Federal Register/vol. 73, No. 221/friday, November 14, 2008/rules ...
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67651
DEPARTMENT OF DEFENSE
governing procurement policy ‘‘that the
Immigration Services (USCIS) as the
President considers necessary to carry
means of verifying that certain of their
GENERAL SERVICES
out’’ that Act and that are ‘‘consistent’’
employees are authorized to work in the
ADMINISTRATION
with the Act’s purpose of ‘‘provid[ing]
United States.
the Federal Government with an
E-Verify Program
NATIONAL AERONAUTICS AND
economical and efficient’’ procurement
SPACE ADMINISTRATION
system. 40 U.S.C. 101, 121. On June 6,
The E-Verify system, formerly known
2008, the President exercised this
as the Basic Pilot/Employment
48 CFR Parts 2, 22, and 52
authority and the authority vested in
Eligibility Verification Program, is an
him under section 301 of Title 3 of the
Internet-based system operated by DHS
[FAC 2005–29; FAR Case 2007–013; Docket
United States Code in issuing Executive
USCIS, in partnership with the Social
2008–0001; Sequence 1]
Order 13465 ‘‘Economy and Efficiency
Security Administration (SSA) that
RIN 9000–AK91
in Government Procurement through
allows participating employers to
Compliance with Certain Immigration
electronically verify the employment
Federal Acquisition Regulation; FAR
and Nationality Act Provisions and the
eligibility of their newly hired
Case 2007–013, Employment Eligibility
Use of an Electronic Employment
employees. E-Verify represents the best
Verification
Eligibility Verification System.’’ 73 FR
means currently available for employers
33285, Jun. 11, 2008, amending
to verify the work authorization of their
AGENCIES: Department of Defense (DoD),
Executive Order 12989 (signed February employees.
General Services Administration (GSA),
13, 1996, published February 15, 1996
Before an employer can use the E-
and National Aeronautics and Space
at 61 FR 6091), previously amended by
Verify system, the employer must enroll
Administration (NASA).
Executive Order 13286 (signed February in the program and agree to the E-Verify
ACTION: Final rule.
28, 2003, published March 5, 2003 at 68
Memorandum of Understanding (MOU)
FR 10619). As amended, Executive
required for program participants. The
SUMMARY: The Civilian Agency
terms of the MOU are established by
Acquisition Council and the Defense
Order 12989 now provides, at Section
5.(a), that ‘‘Executive departments and
USCIS and are not negotiated with each
Acquisition Regulations Council
agencies that enter into contracts shall
participant. In consenting to the MOU,
(Councils) have agreed on a final rule
require, as a condition of each contract,
employers agree to abide by current
amending the Federal Acquisition
that the contractor agree to use an
legal hiring procedures and to ensure
Regulation (FAR) to require certain
electronic employment eligibility
that no employee will be unfairly
contractors and subcontractors to use
verification system designated by the
discriminated against in the use of the
the E-Verify system administered by the
Secretary of Homeland Security to
E-Verify program. Violation of the terms
Department of Homeland Security, U.S.
verify the employment of: (i) All
of the MOU by the employer is grounds
Citizenship and Immigration Services,
persons hired during the contract term
for termination of the employer’s
as the means of verifying that certain of
by the contractor to perform
participation in the E-Verify program.
their employees are eligible to work in
employment duties within the United
Current law (8 U.S.C. 1324a(b))
the United States.
States; and (ii) all persons assigned by
requires all employers in the United
DATES: Effective Date: January 15, 2009.
the contractor to perform work within
States to complete an Employment
Applicability Date: Contracting
the United States on the Federal
Eligibility Verification Form (Form I–9)
Officers should modify, on a bilateral
contract.’’ The Executive Order also
for each newly hired employee to verify
basis, existing indefinite-delivery/
requires, at Section 5.(c), that the
each employee’s identity and
indefinite-quantity contracts in
Secretary of Defense, the Administrator
employment eligibility. Under this final
accordance with FAR 1.108(d)(3) to
of General Services and the
rule, Federal contractors will
include the clause for future orders if
Administrator of the National
additionally enter the worker’s identity
the remaining period of performance
Aeronautics and Space Administration
and employment eligibility information
extends at least six months after the
‘‘amend the Federal Acquisition
into the E-Verify system, which checks
final rule effective date, and the amount
Regulation to the extent necessary and
that information against information
of work or number of orders expected
appropriate to implement the * * *
contained in SSA, USCIS and other
under the remaining performance
employment eligibility verification
Government databases.
period is substantial.
responsibility * * * assigned to heads
SSA first verifies that the name, social
security number (SSN), and date of birth
FOR FURTHER INFORMATION CONTACT: Ms.
of departments and agencies under this
Meredith Murphy, Procurement
order.’’
are correct and, if the employee has
Analyst, at (202) 208–6925 for
On June 9, 2008, the Secretary of
stated that he or she is a U.S. citizen,
clarification of content. For information
Homeland Security designated the ‘‘E-
confirms U.S. citizen status through its
pertaining to status or publication
Verify system, modified as necessary
databases. If the system confirms
schedules, contact the FAR Secretariat
and appropriate to accommodate the
identity and U.S. citizenship, and there
at (202) 501–4755. Please cite FAC
policy set forth in the Executive Order
are no other indicators that the
2005–29, FAR case 2007–013.
* * * as the electronic employment
information is not correct, SSA confirms
eligibility verification system to be used
employment-eligibility. USCIS also
SUPPLEMENTARY INFORMATION:
by Federal contractors.’’ (See 73 FR
verifies through database checks that
A. Background and Purpose
33837, Jun. 13, 2008.)
any non-U.S. citizen employee is in an
This final rule responds to these
employment-authorized immigration
Employment Eligibility Verification
requirements, and the Secretary’s
status.
Requirements
designation, by amending the FAR to
If the information provided by the
As explained more fully in the
require certain Federal contractors and
worker matches the information in the
proposed rule, the Federal Property and
subcontractors to use the E-Verify
SSA and USCIS records, no further
Administrative Services Act of 1949
system (E-Verify) administered by the
action will be required. E-Verify
(FPASA), authorizes the President to
Department of Homeland Security
procedures require only that the
‘‘prescribe policies and directives’’
(DHS), U.S. Citizenship and
employer record on the Form I–9 the
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00003
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67652
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
verification identification number and
participation in E-Verify: (1) Identity
because they either entered the country
the result obtained from the E-Verify
documents used for verification
illegally, or are in an immigration status
query or print a copy of the transaction
purposes must have photos (except as
which does not permit employment. U.S.
record and retain it with the Form I–9.
discussed below with respect to
employers who violate this prohibition
If SSA is unable to verify information
accommodations); (2) if an employer
would be subject to civil and criminal
presented by the worker, the employer
obtains confirmation of the identity and
penalties. Employment is the magnet that
will receive an ‘‘SSA Tentative
employment eligibility of an individual
attracts aliens here illegally or, in the case of
Nonconfirmation’’ notice. Similarly, if
in compliance with the terms and
nonimmigrants, leads them to accept
USCIS is unable to verify information
conditions of E-Verify, a rebuttable
employment in violation of their status.
presented by the worker, the employer
presumption is established that the
Employers will be deterred by the penalties
will receive a ‘‘DHS Tentative
employer has not violated section
in this legislation from hiring unauthorized
Nonconfirmation’’ notice. Employers
274A(a)(1)(A) of the Immigration and
aliens and this, in turn, will deter aliens from
can receive a tentative nonconfirmation
Nationality Act (INA) with respect to
entering illegally or violating their status in
notice for a variety of reasons, including the hiring of the individual; (3) the
search of employment. The logic of this
inaccurate entry of information by the
employer must notify DHS if it
approach has been recognized and backed by
employer into the E-Verify Web site,
continues to employ any employee for
the past four administrations * * *. Now, as
and changes in the worker’s name or
whom the employer has received a final
in the past, the Committee remains
immigration status that the worker has
nonconfirmation, and the employer is
convinced that legislation containing
not updated in the SSA database
subject to a civil money penalty
employer sanctions is the most humane,
searched by the E-Verify system. If the
between $500 and $1,000 for each
credible and effective way to respond to the
individual’s information does not match failure to notify DHS of continued
large-scale influx of undocumented aliens.
the SSA or USCIS records, the employer employment following a final
While there is no doubt that many who enter
must provide the worker with a written
nonconfirmation; (4) if an employer
illegally do so for the best of motives—to
notice generated by the E-Verify system,
seek a better life for themselves and their
continues to employ an employee after
called a ‘‘Notice to Employee of
families—immigration must proceed in a
receiving a final nonconfirmation and
Tentative Nonconfirmation’’. The
legal, orderly and regulated fashion. As a
that employee is subsequently found to
sovereign nation, we must secure our
worker must then indicate on the notice
be an unauthorized alien, the employer
borders.
whether he or she contests or does not
is subject to a rebuttable presumption
contest the finding reflected in the
that it has knowingly employed an
H.R. Rep. No. 99–682(I), 99th Cong.,
tentative nonconfirmation that he or she unauthorized alien in violation of
1st Sess. 46 (1986), 1986 U.S. Code
appears unauthorized to work, and both
Immigration and Nationality Act (INA)
Cong. & Admin. News, p. 5649. INA
the worker and the employer must sign
section 274A(a); and (5) no person or
Section 274A, as established by IRCA,
the notice.
