President’s E-Verify Order Raises Contractor Questions

Following President Bush’s June 6 executive order directing federal agencies to require their contractors to use the federal E-Verify system, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council proposed a rule on June 12 to require contractors and subcontractors that perform work on the federal government’s domestic construction projects to use E-Verify. The prosposed rule was reported in ASA Today, the online newsletter of the American Subcontractors Association (ASA).

ASA reported that the proposal to amend the Federal Acquisition Regulation would insert a clause in prime contracts for federal construction requiring contractors to:

• Enroll in E-Verify within 30 calendar days of contract award.
• Use E-Verify to verify the employment eligibility of all employees assigned to the contract within 30 days of contract award.
  Verify the employment eligibility of new employees assigned to the contract within three days.
  
• Flow down the same requirements to all subcontracts on the project that exceed $3,000.
  

Currently voluntary, E-Verify is an Internet-based system for submitting employees’ names, dates of birth, and Social Security numbers to check against federal databases for work authorization purposes. If the U.S. Department of Homeland Security or the Social Security Administration finds a mismatch in the submitted information, the employer and employee must follow a confirmation process. The acquisition councils estimate that the average cost for a contractor with 50 employees to participate in E-Verify for the first year is $1,168.

Employers that participate in E-Verify must also sign a Memorandum of Understanding (MOU) with DHS and SSA agreeing to abide by current legal hiring procedures and to ensure that no employee will be unfairly discriminated against in the E-Verify process. In the written explanations accompanying their proposed rule, the acquisition councils said they would consider compliance with the MOU “a performance requirement under the terms of the Federal contract or subcontract.”

ASA is seeking members’ input about the proposed rule’s impact on them. ASA has posted a link to the proposed rule on the ASA Web site at http://www.asaonline.com. Some state governments also see E-Verify as part of the answer to the federal government's flawed immigration policies. In Missouri, a new law requires all employers receiving money from the state or tax credits in excess of $5,000 to use E-Verify. A new law in South Carolina also requires any company doing business with the state to use the system.

The Associated General Contractors of America (AGC) said earlier this week that it questioned the use of E-Verify as an immigration status remedy. "While AGC supports the full enforcement of our immigration laws, AGC remains committed to their comprehensive reform, and the association questions whether this piecemeal measure will hasten or delay the day when we will see that kind of reform," Stephen E. Sandherr, chief executive officer of AGC of America said. "Ironically, we also find ourselves questioning whether the executive order is itself in violation of our current laws," he added.

The new requirement will take effect only after the relevant federal agencies revise the regulations that govern federal contracts. AGC  said it will carefully examine the new executive order and the proposed revisions of the regulations to determine if the changes would cause problems for the contractors responsible for constructing and maintaining the federal infrastructure. AGC also will investigate whether or not the changes conflict with the current immigrations laws, and if so, may contemplate even stronger action.

Immediately, AGC said it will also begin seeking further guidance on a host of questions that the executive order raises, including:

• "Who is a "contractor" for the purposes of the executive order? Does it include a subcontractor? Does it include a material supplier? Does it include a vendor of commercial items?"
• "What – if any – are the procedures and deadlines for employers and/or employees to correct the many mistakes that even the E–Verify system will inevitably make?"
• "How should employers deal with individuals who can satisfy the pre–existing rules and standards – which Congress has written into the Immigration and Nationality Act – but not the E–Verify system that the President has mandated entirely on his own? How do employers avoid getting caught in the middle?"
• "What are the penalties for non–compliance? Should federal contractors anticipate debarment for even honest mistakes made in ignorance of technical requirements?"

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