A legal challenge to a new rule requiring businesses with certain federal government contracts to use an electronic system to verify their employees are eligible to work in the U.S. has led the government to delay the rule until February 20, 2009.
The rule, which was to go into effect on January 15, 2009, requires certain contractors and subcontractors to use E-Verify, an internet-based system that checks employee names and identification numbers against federal databases. Although verification that an employee is eligible to work in the United States normally occurs only with new hires, the regulation required contractors and subcontractors to also verify the eligibility of all existing employees directly performing work under the covered contract.
The regulation was put on hold as a result of a lawsuit brought by the U.S. Chamber of Commerce and four other associations. Among other things, the lawsuit claims compliance with the rule places an inordinate burden on employers and that the federal database is inaccurate. In its final version, the rule applies to prime contracts of $100,000 or more with a performance period of more than 120 days and subcontracts of $3,000 or more for for services or construction if the prime contract is subject to the rule. It does not apply to contracts for commercially available off-the-shelf items or where all work is performed outside the United States.