entity participating in E-Verify is civilly
thus prohibits any ‘‘person or other
If the worker chooses to contest the
or criminally liable under any law for
entity’’ from knowingly hiring, or
tentative nonconfirmation, the employer any action taken in good faith reliance
knowingly continuing to employ, any
must print a second notice generated by
on information provided through the
unauthorized alien. INA section 274A(b)
the E-Verify system, called a ‘‘Referral
confirmation system.
provides for an ‘‘Employment
Letter,’’ which contains information
Further information on registration for Verification System,’’ which requires
about resolving the tentative
and use of E-Verify can be obtained via
that employers attest, after examination
nonconfirmation, as well as the contact
the Internet at http://www.dhs.gov/E-
of documentation presented by the
information for SSA or USCIS,
Verify.
employee, that the person being hired,
depending on which agency was the
recruited or referred for employment is
source of the tentative nonconfirmation. E-Verify Basis and Development
not an unauthorized alien. INA section
The worker then has eight Federal
1. Legislative History
274A also provides for the assessment of
Government workdays to visit an SSA
Laws pertaining to the control of
civil monetary penalties and cease and
office or call USCIS to try to resolve the
illegal immigration have received
desist orders against any employer that
discrepancy. Under the E-Verify MOU,
serious attention from Congress and the
has knowingly hired or continued to
if the worker contests the tentative
Executive Branch since at least the early employ an unauthorized alien, or that
nonconfirmation, the employer is
1950s. Chief among the legislative
has failed to comply with the
prohibited from terminating or
approaches to these problems has been
employment verification system
otherwise taking adverse action against
the proposed establishment of penalties
mandated by INA section 274A(b). 8
the worker while he or she awaits a final for the employment of undocumented
U.S.C. 1324a(e)(4)–(e)(5).
resolution from the Federal Government aliens and related laws requiring the
agency. If the worker fails to contest the
Employers who engage in a ‘‘pattern
verification of employment
tentative nonconfirmation, or if SSA or
or practice’’ of violating the prohibition
authorization. See INA Section 274(a),
USCIS is unable to resolve the
against illegal employment of
codified at 8 U.S.C. 1324(a). The House
discrepancy, the employer will receive
unauthorized workers may face criminal
of Representatives Report filed with the
a notice of final nonconfirmation and
sanctions. INA section 274A(f), 8 U.S.C.
Immigration Reform and Control Act of
the worker’s employment may be
1324a(f). DHS U.S. Immigration and
1986 (IRCA), found at 1986 U.S. Code
terminated.
Customs Enforcement (ICE) investigates
Participation in E-Verify does not
Cong. and Adm. News, p. 5649, clearly
complaints of potential violations of
exempt the employer from the
describes the basis for that legislation:
INA section 274A by inspecting
responsibility to complete, retain, and
This legislation seeks to close the back
employment eligibility verification
make available for inspection Forms
door on illegal immigration so that the front
forms maintained by employers with
I–9 that relate to its employees, or from
door on legal immigration may remain open.
respect to their current and former
The principal means of closing the back door,
other requirements of applicable
or curtailing future illegal immigration, is
employees, and compelling the
regulations or laws. However, the
through employer sanctions. The bill would
production of evidence or the
following modified requirements apply
prohibit the employment of aliens who are
attendance of witnesses by subpoena. 8
by reason of the employer’s
unauthorized to work in the United States
U.S.C. 1324a(e)(2); 8 CFR 274a.2(b)(2).
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00004
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67653
Development of E-Verify
12989, signed by President Clinton in
Immigration Agents Arrest 33: Workers
E-Verify provides a modern means of
February 1996. (See 61 FR 6091, Feb.
at Richmond Site of New Federal
verifying employment authorization
15, 1996.) That Order, which pre-dated
Courthouse Alleged to be Here
information in addition to the
Congress’s enactment of IIRIRA
Illegally,’’ Richmond Times Dispatch,
traditional I–9 process. When Congress
authorizing what is now the E-Verify
May 8, 2008, at B3 (reporting the arrest
established the paper-based
program, found that the presence of
of 33 alleged illegal immigrant workers
employment verification system in 8
unauthorized aliens on a contractor’s
employed by a Federal contractor
U.S.C. 1324a(b), it directed the
workforce rendered that contractor’s
during a raid by immigration authorities
workforce less stable and reliable than
at the construction site of a future
President to evaluate that system’s
the workforces of contractors who do
Federal courthouse in Richmond,
security and efficacy and implement
not employ unauthorized aliens:
Virginia); Giovanna Dell’Orto, ‘‘Illegal
necessary changes, subject to
Immigrants Arrested at Military Bases,’’
congressional oversight. 8 U.S.C.
Stability and dependability are important
Press-Register, January 20, 2007, at B12
1324a(d). Congress also authorized the
elements of economy and efficiency. A
(publishing an article on the arrest of
President to establish demonstration
contractor whose work force is less stable
will be less likely to produce goods and
roughly 40 illegal immigrant workers
projects designed to strengthen the
services economically and efficiently than a
over a three day period that were hired
employment verification system. 8
contractor whose work force is more stable.
by Federal contractors to work at three
U.S.C. 1324a(d)(4).
It remains the policy of this Administration
different military bases including Fort
The first demonstration project, in
to enforce the immigration laws to the fullest
Benning in Georgia and the Marine Corp
1992, included the Telephone
extent, including the detection and
Base Quantico in Virginia); Rob Bell,
Verification System (TVS) pilot
deportation of illegal aliens. In these
‘‘Mills Manufacturing Corporation
program—a predecessor to the E-Verify
circumstances, contractors cannot rely on the
continuing availability and service of illegal
Raided by ICE,’’ Western Carolina
system. 69 Interpreter Releases 702
aliens, and contractors that choose to employ
Business Journal, August 15, 2008
(June 8, 1992); 515 (Apr. 27, 1992). In
unauthorized aliens inevitably will have a
(reporting that immigration officials
1996, Congress established the Basic
less stable and less dependable work force
raided a Federal defense contractor and
Pilot program—now called E-Verify—as
than contractors that do not employ such
arrested 57 illegal immigrant workers).
part of the Illegal Immigration Reform
persons. Because of this Administration’s
Consistent with the President’s
and Immigrant Responsibility Act
vigorous enforcement policy, contractors that
authority under FPASA, and to ‘‘ensure
(IIRIRA). Public Law 104–208, Sections
employ unauthorized alien workers are
the economical and efficient
401–405, 110 Stat. 3009–655–3009–666
necessarily less stable and dependable
procurement sources than contractors that do
administration and completion of
(1996) (8 U.S.C. 1324a note).
not hire such persons. I find, therefore, that
Federal Government contracts,’’
On August 10, 2007, the Acting
adherence to the general policy of not
Executive Order 12989 instructed the
Director of the Office of Management
contracting with providers that knowingly
Attorney General of the Department of
and Budget instructed agencies to
employ unauthorized alien workers will
Justice to investigate to determine
encourage their existing and future
promote economy and efficiency in Federal
whether a contractor or an
contractors to use E-Verify and attached
procurement.
organizational unit thereof is not in
a letter that DHS had sent to its major
Executive Order 12989 (preamble), 61
compliance with the INA employment
contractors encouraging their use of E-
FR 6091. This finding is as applicable
provisions, transmit that determination
Verify and emphasizing E-Verify’s
today as it was in 1996. The
to the contracting agency and have the
ability to help contractors comply with
Government is aware, in particular, of
head of the contracting agency pursue
immigration law. See ‘‘Memorandum for recent instances where Federal
debarment or other such action as may
the Heads of Departments and Agencies
Government contracts have been
be appropriate under the FAR. (See
M–07–21,’’ Stephen S. McMillin, Acting disrupted when the contractor’s
Executive Order 12989, Sections 3 and
Director, Office of Management and
employees were identified as
4.) With the establishment of the DHS,
Budget (August 10, 2007) (http://
unauthorized workers. See, e.g., Tami
the Attorney General’s investigative
www.whitehouse.gov/omb/memoranda/
Abdollah, ‘‘2 Sentenced for Hiring
authority transferred to the Secretary of
fy2007/m07-21.pdf) attaching ‘‘Letter
Illegal Migrants; Golden State Fence
Homeland Security. See Executive
from Paul A. Schneider, Under
Executives Get Probation and Fines, and Order 13286, Sec. 19, (Feb. 28, 2003), 68
Secretary for Management’’ (Aug. 10,
the Company is Ordered to Forfeit $4.7
FR 10623. Thus, as early as 1996,
2007). The OMB Memorandum also
Million in Profits,’’ Los Angeles Times,
agencies were instructed to use
announced that the Federal Acquisition
March 29, 2007, (detailing the criminal
provisions within the FAR to support
Regulatory Council was developing
prosecution of two Federal Contractor
economical and efficient Federal
appropriate Governmentwide regulatory company executives for hiring illegal
Government contracting by avoiding
coverage to apply E-Verify to Federal
workers that resulted in a guilty plea;
doing business with contractors that
contractors. It also indicated that by
judgment of probation and combined
employ unauthorized workers.
