A January Surprise!

Are you on the 'E-Verify' hook? If you have a contract for services or construction with the Federal Government, then you probably need to get to know 'E-Verify'. But even if you don't have a federal contract, you still might need to get to know 'E-Verify'. Here's why:

In an earlier blog posted on July 21, 2008, Senitria Goodman explained the computer-based E-Verify program of the U.S. Department of Homeland Security and discussed the proposed rule that makes it mandatory for any federal contractor or subcontractor to use 'E-Verify' for all employees 'assigned' to the federal contract. After a comment period on the proposed rule, a slightly revised final rule was published on November 14, 2008. Its effective date is January 15, 2009.
Basically, the new regulation states that if you provide services or goods (except goods that are 'commercially available off-the-shelf') under a contract with the U.S. government, you are required to use the 'E-Verify' program to verify whether your employees working under the federal contract are eligible to work in in the U.S. (When we talk about being 'eligible' we are talking about making certain that you are not employing someone in violation of U.S. Immigration laws; this is why you complete a Form I-9 for all of your employees.)
If you have a federal contract, you must use E-Verify on all employees assigned to work under the government contract. Furthermore, you must also use E-Verify on all new hires - whether or not they are assigned to work under the government contract.
Now, here's the fun part. All federal contractors must include language in their subcontracts that the subcontractor will use the E-Verify program under the same circumstances. By now you have probably figured out that - even if you are not a federal contractor - this means that if you do business with someone who is a federal contractor - or even another subcontractor of a federal contractor - you may also have to use the E-Verify program for your employees.

Here is the language from the regulation identifying who a 'subcontractor' is:

"Subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor." (emphasis added)

Following this to its absurd conclusion, you might be required to use E-Verify for your employees if a product you provide ultimately ends up in the hands of a federal contractor.
Fortunately, there are some restrictions that narrow this interpretation; the subcontract must meet the following specifications:

1. The subcontract is for 'commercial or noncommercial services' or it is a construction contract;
2. The subcontract has a value of more than Three Thousand Dollars ($3,000.00); and
3. The subcontract includes work performed in the United States.

Nonetheless, if you perform a contract meeting these qualifications, you might be obligated to use the E-Verify program for your employees. The federal contractors are required to put this requirement in their contracts with their subcontractors, so read your contracts carefully - and govern yourself accordingly.

Happy New Year!