Jordan Ramis pc. Attorneys at law
Federal Contractors: New Federal Acquisition Rule Requires E-Verify Enrollment
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This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

Fall 2008

On Friday, November 14, 2008, a final rule was published in the Federal Register that amends the Federal Acquisition Regulation ("FAR") to require certain contractors and sub-contractors to enroll in and use the E-Verifyelectronic employment eligibility and verification program to verify that employees are eligible to work in the United States. The rule becomes effective January 15, 2009. The new rule covers prime federal contracts with a value of at least $100,000 and a performance period of 120 days or longer.

The final rule requires Federal contracts, which are subject to the rule, contain an E-Verify clause. E-Verify is an internet-accessed electronic identity and employment eligibility verification program operated by the United States Citizenship and Immigration Services ("USCIS"). The final rule requires contractors to enroll in and useE-Verify to verify employment eligibility for all new hires, and all employees (both existing and new) directly performing work on a Federal contract. Contractors awarded a Federal contract will have 30 days to enroll in E-Verify after the contract award date, if not already enrolled.

In order to determine if you are a Federal contractor subject to this rule, carefully review any contracts and solicitations to determine whether the contract contains the E-Verifyclause. Under the new rule, all 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 number of orders will be, or is expected to be, substantial.

The final rule:
  1. Exempts contracts that are for commercially available off-the-shelf ("COTS") items and items that would be COTS items but for minor modifications;
  2. Applies to sub-contracts that are over $3,000 for services or construction where the Federal contractor is also subject to the new rule;
  3. Will apply to solicitations issued and contracts awarded after the effective date in the final rule, January 15, 2009, which meet the simplified acquisition threshold of $100,000 and have a performance period of 120 days or longer;
  4. Permits the head of a contracting agency to waive the E-Verify requirement clause in a contract but this authority is non-delegable;
  5. Permits Federal contractors participating in E-Verify for the first time to begin usingE-Verify for new and existing employees 90 calendar days from enrollment;
  6. Provides 30 calendar days to initiate verification of existing employees not previously verified through E-Verify before they are assigned to a Federal contract job. This extended timeline will also apply to Federal contractors already enrolled in and using E-Verify but the time limit will be measured from the contract award date instead of from the contractor's E-Verify enrollment date. Federal contractors already enrolled in E-Verify for more than 90 days will only have 3 business days from date of hire to initiate verification of new hires. Contractors that have been enrolled in E-Verify for less than 90 calendar days will have 90 calendar days from the date of enrollment as a Federal contractor to initiate verification of new hires;
  7. Requires the E-Verify clause in contracts which exceed the simplified acquisition threshold ($100,000);
  8. Provides that E-Verify clause is not required in contracts with a performance term of less than 120 days;
  9. Provides that some covered entities need only verify employees assigned to a Federal contract. These include:
    1. Institutions of Higher Education;
    2. State and Local Governments and Federally Recognized Indian Tribes;
    3. Sureties performing under a takeover agreement entered into with a Federal agency pursuant to a performance bond;
  10. Exempts employees from the verification requirements who hold an active security clearance of confidential, secret, or top-secret. This includes employees for which background investigations have been completed and credentials issued pursuant to the Homeland Security Presidential Directive (HSPD)-12, "Policy for a Common Identification Standard for Federal Employees and Contractors," signed by the President on August 27, 2004;
  11. Permits Federal contractors the option to verify all employees of the contractor, including existing employees not currently assigned to a Federal contract. A contractor choosing this option must notify the Department of Homeland Security ("DHS") of the selection of this option and must initiate verification of all employees within 180 days of such notice to DHS; and
  12. Clarifies that employees who normally perform support work, such as general company administration or indirect or overhead functions, and that do not perform any substantial duties applicable to an individual Federal contract are not considered to be directly performing work under the contract. These employees are not required to be verified through E-Verify unless they are a new hire, are assigned to a position performing direct work under the contract or the contractor elected to verify all existing employees.
Federal contractors and sub-contractors subject to the final rule must enroll in E-Verify by signing a Memorandum of Understanding ("MOU") with the USCIS. Once enrolled the final rule requires a contractor to:
  1. Still complete the paper Form I-9, Employment Eligibility Verification document, but now must require the employee to insert their Social Security Number ("SSN") in Section 1 of the document. Contractor may only accept an identity document containing a photograph of the employee under the final rule;
  2. Submit information, using the Form I-9, into the E-Verify program;
  3. Record the verification identification number on the I-9 or print out a copy of the transaction record and attach to the I-9 if E-Verify submission returns a confirmation of identity and employment verification for the employee;
  4. Print out and provide to the employee a "Notice to Employee of Tentative Non-Confirmation" ("NETN") if E-Verify submission returns a "SSA Tentative Non-Confirmation" notice or a "DHS Tentative Non-Confirmation" notice. The employee must indicate on the employer-provided notice whether they will contest the NETN notice or not contest the NETN notice. Contractor and employee must then sign the notice;
  5. Print out and provide to employee "Referral Letter" if the employee contests the NETN. Employee will have eight federal government workdays to visit SSA or to call USCIS to resolve the NETN discrepancy. Contractor is prohibited from terminating employee during this time; and
  6. Upon receipt of "Notice of Final Non-Confirmation" either terminate the employee or notify DHS that contractor will continue employment of an employee for which a notice of final non-confirmation was received. Note: Contractor that continues employment of employee for which a notice of final non-confirmation is received is subject to a civil monetary penalty between $500 and $1,000 for each failure to notify DHS of continued employment following a notice of final non-confirmation.
A Federal contractor that complies with the final rule has a rebuttable presumption that it has not violated the Immigration and Nationality Act ("INA"), section 274(a)(1)(A), when it obtains a final confirmation of the identity and employment eligibility for the named employee. The contractor, under the final rule, is not civilly or criminally liable under any law for any action taken in good faith reliance on information provided through the confirmation system. However, there is a rebuttable presumption that the contractor has knowingly employed an unauthorized alien in violation of the INA if the contractor continues to employ an employee after receipt of a final non-confirmation and the employee is later found to be an unauthorized alien.

It is our recommendation that Federal contractors subject to this final rule take the following steps:
  1. Determine whether any contract contains the E-Verify clause. This may require the assistance of legal counsel;
  2. Evaluate recruitment and hiring processes, including language in any employment handbook, regarding Form I-9. Any employment handbook may need revisions to incorporate language regarding the E-Verify confirmation process;
  3. Analyze sub-contractors to identify those that may be subject to the final rule. Evaluate sub-contracts to ensure compliance with the final rule. This may also require new contract language be inserted in sub-contracts;
  4. Evaluate Form I-9 procedures and conduct an internal audit of I-9s. Correct any errors or complete new I-9s where missing;
  5. Analyze the USCIS MOU and enroll in E-Verify. Consult legal counsel as necessary to understand legal responsibility and liability issues;
  6. Prepare and publish procedures for administering the E-Verify program or make revisions to existing E-Verify procedures to conform to final rule; and
  7. Conduct training of all personnel that will administer the E-Verify program under the final rule.
To read the final rule click here: http://edocket.access.gpo.gov/2008/pdf/E8-26904.pdf