October 1, 2007, all Federal departments $300,000 in fines for the two
On June 6, 2008, President Bush
and agencies should begin verifying
individuals in addition to the forfeiture
issued Executive Order 13465,
their new hires through E-Verify.
of $4.7 million in company profits the
amending Executive Order 12989 by
company reaped by employing
adding an electronic employment
Compliance Requirements for Federal
unauthorized immigrant workers);
eligibility verification requirement to
Contractors
Karen Lee Ziner, ‘‘3 at Bianco Plant
strengthen the long-standing Executive
The Executive branch has long
Indicted on Immigration Charges,’’
branch policy of furthering economical
recognized that the instability and lack
Providence Journal Bulletin, August 4,
and efficient contracting through only
of dependability that afflicts contractors
2007, at A3 (reporting the indictment of
contracting with Federal contractors
that employ unauthorized workers
company president along with two
who employ persons in the United
undermines overall efficiency and
managers for ‘‘conspiring to harbor and
States who are authorized to work in the
economy in Government contracting.
hire illegal immigrants’’ to work on
United States. Executive Order 13465
The first formal expression of this
Government contracts valued over $200
echoes the findings and conclusions
policy is found in Executive Order
million); Mark Bowes, ‘‘U.S.
stated in Executive Order 12989 and
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00005
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67654
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
builds upon the ‘‘economy and
all existing employees who are directly
2. Covered Prime Contract Value
efficiency’’ justifications for the 1996
performing work under the covered
Threshold—The final rule requires the
Executive Order in light of the
contract.
insertion of the E-Verify clause for
significant advances in the technology
4. Applies to solicitations issued and
prime contracts above the simplified
for employment eligibility verification
contracts awarded after the effective
acquisition threshold ($100,000) instead
that have been made since the issuance
date of the final rule in accordance with
of the micro-purchase threshold
of Executive Order 12989. As amended,
FAR 1.108(d). Under the final rule,
($3,000).
Executive Order 12989 now states:
Departments and agencies should, in
3. Contract Term—The final rule
clarifies that the E-Verify clause need
It is the policy of the Executive branch to
accordance with FAR 1.108(d)(3),
use an electronic employment verification
amend—on a bilateral basis—existing
not be inserted into prime contracts
system because, among other reasons, it
indefinite-delivery/indefinite-quantity
with performance terms of less than 120
provides the best available means to confirm
contracts to include the clause for future days.
the identity and work eligibility of all
orders if the remaining period of
4. Institutions of Higher Education—
employees that join the Federal workforce.
performance extends at least six months The final rule modifies the contract
* * * I find, therefore, that adherence to the
after the effective date of the final rule.
clause so that institutions of higher
general policy of contracting only with
5. In exceptional circumstances,
education need only verify employees
providers that do not knowingly employ
assigned to a covered Federal contract.
unauthorized alien workers and that have
allows a head of the contracting activity
5. State and Local Governments and
agreed to utilize an electronic employment
to waive the requirement to include the
Federally Recognized Indian Tribes—
verification system designated by the
clause. This authority is not delegable.
Secretary of Homeland Security to confirm
The rule is written to apply the above
Similarly, under the final rule, State and
employment eligibility of their workforce
requirements in a manner that will
local governments and Federally
will promote economy and efficiency in
ensure effective compliance by the
recognized Indian tribes need only
Federal procurement.
contractor community, and is
verify employees assigned to a covered
Executive Order 12989, as amended
reasonably limited in certain
Federal contract.
6. Sureties—Under the final rule,
by Executive Order 13465, 73 FR 33285.
circumstances to minimize the burden
Executive Order 12989, as amended,
sureties performing under a takeover
on participants in the Federal
further specifically directs the agency
agreement entered into with a Federal
procurement process.
heads of DoD, GSA and NASA to
agency pursuant to a performance bond
implement this policy through
Changes Adopted in the Final Rule
need only verify employees assigned to
amendments to the FAR. Executive
the covered Federal contract.
Below is a summary of changes made
7. Security Clearances and HSPD–12
Order 13465 at Section 3, 73 FR 33286.
to the final rule:
credentials—The final rule exempts
Accordingly, the Councils amend the
1. Significantly Extended Timelines— employees who hold an active security
FAR in this final rule in accordance
The final rule amends the proposed rule clearance of confidential, secret or top
with the President’s direction, pursuant
to permit Federal contractors
secret from verification requirements.
to his authority under FPASA to
participating in the E-Verify program for The rule also exempts employees for
‘‘prescribe policies and directives’’
the first time a longer period—90
which background investigations have
governing Federal procurement that are
calendar days from enrollment instead
been completed and credentials issued
consistent with the Act’s aim of
of 30 days as initially proposed—to
pursuant to the Homeland Security
providing the Federal Government with
begin using the system for new and
Presidential Directive (HSPD)–12,
an economical and efficient
existing employees. The final rule also
‘‘Policy for a Common Identification
procurement system. 40 U.S.C. 101, 121. provides a longer period after this initial Standard for Federal Employees and
B. Final Rule
enrollment period—30 calendar days
Contractors,’’ which the President
instead of 3 business days—for
issued on August 27, 2004.
Summary of the Elements of the
contractors to initiate verification of
8. All Existing Employees Option—
Proposed Rule That Are Retained in the
existing employees who have not
The final rule provides contractors the
Final Rule
previously gone through the E-Verify
option of verifying all employees of the
This final rule inserts a clause into
system when they are newly assigned to contractor, including any existing
Federal contracts committing
a covered Federal contract. Contractors
employees not currently assigned to a
Government contractors to use the
already enrolled and using the program
Government contract. A contractor that
USCIS E-Verify System to verify that all
as Federal contractors will have the
chooses to exercise this option must
of the contractors’ new hires, and all
same extended timeframe to initiate
notify DHS and must initiate
employees (existing and new) directly
verification of employees assigned to
verifications for the contractor’s entire
performing work under Federal
the contract, but the time limits will be
workforce within 180 days of such
contracts, are authorized to work in the
measured from contract award date
notice to DHS.
United States. Consistent with the
instead of from the contractor’s E-Verify
9. Expanded COTS-related
requirements first set forth in the
enrollment date. With regard to
exemptions for:
proposed rule, the final rule—
verification of new hires, a contractor
• Bulk cargo—The rule will not apply
1. Exempts contracts that are for—
that has already been enrolled as a
to prime contracts for agricultural
• Commercially available off-the-shelf Federal contractor for 90 calendar days
products shipped as bulk cargo that
(COTS) items; and
or more will have the standard 3
would otherwise have been categorized
• Items that would be COTS items but business days from the date of hire to
as COTS; and
for minor modifications.
initiate verification of new hires. Those
• Certain services associated with the
2. Requires inclusion of the clause in
contractors that have been enrolled in
provision of COTS items or items that
subcontracts over $3,000 for services or
the program for less than 90 calendar
would be COTS items but for minor
for construction.
days will have 90 calendar days from
modifications.
3. Requires contractors and
the date of enrollment as a Federal
10. Allows the Head of the
subcontractors to use E-Verify to
contractor to initiate verification of new
Contracting Activity to waive E-Verify
confirm the employment eligibility of
hires.
requirements after contract award,
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00006
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67655
either temporarily or for the period of
and submit comments, and those that
of the E-Verify system by Federal
performance.
did request additional time failed to
contractors was not a comprehensive
11. Definitions:
raise novel or difficult issues that could
solution. They strongly advocate
• Employee assigned to the contract— have justified an extension. Moreover,
‘‘fixing’’ the ‘‘broken’’ immigration
The final rule clarifies that employees
the comments received more than
system. Some commenters see the
who normally perform support work,
adequately provided substantial
solution as giving people a path to legal
such as general company administration information on which the Councils
status, others see it as providing
or indirect or overhead functions, and
could make a final decision.
‘‘tangible solutions for the over 7
that do not perform any substantial
Accordingly, the Councils do not
million undocumented workers in our
duties applicable to an individual
believe that there is a basis for
economy,’’ some see it as enabling
contract, are not considered to be
extending the comment period related
swifter and earlier access to work
directly performing work under the
to this rule.
permits, and still other commenters
contract.
advocate improved ICE auditing teams.
• Subcontract and subcontractor—
Support for the Rule
One commenter claims that, ‘‘[w]hile
Adds definitions derived from FAR
Comment: More than 600 commenters employer sanctions and a mandatory
44.101.
wrote in support of the proposed rule
employment document verification
and strongly urged its adoption. One
B. Response to Comments Received on
system may be an appropriate part of an
commenter noted that it has been illegal
the Notice of Proposed Rulemaking
effective immigration reform package,
for more than 20 years, i.e., since 1986,
Docket
standing alone they only exacerbate the
to hire an individual who is not
problems they are ostensibly designed
The Department of Defense (DoD),
authorized to work in the United States.
to address.’’
