News & Information


Visit us at the new for all legal, business and health care products and services from Wolters Kluwer Law & Business


E-Verify federal contractor rule delayed until September 8, 2009

For the fourth time, the federal government has delayed the effective date of a rule amending the Federal Acquisition Regulation (FAR) to require that certain federal contractors and subcontractors use the federal government's E-Verify program, announced the US Chamber of Commerce, one of the litigants in the case challenging the legality of the rule. The parties have agreed to delay the effective date of the rule to September 8, 2009. The rule has been delayed in order to allow the Obama Administration more time to complete its review of the rule. The decision to delay was reached by agreement between the parties to the lawsuit. Therefore, as it stands now, on or after September 8, contracting officers must include the new E-Verify clause in affected contracts. In addition, contracting officers should modify, on a bilateral basis, existing contracts to include the clause on or after that date. the Federal Acquisitions Regulatory Councils will publish a notice of delay in the Federal Register on June 5.

This is not the first time the rule has been delayed. The rule was last scheduled to take effect June 30. First issued in the November 14, 2008, Federal Register, the final rule was scheduled to take effect January 15, but the federal government delayed implementation until February 20 (and changed its effective date to January 19) after the Chamber, among other business groups, filed suit challenging the legality of the rule (Chamber of Commerce v Chertoff, DMd, No 8:08-cv-03444-AW), while the lawsuit was pending. Then implementation was delayed again until May 21 "in order to permit the [Obama] [A]dministration an adequate opportunity to review the rule," according to a notice published in the January 30 Federal Register.

On January 20, President Barack Obama's Chief of Staff, Rahm Emanuel, issued a memorandum stating that executive departments and agencies should "[c]onsider extending for 60 days the effective date of regulations that have been published in the Federal Register but not yet taken effect." The Chamber requested that the federal government postpone the rule in compliance with the memorandum. The Department of Justice filed papers notifying the district court of these developments and of its intention to stay the legal proceeding during the Obama Administration's review of the rule, according to the Chamber. The Obama Administration has not yet issued a position on the rule.

E-Verify, administered by the DHS's Citizenship and Immigration Services (USCIS) bureau, in partnership with the Social Security Administration, is a voluntary, web-based program that allows employers to verify that their employees are authorized to work in the United States. E-Verify is voluntary for private employers. Over 120,000 employers participate in the program. At the time is was first scheduled to take effect, media reports indicated that E-Verify would effect more than 168,000 contractors and subcontractors.

Background. On June 6, 2008, President George W. Bush amended Executive Order (EO) 12989 (as amended) in order to direct all federal departments and agencies to require contractors, as a condition of each future federal contract, to agree to use an electronic employment eligibility verification system designated by the Secretary of Homeland Security to verify the employment eligibility of all persons hired during the contract term and for all persons performing work within the United States on the federal contract. The EO further instructed federal agencies not to do business with federal contractors who "knowingly employ unauthorized alien workers." While the EO did not specifically address whether subcontractors would also be required to enroll in E-Verify, it provided DHS with the authority to make whatever "rules, regulations, or orders" necessary to implement the EO. Further, it was not clear, according to the EO, when the new requirements on federal contractors would take effect.

At a June 9, 2008, press conference, Homeland Security Secretary Michael Chertoff designated E-Verify as the electronic employment eligibility verification system that all federal contractors must use. Three days later a proposed rulemaking implementing the EO was published in the Federal Register. The proposed rule sought to amend the FAR to require that certain federal contracts contain a clause requiring that contractors and subcontractors enroll in E-Verify to verify the employment eligibility of all newly hired employees and as well as all current employees assigned by the contractor to perform work in the United States under those contracts. The FAR is the principal set of rules in the Federal Acquisition Regulations System, which governs the "acquisition process," through which the federal government purchases goods and services.

In a final rule published in the November 14, 2008, Federal Register, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council amended the FAR to require that certain federal contractors and subcontractors use the federal government's E-Verify program to verify that all new hires and existing employees directly performing work under federal contracts must be authorized to work in the United States. Specifically, the final rule inserts a clause into prime federal contracts with a period of performance longer than 120 days and a value above $100,000 requiring the use of E-Verify. For subcontracts that flow from those prime contracts, the rule extends the E-Verify requirement to subcontracts for services or for construction with a value over $3,000.

Litigation. On December 23, 2008, a coalition of business groups, led by the Chamber of Commerce's National Chamber Litigation Center, filed suit challenging the legality of an Executive Order and related federal procurement regulations. The other plaintiffs in the suit are the Associated Builders and Contractors, Inc, the Society for Human Resources Management, the American Council on International Personnel and the HR Policy Association. The lawsuit names Homeland Security Secretary Michael Chertoff, Chairman of the Civilian Agency Acquisition Council Albert A. Matera and the United States as defendants. The complaint can be found at:

According to the Chamber's complaint, the Illegal Immigration Reform and Responsibility Act of 1996 (IIRIRA), which created the E-Verify program by Congress, states that "the Secretary of Homeland Security may not require any person or other entity to participate in the pilot program." The Act, which created the program, clarified that the program is voluntary, not mandatory. Therefore, pleads the complaint, the requirements imposed by the EO and final rule are "illegal and must be set aside" because they violate IIRIRA's express prohibition against requiring forced participation in the program. The complaint also alleges, among other things, that requiring reverification of existing employees also exceeds the IIRIRA's mandate.

According to the Chamber, the current litigation has been stayed until August 16, 2009.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

Visit our News Library to read more news stories.