Government Contractors Must Verify Employees' Work Eligibility

In response to Congress's failure to put forth comprehensive immigration reform, President Bush issued an executive order that will require all federal contractors to use E-Verify, the U.S. Department of Homeland Security's electronic employment eligibility verification system, when they enter into a contract with a federal agency. While it is not unusual for federal contractors to be held to different or higher standards than other U.S. employers, this is a major development that could have significant effects on federal contractors such as staffing firms.

Section five of the executive order requires contractors to "use an electronic employment eligibility verification system designated by the secretary of homeland security, Michael Chertoff, to verify the employment eligibility of all persons hired during the contract term by the contractor to perform employment duties within the U.S., and all persons assigned by the contractor to perform work within the U.S. on the federal contract."

While proponents of the system applaud the latest move, saying that the administration is setting an example for other employers, some critics are concerned that the implementation of this order is going to be very difficult. Paul C. Light, a New York University professor and federal contracting expert, says, "I just don't know how the administration is going to enforce this. Who is responsible for making sure the sub-sub-subcontractor is using E-Verify?"

DHS has announced that the Office of Management and Budget completed review of a proposed rule that will implement the executive order. The rule will amend the Federal Acquisition Regulation to require that all covered federal contracts entered into after the effective date of the final rule contain language imposing, as a performance requirement, that the contracting party enroll in and use E-Verify for all employees working on the contract and all new hires during the life of the contract.

The OMB's proposed rule is subject to a 60-day comment period. After the comment period closes, the government will have to consider all comments received and address them in a final rule, which must then be reviewed and published in the Federal Register. It will thus be some time before staffing firms will see language in federal contracts stating that they must enroll in and use E-Verify. ASA is conducting a detailed review of the proposed rule.