GOVERNMENT CONTRACTORS WILL BE REQUIRED TO
USE E-VERIFY

by William H. Pickering

In an important development affecting companies that do business with the federal government, President Bush signed an Executive Order this month that will require all federal contractors to use the E-Verify system to determine the employment eligibility of their workers. 

E-Verify is an internet-based system operated by the Department of Homeland Security in partnership with the Social Security Administration that allows participating employers to electronically verify the employment eligibility of their newly hired employees.  Participating employers must sign a Memorandum of Understanding (MOU) with the government.  E-Verify is touted by the government as "the best means available for determining employment eligibility of new hires and the validity of their Social Security Numbers," although the program has been criticized by both employers and immigrants rights groups.

The Executive Order directed the government to adopt appropriate regulations to implement the new E-Verify requirements, and proposed regulations were published in the Federal Register on June 12, 2008.  Under the proposed regulations, a clause will be added to federal contracts requiring contractors to use the E-Verify system to verify the employment eligibility of the company's workers.  The clause will require contractors to enroll in the E-Verify program within 30 days after the contract is awarded and to begin using E-Verify to verify the employment eligibility of all new employees.  In addition, contractors will have to use E-Verify to confirm the employment eligibility of all existing employees who are directly engaged in the performance of work under the contract. 

The proposed regulations contain a couple of important exceptions.  First, the required use of E-Verify will not apply to contracts for commercially available off-the-shelf (COTS) items.  COTS items are generally defined as commercial items that are sold to the federal government in the same form in which they are available to the public in the commercial marketplace.  Secondly, the E-Verify requirement will not apply to contracts that are under the "micro-purchase threshold" (generally meaning contracts under $3,000.00).

The proposed regulations also contain a "subcontractor flowdown" requirement.  Under this requirement, government contractors must include the E-Verify requirement in subcontracts that exceed $3,000.00 and that are for services or construction performed in the United States. 

The proposed rule is not yet final.  Written comments on the rule may be submitted until August 11, 2008.

If you have questions regarding the Executive Order or the proposed regulations, please do not hesitate to contact any member of our Labor & Employment Law Group.