On November 14, 2008, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued a rule requiring federal contractors to use E-Verify to ensure their employees are authorized to work in the United States. E-Verify is an internet-based system administered by the Department of Homeland Security’s U.S. Citizenship and Immigration Services, in partnership with the Social Security Administration, that allows employers to verify employees’ work eligibility.The rule, which will take effect January 15, 2009, amends the Federal Acquisition Regulation to insert a clause into federal government contracts committing contractors to use E-Verify. Agencies must also amend, on a bilateral basis, any existing indefinite-delivery/indefinite quantity contracts 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. Contractors must verify all new hires, regardless of whether they are working under federal contract, and any current employee working under federal contract. The rule applies to all contracts lasting longer than 120 days and valued over $100,000, as well as any subcontracts over $3,000 for services or construction. Contracts for commercially available off-the-shelf items are exempted.

To be eligible to use E-Verify, employers must enroll in the program within 30 days of the contract and must agree to the E-Verify Memorandum of Understanding, which commits the employer to abiding by current legal hiring standards and to ensure that no employee will be discriminated against through the use of E-Verify. A violation of the Memorandum of Understanding could result in termination from participation in the program.

The rule goes into effect despite overwhelming opposition during the public comment period questioning the effectiveness, legality, and cost of the requirement. A June 2008 Government Accountability Office (”GAO”) study pointed out that while E-Verify can detect the use of fraudulent documents, it does not protect against identify fraud, such as when employees use stolen documents. The GAO study also noted that most erroneous tentative nonconfirmations of an employee’s eligibility occur because information such as name changes and citizenship status has not been updated in the databases.