The Federal government has recently adopted a requirement that federal contractors must use an electronic employment authorization system. The following article outlines this rule, how it works, and to whom it is applied. CSU campuses for the most part do not have the type of contracts with the federal government that would trigger this new E-Verify requirement (see especially “Does the new E-Verify rule apply to my college or university?”). Research grants and contracts are not covered by the new requirement. Nevertheless, detailed information about the E-Verify requirement is provided below so campuses can review unusual contracts as a possible exception and understand the consequences of entering into them. If you have any questions, please contact Patty Bartscher, University Counsel or call 415-338-2998.

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E-VERIFY: Compliance for College and University Federal Contractors

 

INTRODUCTION:

Many colleges and universities perform contract work for the federal government. On June 6, 2008, President Bush issued Executive Order (EO) 13,465 [1]. This EO mandates that covered federal contractors enroll in what had previously been a voluntary program to electronically verify the social security number and employment authorization of employees through a web-based E-Verify system [2].

The Department of Homeland Security (DHS) issued final regulations (the Rule) implementing the Executive Order on November 14, 2008 [3]. These regulations became effective September 8, 2009 [4]. The Rule generally requires federal contractors to enroll in and use the E-Verify system to check the employment authorization of all new hires and all existing employees assigned to covered federal contracts. Under the Rule, colleges and universities may also choose to E-Verify all their existing employees (as well as new hires) [5], or just those employees (newly hired and existing) assigned to covered federal contracts.

This Note discusses how the new E-Verify Rule applies to colleges, the compliance options, the risks, and best practices.

 

DISCUSSION:

What is E-Verify?

What is E-Verify? E-Verify is an internet-based system operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA). The system permits employers to electronically verify their employees’ authorization to work in the United States. E-Verify has been in existence as a voluntary program since 1996 [6]. It does not replace the existing I-9 identity and employment verification process that all employers, not just federal contractors, must use when hiring new employees. Rather, E-Verify supplements the existing I-9 process by comparing employee identification information against DHS’ electronic records and SSA’s name and social security number database [7].

Does the new E-Verify Rule apply to my college or university?

The final rule only applies to solicitations issued and contracts awarded pursuant to the Federal Acquisition Regulations (“FAR”) after September 8, 2009 [8]. In addition, the Rule requires that the contract contain language specifically requiring participation in E-Verify. Thus, the E-Verify Rule only applies to contracts awarded on or after September 8, 2009 that contain the FAR E-Verify clause [9]. Certain existing indefinite-delivery/indefinite-quantity (IDIQ) contracts may also be subject to the Rule, if they are modified after the effective date [10].

The Rule requires the insertion of the E-Verify clause for prime federal acquisition contracts with a period of performance longer than 120 days and a value above the simplified acquisition threshold ($100,000) [11]. Subcontracts are covered 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 [12]. The Rule does not apply to contracts to be performed outside the United States or for acquisition of commercially available off-the-shelf (COTS) items [13].

The Rule’s comments also clarify that the term “contract” as used in the Rule does not extend to federal grants and cooperative agreements [14]. The Rule only applies to acquisitions by the federal government and its agencies that are covered by the FAR. Because the FAR ‘s definition of “contract” explicitly excludes grants and cooperative agreements [15], they are not subject to the E-Verify Rule. As the preamble to the Rule explains, “the FAR already defines the term ‘contract’ and the term does not include grants or cooperative agreements. A grant or cooperative agreement that is not governed by the FAR is not required to include the clause in this rule [16].”

If your university does not have a qualifying federal contract that contains the FAR E Verify clause, the university is not a “federal contractor” subject to the Rule and E-Verify is not mandatory pursuant to federal law [17].

If my university signs a contract containing the FAR E-Verify clause, what is it obligated to do?

A university winning a bid on a federal contract with a FAR E-Verify clause on or after September 8, 2009 must enroll in the E-Verify program within 30 calendar days of the contract award date. A university, as does any other federal contractor, enrolls by signing a memorandum of understanding (MOU) [18] with DHS. At the time of enrollment, the university must decide which employees it will E-Verify. As a general rule, federal contractors with qualifying contracts are required to verify the employment eligibility of all employees assigned to the contract and all new hires, whether they work under the contract or not. But certain contractors, such as colleges and universities [19] and state and local governments, have the option of limiting the use of E-Verify to employees (existing and new hires) assigned to covered federal contracts [20].