General Services Administration (GSA)
Another commenter, who identified
Response: Comprehensive
and National Aeronautics and Space
himself as a 30-year Human Resources
immigration reform is beyond the scope
Administration (NASA) published a
professional, stated that this E-Verify
of this rulemaking and was not the
notice of proposed rulemaking (NPRM)
system is not too burdensome for
purpose of Executive Order 12989, as
in this action on June 12, 2008. (See 73
employers. A third commenter said that
amended. The mandate given to the
FR 33374.) The NPRM directed the
the ‘‘E-Verify program WORKS!’’ and
FAR Councils was to implement the
submission of comments to the Federal
that he has found it to work accurately
President’s Executive Order of June 6,
eRulemaking portal, http://
100 percent of the time.
2008, as a means of creating a more
www.regulations.gov, as well as by
The majority of these commenters
economical and efficient Federal
facsimile and by mail to the FAR
expressed overall support for the
Government procurement system. The
Secretariat, with reference to FAR Case
Executive Order’s instruction for
employment of persons unauthorized to
2007–013, Docket 2008–0001; Sequence
Federal agencies to contract with
work in the U.S. has been against the
1, on or before August 11, 2008. The
employers that use E-Verify to check the law for 22 years. Completion of the
agencies received more than 1,600
employment eligibility of all persons
Form I–9 is still required of all
public comments on the proposed
performing work on Federal contracts
employers and this rule does not change
rulemaking from individuals,
and of all persons hired by the
that requirement. This rule merely
organizations, corporations, trade
contractor. Some commenters
provides a more convenient, faster, and
associations, chambers of commerce and applauded E-Verify because it will
more consistent means of determining
Government entities.
establish a level playing field and
whether an individual is, or is not,
Comments submitted to the docket for prevent some employers from obtaining authorized to work in the U.S. to
this rulemaking were distributed
a competitive advantage by exploiting
establish greater stability and
relatively evenly among various issues,
unauthorized workers for lower pay.
dependability among the Federal
with concerns about the Government’s
Many commenters noted that—for 22
contractor workforce.
authority to promulgate the rule and
years—it has been against the law to
questions about the DHS’s and SSA’s
hire workers who are not authorized to
Authority
collective ability to administer the rule
work in the U.S. This is not a new
1. Immigration Statutes
receiving the greatest number of
requirement, they say; it merely puts
comments. Eleven commenters stated
a. Voluntary Participation in E-Verify
some teeth into the existing law. Other
that the 60-day public comment period
commenters observed that E-Verify will
1. Comment. Many commenters
was inadequate to evaluate, research,
help stem the problem of identity theft
challenge the Councils’ authority to
and prepare responses to a complex
by requiring employers to check photo
promulgate the Rule, arguing that the
proposed rule. Those commenters asked identification.
insertion of a clause into Federal
the Councils to extend the comment
Response: The Councils appreciate
contracts that commits Federal
period to allow more time to research
these supportive comments for use of E-
contractors to use E-Verify conflicts
and respond to the proposed rule.
Verify in the Federal Government
with the congressional intent expressed
The Councils declined to extend the
procurement system, but note that
in the IIRIRA that participation in E-
public comment period after concluding application of the system in this context Verify be ‘‘voluntary.’’ Some
that the period was adequate. The
is not meant to regulate immigration,
commenters further argue that the E-
current web-based E-Verify system,
but to provide the Federal Government
Verify program is de facto mandatory
which has been active and available to
with stable and dependable contractors
because contractors who elect not to
employers since 2004, has been the
which, ultimately, results in a more
enter into Federal contracts on account
subject of significant public scrutiny,
economical and efficient procurement
of E-Verify will go out of business.
including in public hearings before
system.
Response: The Councils disagree.
Congress. This has, over time,
Section 402(a) of IIRIRA states, in
disseminated considerable information
Requests for a More Comprehensive
relevant part, that ‘‘the Secretary of
about the program to the public. As a
Solution
Homeland Security may not require any
result, most commenters did not request
Comment: A number of commenters
person or other entity to participate in
additional time to gather information
suggested that merely requiring the use
a pilot program.’’ 8 U.S.C. 1324a note,
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00007
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67656
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
Section 402(a). On its face, this statutory required to participate in the Basic Pilot
b. Existing Employees
limitation applies only to the Secretary
Program. These commenters asserted
of Homeland Security and does not
that the proposed rule’s promulgation of
Comment: Many commenters asserted
apply to the President or the Councils.
that because IIRIRA created the Basic
a contract clause committing Federal
Because the requirement to insert the
Pilot program as a tool to confirm
contractors to use E-Verify violates the
contract clause set forth in this rule
employment eligibility of newly hired
congressional intent behind IIRIRA,
comes from a presidential action,
employees, the contractual
because Federal contractors are not one
Executive Order 12989, as amended,
requirement—announced by Executive
of the classes of employers which can be
and from this rulemaking undertaken by
Order and implemented through this
required to participate in Basic Pilot.
the Councils, it is not a requirement
rulemaking—that existing employees
Some commenters suggested that
imposed by the Secretary of Homeland
assigned to Government contracts be
Congress consciously chose to exclude
Security and therefore does not run
verified (or re-verified) through E-Verify
Government contractors from the subset
afoul of section 402(a) of IIRIRA.
is contrary to law.
of employers for which participation in
Moreover, acceptance of a Federal
Response: The Councils disagree.
Basic Pilot would be mandatory. Many
procurement contract is, by definition, a
Executive Order 12989, as amended,
commenters also asserted that, because
voluntary act. The rule sets forth a
instructs executive departments and
of this alleged violation of congressional
performance requirement to be included
agencies to require, as a condition of
as a contract clause in contracts entered
intent, the Administration lacks the
contracting, that the contractor agree to
into or negotiated anew after the
constitutional authority to promulgate
use an electronic employment eligibility
effective date of the rule. In AFL–CIO v.
this policy through Executive Order or
verification system ‘‘to verify the
Kahn, the D.C. Circuit Court of Appeals, through this rulemaking.
employment of * * * all persons
sitting en banc, rejected the claim that
Response: The Councils disagree.
assigned by the contractor to perform
the Carter Administration’s insistence
IIRIRA requires participation in E-Verify work within the United States on the
that Federal contractors agree to comply by certain employers, including
Federal contract.’’ This Executive Order
with wage and price controls rendered
Executive departments and the
is based on the President’s exercise of
those controls ‘‘mandatory’’ in violation
legislative branch, as well as employers
his authority under FPASA to prescribe
of the Council on Wage and Price
found to have violated INA section
policies that promote economy and
Stability Act (COWPSA). 618 F.2d 784
274A. There is nothing in the text of
efficiency in federal contracting. 40
(D.C. Cir. 1979). The Kahn Court
IIRIRA that prohibits the President,
U.S.C. 101, 121.
analogized the procurement
acting pursuant to separate statutory
The Basic Pilot statute does not
requirement at issue to ‘‘those Federal
authority, from requiring additional
prohibit the verification of existing
programs that offer funds to State and
classes of employers to participate in E-
employees’ work eligibility called for by
local governments on certain
Verify as a condition of contracting with this presidential directive. The Basic
conditions. The Supreme Court has
the Federal Government. Nor is there
Pilot statute lays out a set of procedures
upheld such conditional grants,
any indication in the legislative history
that employers using the system must
observing on one occasion through
to suggest that Congress ever
follow ‘‘in the case of the hiring (or
Justice Cardozo that ‘to hold that motive specifically considered and rejected a
recruitment or referral) for employment
or temptation is equivalent to coercion
proposal to include Federal contractors
in the United States. * * *’’ IIRIRA
is to plunge the law in endless
in the E-Verify program. Here, the
section 403(a). The statute also sets out
difficulties.’ ’’ AFL–CIO v. Kahn, 618
President has acted within his authority
the parameters for the ‘‘employment
F.2d at 794 (quoting Steward Machine
under FPASA and 3 U.S.C. 301 and
eligibility confirmation system’’ that the
Co. v. Davis, 301 U.S. 548, 589–590
Secretary of Homeland Security must
(1937)). According to the D.C. Circuit:
issued an Executive Order to improve
the dependability and stability of the
establish. IIRIRA section 404. Nothing
Any alleged mandatory character of the
in either of these sections, however—or
Federal contractor workforce by
procurement program is belied by the
in any other part of the Basic Pilot
requiring Federal agencies to contract
principle that no one has a right to a
statute—prohibits the use of the
Government contract. As the Supreme Court
with businesses that electronically
confirmation system for existing
ruled in Perkins v. Lukens Steel Co., ‘‘[The]
verify the employment eligibility of
employees or prohibits the President,
Government enjoys the unrestricted power
their employees. In his Executive Order, acting pursuant to separate statutory
* * * to determine those with whom it will
the President tasked the Secretary of
deal, and to fix the terms and conditions
authority, from requiring federal
Homeland Security with designating an
upon which it will make needed purchases.’’
contractors to use the confirmation
appropriate electronic verification tool
Those wishing to do business with the
system for existing employees as a
Government must meet the Government’s
and charged the FAR Councils with the
condition of contracting with the federal
terms; others need not.
responsibility to promulgate a rule to
government.
