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November 19, 2008Client Alert

Final E-Verify Rule for Federal Contractors Issued

Effective January 15, 2009, federal contractors and subcontractors will be required to begin using the Department of Homeland Security’s E-Verify System. Federal agencies will be required to include a clause in all Federal contracts which requires contractors to use the E-Verify System.

This change resulted from Executive Order 12989, amended by President Bush earlier this year. A proposed rule implementing the Order was issued this summer, with comments accepted until August 11, 2008. The final rule implementing the Executive Order was published last week and is available at: http://edocket.access.gpo.gov/2008/E8-26906.htm.

The E-Verify System requires that after completion of an I-9 form, an employer input certain information into a computerized system that checks whether the employee in question is using the correct social security number and whether the employee is authorized to work in the United States. In order to enroll in the E-Verify System, an employer must enter into a memorandum of understanding requiring that specific procedures be followed by the employer when using the system.

Under the final rule, all government contracts worth $100,000 or more for goods, services or construction must contain a clause requiring the contractor to use the E-Verify System. The clause would also appear in subcontracts over $3,000. The rule does not apply to the purchase of goods that are commercially available off-the-shelf, including most food and agriculture products. It also does not apply to contracts with performance terms of less than 120 days.

A contractor will be required within 30 days of the contract award to enroll in the E-Verify System. The contractor has up to 90 days from enrollment to begin using the program to screen all new hires. The contractor must also screen any existing employees directly working on the contract. The rule clarifies that employees performing support work, such as company administration or overhead functions, are not considered to be directly performing work under the contract. Note also that under the final rule, institutes of higher education, state and local governments, and recognized Indian tribes need only verify employees working on a covered federal contract, and need not screen all new hires.

If you have questions regarding E-Verify or the new federal contracting regulation, please contact José Olivieri at 414.225.4967, or jaolivieri@michaelbest.com or Kelly Fortier at 414. 277.3460, or kmfortier@michaelbest.com.

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