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E-Verify Rule for Federal Contractors Takes Effect

Bill Leonard

After several delays and a challenge in federal court, a regulation requiring federal contractors to use E-Verify took effect on Sept. 8, 2009.

On Aug. 26, 2009, a federal district court in Maryland rejected a legal challenge mounted by several business groups to block the federal government from implementing the rule. The district court ruled that the Departments of Justice and Homeland Security could proceed with plans requiring federal contractors to use E-Verify—the electronic employment verification system operated by the U.S. Citizenship and Immigration Services.
 
Starting on Sept. 8, federal contracts worth more than $100,000 and subcontractors must comply with the new regulation. The rule requires federal contracts to include a clause that stipulates that businesses must use E-Verify to determine if all new hires and existing employees performing work directly on the contracts are eligible for employment in the United States.
 
However, the regulation won’t affect all federal contracts immediately and will apply only to federal contracts awarded or renewed after the Sept. 8 effective date. The rule does require federal agencies to review their existing contracts and work with contractors to amend the agreements to include the E-Verify requirements if the contract delivery dates or work arrangements extend six months beyond Sept. 8. Businesses that sign contracts with the federal government will be required to enroll in E-Verify within 30 days of the contract award date. After enrolling to use E-Verify, contractors will have 90 days to implement the program and verify the work eligibility of new hires and existing employees.
 
The business groups that filed the lawsuit to block the rule had filed an appeal of the district court ruling with the 4th U.S. Circuit of Appeals. In the appeal, attorneys for the business groups, which include the U.S. Chamber of Commerce and the Society for Human Resource Management (SHRM), asked the appellate court to issue an emergency injunction and stop the regulation from taking effect on Sept. 8.
 
Several sources familiar with the issue say that the appeals court might be reluctant to issue an injunction and overturn the lower court’s decision so quickly. However, Larry Lorber, a partner with Proskauer Rose, the law firm representing the business groups, said that the case against the government’s new regulation is a strong one.  “We still have a very good chance that the 4th Circuit will agree with our arguments and issue an injunction,” Lorber said.
 
Still, experts say that companies that hold federal contracts or are looking to do business with the federal government should be prepared to comply with the new regulation. “The bottom line is that federal contractors should get ready and understand what they must do to comply with the new requirements,” said Nancy Hammer, manager of regulatory and judicial affairs for SHRM.
 
To help businesses comply with the new regulation, SHRM has scheduled the webcast, “Employment Verification: New Rules for Federal Contractors and Employers,” at 2 p.m. Sept, 10, 2009. The webcast will review the new requirements for federal contractors and how to respond to the changes. The program will feature Michael Aitken, SHRM director of government affairs, Lynn Shotwell, executive director, American Council on International Personnel, and Cynthia Lange, a partner with Fragomen, a law firm that specializes in immigration law.
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