FAR I-9 E-Verify Rule for Federal Contractors Now In Effect--USCIS Issues Guidance

DHS/USCIS has just issued a Supplemental E-Verify Guide for Federal Contractors as well as a Press Release reminding employers that E-Verify Federal Contractor Rule (“FAR”) is effective September 8, 2009.

1. Certain federal contractors are required to enroll in and use the E-Verify system to verify Forms I-9 employment authorization of new hires and of employees assigned to federal contracts. This Rule amends the Federal Acquisition Regulations (“FAR”).

2. FAR does not apply to existing contracts. It only applies to qualifying acquisition contracts awarded on or after September 8, 2009 and certain indefinite-delivery/indefinite-quantity contracts modified after September 8, 2009.

3. FAR only applies if the contract contains language specifically requiring participation in E-Verify. The FAR E-Verify requirement only applies to contracts awarded/amended after September 8, 2009 that contain the FAR E-Verify clause. FAR E-Verify refers to these contracts as “qualifying contracts”.

4. When a contractor wins the bid on a federal contract on or after September 8, 2009 that contains the FAR E-Verify clause, the contractor is now required to enroll in the E-Verify program within 30 calendar days of the contract award date.

5. After enrollment, there is a 90-day phase-in period for the contractor to begin verifying both new and current employees under E-Verify.

6. The FAR E-Verify clause is included only in prime federal acquisition contracts with a period of performance longer than 120 days and a value above the simplified acquisition threshold ($100,000).

7. Subcontractors must also comply use E-Verify where such contracts flow from a prime contract that includes the E-Verify clause if those subcontracts are for services or for construction with a value over $3,000.

8. FAR E-Verify does not apply to contracts to be performed outside the United States, or for acquisition of commercially available off-the-shelf items.

9. FAR E-Verify does not extend to federal grants and cooperative agreements.

10. Federal contractors with qualifying contracts are generally required to E-Verify the employment eligibility of all new hires, whether they will work under the contract or not, as well as all employees assigned to the federal contracts.

11. Only those employers that have covered federal contracts that contain the E-Verify Clause may use E-Verify for existing employees.

12. Certain contractors (institutions of higher education, state and local governments, governments of federally recognized Native American tribes, and sureties performing under a takeover agreement entered into with a federal agency) have the option of using E-Verify only for employees assigned to a covered federal contract.

13. FAR E-Verify allows federal contractors to choose to verify all new hires and all existing employees hired after November 6, 1986, whether or not the employee is currently assigned to a federal contract. A contractor that elects this option must initiate verifications for the contractor's existing employees within 180 calendar days of notifying DHS that they are selecting the entire workforce option. A contractor does not have to elect the 180-day option immediately. A contractor can proceed under the general requirements and then elect, at a later point in time, the option to verify the entire workforce. This provision is intended to make it easier for contractors who may find it difficult to determine which employees have been assigned to a certain federal contract or to track which employees have already been verified.

DHS issued E-Verify Supplemental Guide for Federal Contractors that provides practical guidance regarding federal contractor enrollment in E-Verify, time-lines for verification under the Rule and the 90-day phase-in, qualifying contracts and exemptions as well as prime contractor and subcontractor obligations.

The Guide is helping in providing needed guidance regarding verification of existing employees under E-Verify. The Guide explains that contractors have two options with regard to existing employees: (1) completing new I-9 Forms for existing employees subject to the E-Verify requirement under the Rule (“Option I”); or, (2) updating the existing employees’ I-9 Forms (“Option II”). Option I may not only help avoid claims of discrimination, but it may be easier because the process is the same as that for newly hired employees.

Option II may help “to avoid possible I-9 violations” but the employer must carefully determine which cases require a new Form I-9 using the detailed guidance at Section 2.2.1; that lists many situations in which an employer, even though Option II of updating is selected, will need to complete a new I-9 including, for example, if the employee: presented a List B document that did not have a photo; had a change in his or her immigration status; changed his or her name; or, presented an expired document.

As a practical matter, not only will Option I avoid claims of discrimination due to disparate treatment, but it will also likely be easier to implement than the detailed rules for updating.

Regardless of which option is used, the employer is “required to retain any previously completed Form I-9 for that employee, and the employer “will also be required to make the previous form available for inspection if it is requested by an authorized official.” Accordingly, employers are well advised not only to retain Forms I-9 consistent with regulatory guidelines, but also regularly audit existing Forms I-9. This is especially true for Federal Contractors and other employers who sign up for E-Verify because, under the Memorandum of Understanding signed to participate in E-Verify they agree to make employment records available (including new and existing Forms I-9) to the government or its agents.