By:  Michael H. Payne and Craig A. Schroeder

Effective September 8, 2009, federal contractors awarded new contracts of $100,000 or more with a performance period of longer than 120 days will be required to use E-Verify, an internet-based system that allows employers to electronically verify the employment eligibility of their newly hired employees.  In addition, affected contractors will also be required to confirm the employment eligibility of their current employees who perform contract services for the federal government within the United States. The contractor and any covered subcontractors on the project are required to enroll in the E-Verify program within 30 calendar days of the contract or subcontract award date.  The rule only covers subcontractors if a prime contract includes the E-Verify clause (73 FR 67704).  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.  Usage of E-Verify also applies to indefinite-delivery/indefinite-quantity contracts modified after the September 8, 2009 rule effective date.

The rule, however, exempts the following contracts:

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 ($100,000);

Contracts with a performance period of less than 120 days; and

Contracts where all work is performed outside the United States.

Employees who normally perform support work, e.g., indirect or overhead functions, and do not perform any substantial duties under the contract, are also excluded from the E-Verify requirement.

Proponents of the E-Verify rule say that it confirms the government’s commitment to maintain a legal workforce, creating more reliable employees and reducing illegal hiring practices.  They also say that E-Verify reduces discrimination against immigrant workers since employers feel confident that the new hires are authorized to work and are not using false documents.  This alleviates employer concerns about discrimination lawsuits since the employer is relying on the government for authorization.

While the system is accurate, it’s not fail-proof – if the program inaccurately rules out a potential employee, that employee may not get a job.  It also creates yet another hoop through which contractors that want to work with the government must now jump through.

This program, of course, simply adds to the recent ARRA reporting requirements, and the ethics compliance requirements, that make contracting with the federal government more and more difficult.  Contractors need to be ever vigilant in their compliance with solicitation requirements to avoid inadvertent violations that could lead to suspension and debarment.

More information about the rule can be found at and