June 8, 2009Client Alert

Implementation of E-Verify Rule for Federal Contractors Delayed until September 8, 2009

The effective date of the regulation requiring certain federal contractors and subcontractors to use E-Verify has been postponed until September 8, 2009. The regulation will only affect federal contractors who are awarded a new contract after September 8, 2009 that includes the Federal Acquisition Regulation (“FAR”) E-Verify clause. Federal contractors cannot use E-Verify to verify the work authorization of current employees until they are awarded a contract that includes the FAR E-Verify clause.

The E-Verify on-line system allows U.S. employers to check whether an employee is authorized to work in the United States and whether the social security information presented by the employee matches information in the Social Security Administration’s databases.

Under the new federal contractor regulation, 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 regulation does not apply to the purchase of goods which 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. Also note that under the regulation, institutions 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.

The E-Verify federal contractor regulation resulted from Executive Order 12989, issued by President George W. Bush in 2008. The final rule implementing the Executive Order was published last year, but was put on hold to allow time for review by the Obama administration.

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