Vendors to the Federal Government Face E-Verify Mandate

Today’s guest blogger is Kevin Lashus, Senior Attorney with FosterQuan, LLP in its Austin, Texas office.

On 8/25/09, a federal district judge for the District of Maryland denied the US Chamber of Commerce’s challenge to an amendment to the Federal Appropriation Regulation–originally mandated by a Bush Executive Order and recently adopted by the Obama Administration. As a result, as of 9/8/09, the Federal Appropriation Regulations will require that participating vendors (and flow-down subcontractors) initiate E-Verify for active and new employees.

Because every employer in the country is required to have a Federal Form I-9 on file for each employee hired after November 6, 1986, that establishes work authorization, and because, by virtue of this decision, the Federal Government will mandate that each federal vendor sign-up for E-Verify, the impact of today’s decision is immensely significant.

During these difficult economic times, most businesses are looking to the federal government (and those who do business with the federal government) to provide a source of income. However, to date, only a small portion of the American Recovery and Reinvestment Act of 2009 stimulus funds have been obligated as of 8/26/09 (for specific details, please visit: So, any funds obligated by contract after 9/8/09 under the ARRA will include the E-Verify requirement.

More importantly, the regulation is not limited to ARRA funds, but to all appropriations contracts with the federal government beginning 9/8/09–with some very limited exceptions.

Accordingly, American companies who contract with the federal government for goods or services (including construction) will likely see existing contracts modified to require E-Verify review of (i) all persons hired during the contract term; and (ii) all persons assigned by the contractor to perform work on the federal contract.

Some employers assume that E-Verify only relates to foreign nationals because it is administered by US Citizenship and Immigration Services. That is not the case–an E-Verify requirement potentially touches upon every employee in the country and is not limited to foreign nationals working in the United States.

What does the decision mean?

Those employers who are already enrolled in E-Verify for more than 90 days are required to continue to initiate verification of newly hired employees within three business days of their start date, but have 90 days from the effective award date to begin using E-Verify for each employee already on their staff who is performing work upon an existing federal contract. (Any transition to using the system as a federal contractor does not allow a client to stop using E-Verify for its new hires on the standard three-day schedule).

For those clients not already enrolled, the contractor and any covered subcontractor will be required to enroll in E-Verify within 30 calendar days of the contract or subcontract award date. New enrollees will be provided an additional 90 days–for a sum total of 120 days–to enroll and initiate verification queries for employees already on their staffs assigned to fulfill a federal contract and to begin using the system to verify all newly hired employees.

Why should all employers care?

USCIS is data mining E-Verify, resulting in the identification of compliance failures, such as failure to E-verify all employees and failure to terminate employees after a final non-confirmation of employment eligibility. The monitoring will result in referrals to Immigration and Customs Enforcement for follow-up inspection.

Accordingly, non-compliant employers (but, more commonly uneducated/ unrepresented businesses) may increase the prospect of ICE inspection.

Bottom line: increased mandatory E-Verify requirements will lead to increased scrutiny. Ironically, those clients agreeing to initiate the E-Verify program are increasing, not decreasing their exposure.

by Crystal Williams