement those procedures.
The E-Verify system was originally developed as an entirely voluntary program in which employers had the option to participate. It remains voluntary for most private sector employers, although, in some states, employers must comply with various state laws making E-Verify mandatory.
What Is the E-Verify Rule for Federal Contractors?
The new E-Verify rule is an amendment to the Federal Acquisition Regulation (FAR). It requires federal contracting officers to include, in most federal contracts exceeding $100,000, a clause stipulating that the contractor must be enrolled in E-Verify and must use the system to confirm the employment eligibility of (1) all new hires and (2) all employees-new and existing-assigned to the contract.
This new rule represents a departure from the way E-Verify has operated previously in two significant ways. First, E-Verify will no longer be voluntary for most federal contractors; if the contractor has at least one federal contract containing the E-Verify clause, its participation in the program is mandatory. Second, covered federal contractors will now be required to use E-Verify not only for new hires, but also to check at least some of its existing employees.
Consequences of Non-Compliance
Compliance with the E-Verify rule is a contract performance requirement and an absolute necessity for companies wanting to continue to do business with the federal government. Failure to comply with the requirements imposed by the new rule can lead to termination of the contract and, potentially, suspension or debarment of the contractor.
The Effective Date
Under the new rule, contracting officers will be required to include the E-Verify clause in all covered contracts and solicitations awarded after September 8, 2009. Additionally, existing indefinite-delivery/indefinite-quantity (IDIQ) contracts must be amended to include the E-Verify clause if the remaining period of performance extends at least six months past September 8, 2009, and the amount of work or number of orders expected during the remaining performance period is deemed substantial. A contractor's obligations under the new E-Verify rule do not commence unless and until the contractor is awarded a new contract which includes the E-Verify clause or it has an existing IDIQ contract which is amended to include the clause.
Are Any Contracts Exempt?
Certain federal contracts are exempt from the E-Verify rule. These include contracts that do not exceed $100,000, contracts with a performance period of less than 120 days, and contracts that are only for work that will be performed outside the United States.
Which Employees Must Be Verified?
If the federal contract contains the E-Verify clause, the contractor must verify (1) all newly hired employees who work in the United States and (2) all existing employees "assigned to" the federal contract. An employee is considered to be "assigned to" the federal contract if he or she is "directly performing work" under that contract. The rule provides that an employee is not "directly performing work" under the contract if the employee normally does support
