On September 8, 2009, regulations (73 FR 67704) requiring federal contractors to use the flawed E-Verify system, the federal government's employment verification program to determine an employee’s legal work eligibility went into effect. 

The new regulation represents a joint agreement between the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council to amend the Federal Acquisition Regulation (FAR). According to the Department of Homeland Security (DHS), it reinforces the federal government’s policy to conduct business with organizations that employ a “legal workforce.”

The regulation was first published on June 13, 2008 by the Bush Administration to implement a June 6, 2008 Executive Order (No. 12989).  Its enactment was postponed four times in response to a legal challenge and to give the Obama Administration time to review it; however, on July 8, Department of Homeland Security Secretary Janet Napolitano announced that after reviewing the federal contractor requirement and the E-Verify program generally, the regulation would go into effect on September 8, 2009.

NMHC/NAA have opposed mandatory E-Verify participation because of the program’s inaccuracies and inability to address identity theft and document fraud. The system relies on the same documents that render the I-9 process vulnerable to fraud and error.  We have also argued that employment verification is just one component of comprehensive reform that is necessary to modernize our federal immigration policy.  

Overview and Applicability to Apartment Firms

The general application of the regulation, compliance options and calendar deadlines depend on various factors that include, but are not limited to, whether a company already participates in the E-Verify Program.  Consultation with an attorney and federal contracting officer is recommended to assist you with determining your obligations under the new regulation.  

The regulation requires covered federal contractors to enroll in the E-Verify program within 30 days of a contract award that exceeds $100,000 and covers more than 120 days.  Subcontractors for services or construction with a value of more than $3,000 are also covered. 

Once enrolled in the program, contractors must begin to screen ALL new hires within 90 days and existing staff who are working on a covered contract within 120 days.

The rules are different for contractors already using E-Verify.  If an employer was already enrolled prior to September 8, but for fewer than 90 days, then it must begin to screen existing employees within 90 days of enrolling or 30 days of assigning staff to a covered contract, whichever is longer.

If an employer has been enrolled for more than 90 days, it must screen new employees within three days of hiring them and existing workers within 90 days of a contract award.  If an employer chooses to retroactively screen its entire staff, including employees who do not work on covered contracts, it must advise the Department of Homeland Security and complete the re-verification process within 180 days.

Importantly, employers that are not federal contractors or that have a contract without the FAR E-Verify clause are actually prohibited from screening current employees until they are awarded a contract that includes the new regulatory requirement.  Indefinite contracts with performance periods extending more than six months beyond the effective date of the regulation may be amended by a federal contracting officer to include the E-Verify requirement.

NMHC/NAA’s analysis of the final regulation indicates that firms will probably be covered if they have an agreement solicited and entered into after September 8 with a federal agency that incorporates the FAR into its acquisition contracts.  Such agencies will update their contract language to include the E-Verify requirement within a year.

Firms with federal contracts, including those that participate in project-based Section 8 and military housing, are encouraged to consult with an attorney to evaluate the impact of the regulation.  We are undertaking a careful review of various housing and property management programs within the U.S. Department of Housing and Urban Development and other federal agencies and will report our findings.  We suggest that you consult with your counsel for advice about particular contracts and circumstances, and to ensure compliance with the requirement going forward.

Legislation

The Obama Administration and Congress support a federally controlled employee screening system.  The Senate version of the DHS appropriations bill (H.R. 2892) includes the requirement; however, the House version merely extends the E-Verify program but it does not include the federal contractor requirement.

Congress has considered various legislative proposals to extend and/or modify E-Verify, or replace it with a new system, for years.  Senator Charles Schumer (D-NY), a leading supporter of comprehensive immigration reform, has indicated his support for a system that incorporates a biometric identification component.

Litigation

On August 25, a federal court in Maryland upheld the regulation in a lawsuit brought by a coalition of business groups (U.S. Chamber of Commerce, et al. v. Napolitano, Civil Action No. AW-08-3444 (D. Md. Aug. 25, 2009)).

The court granted the federal government's cross motion for summary judgment, rejecting the business coalition’s arguments that the executive order and regulation violate the Illegal Immigration Reform and Immigrant Responsibility Act's (IIRIRA) prohibition against requiring participation in the program and retroactive screening, among others raised by the coalition.

On September 4, that court rejected a subsequent motion filed by the U.S. Chamber of Commerce and several other business groups to put the regulation on hold pending an appeal to the U.S. Court of Appeals in Richmond.

Resources

• Federal Register Notice: http://edocket.access.gpo.gov/2008/pdf/E8-26904.pdf
• Executive Order: http://edocket.access.gpo.gov/2008/pdf/08-1348.pdf

Staff Contact

For more information, please contact Betsy Feigin Befus, NMHC Vice President of Employment Policy and Counsel, at 202/974-2339 or bbefus@nmhc.org.