Under a new rule passed by the Bush administration, larger federal contractors and sub-contractors will now be required to use the federal government's E-Verify system to determine whether the employees working on the contracts are authorized to work in the United States. The rule will also require the contractor to use the E-Verify system on all new hires, including employees who are not directly working on the covered contract.
The E-Verify System was established by the U.S. Citizenship and Immigration Services (USCIS) to enable employers to verify the employment eligibility of newly-hired employees against the information contained in the Social Security Administration, USCIS, and other government databases. Until recently, participation in the E-Verify program was voluntary.
A final rule recently published in the Federal Register amends the Federal Acquisition Regulation (FAR) to require specified federal contractors and sub-contractors to use the E-Verify system. As a result, all federal solicitations issued and contracts awarded after January 15, 2009 will include a clause in the solicitation or contract requiring the bidders to commit to using the E-Verify program.
Under the new rule, federal contractors and sub-contractors will be required to verify through E-Verify the employment eligibility of all new-hires and all existing employees "directly performing work" on the covered federal contract, during the term of the covered contract.
Existing indefinite-delivery/indefinite-quantity federal contracts will be amended to include the E-Verify clause for future orders if the performance period extends at least to July 16, 2009 and the work or number of orders will be or is expected to be "substantial."
Which Contracts Are Covered?
The rule covers prime federal contracts with a value of at least $100,000 (the draft rule had stated $3,000) and a period of performance of 120 days or longer.
A contract is not covered by this new rule in any one of the following circumstances:
1) the work will be performed only outside the U.S.;
2) the performance period is less than 120 days;
3) it includes only commercially available off-the-shelf (COTS) items (or but for minor modifications would be COTS items); or
4) the contract is for a value of less than $100,000. The rule also does not apply to prime contracts for food and agricultural products shipped as bulk cargo and which would otherwise be classified as COTS items.
Note: Sub-contractors with a value of $3,000 or more will also be covered by this new rule, but only if the prime contract includes a clause of this nature covering the sub-contract. Sub-contractors will want to inquire about this to verify whether the new rule applies to the sub-contract.
Note: Institutions of higher education, state and local governments, federally recognized Indian tribes, and sureties operating under a takeover agreement with a Federal agency pursuant to a performance bond are required to verify only employees assigned to the covered federal contract.
Which Employees are Covered?
Even if the contract is covered, the new rule exempts certain employees. You do not need to E-Verify employees holding an active security clearance of confidential, secret or top secret or who have undergone background investigations under the Homeland Security Presidential Directive (HSPD-12).
You need not use E-Verify to verify the employment status of existing employees who are not directly performing work on the covered contract. Employees are not considered to be "directly performing work" under the contract if they normally perform general company administration or indirect or overhead functions, and do not perform any substantial duties on an individual contract.
However, a covered contractor must use E-Verify for all new hires during the validity of the covered federal contract. This includes all new workers hired during the term of a covered contract, even if the employee is not assigned to work on the federal contract.
What Must Be Done?
Federal contractors and sub-contractors who are not currently enrolled in E-Verify must enroll within 30 calendar days of the award of the contract that requires E-Verify participation.
Contractors enrolling for the first time in E-Verify must begin using the system to verify new employees within 90 days of enrollment. After the 90-day period, the contractor must initiate the E-Verify verification of the newly-hired employees within three business days of their start date of employment.
Federal contractors and sub-contractors who have been enrolled in E-Verify for more than 90 days are required to continue to submit verification queries to E-Verify within three business days of the newly-hired employee's start date, but must start using E-Verify for existing employees assigned to perform work on the contract 90 days from the contract award date.
Contractors or sub-contractors who have been enrolled in E-Verify for less than 90 calendar days are allowed 90 calendar days from the date of enrollment in the system to initiate verification of newly-hired employees.
The Form I-9 and E-Verify query may be completed prior to the employee's start date so long as the employee has been offered and has accepted the position.
Recommendations.
Immediately review all current federal contracts, any bids and/or solicitations for future federal contracts, and the scope of any applicable contracts (in particular, contracts on which current employees are working or will be assigned to work) to determine whether you are covered by this new rule. If covered under the new rule, employers should determine when the requirements of this rule will need to be implemented.
Additionally, consider a company wide audit of the Company's current I-9 compliance for all current employees, even those that are not working on a covered contract.
Your Firm contact is ready to answer your questions relating to this new rule and/or general I-9 compliance.