AFL–CIO v. Kahn, 618 F.2d at 794. If a
implement the requirements of the
c. Congressional Notification
contractor chooses to do business with
Executive Order. The Secretary of
the Federal Government, then the
Homeland Security and the FAR
Comment: Commenters noted that
Federal Government can, and routinely
Councils have acted in accordance with
IRCA requires the Administration to
does, impose contract performance
the President’s directive, issued as an
notify Congress before implementing
requirements. Where, as with this rule,
exercise of his authority under FPASA,
any changes to the employment
such requirements are imposed through
and in so doing, neither the Secretary
verification system ‘‘established under
contract terms included in contracts, a
nor the Councils have taken any action
subsection (b) of [INA section 274A].’’
contractor’s agreement to abide by those in conflict with IIRIRA. Congress merely INA section 274A(d)(1), (d)(3). These
terms of the agreement is not
prohibited the Secretary of Homeland
commenters suggest that this
‘‘involuntary.’’
Security from requiring participation in
rulemaking amounts to such a change,
2. Comment: Many commenters
E-Verify by other persons or entities,
and that it may not be implemented
suggested that IIRIRA and the INA limit
and this rule does not violate that
without notice to Congress called for in
the types of employers which can be
prohibition, as described above.
section 274A(d)(3).
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00008
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67657
Response: The Councils disagree. This Kahn, 618 F.2d at 792–793 (upholding
of goods and services purchased.’’). In
rule instructs Federal contracting
an Executive Order implementing
this case, the ‘‘nexus’’ is explained at
officers to insert the specified clause
procurement wage and price controls,
some length in the text of Executive
into future Federal contracts, thereby
noting need for a ‘‘nexus’’ between
Order 13465. (See 73 FR 33285.)
committing Federal contractors to use
those wage and price controls and
3. The MOU Requirement
the E-Verify system as specified in the
procurement economy and efficiency).
rule. It does not, however, constitute a
The fundamental ‘‘economy and
Comment: One commenter specified
change to ‘‘the requirements of
efficiency’’ principles underlying the
that ‘‘[t]he inclusion of an MOU in
subsection (b)’’ of INA section 274A,
Executive Order were first articulated in addition to, or as a supplement to, the
which established the paper-based Form the original Executive Order 12989,
contract performance requirements, is
I–9 employment verification process.
issued in February 1996, which
contrary to contract formation law in
The I–9 process that all employers must
concluded that contracting with
that it might create a separately
follow at the time of hire continues to
employers who hire unauthorized
enforceable (and potentially conflicting)
apply to Federal contractors without
workers in violation of the INA
obligation between the parties beyond
any change. This rule, and the Executive undermines the economy and efficiency the scope of the contract and could
Order on which it is based, promotes
of the Federal procurement system. The
create confusion and result in problems
economy and efficiency in Federal
1996 Executive Order imposed
with contract administration and/or
contracting by assisting employers to
debarment penalties on contractors
lead to the submission of contract
avoid employment of unauthorized
found to have violated the immigration
claims.’’
workers and by limiting the risk that
laws, and was never found by a court to
Response: The Councils do not concur
Federal contracts performed in the
be inconsistent with FPASA, the INA, or with these comments. The requirement
United States will be staffed by persons
IRCA. Executive Order 13465 amends
in this clause for the contractor to
unauthorized to work in the United
Executive Order 12989 to use new
comply with the requirements of a
States.
employment verification technology in
secondary agreement is no different
2. Executive Order Authority
order to advance the same goal of
than any other contract term that
ensuring a stable and dependable
requires adherence to a standard or a
Comment: As noted above, many
Federal contractor workforce and more
specification. The clause merely
commenters challenged the President’s
economical and efficient Federal
requires adherence to the conditions of
authority to issue the Executive Order
Government contracting. See 73 FR
the MOU as part of the contractor’s
under FPASA. These commenters
33285 (‘‘This order is designed to
performance duties. The terms of the E-
suggested that Executive Order 12989
promote economy and efficiency in
Verify MOU are readily available to the
does not promote ‘‘economy’’ and
Federal Government procurement.
public, and were included in the docket
‘‘efficiency’’ in Government contracting, * * * I find * * * that adherence to the of this rulemaking on the
and that the Executive Order is therefore general policy of contracting only with
www.regulations.gov Web site so that
not supported by FPASA’s statement
providers that do not knowingly employ commenters on this rule would have the
that the President may enact
unauthorized alien workers and that
opportunity to review and take into
procurement regulations which further
have agreed to utilize an electronic
consideration the proposed terms of that
those two ends. Commenters also
employment verification system
agreement in providing comments on
contended that the main purpose of the
this rulemaking. Potential contractors
Executive Order is to advance a social
designated by the Secretary of
have adequate advance notice of the
policy—a strengthening of the
Homeland Security to confirm the
ancillary agreement with which they
immigration enforcement relating to
employment eligibility of their
must comply.
employment in the United States—in a
workforce will promote economy and
way that is contrary to congressional
efficiency in Federal procurement.’’)
4. Consistency With Other Federal
intent, and that the President’s power
The President has determined that this
Regulations
recognized by FPASA cannot be
rule will produce net economy and
a. FAR Guiding Principles
employed by the Executive Branch to
efficiency gains in Federal procurement.
advance policies that conflict with the
The Councils also disagree with
Comment: Several commenters claim
statutes passed by Congress.
assertions that the proposed rule is a
that the proposed rule contradicts many
Response: These challenges to the
veiled attempt to modify immigration
of the guiding principles used in the
legal authority for Executive Order
policy under the guise of procurement
creation of the FAR, including (1)
12989 are outside the scope of this
regulation. This rule implicates
minimizing administrative operating
rulemaking. The Councils note,
immigration, but does so in a
costs, (2) conducting business with
however, that Executive Order 12989
permissible manner. The President may, integrity, fairness, and openness, and (3)
falls well within the established legal
under FPASA, promulgate procurement
promoting competition.
bounds of presidential directives
policies and directives touching upon
Response: Commenters claim that
regarding procurement policy. FPASA
policy matters beyond Government
administrative operating costs can
authorizes the President to craft and
contracting, so long as there is a
include start-up, implementation,
implement procurement policies that
sufficiently close ‘‘nexus’’ between the
training, and maintenance costs; and the
further the Act’s statutory goals of
policy or directive and the promotion of Councils agree. All of these costs were
promoting ‘‘economy’’ and ‘‘efficiency’’
economy and efficiency in Federal
included, and evaluated, in the
in Federal procurement. See, e.g., UAW- procurement. See Chao, 325 F.3d at
Regulatory Impact Analysis (RIA)
Labor Employment & Training Corp. v.
366–67; Kahn, 618 F.2d at 792; Chamber released with the proposed rule. Some
Chao, 325 F.3d 360, 366 (D.C. Cir. 2003) of Commerce v. Reich, 74 F.3d 1322,
adjustments have been made to the RIA
(affirming authority of the President
1337 (D.C. Cir. 1996) (‘‘[T]he President,
as a result of comments received in
under FPASA to require federal
in implementing the Procurement Act,
response to the proposed rule, and they
contractors, as a condition of
may * * * draw upon * * * secondary
are addressed in the Regulatory
contracting, to post notices informing
policy views * * * that are directed
Flexibility Analysis section of this rule.
workers of certain labor law rights);
beyond the immediate quality and price
Commenters claim that there are also
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00009
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67658
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
other direct and indirect costs to
susceptible to a response. Other
of the rule is to implement Executive
employers who use E-Verify—
commenters have made similar
Order 12989, which aims to promote
employers may perceive foreign-born
assertions that E-Verify is contrary to
economy and efficiency in the Federal
workers as more expensive to employ
law and the Councils have addressed
procurement system by ensuring that
than native-born workers due to the
these specific concerns. The Councils
the Federal Government does not do
database inaccuracies. Commenters
are not aware of any DHS regulation
business with contractors that hire or
claim that resolving tentative
violated by this final rule.
employ unauthorized aliens, thereby
nonconfirmations and correcting
c. Verification of Federal Employees
promoting the stability and
employee records costs time and money
dependability of contractor workforces
and affects other resources. In claiming
Comment: Several commenters noted
and minimizing the potential for
that the costs associated with the
that OMB has directed all Federal
disruption to federal contracts. The
proposed rule do not minimize
departments and agencies to use E-
President is well within his authority
administrative costs, however, the
Verify on their newly-hired employees,
under FPASA to require the agencies to
commenters overlook the costs already
but not on their existing employees.
promulgate this rule, which has a clear
incurred by contractors as a result of the These commenters asserted that the
nexus to promotion of economy and
I–9 process mandated by the INA, and
proposed rule is inconsistent with that
efficiency in Federal contracting, even if
they overlook the gains in stability and
OMB decision, because the rule requires it might also have other impacts. Chao,
reliability of the Federal contractor
Federal contractors to use E-Verify on
325 F.3d at 366 (affirming authority of
workforce that contractors’ use of E-
not only new hires but also on existing
the President under FPASA to require
Verify will produce.
employees working on Federal
federal contractors, as a condition of
The Councils also disagree with the
contracts, and argue that Federal
contracting, to post notices informing
claim by some commenters that the
contractors should not be held to a
workers of certain labor law rights.)
proposed rule fails to advance integrity,
higher verification standard than is
fairness, and openness in the way
applied to the Executive branch.
