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Proposed New E-Verify Rules for Federal Contractors Greatly Expand Scope of Program

The Government Services Administration (“GSA”) has issued proposed regulations to implement the June 9, 2008 Executive Order amendment by President Bush mandating use of the E-Verify program for federal contractors. The comment period is until Aug. 11. The proposed regs are at: http://edocket.access.gpo.gov/2008/pdf/E8-13358.pdf.

The proposed regulations require E-Verify participation by a federal contractor in most circumstances. The E-Verify program participation clause will not be included in federal contracts for commercially available off-the-shelf items, for contracts of $3000 or less, or for contracts including no work to be performed in the US.

For most private employers to this point, E-Verify has been a voluntary system. About 70,000 employers are currently using the program. Employers using E-Verify now submit the names and Social Security numbers of new hires through the internet and the information is checked against the Social Security Administration’s database and an immigration database to confirm that the name matches the number and that there is no database information indicating the individual is unauthorized to work.

The E-Verify system has been criticized because of errors that are present in the Social Security database. Moreover, employers using the system must also agree to open their records to the federal government for investigation upon request. Additionally, employers who have used E-Verify are not protected from investigations or raids by the Department of Homeland Security. There is also some question whether theE-Verify system can easily absorb participation by perhaps as many as two hundred thousand federal contractors.

The proposed regulations require a federal contractor to enroll in the E-Verify program within 30 days of being awarded a contract and then, within the next 30 days, run all of the contractor’s employees on the federal project who were hired after Nov. 6, 1986 through the E-Verify program. The federal contractor must continue participation in the E-Verify program for the duration of the federal contract and continue verification within three (3) days of all new hires or employees assigned to the federal project. All subcontracts of $3000 or more of the contractor for work to be performed in the US must also impose these same requirements.

This is a major expansion of the E-Verify program. First, it will be mandatory, rather than voluntary, for a very large group of employers. Second, for the employees assigned to the federal project, it is to be used not only for new hires, but for all of the federal contractor’s employees assigned to the project, with the modest exception that it will not apply to employees hired on Nov. 6, 1986 or before. This is a major change becauseE-Verify by its current terms does not even permit a participating employer to use E-Verify other than for new employees. Third, the regulations do not appear to limit the contractor’s obligation to check new hires only to the employees hired to work on the federal project. The proposed language for the contract makes clear that E-Verify is to be used for “each assigned employee who is assigned to the contract”, but then also requires use of E-Verify “(3) Within three business days of the date of employment, for all employees of the contractor hired after the date of enrollment in the E-Verify program.” Accordingly, nationwide contractors with only a single site federal contract will be required to use E-Verify nationwide for new hires if the proposed regulations are adopted.

Comments are being accepted on the proposed regulations until August 11, 2008. After the comments are considered, final regulations will be published and they will likely be made effective 30 days after publication. The earliest date for new federal contracts to include the E-Verify language will be September 11, 2008 and because of the time involved in reviewing the comments, the actual effective date will likely be several weeks after that.

If you have questions about the proposed regulations or would like assistance with commenting on the proposed regulations to the GSA before August 11, 2008, please contact David L. Wing with the Spencer Fane Labor & Employment Law Group.