Client Alert

Immigration News: Final Regulation to Require All Federal Contractors to Use E-Verify to be Published Today

November 14, 2008

The Immigration Practice Group

Today, the final rule amending the Federal Acquisition Regulation to require all federal contractors to use E-Verify will be published in the Federal Register. The final regulation implements the Executive Order issued by President Bush on June 6, 2008 and will impose substantial new compliance burdens on federal contractors.  Under the regulation, government contractors will be required to use the Department of Homeland Security's (DHS) E-Verify program to verify the employment eligibility of all newly hired employees and all employees (both new and existing) directly performing work under federal contracts.  The final rule will become effective on January 15, 2009 and will apply to all solicitations issued and contracts awarded after that date.  The final regulation contains a number of significant changes to the proposed regulation.  The rule's key requirements appear below, and we will follow up with a more detailed summary and additional guidance in the near future.

Summary of the Rule

• The rule's E-Verify requirements will apply to all prime contracts with a value above the simplified acquisition threshold of $100,000.  The requirements will also extend to all subcontracts for services or construction with a value over $3000.

• The E-Verify requirements will not apply to contracts that:

• Are only for work that will be performed outside the U.S.;

• Are for a period of performance of less than 120 days; or

• Are only for commercially available off-the-shelf items.

• The rule will apply to solicitations issued and contracts awarded after January 15, 2009.  However, under the rule, federal agencies are also supposed to modify existing indefinite-delivery/indefinite-quantity contracts to incorporate the E-Verify requirements for future orders if the remaining period of performance on the contract extends at least six months beyond the rule's effective date (that is, beyond July 15, 2009).

• The final regulation imposes the following employment verification requirements:

Contractors not enrolled in E-Verify at the time of a contract being awarded

• Enroll in the E-Verify program as a federal contractor within 30 days of a contract award;

• Begin to verify the employment eligibility of all new employees in the system within 90 calendar days of enrollment in the E-Verify program; and

• Initiate verification in the program for each employee assigned to the contract within 90 calendar days after the date of the company's enrollment in the program or 30 calendar days of the employee's assignment to the contract, whichever date is later;

Contractors already enrolled in E-Verify at the time of a contract being awarded

• If the contractor has already been enrolled in E-Verify for 90 calendar days or more, the contractor must initiate verification of the employment eligibility of all new hires in the system within 3 business days after the date of hire;

• If the contractor has been enrolled in E-Verify for less than 90 calendar days the contractor must initiate verification, no later than 90 calendar days after enrollment, of the employment eligibility of all new hires, within 3 business days of the date of hire; and

• For each employee assigned to the contract, the contractor must initiate verification of employment eligibility in the system within 90 calendar days after the date of the contract award or within 30 calendar days after assignment to the contract, whichever is later.

• Current employees who normally perform support work, such as general company administration or indirect or overhead functions, and who do not perform any substantial duties applicable to an individual contract, are not considered to be directly performing work under the contract and thus do not need to have their employment eligibility verified in the program.

• Institutions of Higher Education, State and Local Governments, Federally Recognized Indian Tribes, or Sureties performing under a takeover agreement entered into with a federal agency pursuant to a performance bond may choose to verify only workers assigned to the contract (whether new or existing employees).

• Contractors may elect to verify the employment eligibility of all employees hired after November 6, 1986, instead of just those employees assigned to the contract.

• Contractors are not required to verify the employment eligibility of employees whose eligibility has previously been verified in the system or employees who hold an active security clearance or for whom background investigations have been completed and credentials issued pursuant to Homeland Security Presidential Directive 12.

• Contractors must comply during the contract period of performance with the E-Verify Memorandum of Understanding (MOU) that all companies must complete prior to enrolling in the program.

• DHS or the Social Security Administration (SSA) may terminate a contractor's MOU and deny access to the E-Verify system if a contractor violates the terms of the MOU.  If DHS or SSA terminates the contractor's MOU. the terminating agency must refer the contractor to a suspension or debarment official for possible debarment from federal contracting.