Relationship With States
business is conducted. While
Response: The Councils disagree. The
1. States Prohibiting Mandatory Use
Government-commissioned reports have rule is consistent with the policy
found some employer abuse of the
announced in Executive Order 12989
Comment: Several commenters
program, discriminatory behavior and
requiring the Executive branch to
requested that the Administration
other such prohibited employment
contract with employers that agree to
clarify the effects of the proposed rule
practices is not encouraged by the E-
use E-Verify for their employees who
on employers conducting Federal
Verify system. Use of E-Verify cannot
are working on a covered Federal
Government contracting business in
prevent all such illegal action, but the
contract. The aim of the Executive Order locations where State and/or local law
record created by use of the system does is to promote economy and efficiency in prohibits the use of E-Verify. One of
make it more difficult for an employer
Federal procurement by ensuring stable
these commenters specifically asked if
engaged in discrimination to conceal its
and dependable Federal contractors.
the requirements of the proposed rule
unlawful behavior. If any employer
Furthermore, Federal employees are
would function as an affirmative
engages in discriminatory practices,
required to undergo background checks
defense in actions brought against
such abuses should be reported to the
pursuant to HSPD–12, which mandates
employers which use E-Verify in
appropriate Federal and State agencies
that a person must be suitable
contravention of State/local law. Two
responsible for enforcement of the anti-
(minimum of a national agency check
other commenters suggested that the
discrimination laws.
with inquiries (NACI)) in order to be
proposed rule be modified to provide
Commenters claim that the proposed
issued an HSPD–12 card. HSPD–12
E-Verify participation waivers to
rule does not encourage competition
requires certain credentialing standards
employers located in States prohibiting
because the harmful impact on small
prior to issuing personal identity
E-Verify enrollment, to allow such
businesses (many of which are
verification cards. These standards
employers to participate in Government
minority-, immigrant-, or family-owned) include verification of name, date of
contracting without violating State law.
is disproportionate and makes the
birth, and social security number
Response: The Councils decline to
playing field for small businesses more
(among other data points) against
provide an exemption to the E-Verify
uneven. The claim of a disproportionate Federal and private data sources. The
term in contracts covered by this rule
impact on small businesses is addressed Councils agree that the degree of
for employers located in States that
elsewhere in this rule (see the
scrutiny applied to individuals granted
prohibit E-Verify enrollment, because
Regulatory Flexibility Analysis section
HSPD–12 credentials provides sufficient such state and local laws would be
of this rule). However, the Councils
confidence that any such person is
preempted by Executive Order 12989, as
believe that there is an impact on
likely truthful about his or her
amended, and by these rules
competition, and it believes that the
authorization to work in the United
implementing the Order. The Councils
impact is positive rather than negative.
States that additional investigation
note that an Illinois state statute
Use of the E-Verify system will make it
through E-Verify is not necessary.
prohibiting use of E-Verify by employers
more difficult for firms to gain a
within that state is currently in
d. Appropriate Scope of Regulations
competitive edge by hiring
litigation, as a result of a lawsuit filed
unauthorized workers at lower pay.
Comment: One commenter suggested
by DHS arguing that the state statute is
that the proposed rule’s goal was to
preempted by Federal law. The state has
b. DHS Regulations
‘‘protect U.S. workers’’—one that is
agreed not to enforce its statute pending
Comment: One commenter asserted
beyond the scope of that which can
the final resolution of the litigation.
that the proposed rule’s requirement to
rightfully be pursued under
2. Other States
re-verify certain employees violates
procurement authorities.
existing DHS regulations.
Response: The Councils do not agree
Comment: Two commenters noted
Response: As the commenter did not
with the premise of this comment. The
that they are concerned that the
identify the specific DHS regulations
goal of the proposed rule is not to
proposed rule’s requirement that certain
allegedly violated, this comment is not
‘‘protect U.S. workers.’’ Rather, the goal
existing employees undergo E-Verify
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00010
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67659
verification could ‘‘embolden’’ States
with various stakeholders to determine
they cannot be completely eliminated.
and localities to require the same type
and address the biggest concerns with
Many commenters feel this issue
of verification for employees working
the process, and hopes to conduct focus
especially affects employees with
under State/local contracts. These
groups on ideas for improvement. The
nontraditional or complex names.
commenters fear that such an expansion program has also undertaken a Plain
Response: The improvements made to
would complicate employment
Language Initiative, designed to
E-Verify over the last few years have
verification legal requirements, to the
simplify the language associated with
decreased the incidence of data
detriment of both employers and
the program and to update the materials
mismatches, which is referred to as a
employees.
associated with the program once the
‘‘tentative nonconfirmation’’ in the E-
Response: The commenters concerns
new verbiage has been finalized. Within Verify program, and often referred to as
are speculative and, in any case, State
this effort, the program also intends to
the ‘‘error rate’’ by the public. DHS and
and local government action is outside
conduct focus groups to determine the
SSA continue to analyze and implement
the scope of this case.
best response to various word choices.
improvements to reduce data
With regard to the burdens or costs to
mismatches as part of ongoing
E-Verify System
employers to register and participate in
management of the E-Verify program.
1. E-Verify Procedural Issues
E-Verify, DHS has informed the
The majority of mismatches are with
a. Burdensome
Councils of a report entitled the
SSA data, since the SSA database is the
‘‘Findings of the Web Basic Pilot
only source for citizen data, against
Comment: One commenter stated that
Evaluation’’ that was prepared by
which the large majority of E-Verify
the E-Verify enrollment process is
Westat in September 2007. The report
queries are run. Instances of data
cumbersome and difficult and that
may be found at http://www.uscis.gov/
inaccuracies include name changes due
USCIS support for employers trying to
files/article/
to marriage or divorce not reported to
enroll has been inconsistent and
WebBasicPilotRprtSept2007.pdf. The
SSA, or, in the case of naturalized U.S.
ineffective. Three commenters felt that
report found that 96 percent of long-
citizens, unreported changes in
tentative nonconfirmations and the
term users indicated that E-Verify was
citizenship status. Most citizenship
subsequent efforts to resolve them place
not burdensome. The Westat report also
status mismatches that resolve as ‘‘work
additional burdens on employers and
stated that approximately 97 percent of
authorized’’ do involve naturalized
employees alike. Two other commenters long-term users reported that the
citizens who have failed to notify SSA
state that costs associated with E-Verify
indirect set-up and system maintenance
of their change in citizenship status. To
are burdensome to employers. One
costs were either no burden or only a
reduce the number of SSA mismatches
commenter considered that the vast
slight burden and that the majority of
due to this situation, USCIS developed
scope of coverage in the proposed rule
employers reported that they spent $100 an automated check against the USCIS
is contrary to the ‘‘economy and
or less in initial set-up costs. The
naturalization database for U.S. citizen
efficiency’’ argument that justified
Councils recognize that costs to
new hires and provided employees who
issuance of the rule, as compared to
employers will vary depending on
receive an SSA citizenship status
other labor requirements attached to
employer characteristics and practices.
mismatch notice the option of calling
procurement.
DHS directly to resolve it rather than
Response: The Councils have
b. Data Accuracy
resolving the mismatch with an in-
narrowed the coverage to the extent
Comment: Numerous commenters
person visit to an SSA field office. This
possible yet still meeting the purpose of
focused their concerns primarily on the
has significantly reduced the burden of
the Executive Order. The Councils are
reliance of the E-Verify system on DHS
resolving tentative nonconfirmations for
not charged with administration of the
and SSA databases that contain high
naturalized citizens. The changes went
E-Verify program and this process is not percentages of errors. Many
into effect in May 2008, and preliminary
within its rulemaking authority or the
commenters, in particular, specifically
data show a 30 percent decrease in the
scope of this final rule. The Councils
call out the reported 4.1 percent error
number of SSA tentative
have considered the burdens and costs
rate of the Social Security
nonconfirmation for naturalized
associated with E-Verify in the RIA and
Administration’s database as a large
citizens.
Regulatory Flexibility Analysis.
source of inaccurate data. Several
It is important to clarify that if the E-
The E-Verify registration process is an commenters stated concern that DHS
Verify program issues an initial
automated process that uses a
databases are not updated in real-time.
mismatch to an employee, the employer
registration wizard to assist employers
Many commenters also believe the
cannot fire, prevent from working, or
in determining which access method
inaccurate data in the database leads to
withhold or delay training or wages for
will best suit their company needs.
the misidentification of workers and to
that employee during the mismatch
Once that is decided, the individual
denial of employment for work-
process. All employees receiving an
registering the company is required to
authorized individuals, especially
initial mismatch are given the
enter the company contact information,
naturalized citizens and foreign-born
opportunity to contest to ensure that
including the number of company
authorized workers. Many commenters
every employee who has a work
locations for which E-Verify will be
stated concerns that naturalized citizens authorized status is not prevented from
used and the address of these locations.
or foreign-born authorized workers are
working. All employees must be given
Within 24 hours, that individual will
considerably more likely to receive
the opportunity to contest and correct
receive an email from E-Verify that
erroneous tentative nonconfirmations
their records.
includes their username and password
than native-born U.S. citizens. One
The Government recognizes the
which they will use to log on to the
commenter questions the 0.5 percent
concerns over the SSA Office of the
system. In mid-FY08, the E-Verify
‘‘error rate’’ claimed by E-Verify when
Inspector General Congressional
program launched a registration
the system is based on SSA databases
Response Report (2006) estimates that
reengineering effort aimed to streamline
with a 4 to 5 percent error rate.
