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E-Verify Best Practices for Federal Contractors
 

By Dawn M. Lurie  6/6/2013
 

The Federal Acquisition Regulation (FAR) E-Verify clause for federal contractors went into effect in September of 2009. While the government does not charge contractors to use the program, companies should be cognizant of the operational costs associated with E-Verify, including costs connected to training, monitoring and verifying compliance with the system. In the case of federal contractors, E-Verify must be used to verify all new employees as well as existing employees assigned to a contract. However, there is also an option available to verify an entire existing workforce upon receipt of a qualifying federal contract.

Not every federal contract, however, will be subject to the FAR E-Verify requirements.

FAR exempts:

  • Federal contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services.
  • Contracts of less than the simplified acquisition threshold (currently $150,000).
  • Contracts that have a duration of less than 120 days.
  • Contracts where all work is performed outside the United States.

There are other employee-related exemptions that federal contractors should be familiar with, including employees hired before November 7, 1986; employees with specific security clearances; and employees that have previously been processed through E-Verify by the federal contractor.

Compliance Is Not Negotiable

To date, the government has been fairly lackadaisical in its review of E-Verify compliance. Accordingly, it is not surprising that E-Verify compliance may not fall very high on a federal contractor’s list of legal concerns. However, with a comprehensive immigration reform package that includes a mandatory E-Verify provision and new laws percolating in the states, contractors should reconsider their priorities. Increased enforcement is likely and a proactive review of current E-Verify related processes, including subcontractor flow-down, is recommended.

In fact, U.S. Citizenship and Immigration Services (USCIS), the agency that runs the E-Verify program, has beefed up its Monitoring & Compliance Branch’s activity to detect, deter and reduce misuse, abuse and fraud. And who can blame it? The agency clearly wants to be in a position to provide detailed E-Verify data and good-looking numbers to Congress as the immigration debate heats up in Washington, D.C. Fortunately for USCIS, ample funding has been designated for the program. As a result, participants have benefited not only from an extraordinary increase in E-Verify resources and training aides, but also from immensely improved technology.

It is no surprise that along with the increased funding comes increased monitoring of usage. In fact, USCIS site visits and desk reviews appear to have escalated. A number of companies recently have received calls informing them they are not in compliance with E-Verify procedures. The calls are friendly and are sometimes coupled with an “offer of assistance” in the form of a USCIS visit. By the way, it is an offer you cannot refuse without being viewed as uncooperative—not a good thing for a government contractor.

Such visits and calls from the USCIS’ Monitoring & Compliance Branch are to be taken very seriously. Accordingly, federal contractors not only should review and revise, but truly understand, the processes they have in place for E-Verify as well as the entire Form I-9 process. Such processes also should be tested periodically for accuracy and efficacy. Federal contractors should want to know whether their E-Verify policies actually are working in the field the way they are written on paper. Nothing a company is doing should be a surprise to the general counsel’s office, and nothing in the E-Verify reports should read like a foreign language to the individuals charged with overseeing the system.

Debarments and Other Penalties

Federal contractors will continue to be responsible for E-Verify compliance for the foreseeable future. The consequences of a failure to use the E-Verify program leading to the loss of current and future federal contracts should not be downplayed. Federal contractor compliance with the E-Verify MOU is a performance requirement under the terms of the federal contact. As such, termination of the contract for failure to perform is one potential consequence of noncompliance with the MOU. Suspension or debarment, of course, also may be a potential consequence where the violation suggests the contractor is not responsible. Indeed, the E-Verify program’s suspension and debarment enforcement activities are being ramped up.

In fiscal year 2012, Immigration and Customs Enforcement debarred 142 businesses and 234 individuals. Federal contractors need to take this enforcement activity seriously as it likely will increase in the face of mandatory E-Verify.

In short, now is the time for companies proactively to review internal polices, perform the necessary risk assessments, conduct the Form I-9 exposure as well as anti-discrimination audits, and then take ownership of any changes or improvements that need to be made.

Best Practices for Federal Contractors

There is no doubt that E-Verify is a best practice. However, it is not a replacement for background checks and other post-employment screenings and safeguards monitoring the system. In fact, the E-Verify system is still very much prone to identity theft, and must internally be monitored for misuse and overall compliance. While the government agrees that E-Verify usage creates a “rebuttable presumption” that a company has not knowingly hired an unauthorized alien, there still can be problems. In fact, employers may face civil and criminal liability if, based upon the totality of the circumstances, it can be established that they knowingly hired or continued to employ unauthorized workers. Remember, a federal contractor’s participation in E-Verify does not provide a safe harbor from worksite enforcement. The Department of Justice’s Office of Special Counsel also takes E-Verify violations very seriously and continues to open investigations involving abuse of the system.

