As most Denver businesses with federal contracts know, effective September
8, 2009, compliance with the free E-Verify internet-based system, formerly
voluntary, became mandatory. The rule applies if the prime contract for
services or construction is more than $100,000 with a period of performance
longer than 120 days. For subcontractors, the value of services or construction
must exceed $3,000.
Contractors and subcontractors are required to register with E-Verify
within 30 days of the contract award date. The system, which facilitates
compliance with federal immigration laws, requires that employers run
new hires, whether or not employed on a federal contract, and existing
employees directly working on these contracts, through the E-Verify system
to determine the person’s eligibility to work in the U.S.
E-Verify compares the information on the individual’s Employment
Eligibility Verification Form (I-9) against federal government databases
to verify work eligibility. The E-Verify system is operated by the Department
of Homeland Security in cooperation with the Social Security Administration.
Applicable government contracts must have an E-Verify provision in the
contract document. Penalties for non-compliance with the system’s
mandatory requirements range from fines to criminal penalties and loss
of eligibility to complete or bid on applicable federal government contracts.
The U.S. Chamber of Commerce and various industry associations filed a
suit in a Maryland federal court, mounting serious legal challenges to
the validity of the system, but the court upheld the system.
It would be prudent for prime contractors to have a provision in their
subcontracts for mandatory compliance by subcontractors with the E-Verify
system. Affected Colorado contractors should feel free to contact this
office or their existing counsel for advice concerning the E-Verify system.