4.1 percent of their NUMIDENT
the E-Verify registration process and
One commenter feels data entry or
database may contain discrepancies that
shift to a profile based registration
‘‘human’’ errors on the part of
could potentially affect 12.7 million
system. The program has been working
employers are of concern as well since
individuals. The E-Verify program,
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00011
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67660
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
however, provides due process for
errors cannot be completely eliminated
sources for required paperwork, and
correcting any errors with SSA, which
but the E-Verify program has worked to
DHS is continually working towards
will help to reduce the NUMIDENT
minimize and catch those errors before
more paperless systems, but is still
discrepancies over time and provides an verification query results are returned.
within that process.
opportunity for an individual to correct
In September 2008 E-Verify instituted a
With respect to telephone inquiries,
an error they may not have been aware
pre-mismatch typographical error check
the E-Verify program has a Tier system
of otherwise. The E-Verify MOU makes
that asks the employers to double-check
when addressing phone calls. While
clear that employers are prohibited from the information they entered into the
most calls go directly to the first level,
discharging, refusing to hire, or
system with the employee’s documents
Tier One, for general program
assigning or refusing to assign to federal
in the case of a mismatch. Preliminary
information or employer questions,
contracts employees because they
data show that this enhancement has
there is a system in place to escalate
appear or sound ‘‘foreign’’ or have
reduced SSA mismatches by 30 percent. calls to other Tiers depending on the
received tentative nonconfirmations. If
In response to the issue of employees
complexity of the case. The program has
an employee elects to challenge a
with nontraditional or complex names,
subject matter experts on staff to address
tentative nonconfirmation, the
the system provides guidance to
phone calls that require further
employee may not be terminated or
employers on the system page where the attention. For cases that they are unable
suffer any adverse employment
name is entered into the field. There is
to resolve, USCIS has a Special Case
consequences based upon the
a box that appears when an employer
Resolution unit in the Washington, DC
employee’s perceived employment
scrolls over the name field and there is
Headquarters office that the cases can be
eligibility status (including denying,
also a help button next to the field that
referred to for further review. The
reducing, or extending work hours,
opens up a document that provides
average wait time is less than 20
delaying or preventing training,
detailed guidance on how to enter
seconds for a phone call to transfer from
requiring an employee to work in poorer complex surnames such as multiple last
Tier 1 to Tier 2 and calls to the program
conditions, refusing to assign the
names or hyphenated names.
are currently answered within 0.2
employee to a Federal contract or other
c. Technology Issues
minutes or 12 seconds on average. The
assignment, or otherwise subjecting an
E-Verify program has substantially
employee to any assumption that he or
Comment: Many commenters stated
increased its customer service and
she is unauthorized to work) until and
that the E-Verify system remains a
program staff over the past two years in
unless secondary verification by SSA or
paper-based system which still requires
an effort to work with employers and
DHS has been completed and a final
a contractor to complete the paper Form ensure that every question or difficulty
nonconfirmation has been issued.
I–9 after analyzing up to 25 different
that arises is addressed.
Employers are further notified that any
documents that an employee could
In any specific case where additional
violation of the unfair immigration-
present and is not an entirely electronic
time may be needed to address an issue
related employment practices
system. One commenter stated that the
or research the case information before
provisions in section 274B of the INA
system should provide an electronic
a verification query can be resolved, it
could subject the Employer to civil
export or reporting functionality for
is important to note that the employer
penalties, back pay awards, and other
Case Verification Numbers. They state
would receive a ‘‘case in continuance’’
sanctions, and violations of Title VII
that the transfer of the verification case
response and cannot take any adverse
could subject the Employer to back pay
number to paper or on-line I–9 forms is
action on an employee during this time.
awards, compensatory and punitive
now a manual, case-by-case ‘‘pen and
DHS and SSA are constantly
damages. Moreover, the MOU states that paper process’’ that would fail under
violations of either section 274B of the
high volume. Another commenter stated exploring ways to make the system more
INA or Title VII may also lead to the
concern over the degree of knowledge
efficient and effective. However, the
termination of its participation in E-
the personnel managing the toll free E-
suggestion made here, that the system
Verify. If the Employer has any
Verify phone number has on the myriad
can be made totally web based so that
questions relating to the anti-
of complex immigration documentation
individuals receiving a tentative
discrimination provision, it may contact and state that the USCIS National
nonconfirmation could prove that some
the Department of Justice’s Office of
Customer Service (NCS) lines have been factor generating the nonconfirmation
Special Counsel for Immigration-Related unable to provide accurate and timely
was in error, is unrealistic. Generally,
Unfair Employment Practices (OSC) at
information which can lead to
SSA requires documented proof of the
1–800–255–8155 or 1–800–237–2515
confusion, multiple calls, and case
factors that might be in question, SSN,
(TDD).
resolution delay.
date of birth, name, citizenship; and that
The ability to identify and fix any
Response: Completion of the Form
the documents used be originals. The
errors will help them maintain accurate
I–9 is required regardless of whether an
documents used to prove these elements
records with SSA, which is beneficial to employer is a participant in E-Verify.
(driver’s licenses, birth certificates, etc.)
them in the future, particularly when
DHS rules permit the completion and
are subject to forgeries, which are much
applying for SSA benefits. The report
storage of the I–9 electronically rather
easier to detect when a human being
also indicates that the majority of the
than on paper. See e.g., 8 CFR
inspects original documents. Use of
discrepancies (64 percent) in the
274a.2(a)(2). E-Verify provides Form
photocopies or fax copies, which would
Numident are in the ‘‘Death Indication’’
I–9 support materials for employers on
be necessitated by a totally Web based
field, which would not affect new hires.
the system’s website including the Form process, would make the process much
However, the E-Verify program can
I–9, in English and Spanish, and the
more susceptible to fraud.
detect instances in which an individual
Handbook for Employers, Instructions
If an employee believes that s/he has
is fraudulently using the SSN of a
for Completing the Form I–9 (M–274), as been discriminated against during the
deceased person to gain unauthorized
well as many immigration-related
employment eligibility verification
employment.
materials such as a Guide to Selected
process, he or she should contact OSC
In response to data entry error, the
Travel Documents. The Councils and
at 1–800–255–7688 or 1–800–237–2515
independent report by Westat does state DHS recognize the preference some
(TDD). Employers that have questions
that employee and employer data entry
employers have to utilize electronic
relating to the anti-discrimination
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00012
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67661
provision should contact OSC at 1–800–
Moreover, the documentation
generally necessary to comply with the
255–8155 or 1–800–237–2515 (TDD).
requirement is a basic requirement for
IRS statutes and regulations that already
the I–9 process that has to be completed
require every employee in the United
d. Photo Identification
regardless whether or not the employer
States to have an SSN.
Comment: Many commenters stated
is in E-Verify. The E-Verify photo
that there is an estimated 11 percent of
f. Privacy
identification requirement does limit
the population that does not have a
the scope of acceptable ‘‘List B’’
i. System Security
Government-issued photo identification. identification documents somewhat, but
Comment: Several commenters
Some of those same commenters also
we are not aware of a basis to conclude
stated that studies have indicated
suggested that E-Verify has ongoing
that the non-photo identity
members of minority populations such
system security problems that
documentation that is currently
as African Americans, Latinos, Women,
jeopardize the privacy and security of
permitted for the I–9 is broadly
and Senior Citizens are less likely to
individuals’ personal information.
available to, or used by the referenced
have photo identification as well as
These comments focused on (1) general
populations. In other words, the effect
many lawfully present immigrants such
concerns with DHS, and more generally
of limiting the non-photo documents
as refugees and asylees. These
the U.S. Government, in the handling of
would appear to be marginal.
commenters also state that there are
personal information, and (2) general
USCIS has taken substantial steps to
situations where an individual may
concerns about the potential for cyber
expedite EAD issuance, especially for
have the right to work but has not yet
attacks.
refugees and asylees. The non-photo
received a physical Employment
List B documents are not normally
Response: The Councils disagree with
Authorization Document (EAD) and that available to aliens who need EADs in
these comments. Any database of
the proposed rule fails to make
any case. Those that reasonably might
personal information would be
exceptions for cases where photo
be available, especially the driver’s
attractive to hackers or cyber attacks.
identification has been lost or destroyed license, contain photographs and thus
That is why USCIS has developed a
due to crime, accidents, natural
are acceptable for E-Verify. Thus, this is
robust security program to protect the
disasters, or other causes.
not really an E-Verify issue per se;
Verification Information System (VIS),
Response: The Councils recognize the
rather, it is a general issue about the
the technical system that supports the E-
concerns of the commenters in regard to I–9 compliance that employers are
Verify program, from such attacks. This
the percentage of the U.S. population
responsible for whether or not they
security program fully complies with
that do not have photo identification,
participate in E-Verify.
