DHS to Implement E-Verify Rule but Revoke No-Match Rule

The Department of Homeland Security (DHS) on July 8 announced the Administration's intent to "push ahead with full implementation" of a rule requiring federal contractors to use the E-Verify system to verify employees' authorization to work in the U.S.  The E-Verify rule will apply to federal solicitations and contract awards government-wide beginning September 8.  At the same time, DHS announced its intent to issue a new regulation rescinding a rule establishing procedures for employers to follow upon receipt of a "no-match letter" from the Social Security Administration (SSA) or DHS.

E-Verify E-Verify, formerly known as the Basic Pilot Program, is an Internet-based system operated by DHS in partnership with SSA that enables employers to verify the employment eligibility of their employees.  Its use is currently voluntary under federal law and required of certain employers under state law in about a dozen states.  Pursuant to an executive order issued by President Bush, the Federal Acquisition Regulation (FAR) Council in November 2008 issued a final rule directing federal contracting officers to mandate contractor use of E-Verify in solicitations issued and contracts awarded after January 15, 2009.  In response to a legal challenge to the rule and in order to give the new Administration time to fully review the matter, the government agreed to suspend the rule on three separate occasions, with the latest delay date of September 8, 2009.   The rule requires the insertion of a new clause in certain federal contracts and subcontracts.  Prime contracts below the simplified acquisition threshold of $100,000 and those with performance terms of less than 120 days are excluded.  The clause requires the contractor to use E-Verify to confirm employment eligibility of all newly hired employees hired during the contract term and all current employees assigned to work on a federal job within the U.S.  It also allows, but does not require, the federal contractor to use E-Verify to confirm eligibility of all employees, regardless of whether they are assigned to work on a federal job.  Currently, use of E-Verify to confirm anyone other than a new hire (including applicants and current employees) is prohibited.  Click here for DHS's list of Frequently Asked Questions (FAQ's) for Federal Contractors and E-Verify.  Click here for more information about critical components of the rule. The rule applies only to employers with direct contracts with the federal government and, via a flow-down requirement, their subcontractors.  It does not apply to employers working only on federally funded projects or on other projects not under contract with a federal agency.  DHS's July 8 announcement states that the rule "extends use of the E-Verify system to covered federal contractors and subcontractors, including those who receive American Recovery and Reinvestment Act (ARRA) funds."  Presumably, DHS intended to refer only to direct federal contracts receiving ARRA funds rather than to all ARRA-funded contracts, as neither the E-Verify rule nor the ARRA itself extends the mandate to the latter. Based on the latest announcement, it seems that the government now plans to implement the rule regardless of the pending lawsuit.  It is uncertain whether the court will allow the government to proceed as planned or will enjoin implementation.   Meanwhile, the Senate is also addressing E-Verify.  On the same day that DHS issued its announcement, the Senate approved an amendment to the homeland security appropriations bill that would codify the mandate that federal contractors use the E-Verify system.  The Senate is also considering an amendment that would allow employers to use E-Verify for all employees rather than just new hires.  No-Match  The final "no-match rule" was issued by DHS in August 2007 and supplemented in October 2008.  However, it was blocked by court order shortly after issuance and has never taken effect.  A "no-match letter" is a letter from SSA informing an employer that employee Social Security Numbers submitted by the employer do not match SSA records or a letter from DHS indicating a discrepancy calling into question an employee's work authorization.  The rule set forth a safe-harbor process for an employer to follow in order to avoid a finding that its receipt of such a letter gave it constructive knowledge of a worker's illegal status.  The U.S. Chamber of Commerce, the AFL-CIO, and others filed a lawsuit arguing that DHS failed to meet procedural requirements in issuing the rule, leading to a preliminary injunction.  The litigation was still in progress when DHS, now under a new Administration, announced its intent to rescind the rule. Although AGC did not join in the lawsuit, AGC raised concerns with DHS about certain shortcomings in the safe-harbor process and about misleading content of a standard cover letter that DHS intended to insert in all no-match letters.  While the safe-harbor process in the final rule continued to contain shortcomings, it did provide employers with needed guidance about how to respond to a no-match letter.  At this time, it is unclear whether DHS or SSA will issue any new guidance.  AGC will monitor and report on any developments.  In the absence of any new guidance, however, employers that receive a no-match letter are advised to carefully follow the instructions provided in letter so as to avoid discrimination and document abuse violations, to consider following the safe-harbor process as evidence of good-faith compliance, and to seek the advice of legal counsel as needed.  For more information on the safe-harbor process and guidance on how to protect your company, click here.   Again, this issue could be affected by efforts in Congress.  The Senate has also just added an amendment to its homeland security appropriations that would prohibit any funds provided by the legislation from being used to rescind the no-match rule.  If the amendment is included in the final bill passed by Congress, DHS would be prevented from withdrawing the rule, and the fate of the rule will again fall on the litigation. Additional Information and Resources AGC will monitor all related litigation and legislation and will report on significant developments. Meanwhile, further guidance on immigration compliance is available in an MP3 download of a live educational session held at AGC's Annual HR Professionals Conference in June 2008.  An immigration law update will also be provided at AGC's next HR Professionals Conference, which will take place October 27-29, in Atlanta, GA.  Click here for conference details and registration.  For additional resources and for information on immigration reform efforts, click here.