Mandatory E-Verify for Federal Contractors and Subcontractors
Effective September 2009, the Federal Acquisition Regulation (FAR) was amended to make billions of dollars in federal contracts available only to federal contractors and subcontractors who agree to enroll in the government's E-Verify program.
E-Verify is a Internet-based voluntary program operated by U.S. Citizenship and Immigration Services (USCIS) in partnership with the Social Security Administration (SSA) that allows participating employers to electronically verify a new hire's legal ability to work in the United States. E-Verify supplements the Form I-9 process by allowing an employer to cross-check the I-9 information presented by the employee against SSA and USCIS databases. The system will typically provide an instant response that the employee is work-authorized or that a discrepancy exists. If the employee cannot work out the discrepancy with USCIS or SSA, the employer must either fire the employee or risk employing an unauthorized worker contrary to law.
The goal of the rule is to ensure that only authorized workers are employed on federal contracts. The E-Verify clause is required to be included in any prime contract with a value of $100,000 and a performance period of 120 days or more. The clause will require enrollment in E-Verify as a term of the contract, and will also require the prime contractor to ensure that the E-Verify requirement flows down to subcontractors for services or construction for more than $3,000. The prime federal contractor is responsible for ensuring that its subcontracts include the E-Verify clause, and that its subcontractors are complying with the requirements of the E-Verify clause.
Which Employers are Affected?
The E-Verify rule applies to prime contracts (including construction contracts) with a value of more than $100,000. The rule exempts:
•· Subcontracts valued at less than $3,000;
•· Contracts for commercially available, off-the-shelf items;
•· Contracts under which all work is performed outside of the United States; and,
•· Contracts with a period of performance of less than 120 days.
Because the FAR does not typically cover federal grants and cooperation agreements, they are not generally be subject to the rule.
Which Employees are Affected?
The E-Verify clause requires the covered federal contractors and subcontractors to use E-Verify to verify the employment eligibility of:
•1. All persons hired during the contract term to perform employment duties within the United States; and
•2. All persons assigned by the employer to perform work within the United States on the federal contract.
As an exception to the first requirement, the rule specially exempts institutes of higher education, certain sureties performing takeover work under performance bonds, state and local governments, and federally recognized Indian tribes, from verifying all new hires. Instead, the rule allows these employers to verify only employees assigned to the federal contract (whether existing employees or new hires).
The second requirement means that employers will be required to use E-Verify to re-verify the employment eligibility of existing employees who directly perform work under the federal contract. The amended FAR rule also allows a covered federal contractor or subcontractor to verify its entire workforce, both new hires and existing employees, via E-Verify. A contractor that chooses to exercise this option must notify the government, and must initiate verification for the entire workforce within 180 days of providing its notice.
When Must an Employer Enroll In and Use E-Verify?
When a contractor wins the bid on a contract that contains the FAR E-Verify clause, the contractor and any covered subcontractors on the project are required to enroll in the E-Verify program within 30 days of the contract or subcontract award date. An employer's obligation to enroll in E-Verify is triggered by agreeing to a contract containing the E-Verify clause.
Once an employer wins a federal contract containing the E-Verify clause, they must register with E-Verify within 30 days. Within 90 days of registering, they must begin using E-Verify in supplement to the I-9 to confirm that all new hires are work-authorized under U.S. immigration law. In addition, the contractor must begin using E-Verify to confirm that each employee assigned to the federal contract is work-authorized under U.S. immigration law within 90 days of registering, or within 30 days of the employee's assignment to the contract, whichever is later.
Once a federal contract or subcontract is complete, a contractor may withdraw from the E-Verify system.
Who Should Anticipate Enrolling in E-Verify?
Prime contractors, as well as subcontractors, should anticipate that enrollment in E-Verify will become as cost of doing business in the federal contract arena. As existing contracts are renewed and/or modified, and as new contracts are awarded, federal contractors will be required under the amended FAR regulation to enroll in E-Verify as a term of receiving the contract.
Prime contractors will have a high incentive to ensure that their subcontractors enroll in E-Verify as required by FAR. Under the Memorandum of Understanding (MOU) an employer signs upon enrolling in E-Verify as a federal contractor, the employer agrees to comply with the most recent version of the E-Verify User Manual, and acknowledges that its compliance with the MOU is a performance requirement under the terms of the Federal contract or subcontract. In addition, under the MOU, the employer consents to the release of information relating to compliance with its verification responsibilities to contracting officers and/or other officials authorized to review the employer's compliance with federal contracting requirements.
The E-Verify User Manual, which is incorporated by reference into the MOU, goes on to explain the following regarding prime contractor and subcontractor obligations:
•· The prime contractor should provide general oversight to subcontractors to ensure they meet the E-Verify requirement;
•· The prime contractor may be subject to fines and penalties if it knowingly continues to work with a subcontractor who is in violation of the E-Verify requirement;
•· As proof of enrollment, the subcontractor should provide the prime contractor with a copy of its company page from the E-Verify system; and
•· The prime contractor must, by whatever means the contractor considers appropriate, ensure that all covered subcontracts at every tier incorporate the FAR E-Verify clause, and that all subcontractors use the E-Verify system.
Given these requirements, prime contractors will have a strong business incentive to make sure that all tiers of contractors on the federal contract are properly using the E-Verify system. Subcontractors should expect to be required to comply with the FAR E-Verify rule by their upstream contractors.
