E-Verifiy Proposal a Headache for Small Business

E-Verifiy Proposal a Headache for Small Business

June 24, 2008

On June 12, 2008, the Federal Acquisition Regulation Council published a proposed rule to require most federal contractors and subcontractors to participate in the Homeland Security Department’s (DHS) E-Verify system, formerly known as the Basic Pilot Program. The system is used to check the eligibility of employees to work in the United States.

The proposed rule:

Requires the insertion of a clause into government prime contracts and subcontracts that include work in the United States for over $3,000, other than contracts for commercially available off-the-shelf items.

Requires a contractor or subcontractor to enroll in the E-Verify program within 30 days of contract award, begin verifying the employment eligibility of all new and existing employees of the contractor or subcontractor that are hired after enrollment in E-verify, and continue to use the E-Verify program for the life of the contract.

Requires departments and agencies to amend existing indefinite-delivery/indefinite-quantity contacts to include the clause for future orders if the remaining period of performance extends at least six months after the effective date of the final rule.

If an employee’s status is not verified, the contractor must terminate the employee immediately. Employees who choose to contest the results would have eight days to do so at a Social Security Administration Office. The proposed rule does not indicate what penalties will be given for employers who do not use the system or adhere to the termination policy.

The database, run by the DHS, has been available for some time and is currently voluntary for the private sector but mandatory for federal agencies. Employees will be required to supply their employers with photo identification and a Social Security number. The contractor can directly insert the information online and get an immediate response to verify the employee's working status.

NSBA is taking part in a small business E-Verify roundtable on July 17th to discuss the proposed rule with other small business stakeholders and the U.S. Small Business Administration Office of Advocacy. Of particular concern to NSBA is how efficiently the system performs and what the aggregate impact would be on the small-business community.