The E-Verify Federal Contractor Mandate
Does It Affect You As An Employer?
Now that the mandatory federal contractor compliance deadline of September 8th has passed, many employers are still scratching their heads and wondering if Executive Order 13465, requiring the use of E-Verify applies to them or not. Executive Order aside, as an employer it is illegal to hire individuals that don’t have the right to work in the U.S.
Immigration Compliance Enforcement (ICE) is auditing businesses at a significantly increased rate, handing out civil and even criminal penalties for employers that don’t maintain proper I-9 Forms, or don’t use E-Verify as mandated by federal and state law. Twenty-six (26) states already have some type of legislation further penalizing employers for non-compliance with right to work eligibility or even the use of E-Verify. EBI’s E-Verify State Legislative Map provides an easy way to identify these legal requirements in each state with Just One click.
Effective September 8, 2009 the Federal Acquisition Regulation (FAR) E-Verify requirement clause must be included in all qualifying government contracts, and contractors and any covered sub-contractors will be required to utilize the federal E-Verify program. It is our understanding that government contracts that do not include the E-Verify requirement clause are not subject to the E-Verify requirement, and employers should classify themselves as federal contractors only when they are entered into active contracts which include this requirement. Failure to comply with these new provisions in the correct manner could result in the suspension or cancellation of a federal contract and/or debarment from future federal contracts. Here are a few qualifications to determine if the Executive Order applies to your company:
- The value of the federal contract is $100,000 or greater.
- The length of the contract is 120-days or more.
- All of the services performed under the contract are conducted inside the U.S. or a U.S. Territory.
- The services or products being provided are NOT a “commercially available off the shelf item” (COTS). A COTS item is defined as an item sold in substantial quantities to the commercial or consumer marketplace. In other words, if you can buy it at a retailer and the product you produce is a general consumer or commercial good, the Executive Order probably doesn’t apply to you. However, if the product requires a special ingredient, packaging or some special federal requirement as part of the contract, your firm probably falls within the Executive Order. In addition, bulk cargo (i.e. oil and agricultural products) are not considered COTS items.
Certain requirements within the Executive Order help employers better understand which employees are affected within a company’s payroll. The following are three (3) criterions that must be satisfied, and therefore, should be verified through the E-Verify system as part of this Executive Order:
- Any employee hired after November 6, 1986
AND - Employee works directly on the contract affected by the Executive Order
AND - Employee is located within the U.S. or U.S. Territory
Employees that provide general corporate functions or administrative support and are not directly related to a specific federal contract will probably not fall within this criterion. It is best to seek legal counsel, or refer to your federal contract directly for additional information on full compliance.
There are certain types of employers that are exempt to this ruling:
- Institutions of higher education.
- Federally-recognized Indian Tribes.
- State and local governments.
- Sureties performing under a takeover agreement entered into with a Federal agency pursuant to a performance bond.
- Please note there is no requirement to use E-Verify for employees with confidential, secret or top secret clearances.
OR - HSPD-12 credential security clearances.
These employers may opt to E-Verify either new hires or existing employees that are assigned to a federal contract that fall within the Executive Order regulations.
Employers affected by the Executive Order must register for E-Verify within 30 calendar days from the award date of the contract, or by the modification date of a federal contract or subcontract that contains the E-Verify clause. The timeline requirements for submitting queries to E-Verify depends upon your company’s E-Verify enrollment status at the time the qualifying contract is awarded. For full compliance, employers should follow the "Requirements" timeline listed below:
- Employers must begin using E-Verify for all new hires within 90 days of registration.
- Once an employer begins using E-Verify, queries must be submitted within 3 business days of the hire date for each employee.
- Employers previously enrolled in E-Verify for more than 90 calendar days must submit queries within 3 business days of the hire date for each employee.
- Employers previously enrolled in E-Verify for less than 90 days must submit queries within 90 calendar days, and then within 3 business days of the hire date for each employee.
- Employers must initiate queries for all existing employees assigned to the contract within 90 days after the registration, or within 30 days of an employee’s assignment to the contract or whichever is later.
- Employers must submit queries within 90 calendar days of award, or 90 days after assignment, or whichever is later.
The Executive Order also provides Employers the option to verify their entire workforce, both new hires and existing employees – including those not assigned to a federal contract. The employer must notify the Department of Homeland Security (DHS) through the E-Verify system and must initiate an E-Verify query for each employee in the contractor's entire workforce within 180 days of notifying DHS of this intent. It is extremely important that you review the E-Verify Supplemental Guide for Federal Contractors (M-574A) for the correct guidance pertaining to verifying your entire workforce.
There is a flow-down affect to the Executive Order that involves all Contractors and Subcontractors. A Prime Contractor is considered responsible for all aspects of a contract being performed including subcontractor compliance. The Prime Contractor is responsible for ensuring compliance of the E-Verify mandate as part of their overall contract. The term Subcontractor refers specifically to employers that are in direct support of the primary contract. Subcontractors that fall within the Executive Order requirement are as follows:
- The value of the subcontract is valued at more than $3,000.
OR - The subcontractor is supplying services or construction as part of their contract.
OR - Some portion of the contract is being performed within the U.S. or a U.S. Territory.
Please note that the Prime Contractor is not expected to monitor the individual use of E-Verify of its Subcontractor(s), however, they are responsible to ensure that all required subcontracts incorporate the E-Verify requirement clause and use the system. An example of monitoring would be for the Prime Contractor to require a Subcontractor’s certification and submission of an E-Verify registration numbers to the federal government if requested.
In addition, employers are not required to use E-Verify for their Independent Contractors. However, if the Independent Contractor is a Subcontractor under a federal contract with a Federal Acquisition Regulation (FAR) clause, the E-Verify requirement will apply to the Independent Contractor, and must complete a Form I-9 for its own employees.
EBI recommends that employers review the E-Verify Supplemental Guide for Federal Contractors (M-574A) in detail prior to taking action to comply with Executive Order 13465. Please visit www.uscis.gov/e-verify for the most current information, additional downloads, and answers to frequently asked questions. In addition, there are many helpful documents available for download on the EBI website at www.ebiinc.com/downloads.html.
EBI is committed to providing employers with valuable education and resources on changing legislation and cutting-edge and compliant solutions to meet federal mandatory requirements. EBI’s Employment Eligibility Compliance Solutions help keep you compliant, and keep ICE from showing up at your company door.
All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided within this article should be deemed as legal guidance or advice. Readers should consult with their own legal counsel to determine their legal requirements or if they have questions on any information provided by EBI.
Read Past Editions of The Source
All information contained herein is provided by Employment Background Investigations solely for the convenience of its clients. EBI is not providing legal advice or counsel and nothing provided on this document should be deemed as legal guidance or advice. Readers should consult with their own legal counsel to determine their legal responsibilities or if they have questions on any information provided by EBI.