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Ethics Corner 

New Employment Eligibility Rules Take Effect 

11  2,009 

By Dorn C. McGrath and Dawn M. Lurie 

As of Sept. 8, contractors and subcontractors must focus attention on the new “E-Verify” requirements to confirm employment eligibility of all newly hired employees and all employees assigned to federal government contracts.

Since 1986, it has been illegal to hire employees not authorized to work in the United States.

Many government contractors adopted document-based systems, completing a U.S. Citizenship and Immigration Services (USCIS) Form I-9 for all newly hired employees to verify their identity and authorization to work. Established as a pilot program in 1996, E-Verify is an Internet-based system operated by USCIS in cooperation with the Social Security Administration, which some contractors have used voluntarily to electronically submit I-9 information to verify employment eligibility. 

Government contracts awarded on or after Sept. 8, will require most contractors to use E-Verify under a new clause (FAR 52.222-54). Moreover, E-Verify now requires contractors and subcontractors to “re-verify” many existing employees as well as new hires.

The E-Verify clause requires contractors to: enroll in E-Verify; use E-Verify for new hires; use E-Verify for existing employees assigned to a government contract; and include the E-Verify requirements in subcontracts for certain commercial or noncommercial services and construction.

If not already enrolled in E-Verify, the contractor has 30 calendar days from contract award to enroll in E-Verify. Within 90 days of enrollment, all new hires must be processed through the system within three days from the date of hire, whether or not they are assigned to the government contract. Additionally, each existing employee assigned to the contract must be verified within 90 calendar days of enrollment, or 30 days from the employee’s assignment to the contract, whichever is later.

If the contractor already was enrolled in E-Verify, in addition to the three-day new hire requirement, all existing employees assigned to the contract must be run through the system within 90 days of the contract award, or 30 days from assignment to the contract.

Instead of implementing E-Verify to the extent necessary for each contract, businesses may elect to verify all employees, including existing workers not currently assigned to a government contract.

The timeline for this possibility allows contractors to initiate verification of all existing employees within 180 calendar days of notifying USCIS of this decision. Unlike other recent government contract compliance rules, such as the “Contractor Business Ethics Compliance Program and Disclosure Requirements,” the E-Verify rules do not modify coverage for small businesses.

Government databases are used to compare a worker’s I-9 data against more than 400 million records. Employers can expect a “tentative non-confirmation” rate of about 3 percent requiring additional follow up to resolve discrepancies for these employees.  

An employee may contest a non-confirmation by contacting the Department of Homeland Security or Social Security within eight business days of receiving written notice. Many of the discrepancies arise when a contractor enters incorrect employee data, or the employee has had a name change or change in immigration status. However, if the employee fails to contest the non-confirmation, or the agencies are unable to resolve the discrepancy, the contractor will be notified of “final non-confirmation” based on which the employee may be terminated.  

USCIS must be notified if the employee is not terminated. Employee rights should always be respected, but the government can suspend or debar any contractor or subcontractor for serious noncompliance with immigration or E-Verify requirements.

Companies should — but are not required to — maintain copies of the identity documents each new employee presents when completing I-9 forms. The list of acceptable documents contractors may rely on for I-9s has been changed considerably and the updating protocols can be complex, so contractors may prefer new I-9s for existing employees assigned to government contracts.  This would help ensure clean data inputted to the E-Verify system and avoid “no-matches” or unnecessary status verifications. An employer’s ability to selectively re-verify employment authorization has limitations under antidiscrimination laws.

Contractors need I-9 compliance-trained personnel and human resources support to manage the I-9 reviews and other employee issues. Contract administrators must know how to confirm E-Verify compliance for prime contracts of more than $100,000 and 120 days. They should also know which employees are “assigned” to a contract within the meaning of the regulations.

Commercial-off-the-shelf contracts are exempt. However, the Federal Acquisition Regulations have a specific definition of COTS for purposes of E-Verify. Because E-Verify is a “flow down” requirement, prime contractors also should take reasonable steps to ensure that subcontractors for services or construction of more than $3,000 implement the rules. Contracts performed outside the United States are exempt. Other limited exceptions to E-Verify include employees with specific active security clearances.

Many questions under the E-Verify rules are still open. The scope of a prime contractor’s “flow down” responsibilities to subcontractors and which subcontracts are subject to E-Verify are not clearly defined.

Legislation is pending in Congress to reauthorize the program, and a court challenge also is on appeal. However, with the support of the current administration, E-Verify is likely here to stay. The short enrollment timelines and the relatively complex verification process for existing employees warrant dedicated focus.

Dorn C. McGrath ( is a shareholder in the government contracts practice group, and Dawn M. Lurie ( is a shareholder in the business immigration and compliance practice group, with Greenberg Traurig, LLP.  The views expressed are solely those of the authors.
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