What employees are exempt from E-Verify?

Consistent with I-9 requirements under IRCA, all employees hired before November 7, 1986 are exempt from E-Verify and should not be queried under the system. In addition, the Rule exempts individuals who have been:

  • previously verified by the employer under E-Verify;
  • granted an active U.S. Government security clearance for access to confidential, secret, or top secret information in accordance with the National Industrial Security Program Operating Manual; or
  • granted Homeland Security Presidential Directive (HSPD)-12 Security clearance [21].

Who are “assigned employees”?
“Assigned employees” are those in the United States performing work directly on the covered contract [22]. An employee is not performing work directly on the contract if the employee normally performs support functions, or indirect or overhead functions, such as secretarial, janitorial or administrative services, and such employee is not performing substantial duties on the contract [23].

What if it is too difficult to determine who is assigned to work directly under the covered contract?

If a university finds it cannot consistently and accurately determine who is working on a covered federal contract and complete the E-Verify query within the allotted time [24], it can instead elect to E-Verify all existing employees, including student workers. A university must complete this process within 180 days from the time of election [25]. Note that while E-Verify system programming previously did not allow a university to select the option to verify all existing employees, the DHS E-Verify team recently confirmed that it will modify the system in December 2009 to allow universities to select the option to verify all existing employees [26]. Universities may want to consider disadvantages of making this election discussed below.

What does a university have to do after enrolling in the E-Verify Program?

  • Continue to complete an I-9 Form for every new hire.
  • Begin submitting a query to the E-Verify system on every new hire, no later than three (3) business days from the hiring date [27]. If your university is not yet enrolled in E-Verify, it has a ninety (90) day phase-in period to do this [28].
  • Query existing employees assigned to work under the federal contract within ninety (90) days from the contract award or thirty (30) days after assignment to the contract, whichever is later [29].
  • If the 180 day option is selected, E-Verify all new hires within three days of hire and E-Verify all existing employees within 180 days of the election, and [30]
  • Include E-Verify compliance clauses in covered sub-contracts and adopt procedures to ensure insertion of the E-Verify clause and E-Verify compliance.

In addition, the MOU that a university federal contractor signs to enroll in the new E-Verify system requires it to undertake the following responsibilities:

  • Post a notice informing prospective employees that the university is an E-Verify participant.
  • Post an Anti-Discrimination Notice issued by the Department of Justice Office of Special Counsel that is visible to prospective employees. Note, using E-Verify does not provide protection from claims of discrimination [31].
  • Become familiar with the E-Verify User Manual. Any Employer Representative that performs queries must also complete the E-Verify tutorial.
  • Write the E-Verify query # on the I-9 Form OR attach the E-Verify results to Form I-9 and retain them for the same duration as the form.
  • Provide thirty (30) days notice to DHS before terminating participation in the E-Verify program.
  • Properly handle receipt of notification from E-Verify that the system is initially unable to verify work authorization, commonly known as a Tentative Non-Confirmation (“TNC”), including advising the employee of the TNC, referring the employee to the appropriate agency and continuing to employ the employee while the TNC is pending, unless the employer obtains other independent evidence of unauthorized status.
  • Notify the government should the university continue to employ an individual after receiving a final determination that the employee is not authorized to work, commonly known as a Final Non-Confirmation (“FNC”) [32].
  • Agree to allow the government to interview university employees and to make available for government inspection all of their E-Verify records, as well as, related I-9 and other personnel records [33].

What are the general guidelines for university employers using the E-Verify system?

  • E-Verify procedures must be applied equally to all U.S. citizen and non-citizen employees.
  • E-Verify should not be used to pre-screen employees. Use it only after a written offer of employment is accepted and a Form I-9 is completed.
  • Unless the employer is a federal contractor, E-Verify can only be used to verify university employees hired after enrolling in the E-Verify program.
  • E-Verify cannot be used to query existing employees unless the university has signed a qualifying federal contract.
  • E-Verify queries must be conducted under the timelines set forth above, unless there is no social security number available for the employee.
  • E-Verify does not relieve university employers of the I-9 employment eligibility verification requirement.
  • Form I-9 requirements remain the same with the exception that E-Verify participating employers can only accept “List B” identity documents that have a photograph.

