Homeland Secretary Janet Napolitano announced on Wednesday, July 8, that the rule would go into effect on September 8. At that point, federal contractors and subcontractors would have to use the government’s E-Verify system to ensure that all employees who work on federal projects are legal.

The move is another step in the Obama administration’s effort to crack down on employers to stem illegal immigration. Last week, the homeland department announced that it would conduct audits of I-9 forms at 652 companies, an increase from 503 inspections in the previous fiscal year.

Napolitano also rescinded a regulation, first proposed by the George W. Bush administration, that could have led to employers firing workers whose name and Social Security numbers on earnings reports don’t match information in the Social Security database. That rule had been tied up in court proceedings.

In another immigration development on Wednesday, the Senate approved an amendment to a homeland department appropriations bill that would codify the federal contractor E-Verify mandate and make E-Verify a permanent program.

E-Verify authorization runs out at the end of September. In June, the House approved the homeland funding bill with a two-year extension. The Senate bill has a three-year reauthorization.

The Senate amendment, sponsored by Sen. Jeff Sessions, R-Alabama, may not survive House-Senate negotiations on the homeland appropriations bill because similar language is not included in the House measure.

Meanwhile, a federal court in Maryland is considering a lawsuit filed by business groups who assert that the DHS has overstepped its legal authority in promulgating the federal contractor rule.

The regulation, first proposed by the Bush administration, was supposed to go into effect in January but was delayed until September to give the Obama homeland department a chance to review it.

“E-Verify is a smart, simple and effective tool that reflects our continued commitment to working with employers to maintain a legal workforce,” Napolitano said in a statement. “Requiring those who seek federal contracts to use this system will create a more reliable and legal workforce.”

E-Verify currently is a voluntary program used by about 134,000 companies. It checks an employee’s I-9 information against Social Security and DHS databases. The homeland agency says that 96.9 percent of all queries are work-authorized within 24 hours.

But employer groups have criticized E-Verify for being ineffective, inefficient and unable to detect stolen identities. They point to a 4 percent error rate in the Social Security database to argue that expanding E-Verify to all U.S. employers could result in millions of people being mistakenly declared ineligible to work.

The HR Initiative for a Legal Workforce is advocating legislation, the New Employee Verification Act, that would establish an electronic verification alternative to E-Verify.

Under the bill, employers would have to sign up for a new-hire system already being used in each state to enforce child support payments. It also would offer a biometric option to combat identity theft.

Mike Aitken, director of government affairs for the Society for Human Resource Management, says that he is not discouraged by Napolitano’s endorsement of E-Verify.

“Our legislation does not kill E-Verify,” Aitken said. “NEVA builds on what E-Verify does well and addresses its shortcomings, particularly the huge issue of identity theft.”

The business community is not monolithic in opposing E-Verify.

“I see the mood shifting on E-Verify,” said Tamar Jacoby, president of ImmigrationWorks USA, an organization composed of employer coalitions in 25 states.

She says that “there’s still a lot of room for improvement on E-Verify” but that companies are warming up to it as they see it in action.

Jacoby said Napolitano’s decision underscores the administration’s effort to answer critics who say immigration laws aren’t being enforced.

“It’s bold,” Jacoby said. “In some ways, you can see it as a down payment on comprehensive [immigration] reform.”
Whether or not they like E-Verify, companies should begin to accept that it’s becoming a reality, according to experts.

“Wise employers will begin exploring ways to become E-Verify compliant, even if they don’t have to start using E-Verify immediately,” said Eric Bord, a partner at Morgan Lewis & Bockius in Washington.

They also should perform their own I-9 audits and consider implementing an electronic I-9 process coupled with E-Verify, according to Darlene Baker, senior product manager at HireRight in Irvine, California.

“What [Napolitano’s announcement] really means for employers is that they’ve got to kind of get their act together in terms of having an I-9 on file for every employee,” Baker said. HireRight, a provider of employment screening and eligibility services, is a designated E-Verify agent.

It’s not likely that employers will have a clear idea anytime soon of how immigration reform will unfold.

“It’s almost impossible to predict where this will go,” Bord said. “There are a lot of moving parts.”