Federal Contractors, Subcontractors Are Required to Start Using E-Verify Beginning January 15, 2009

In a final rule scheduled to be published in the November 14, 2008, Federal Register, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council amended the Federal Acquisition Regulation (FAR) to require that certain federal contractors and subcontractors use the federal government’s E-Verify program. The final rule inserts a clause into federal contracts committing government contractors to use E-Verify to verify that all its new hires and existing employees directly performing work under federal contracts must be authorized to work in the United States.

According to the final rule, federal contractors and subcontractors must begin using E-Verify starting January 15, 2009, to verify their employees’ eligibility to legally work in the United States. E-Verify, administered by the Department of Homeland Security’s (DHS) Citizenship and Immigration Services (USCIS) bureau in partnership with the Social Security Administration, is a web-based program that allows employers to verify that their employees are authorized to work in the United States.

The final rule takes into account the more than 1,600 comments received by the two councils from individuals, organizations, corporations, trade associations, chambers of commerce and government entities. According to the councils, more than 600 commenters wrote “in support of the proposed rule and strongly urged its adoption.” More than 92,000 employers currently use E-Verify, according to USCIS.

Background. On June 6, President George W. Bush amended Executive Order (EO) 12989 (as amended) in order to direct all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility of all persons hired during the contract term and for all persons performing work within the United States on the federal contract. The EO further instructs federal agencies not to do business with federal contractors who “knowingly employ unauthorized alien workers.” While the EO did not specifically address whether subcontractors would also be required to enroll in E-Verify, it provided DHS with the authority to make whatever “rules, regulations, or orders” necessary to implement the EO. Further, it was not clear, according to the EO, when the new requirements on federal contractors would take effect.

At a June 9 press conference, Homeland Security Secretary Michael Chertoff designated E-Verify as the electronic employment eligibility verification system that all federal contractors must use. Three days later a proposed rulemaking implementing the EO was published in the Federal Register. The rule amends the FAR to require that certain federal contracts contain a clause requiring that contractors and subcontractors enroll in E-Verify to verify the employment eligibility of all newly hired employees and as well as all current employees assigned by the contractor to perform work in the United States under those contracts. The FAR is the principal set of rules in the Federal Acquisition Regulations System, which governs the “acquisition process,” through which the federal government purchases goods and services.

Provisions. The final rule calls for the insertion of a clause in federal contracts and solicitations requiring that the contractor enroll in E-Verify to verify the employment eligibility of: (1) all newly hired employees, following completion of the Employment Eligibility Verification Form I-9 (Form I-9); and (2) all existing employees who are classified as “employees assigned to the contract.” An “employee assigned to the federal contract” is any employee hired after November 6, 1986, who is directly performing work in the United States under a contract that includes the clause committing the contractor to use E-Verify. An employee is not considered to be directly performing work under the contract if the employee normally performs support work, such as indirect or overhead functions, and does not perform any substantial duties under the contract.

Contracts covered under the final rule are prime federal contracts with a period of performance longer than 120 days and a value above the simplified acquisition threshold, which is $100,000. This is a change from the proposed rule, which required the clause in prime contracts above $3,000, the micro-purchase threshold. According to USCIS, the final rule “lightens the burden on small businesses who decide to accept federal contracts and...provide[s] contractors with flexible means of complying with the basic requirement that all persons working on federal contracts be electronically verified.”

In addition, the rule only covers subcontractors if a prime contract includes the clause. For subcontracts that flow from those prime contracts, the rule extends the E-Verify requirement to subcontracts for services or for construction with a value over $3,000. The rule applies only to employees working in the United States, which is currently defined to include the fifty States and the District of Columbia, Guam, Puerto Rico and the US Virgin Islands.

Contracting officers should modify, on a bilateral basis, their existing indefinite-delivery/indefinite-quantity contracts in accordance with the FAR to include the clause for future orders if the remaining period of performance extends at least six months after the final rule’s effective date, and the amount of work or number of orders expected under the remaining performance period is substantial.