All employers, universities included, should follow consistent I-9 procedures and audit I-9 records of all current employees for compliance with IRCA [34]. This advice also applies to those who choose to sign up voluntarily under E-Verify, because those employers agree, through the MOU, to site visits, employee interviews and the production of employment documentation.

Finally, DHS has stated that it engages in “data mining”, which means that DHS actively reviews individual employer’s activity in E-Verify to ensure compliance. As a result, investigations are more likely to happen than they would under the old I-9 complaint based audit system. As a result, employers that participate in E-Verify are advised to diligently follow all E-Verify rules and to establish detailed training and compliance programs to ensure continued compliance [35].

Are there disadvantages to participation in the E-Verify Program?

Some of the most potentially significant disadvantages for universities that participate in E-Verify are:

  • The high error rates [36] and unresolved privacy and identity theft concerns [37] affecting the government databases on which E-Verify relies.
  • Possible increased exposure to investigations and worksite enforcement actions. Participation in E-Verify does not provide a safe harbor from worksite enforcement. Instead, the MOU contains provisions which allow for the federal government and designees to conduct site visits, have full access to employment records, and interview employees. By entering into the MOU, the employer may arguably be waiving its Fourth Amendment rights and allowing the government free access to employment records.
  • For those universities electing to enroll all employees, not just those working on federal contracts, the increased administrative burden created by large numbers of foreign national employees entering a semester-based hiring system is significant. Many of these foreign nationals are F-1 and J-1 students in the Student Exchange Visitor Information System (SEVIS). At present, the SEVIS system does not fully link up with the E-Verify system. As a result, foreign national students often receive initial TNCs. Universities may also face increased TNCs for non-student foreign national employees having work-authorized visas such as the H-1B because E-Verify has similar inaccessibility problems with the Computer Linked Applicant Information Management System (CLAIMS) used to verify work-authorized visas. Together, these issues could produce an immense administrative burden at the beginning of a term, when most hiring takes place [38].
  • Federal contractors will also have additional burdens for qualifying subcontracts and they must develop procedures to comply with the rule, including, for example, assuring that the E-Verify clause is inserted into all such contracts.

, anticipated or current legislation or litigation that could also impact a university’s obligation to participate in E-Verify?

Yes. Both pending federal legislation, as well as current and pending state legislation, may impact a university’s obligation to participate in E-Verify. For instance, a bill currently making its way through Congress would expand the number of employers required to use E-Verify [39].

Because the E-Verify program is temporary in nature, it must be renewed periodically by Congress. On October 29, 2009, President Obama signed into law an extension of the E-Verify program until September 30, 2012 [40].
Additionally, there has been increasing interest by Congress and the Administration in comprehensive immigration reform. It has been reported that the Administration, as well as many in Congress, would require E-Verify to be included in any such immigration reform.

of state laws also require employers to participate in E-Verify. These laws can be divided into three basic categories: (1) laws that require all employers in the state to participate in E-Verify, (2) laws that require public or state employers to participate and (3) laws that require those contracting with the state or political subdivisions within the state to participate in E-Verify. The penalties for non-compliance vary by state and may include loss of business licenses and the ability to conduct business in the state, loss of state contracts as well as civil fines and penalties [41].

The U.S. Chamber of Commerce is also challenging the Rule in court on the grounds that the President exceeded his authority in promulgating the Rule. The lawsuit alleges that the Rule exceeds the authority granted by Congress to the Executive Branch when the E-Verify program was created [42]. It points out that the regulations mandate that certain contractors must verify work authorization of their new hires through enrollment in and use of the E-Verify system; however, when Congress established the E-Verify program, it explicitly stated that no employer could be required to participate in such a program. The plaintiffs also argue that the Rule requires contractors to verify the employment eligibility of any current employee assigned by the contractor to perform work within the United States on the federal contract, but such “reverification” of current employees who have already been subject to I-9 requirements at the time of hire is barred by statute. On August 26, 2009, the U.S. District Court for the Southern District of Maryland held that the Rule was valid because the President has broad discretion to regulate government contracting under the Procurement Act; the Rule did not contravene IIRIRA since “entities can simply choose not to be a government contractor and thus will not be forced to use E-Verify;” and, while IIRIRA only refers to E-Verify for new hires, nothing in IIRIRA “explicitly prohibits the Executive Branch from using E-Verify for current employees [43].”  On September 9, 2009, the Fourth Circuit Court of Appeals denied the Appellant’s motion for an injunction pending appeal without specifying its reasoning [44].

