Sept. 7, 2009 E-Verify Rule Effective for Federal Contractors and Subcontractors on September 8, 2009

Summary

Effective today, federal contractors and subcontractors who are awarded certain qualifying contracts from the federal government will be required to enroll in and use the E-Verify system.  E-Verify is a free, Internet-based system that electronically compares information submitted by applicants on the I-9 form with records held by the Social Security Administration and the Department of Homeland Security to determine whether an applicant meets the eligibility requirements to be employed in the United States.

E-Verify still faces legal challenges, including an emergency appeal filed by the Chamber of Commerce and other business groups on September 4, 2009.  Until further direction is given by a court or the federal government, employers should comply with the E-Verify requirement.

Discussion

The requirement to enroll in and use the E-Verify system will be triggered by the award of a new "qualifying" federal contract on or after September 8, 2009. A qualifying contract is a prime federal contract that: 1) exceeds the minimum acquisition threshold of $100,000; 2) has a performance period in excess of 120 days; and 3) contains the E-Verify clause that requires contractors to use the system. The E-Verify requirement also applies to subcontractors if the subcontract flows down from a prime federal contract that contains the E-Verify clause and is for services or construction with a value of over $3,000. Certain types of federal contracts are excluded from the E-Verify rule, including contracts where all of the work is performed outside the United States or the contracts are for the acquisition of commercially available off-the-shelf items.

Companies awarded a contract with the E-Verify clause after September 8, 2009 will be required to enroll in E-Verify within 30 days of the contract award date. If the E-Verify rule applies, the E-Verify system must be used to confirm that all new hires, whether employed on a federal contract or not, and existing employees directly working on the qualifying contracts are legally authorized to work in the United States.

What This Means

Companies who expect to be awarded a qualifying federal contract or who are pursuing federal contract work should begin preparing for compliance with the E-Verify system. Failure to comply with the E-Verify requirement could result in the suspension or cancellation of a federal contract and/or debarment from future federal contracts.

This E-Update was authored by Brenda Kasper and Lisa Frank, who are prepared to help companies determine whether the E-Verify requirement will apply to them.  For more information, or questions, please contact Ms. Kasper, Ms. Frank or any Paul, Plevin attorney at (619) 237-5200.

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