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On November 14, 2008, the U.S.Department of Homeland Security
(DHS) published the final rule implementing the Executive Order
that requires all federal contractors, and certain subcontractors,
to use the E-Verify system to verify their employees'
authorization to work in the U.S. beginning on January 15,
2009.
E-Verify is an online database jointly administered by DHS and
the Social Security Administration (SSA) that enables participating
employers to verify the work authorization of newly hired employees
by checking the information employees provide on their Form I-9
against both DHS and SSA databases. Although participation in
E-Verify is voluntary in principal, certain federal contractors and
their subcontractors are now obligated to participate as a
condition to performing under their government contracts. Also,
certain states now have laws, which have been challenged in some
instances, that compel private employers to participate in
E-Verify.
The new rule amends the Federal Acquisition Regulation to
mandate that, for contracts of a certain length of time and size,
federal contractors consent, through language in their contracts
with federal agencies, to verify the work eligibility of (1)
all new employees hired during the contract term,
not just employees hired to work on the federal contract,
and (2) all existing employees assigned to work in the U.S.
on the federal contract using the E-Verify system.
Consequently, all federal contracts awarded and solicitations
issued after January 15, 2009, will incorporate a clause committing
all federal contractors with a contract performance period of
longer than 120 days and a value exceeding $100,000 to enroll in
E-Verify within 30 days of the contract award date. This rule also
will apply to subcontractors providing commercial or noncommercial
services or construction in excess of $3,000.
As part of the process of enrolling in the E-Verify system,
federal contractors and subcontractors will have to sign a
Memorandum of Understanding (MOU), which sets out the terms of
agreement between their companies and DHS. The MOU imposes
additional burdens on employers, such as providing for a shorter
list of acceptable I-9 documents and tracking tentative
nonconfirmations (a "nonconfirmation" is notice from DHS
that an employee has not yet been confirmed as authorized to work
under the applicable databases). The MOU also requires that
participating employers grant the federal government the right to
view certain employment records without a court order as well as
enter the workplace and question employees with no advance
warning.
It is not yet clear what legal exposure participating employers
will face for terminating employees or not hiring applicants based
upon a final nonconfirmation that results from an error in the
E-Verify database. Also, employers need to recognize that because
the federal government tracks nonconfirmations in the electronic
database system, the E-Verify system facilitates the
government's enforcement activities, including I-9 audits,
worksite enforcement raids, and other I-9 and employment-related
sanctions investigations.
Federal government contractors are subject to audits of their
compliance with federal affirmative action obligations. Pursuant to
a governmental work-sharing agreement, when the Office of Federal
Contract Compliance Programs audits a company for affirmative
action purposes, it also reviews I-9 form compliance. The new
Executive Order increases contractor exposure to immigration
enforcement actions and debarment.
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