Executive Order Mandates E-Verify System

Washington — On June 6, President Bush issued an amendment to Executive Order 12989 requiring federal contractors and subcontractors to use the Department of Homeland Security's previously unreliable E-Verify system to check whether their employees are eligible for lawful employment in the U.S. Within a week after the EO amendment, the Federal Acquisition Regulatory Council issued proposed regulations laying out the full details of the amended EO requirements. Comments on the FAR proposed regulations are due by August 11.

All federal contractors on construction contracts worth more than $3,000 will be required to use the electronic verification system to confirm the employment eligibility and work authorization of their workforce. Prime contractors will also have to require by contract that all subcontractors performing work under contracts adhere to the E-Verify requirement.

It's anticipated that the final rules will be in place by the end of this year.

E-Verify is an Internet-based system operated by the U.S. Citizenship and Immigration Service, a part of the Department of Homeland Security, and is used in conjunction with the Social Security Administration to verify employment eligibility in the U.S.

The problem for contractors is that the Social Security database has been unreliable. Jessica Johnson Bennett, director of government relations for the Plumbing-Heating Cooling Contractors - National Association, has noted that her name came up as a “no-match” in Social Security records when she tried to renew her drivers license.

The rule to amend the FAR would require all federal contracting officers to include in covered contracts language requiring the contractor to use E-Verify to verify the employment authorization of employees “assigned to the contract,” as well as all new hires. Compliance with the E-Verify rules will be a performance element of contracts that contain the requirement.

The contractor would be required to enroll in the E-Verify program within 30 days of the date a contract is awarded, and within 30 days of that date use E-Verify to verify the employment authorization of all employees “assigned to the contract.” If the contractor is already enrolled in E-Verify, it must use E-Verify for these employees assigned to the contract within 30 days.

The contractor will have to use E-Verify for all new hires within three days of the date of hire for all new employees hired after the contract is awarded as well as for all existing employees who later are “assigned” to the contract.

The proposed rules leave contractor associations with many questions.

For example, Mechanical Contractors Association of America will ask if the rules will cover change orders on contracts in place before the rules go into effect, and will the cost of compliance be allowed as part of a contractor's costs for the change order, noted MCAA General Counsel John McNerny.

MCAA will also ask about potential pitfalls, such as what happens if the flow-down language requiring subcontractors to comply with the rule is not written in a contract? If a contractor violates discrimination rules for an employee who gets a Notice to Employee of Tentative Non-confirmation from Social Security, can the contractor be debarred for that? If the rule applies to employees “assigned to the contract,” what does that really mean? Does it apply to employees working on the contract off-site?

Associated General Contractors of America said it wants to know if a material supplier or a vendor of commercial items is considered a contractor. What are the procedures and deadlines for employers and employees to correct mistakes that are the fault of the E-Verify system? How should employers deal with individuals who can satisfy the existing rules and standards in the Immigration and Nationality Act, but not the E-Verify system? Should federal contractors anticipate debarment for even honest mistakes made in ignorance of technical requirements?

More information on the E-Verify program is available on the DHS website at www.dhs.gov/E-Verify. Comments on the proposed FAR regulations are due by August 11. The proposed regulations may be accessed at www.regulations.gov. Contractors submitting comments to the FAR should reference FAR Case 2007-13. Comments may be mailed to Attention Laurieann Duarte, General Services Administration, Regulatory Secretariat (VPR), 1800 F Street, NW, Room 4035, Washington, DC 20405.