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E-Verify and Federal Contractors

    Client Alerts
  • September 04, 2009

In a long-awaited decision in Chamber of Commerce of the United States of America et al v. Janet Napolitano et al , a federal district judge for the District of Maryland granted summary judgment to the Defendants on August 25, 2009. The claim brought by U.S. Chamber of Commerce was a challenge to an amendment to the Federal Appropriation Regulation first mandated by Bush Executive Order, but adopted by the Obama Administration, which requires federal contractors and subcontractors to enroll in E-Verify (the Federal Government's electronic employment verification system) to check the employment eligibility of all new employees and those current employees who will be working on federal contracts. Although the implementation of this mandate had been delayed on several occasions since its enactment last year, the rule has been anticipated to take effect on September 8, 2009. This schedule was further confirmed by Secretary Napolitano in a press release in July as part of the Obama Administration's focus on immigration enforcement.  Last week's ruling in the case served to remove any lingering concerns as to whether the E-Verify rule would take effect on September 8 as planned.

What this decision means to employers:

  1. All federal contracts with a performance period of longer than 120 days and a value over a simplified acquisition threshold of $100,000 will require the insertion of a FAR E-Verify clause which mandates that government contractors to use E-Verify for new hires and for all employees (existing and new) who are assigned to any given federal contract.
  2. Subcontractors working under the auspices of a prime contract with the federal government and who are providing services or construction with a value over $3,000 will be required to comply with E-Verify as well so long as the prime contract includes the E-Verify clause.
  3. Existing indefinite-delivery / indefinite quantity contracts are required to be modified to include the FAR E-Verify clause for future orders in the event the remaining period of performance extends for at least six (6) months after the effective date of the rule and the amount of work or number of hours remaining is substantial.
  4. Contractors and Subcontractors subject to the new rule will be required to enroll in E-Verify within 90 days of the contract or subcontract award date. All new employees will need to be confirmed using the E-Verify system within three business days of the employment start date in accordance with standard E-Verify requirements. Contractors and subcontractors will have 90 days after the award date to begin using E-Verify for current employees who will be working on federal contracts.
  5. Exempt from application of the rule are Prime Contracts: for commercially available off-the-shelf items and related services, under an acquisition threshold of $100,000, for a performance period of  under 120 days, and for which all work is to be performed outside of the United States.

NOTE: The Plaintiffs in the Maryland case have filed an emergency motion for injunction pending its appeal of the federal district court judge's opinion.  As a result of the motion, it is possible that the effective date of the rule may be further delayed.  We will continue to keep clients posted of any further decision.