DHS wins E-Verify Federal Contractor Lawsuit

In a decision announced this morning, the U.S. District Court for the District of Maryland upheld the E-Verify Federal Contractor Rule which will require certain federal contractors and subcontractors to use the E-Verify system for all new hires and as well as existing employees working on a federal contract. The rule is scheduled to go into effect on September 8, 2009. Once in effect, federal contractors must enroll in E-Verify within 30 calendar days after being awarding a covered contract. Most contractors must then start using E-Verify within 90 days from the date of E-Verify enrollment.

In the court’s 24 page memorandum opinion, Judge Alexander Williams, Jr. addressed both parties request for summary judgment on seven complaints alleged by the plaintiffs. As previously reported, the Chamber of Commerce and other co-plaintiffs argued that President Bush’s executive order and the implementing regulations amending the Federal Acquisition Regulation (FAR) violate existing federal immigration law, exceed statutory authority, constitute improper rulemaking by the Executive Branch, and fail to account for the significant costs to employers.  After weighing the evidence, the court ruled in favor of DHS and the FAR Council on each one of these counts. Here is a summary of the court’s findings on some of the major issues:

1. While Federal immigration law (IIRIRA) does restrict the Secretary of Homeland Security from requiring any person or entity to use E-Verify, it does not apply to the President of the United States or the FAR Council. Had Congress intended anything else, Congress easily could have drafted this section to apply to the President or other agencies.

2. The E-Verify Federal Contractor Rule does not violated federal immigration law because it does not require any person or entity to use E-Verify. The decision to be a government contractor is voluntary and no one has a right to be a government contractor.

3. The executive order by President Bush was properly authorized since it made findings that show that requiring government contractors to use an electronic employee eligibility system will promote economy and efficiency in procurement. The court also noted that the President has broad discretion in this regard.

4. Nothing in federal immigration law explicitly prohibits the Executive Branch from using E-Verify for current employees. Though there is administrative guidance saying that E-Verify should not be used for that purpose, that guidance does not legally prohibit the President from requiring it. If Congress intended it to be illegal to use E-Verify for current employees, then Congress should have made that clear in the statute.

5. The executive order and final rule are permissible actions pursuant to the Procurement Act, since they do not constitute lawmaking for which the Executive Branch lacks constitutional authority.

6. The Final Rule contains a discussion of the regulatory flexibility analysis conducted by the Council which considered the costs that incorrect results produced by E-Verify would have on small businesses. Therefore, the government has not violated the Regulatory Flexibility Act.

In the coming weeks, this blog will focus on specific requirements and exemptions in the E-Verify rule and discuss best practices going forward for federal contractors and subcontractors. Stay tuned for updates.