Government Contracts &
Labor and Employment Alert
September 1, 2009
Author:
Hayes C. Stover
hayes.stover@klgates.com
Federal Contractor E-Verify Regulations
Upheld
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On August 26, 2009, a United States District Court in Maryland upheld procurement
regulations which require federal contractors to use the E-Verify system to confirm
that the contractor’s employees are legally entitled to work in the United States.
Subject to a possible judicial stay pursuant to a possible appeal, the regulations
become effective September 8, 2009.
Background
The history and requirements of the regulations are set forth in detail in our Alerts
dated June 19, 2008, click here, and December 22, 2008, click here. In summary, the
regulations at issue require that most federal contractors with contracts in excess of
$100,000 for most goods and services, and most subcontractors with contracts of
$3,000 or more for services or construction, confirm the employment eligibility of all
new hires, whether or not assigned to work on the federal contract, and of all existing
employees assigned to work on a federal contract.
On December 23, 2008, a coalition of business groups sued to enjoin the
implementation of the regulations. Pending the outcome of the litigation, the
effective date was delayed several times. On July 8, 2009, the Department of
Homeland Security (DHS) announced that it would implement the regulations. In its
August 26, 2009, decision, the Court granted summary judgment to the government
and dismissed the claims by the coalition.
The Decision
The Court’s decision rejected the arguments made by the plaintiffs and reached the
following conclusions.
1. The provision in the Illegal Immigration Reform and Immigrant Responsibility
Act (IIRIRA) which authorized what is now named E-Verify but which also
prohibited mandatory participation by employers was not violated. The Court
first noted that the prohibition against mandatory participation was directed only
to DHS, not to other agencies of the Executive Branch. More importantly, the
Court concluded that a decision to be a government contractor is a voluntary act,
and thus no employer is required to participate in E-Verify.
2. Although IIRIRA references using the verification system for hiring, nothing in
IIRIRA prohibits the government from also requiring its use to verify eligibility
of existing employees.
3. President Bush’s Executive Order directing the use of E-Verify by government
contractors clearly established the necessary connection between that
requirement and promoting efficiency and economy in procurement.
Government Contracts & Labor and Employment Alert
4. The Court rejected procedural arguments that a
revised Memorandum of Understanding which
E-Verify users must sign had not been properly
published, and that a proper Regulatory
Flexibility Act analysis had not been compiled.
mandatory E-Verify use by contractors in the
pending homeland security appropriations bill.
Lamar Smith, the ranking minority member on the
House Judiciary Committee, praised the decision as
a step toward preventing U.S. workers from being
required to compete for jobs with illegal workers.
Conclusion
The plaintiffs and others contend that E-Verify and
the data contained in it are unreliable, produce too
many false results, cannot handle the anticipated
volume, and also assert that the use of E-Verify may
disrupt many existing employment relationships.
The government, of course, discounts these
contentions. Moreover, the Senate approved
The regulations go into effect September 8, 2009.
An appeal and a possible stay are possible, but
uncertain at this time. Although the regulations
provide for various implementation periods,
government contractors should assume that they
will be required to comply and begin to take steps to
implement the requirements.
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September 1, 2009
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