While not an all-inclusive list, federal contractors would be well-served by considering the following proactive steps:

*Provide biannual training to anyone who is a user in the system. As E-Verify ramps up its site visits and desk reviews, compliance is more important than ever. Ensure your I-9 compliance is also in shape, as the I-9 data feeds into the E-Verify system.

*Verify your company has a viable policy established to flow-down the E-Verify requirement to your subcontractors and vendors. E-Verify usage is a flow-down requirement; prime contractors are required to take steps to ensure that subcontractors for services or construction of more than $3,000 also implement the rules. Regardless of the size of your company, verify this process and take the extra step of seeing how it works in practice.

*Create a subcontractor verification system. While the scope of a prime contractor’s flow-down responsibilities to subcontractors and identifying which subcontracts are subject to E-Verify were not clearly defined in the FAR regulation, many believe merely having a copy of the “E-Verify Enrollment Page” of the subcontractor will not be enough when things go wrong.

*Carefully review the E-Verify exemptions. Limited exemptions for COTS contracts, contracts where work is performed outside of the United States, and for employees with specific active security clearances exist but are often harder to segregate and rely on than general usage of E-Verify. Consistency is key in deciding when to use E-Verify.

*Review overall immigration and visa compliance. In today’s world, it is simply not acceptable for employers, particularly large ones, to rely on an “off-the-shelf” compliance approach. Policies, electronic I-9 and E-Verify systems all must be vetted and monitored. Audits that review overall immigration compliance programs should address E-Verify compliance risk factors. Moreover, an independently audited immigration compliance program preserves attorney client privilege and could protect employers from debarment or involuntary suspension from the E-Verify program. Specifically such a review should include the company’s Form I-9s, visa processes and E-Verify reports.

*Review E-Verify usage. Do not assume everything is working the way it is supposed to. Someone needs to roll up their sleeves, and get dirty ensuring all users are closing cases correctly and ensuring all users know how to process tentative nonconfirmation notices. Reviewing E-Verify reports should be an ongoing, frequently completed task for someone in the organization. If you use an electronic I-9 system, it is even more important that you review the status of cases as well as historical data as often as possible. E-Verify only works well if a company first understands the importance of Form I-9 compliance.

*Review your Memorandum of Understanding (MOU) with USCIS. The E-Verify program requires companies to agree to certain conditions upon enrolling in the system via the MOU. Do not take these responsibilities lightly. Ensure the specifics of the E-Verify agreement are accurate and up-to-date. For example, does the company still have two hiring sites? Is the company no longer performing E-Verify from the centralized location noted in the MOU?

We still run across government contractors that are not enrolled in the E-Verify program or not correctly enrolled. We also routinely run across large prime contractors that have not adequately implemented their E-Verify program and flow-down procedures.

*Consider the impact of E-Verify as it pertains to any union presence the company may have. A careful review of the National Labor Relations Board claim that use of E-Verify should be bargained is something to be carefully reviewed by federal contractors and their affiliates.

Ensure you track employees assigned to contracts if your entire workforce was not verified at the onset. It is critical to have someone charged with knowledge of which employees are assigned to a contract within the meaning of the regulations and a system in place to verify any legacy employees that have not previously undergone verification.

*Review E-Verify in the context of your current corporate structure or in terms of a merger, acquisition or other restructuring. A careful assessment of a federal contractor’s E-Verify-related responsibilities and the associated timelines involved during any restructuring must be carefully considered. It is also important to analyze which affiliated entities are considered under government contract for purposes of the E-Verify clause. An affiliate or subsidiary with a different Employer Identification Number may not necessarily be subject to the E-Verify provisions.

Dawn M. Lurie is a partner in Sheppard Mullin’s Labor and Employment practice group and leader of the firm’s Business Immigration and Compliance practice, based in the firm’s Washington, D.C., office.

Related Articles:

Senate Bill Mandates E-Verify for All Employers, SHRM Online Global HR, April 2013

ACIP, SHRM Release Solutions for Employment-based Immigration, SHRM Online Global HR, March 2013

Mandatory E-Verify Central to Immigration Reform, SHRM Online Global HR, March 2013

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