Proposed Rule Clarifies Federal Contractors' E-Verify Obligation

  • June 25, 2008

Executive Order 12989 requires federal contractors to use E-Verify to confirm the identity and work authorization of all employees working on federal contracts. The Executive Order, signed by President George W. Bush on June 6, 2008, left open a number of questions, including, for example, whether subcontractors are covered, will the Office of Federal Contract Compliance Programs (OFCCP) have a role and are there monetary thresholds for coverage. Typically, such unanswered questions are addressed in implementing regulations. On June 9, 2008, agencies responsible for administering the Federal Acquisition Regulations sent a Notice of Proposed Rulemaking to the Federal Register, setting forth proposed implementing regulations (the "Proposed Rule").

On June 11, 2008, the Proposed Rule was published in the Federal Register. The Proposed Rule clarifies the employment eligibility verification obligations that will affect approximately 168,324 federal contractors and 3.8 million employees, including, among other things, clarification that subcontractors are covered, there appears to be no role for the OFCCP and there is a very low monetary threshold for covered contracts.

The Proposed Rule applies to federal contracts and subcontracts that include work in the United States and meet the monetary threshold of $3,000, other than those for commercially available off-the-shelf (COTS) items or items that would be COTS items but for minor modifications. The Proposed Rule also requires contractors and subcontractors to:

  1. enroll in the E-Verify program within 30 days of a contract award,
  2. begin verifying the employment eligibility of all new employees of the contractor or subcontractor that are hired after enrollment in E-Verify,
  3. continue using E-Verify for the duration of the contract, and
  4. confirm the employment eligibility of all existing employees who are directly engaged in the performance of federal contract work.

Employees assigned to the contract must be verified within 30 days of the contract date. Thereafter, newly hired and newly assigned employees must be verified within 3 days. The Proposed Rule does not apply to any employee hired prior to November 6, 1986, since those employees are not subject to employment verification under the Immigration and Naturalization Act.

The Proposed Rule applies to:

  1. solicitations issued and contracts awarded after the effective date of the Final Rule, and
  2. existing indefinite-delivery/indefinite-quantity contracts for future orders if the remaining period of performance extends at least six months after the effective date of the Final Rule and the amount of work or number of orders expected under the remaining performance period is substantial.

However, the Proposed Rule does not specify the amount of work or number of orders that will be considered "substantial" enough to trigger the contractor's obligation to use E-Verify. In exceptional circumstances, the Proposed Rule allows the head of the contracting agency to waive the requirement to include the clause in the federal contract. The Proposed Rule does not provide examples of "exceptional circumstances" that will relieve a contractor of the obligation to verify its employees through E-Verify.

Before an employer enrolls in the E-Verify program, the employer must enter into a Memorandum of Understanding (MOU) with the Department of Homeland Security (DHS) and Social Security Administration (SSA), agreeing to continue hiring employees lawfully and to ensure that no employee will be unfairly discriminated against as a result of the employer's participation in the E-Verif y program. Violation of the MOU by the employer can lead to termination of its participation in the E-Verify program.

Employers participating in the E-Verify program must continue to complete and retain I-9 Forms for each newly hired employee. However, employers must now require new employees to provide identity documents with photos for verification purposes.

Employers are invited to submit comments on or before August 11, 2008, by visiting the Federal eRulemaking portal at, inputting "FAR Case 2007-013" under the heading "Comment or Submission," and selecting the link "Send a Comment or Submission."

Recommended Actions

While any obligations do not become effective until a final rule is published, employers should:

  • Inventory current federal contracts and subcontracts to establish which locations and employees may be impacted by this rule.
  • Review current I-9 forms for any errors or missing information. Correct any forms that have not been completed correctly.
  • Ensure that all personnel are trained on the proper completion and retention of I-9 forms.

Jackson Lewis is available to assist employers with any of these items.

©2008 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

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