E-Verify: What Federal Contractors Need to Know

In accordance with an executive order signed on June 6 by President Bush, all organizations working under contract to the federal government are required to use the Department of Homeland Security's (DHS) E-Verify system to check that new hires are eligible to work in the U.S.

Three days after President Bush issued his executive order, on June 9, the Department of Homeland Security (DHS) designated E-Verify as the electronic employment eligibility verification system that all federal contractors must use as required by Executive Order 12989, as amended.

Also on June 9, 2008, the federal agencies responsible for administering the FAR sent a Notice of Proposed Rulemaking to the Federal Register, setting forth proposed implementing regulations (the "Proposed Rule"). The terms of the Executive Order will not become effective until final regulations are issued. Final regulations are expected to be issued at the end of 2008.

We asked Attorney Jennifer G. Parser, an immigration specialist with Ward and Smith in Raleigh, North Carolina, to walk us through E-Verify.

Delving into the "new" system. The system is only new in that it was rechristened E-Verify on January 1, 2008; its earlier version, called either Basic Pilot of Electronic Eligibility Verification System, was first deployed during federal fiscal year 2005. Since its earlier incarnation, DHS head Michael Chertoff has said employer participation has increased 1,070 percent. And, it's sure to increase now that thousands of federal contractors are using it. E-Verify combines DHS data with records from the Social Security Administration to determine whether a new hire is eligible to work in the U.S. The verification doesn't replace the employer's gathering of documents to complete the I-9 form--both that form and some mode of verification are necessary. Or, at least, Parser highly recommends the additional verification step, one of whose purposes is to check that the new hire's Social Security number is valid.

Here's how it works: An employer submits a Memorandum of Understanding to the system to get started: A separate memo must be submitted for each location where the employer wants to conduct verifications. Once that step is completed, one or more company individuals, usually in HR, can apply for passwords to access the system. Parser says those people can include a general user, a program administrator, and a corporate administrator, each of whom will then be able to perform a different level of functions with E-Verify. Further, once an employer is on file to use the system, E-Verify generates posters in English and Spanish that must be prominently displaced in the workplace. The posters inform employees that the system is being used, and copies are filed with DHS. If all those administrative steps strike the organization as too much of a headache, says Parser, "There are now 310 third-party agents nationwide who will, for a fee, perform your E-Verify checks for you."

What about the critics? The Society for Human Resource Management and others oppose E-Verify, primarily because, they say, its databases are rife with errors, especially in Social Security records. Some legislators have been urging Congress to mandate that employment verification be done through state records created for Welfare to Work instead. Parser tells her clients to use E-Verify: If agents raid your workplace, and you've verified your employees, you may have a good-faith defense that will persuade them to see you more favorably. Replace the system with state records? "I'd be concerned that they may not contain the information that DHS is using in E-Verify," says Parser.

Compliance checklist. In leading us through the DHS/SSA system for checking a new hire's eligibility to work in the U.S., Parser offered a series of tips and cautions.

-         Just as you can't arbitrarily screen out applicants in other ways, you cannot prescreen applicants using E-Verify (and then hire only those that pass).

-         Nor can you selectively decide which new hires to verify--such as those who aren't U.S. citizens--and fail to check on the rest. All new hires must be run through the system after they've been hired and within 3 days of their actual start dates.

-         The system can't be used to delay training or start dates or to speed up start dates.

-         E-Verify information must be kept separate from an employee's other personnel records, just like personal medical information.

-         Remember that the system tests only eligibility to work in the U.S., not immigration status. Examples: The spouse of an H 1-B visa holder is in the U.S. legally (his or her immigration status) but is not eligible to work in the U.S. (E-Verify status). By contrast, the spouse of an L-1 visa holder (a visa issued to those making international intracompany transfers) are not only in the U.S. legally (immigration status) but also eligible to work in the U.S. (E-Verify status).

-         Federal contractors aren't the only employers required to use E-Verify. So are employers in close to 10 states, including Arizona, and employers who hire foreign students under the new 29-month STEM (science, technology, engineering, and math) visa program.

-         E-Verify is currently set to expire on November 30, 2008, but it is likely that Congress will act to extend it and/or update it.