The rule exempts: (1) contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services; (2) contracts of less than the simplified acquisition threshold ($100,000); (3) contracts less than 120 days; and (4) contracts where all work is performed outside the United States. A COTS item is a commercial item that is sold in substantial quantities in the commercial marketplace and is offered to the government in the same form that it is available in the commercial marketplace, or with minor modifications. Nearly all food and agricultural products fall within the definition of “commercially available off-the-shelf (COTS)” items. Federal contracts for COTS items are exempt from the rule. Federal contracts for food and agricultural products shipped as bulk cargo, but that otherwise would be considered COTS items, such as grains, oils and produce are also exempt. Subcontracts that only provide supplies, such as food, are exempt from the rule.

Timeframes. All employers, including federal contractors, may enroll in E-Verify at any time without waiting for the January 15, 2009, effective date.

Under the final rule, federal contractors are required to enroll E-Verify within 30 days of when they are awarded a federal contract or subcontract that requires participation in E-Verify.

First time enrollees. The final rule amends the proposed rule to permit federal contractors participating in E-Verify for the first time a longer period —90 calendar days from enrollment instead of 30 days as initially proposed —to begin using the system for verifying new employees. After this 90-day phase-in period, the contractor will be required to initiate verification of each newly hired employee within three business days after their start date. To meet the three-day requirement, employers may initiate verification of a newly hired employee before their start date if the employee has accepted the job offer and filled out the Form I-9. Please note that pre-screening of job applicants is not allowed; the system may be used for new hires only after the employee has been offered the job and has accepted. Employers must use E-Verify for the life of the contract for all their new hires, whether or not they are employees assigned to the contract, unless certain exceptions apply.

The final rule also provides a longer period after the initial enrollment period —30 calendar days instead of three business days —for contractors to initiate verification of existing employees who have not previously gone through the E-Verify system when they are newly assigned to a covered federal contract.

Companies enrolling in E-Verify for the first time will be asked to provide basic contact information their business. At the end of the enrollment process, the company will be required to sign a Memorandum of Understanding that provides the terms of agreement between the company and DHS. To learn more about enrolling in E-Verify, visit: https://www.vis-dhs.com/EmployerRegistration/StartPage.aspx?JS=YES EXE:  https://www.vis-dhs.com/EmployerRegistration/StartPage.aspx?JS=YES.

Current enrollees. Contractors already enrolled and using the program as federal contractors will have the same extended timeframes to initiate verification of employees assigned to the contract, but the time limits will be measured from contract award date instead of from the contractor’s E-Verify enrollment date. With regard to verification of new hires, a contractor that has already been enrolled as a federal contractor for 90 calendar days or more will have the standard three business days from the date of hire to initiate verification of new hires. Those contractors that have been enrolled in the program for less than 90 calendar days will have 90 calendar days from the date of enrollment as a federal contractor to initiate verification of new hires.

The final rule also provides contractors with the option of verifying all employees of the contractor, including any existing employees not currently assigned to a government contract. A contractor choosing to exercise this option must notify DHS and must initiate verifications for the contractor’s entire workforce within 180 days of such notice to DHS.

Odds and ends. In exceptional cases, the head of the contracting activity may waive the E-Verify requirement for a contract or subcontract or a class of contracts or subcontracts, either temporarily or for the period of performance. This waiver authority may not be delegated.

Enrolling in E-Verify does not provide guarantee a safe harbor from a worksite enforcement operation from US Immigration and Customs Enforcement, DHS’s largest enforcement arm, but it creates a rebuttable presumption that the company has not knowingly hired an unauthorized alien.

As an employer participating in E-Verify, the company must post a notice provided by DHS indicating participation in the E-Verify program as well as the anti-discrimination notice issued by the Office of Special Counsel for Immigration-Related Unfair Employment Practices at the Department of Justice. The posting must take place in a prominent place that is clearly visible to prospective employees and all employees who are to be verified through the system. Once the company is enrolled, and able to log into the E-Verify online system, these notices can be found in the “On-line Resources” section.

The final rule can be found at: http://federalregister.gov/OFRUpload/OFRData/2008-26904_PI.pdf. EXE:  http://federalregister.gov/OFRUpload/OFRData/2008-26904_PI.pdf. A Q&A from USCIS on the final rule can be found at: http://www.uscis.gov/files/article/FAR_FAQ_13nov08.pdf EXE:  http://www.uscis.gov/files/article/FAR_FAQ_13nov08.pdf.

Reprinted with permission. © CCH

Federal Contractors, Subcontractors Are Required to Start Using E Verify Beginning January 15, 2009 In a final rule scheduled to be published in the November 14, 2008, Federal Register, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council