One of NUCA’s priority issues over the past couple of years has been immigration reform. The only issue left in the debate is the enforcement-only approach, which involves increased border security and increased responsibilities for employers in terms of verifying the legal status of their workers. Although this is the only game in town regarding immigration, this game is cutthroat and American employers are on the defensive.

Traditionally, NUCA has had a two-tiered position on immigration. We have supported comprehensive immigration reform legislation that would not only increase security, but also provide incentives for the currently 13 million undocumented workers to stay and work while going through a rigorous documentation process. Unfortunately, all bets are off in terms of establishing a temporary worker program or a path to legal status for undocumented individuals — at least until the next White House and Congress are sworn in. In the meantime, all eyes are on enhanced border security and cracking down on employers who hire illegal workers.

A major rulemaking has been proposed that would force virtually all federal contractors to use the E-Verify system to check the legal status of their workers.

E-Verify 101

E-Verify is a Web-based program that electronically verifies an individual’s employment eligibility. Jointly created by the U.S. Department of Homeland Security (DHS) and the Social Security Administration (SSA), E-Verify is overseen by the U.S. Citizenship and Immigration services (USCIS). The verification process is supposed to be relatively simple. An employer enters data from “I-9” forms into the system via the Internet, which is then checked against data from SSA and DHS. The system will either return an immediate notification that the worker is authorized, or return what is known as a “tentative non-confirmation.” A worker who receives a tentative non-confirmation must resolve the issue with DHS and/or SSA or else receive a final non-confirmation, after which the employer must terminate the worker’s employment.

Critics of E-Verify cite its error rate in returning tentative non-confirmations (and the amount of time it takes to resolve those errors with the DHS and SSA) when making the point that E-Verify has to be considerably improved before its use is mandated to even part of America’s community of employers. Additionally, employers face both uncertainty and disruption when a tentative non-confirmation is returned and a newly-hired employee must be let go if it becomes final.

Provisions of Proposed New Rule

In June, a Notice of Proposed Rulemaking (NPRM) was issued by several federal agencies with authority over the federal contracting process that would require all federal contractors to enroll in and use the E-Verify system.

This followed an Executive Order issued by the White House only a few days earlier. The NPRM would require federal contractors to enroll in and use E-Verify within 30 days of the award of a contract and verify all employees “assigned to the contract” within 30 days of the date of enrollment.

After the enrollment process is complete, the contractor would have to use E-Verify for all new hires and any existing employees later “assigned to the contract” within three days of assignment. Finally, contractors would have to require all subcontractors performing work under the federal contract to adhere to the E-Verify requirement.

There are several important provisions in the NPRM that NUCA members should be aware of, most notably the following:

• The NPRM would not cover existing contracts; only contracts awarded after publication of the final rule would be subject to an E-Verify requirement.
• The NPRM does not require contractors to verify all of their employees once the employer becomes a federal contractor; verification involves only those working on federal projects.
• The NPRM would only apply to federal acquisitions (i.e., contracts appropriated with federal funds for supplies or services, including construction) valued at more than $3,000; only contracts covered by the Federal Acquisition Regulations (FAR) would be subject to the new verification requirements. (NOTE: The FAR covers the vast majority of federal construction projects).

Subcontractor Flow Down

Here’s the kicker — federal contractors would also be required to impose (or flow down) the E-Verify requirement to their subcontract personnel. That means that flow-down responsibility lies with the principal contractor, not with the subcontractor. Principal contractors would be required to include the E-Verify requirement in their contracts with subcontractors and ensure that the latter comply with the requirement. NUCA entirely opposes this provision as an overwhelming and unfair burden on general contractors.

NUCA believes that any verification system, including E-Verify, must clearly indicate that employers are held responsible for the legal status of their own, direct workers, not those of another employer such as subcontract personnel.

The bottom line here is that an employer should not be held accountable for verifying the legal status of workers that the employer does not have the authority to hire and fire.

Let’s Get It Right

If and when a final rule is promulgated and depending on what the final product looks like, contractors will have to decide whether the benefits of working on federal contracts are worth the costs of compliance. Clearly, those that continue to work in the federal market will have to closely monitor their workforce in order to ensure full compliance with the rule.

In the meantime, NUCA plans to oppose any efforts to mandate use of E-Verify unless and until the program addresses issues like safe harbor provisions for employers who use the recognized system in good faith in cases where the system fails, as well as any other provisions with a potentially negative impact on employers — e.g., the subcontractor flow-down concept.

The concept of E-Verify is sound; its operational history is not. We need to make sure we get this right before subjecting federal contractors to sweeping and overly-burdensome new verification requirements.

Eben Wyman is NUCA Vice President of Government Relations.