What practical steps should colleges and universities take to prepare for E-Verify and the Federal Contractor Rule?

Aside from deciding whether the institution must participate under state law or under federal law as a federal contractor, colleges and universities, because of their often decentralized nature, should strive to develop consistent policies to comply with I-9 and E-Verify requirements. The key issues these policies should address include:

  • Determining whether the institution must participate and, if so, the legal basis of their participation, state law requirements or federal contractor requirements;
  • Auditing existing I-9 files. This is especially important if the university is obligated or decides to participate in E-Verify because the MOU requires the institution to produce I-9 and related records, even for those employees unrelated to E-Verify that are not afforded presumptive protection under E-Verify;
  • Updating I-9 policies to require that any “List B” document contain a photo, if the institution participates in E-Verify;
  • If the university is subject to the Federal Contractor Rule, deciding which E-Verify option to elect (i.e., 180 day option for all workers or the university exemption requiring E-Verify only for employees (new hires and existing) assigned to the covered contract);
  • Developing a process to identify and track potential/subject federal contracts;
  • Developing a process to track those employees assigned to federal contracts, assuming the 180 day option is not selected;
  • Identifying a Human Resources (HR) employee with overall responsibility for covered federal contracts and E-Verify compliance for such contracts;
  • Developing a process to track employees assigned to contracts queried under E-Verify (the current USCIS position is that such employees should only be run through E-Verify once);
  • If the institution decides to participate in E-Verify, determining whether to conduct queries internally or through a designated agent [45];
  • Deciding whether to use an electronic I-9 system to facilitate E-Verify queries as well as electronic I-9 systems that may have features to ensure proper I-9 completion [46];
  • Deciding whether the I-9 and E-Verify process should be conducted by departments/smaller groups or by a central HR unit;
  • Even if the process is conducted in a decentralized manner by departments, assign a central employee with overall responsibility for I-9 process and E-Verify;
  • Even if E-Verify queries are conducted by departments, consider having a central HR unit deal with any E-Verify non-confirmation. This is recommended to insure a uniform process and handling and avoidance of possible discrimination charges;
  • Determining which individuals should be designated E-Verify program administrators and E-Verify users [47];
  • Developing an initial training program and E-Verify launch procedures;
  • Conducting on-going periodic I-9 and E-Verify training both for new employees and as a refresher for current employees;
  • Developing a process for ensuring that the E-Verify clause is included in applicable subcontracts.

To ensure that the university is consistently handling I-9 and E-Verify issues in compliance with current law, the above issues should be addressed by the institution and incorporated into the institution’s I-9 policies and procedures. Institutions are also advised to consider these issues because increasingly institutions are being required to participate in E-Verify pursuant to state law.

 

CONCLUSION:

he E-Verify Rule presents several compliance challenges for universities. These include deciding whether they want to participate in federal contracts governed by the Rule and, if so, determining which option concerning E-Verification of new hires and existing employees to select. In order to best ensure compliance, it is also recommended that universities establish policies and procedures that include regular audits as well as I-9 and E-Verify training. An effective compliance program is essential, as failure to comply with the Rule may result in debarment from receiving future federal contracts.

FOOTNOTES

 

AUTHORS:

Elise Fialkowski, Partner, Klasko, Rulon, Stock & Seltzer, LLP

Helen Konrad, Partner, Immigration Practice Group ("IPG"), McCandlish Holton

 

RESOURCES:

Statutes and Regulations:

Federal

Executive Orders:


Statutes


State Laws


Regulations

EVerify: Further Delay of Effective Date



Agency Guidance:

· E-Verify


Form I-9 Resources

No-Match Letters



E-Verify Caselaw



NACUA Resources:

Resource Pages

E-Verify Resource Page

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Last updated: February 01, 2010

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