Federal Information Security
but note that there is no evidence from
To address situations of lost or stolen
Management Act (FISMA) requirements
the extensive operations of the E-Verify
documents, the DHS regulations permit
and has been certified and accredited as
program to date that this has been a
temporary presentation of a receipt for
secure. The security measures in place
significant problem. There are also cases the application for a replacement
include among other things both strong
and studies that find a far lower
document, and this is permissible for
and limited access controls,
percentage of individuals lack a photo
E-Verify employers as well as those just
transmission encryption, and extensive
identification, at least in the context of
using the paper I–9.
audit logging. Accordingly, the Councils
evaluating photo identification
For the six commenters who assert
have no reason to believe that these
requirements for voting. See Indiana
that employees need to show an EAD,
systems are not secure enough to ensure
Democratic Party v. Rokita, 458
the Councils note that there is no
the effectiveness of the rule.
F.Supp.2d 775, 803 (S.D. Ind. 2007),
requirement to states that if an
ii. Privacy Protections
aff’d sub nom. Crawford v. Marion
employee has an EAD card they must
County Election Bd., 472 F.3d 949 (7th
provide it for purposes of the Form
Comment: A number of comments
Cir. 2007), aff’d, 128 S.Ct. 1610, 553
I–9. Employees may choose to provide
stated that E-Verify does not adequately
U.S. ––– (2008); see also Voter IDs Are
any approved List B document with a
protect the privacy of individuals’
Not the Problem: A Survey of Three
photo for the purpose of verification
personal information. These comments
States, American University Center for
through E-Verify. It is true that many
focused on (1) general concerns with E-
Democracy and Election Management,
aliens who apply for an EAD card
Verify handling of personal information,
January 9, 2008, found at http://
would not normally have List C
(2) specific concerns about potential for
www.american.edu/ia/cdem/pdfs/
evidence of work authorization and thus employer misuse of E-Verify for pre-
VoterIDFinalReport1-9-08.pdf (finding
cannot comply with Form I–9
screening and other misuse, (3) specific
that 1.2% of registered voters lacked a
requirements until they receive the
concerns about the potential for misuse
government issue photo identification).
EAD. But this is a concern generally
of E-Verify by those falsely claiming to
Photographs serve a unique and
applicable to Form I–9 compliance and
be employers, and (4) specific concerns
essential function and significantly
E-Verify participation would not affect
with E-Verify relying on external
minimize the opportunities for
it one way or another.
databases.
document fraud, unlike fingerprints, by
Response: The Councils disagree in
allowing a contractor to immediately
e. SSN Number
part with these comments. Several
compare the picture embedded in the
Comment: One commenter noted that
comments addressed non-specific
document against the employee. IIRIRA
the SSN is not required for the Form
privacy concerns about the handling of
Sec. 403(a)(2)(A)(ii), 8 U.S.C. 1324a
I–9.
personal information. USCIS fully
note, thus requires photo identification
Response: The Form I–9 (Rev. 06/05/
appreciates the significant
from employees of employers
07) states ‘‘[p]roviding the Social
responsibilities of handling this large
participating in the E-Verify program. In Security number is voluntary, except for amount of personal information. DHS,
order to be consistent with these
employees hired by employers
and specifically the E-Verify program,
standards, the E-Verify MOU requires
participating in the USCIS Electronic
has developed a robust privacy program
all employees of Federal contractors
Employment Eligibility Verification
to not only ensure that the privacy of
participating in E-Verify to present a
Program (E-Verify).’’ Additionally,
this information is respected but also to
photographic identification document.
providing an SSN to employers is
ensure that the public is made aware of
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00013
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67662
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
how their information is being treated.
Number data with other Government
Response: The Councils disagree.
There is a dedicated staff of privacy
agencies, such as USCIS. In advance of
E-Verify has had remarkable success
professionals who work at the
such a statutory change to that
preventing those from maintaining
operational, tactical, and strategic
prohibition, USCIS is currently
employment who are not authorized to
planning levels and every significant
undertaking a robust reengineering of
work in the United States. When
change to E-Verify is documented in a
the employer registration process,
Congress established E-Verify, one of its
system of records notice (SORN) or
including exploring ways of verifying
goals was to prevent employment of
privacy impact assessment, as
the authenticity of employers registering those who are not authorized to work by
appropriate. USCIS continuously seeks
for E-Verify.
detecting document fraud during the
to improve security and privacy
Finally, commenters noted that E-
hiring process. Information matching
protections as the E-Verify program
Verify relies to a large extent on
and the photo identification
develops.
databases external to DHS. The
requirement, while not airtight, are parts
Several commenters noted that E-
commenters questioned the integrity of
of this process. When an individual has
Verify could be misused by employers,
the data in these external databases and
presented fraudulent documents to an
either by pre-screening applicants or by
specifically recommended that they be
employer, the E-Verify program is more
treating differently employees who have made to provide full Privacy Act
likely to identify that fact than the paper
received a tentative nonconfirmation.
protections without being exempt from
I–9 process and, is thus an improved
The Westat report suggests that this
any of the Privacy Act requirements.
process in relation to document fraud.
indeed does take place. Unfortunately,
The SORN and privacy impact
Criticism has arisen from E-Verify’s
some employers do not follow the
assessments for VIS, the underlying E-
limited ability to detect identity theft,
requirements and guidelines for
Verify system, can be found at the DHS
i.e., when legitimate documents are
participating in E-Verify. Those
Privacy Office Web site http://
presented but have been stolen from
requirements and guidelines address
www.dhs.gov/privacy. The SORN and
another individual. A concern also has
these concerns in several ways. First, E-
been stated that identity theft may
privacy impact assessments describe
Verify is educating employees and job
increase as more employers use the E-
more fully what information is collected
applicants about how E-Verify should
Verify program. The Councils note that
and how it is used, protected, and
work and what their options are to
E-Verify was not established to prevent
shared. The particular Privacy Act
address perceived misuse or abuses of
identity theft, but increasingly has the
exemptions and the extent to which the
the program. To this end, the E-Verify
effect of doing so.
external source systems apply the
MOU requires that E-Verify
First, while document fraud requires
Privacy Act vary based on the type of
informational posters be placed in the
some level of ingenuity, identity theft
system and reason for collection. USCIS
work site where employees can see
requires far more ingenuity. E-Verify
has asserted no Privacy Act exemptions
them. These posters provide employees
continually forces unauthorized workers
and fully embraces the Privacy Act
with a concise statement of their rights
to resort to more and more difficult
and contact information for submitting
protections for the E-Verify VIS. E-
methods to obtain unauthorized
complaints regarding misuse and abuse
Verify fully appreciates that because it
employment. USCIS anticipates that this
of the program. In addition, E-Verify
is making such significant decisions
increased burden and the increased
conducts outreach to educate employers based on information over which it does danger of involvement in identity theft
and the general public about the
not have direct authority, it must be
criminality causes a significant number
program. Moreover, E-Verify requires
very careful to ensure that these
of unauthorized workers not to seek
user training and testing in addition to
decisions are made as accurately as
employment with employers who use
providing users with guidance on the
possible. E-Verify will often check more
E-Verify.
appropriate use of the E-Verify program. than one database for verification of a
Second, E-Verify introduced a photo
Finally, USCIS has developed a
single data element acknowledging that
screening capability (‘‘photo tool’’) into
monitoring and compliance capability
data may occasionally be wrong. In any
the verification process in September
to assist in identifying when an
event, individual employees are not
2007. When an employer is presented
employer may be misusing the E-Verify
deemed unauthorized to work as long as with an employment authorization card
program.
they are contesting a tentative
or permanent residence card during the
Several commenters noted that E-
nonconfirmation from E-Verify.
Form I–9 documentation process, the
Verify does not currently screen
iii. Identity Theft
employer can match the photo on the
employers who register with E-Verify,
documents to the photo which appears
therefore it is possible that some may
1. Comment: Several commenters
on the computer screen during the E-
not be actual employers, but rather
addressed E-Verify’s current ability to
Verify process because the two should
groups or individuals seeking to
combat identity theft. One commenter
be the identical photo. Fifteen million
‘‘phish’’ E-Verify to validate personal
stated that there is no rational
photographs are contained within the
information for identity theft purposes.
relationship between the E-Verify
USCIS databases. This has led to
E-Verify does capture information on
mandate on Federal contractors and the
instances where employees who have
employers and, as part of the program’s
aim of having more efficient and
either used photo substituted
monitoring and compliance activities,
dependable procurement sources
documents or have created entirely
researches on an ad hoc basis whether
because E-Verify does not prevent
counterfeit documents have been
E-Verify users are actually employers. E- identity theft. The same commenter also identified. USCIS is currently in
Verify has sought authority to verify
stated a concern that the use of E-Verify
discussions with the Department of
employer authenticity directly from
would encourage identity theft. Another State to add United States passport and
other Government sources but has not,
commenter stated that E-Verify could
visa photographs to the E-Verify process
as of yet, received that authority. Last
not prevent the hiring of unscrupulous
as well. It is USCIS’s long-term goal that
year, in particular, the Administration
workers because it does not check
the E-Verify photo screening process
sought a statutory change to the current
identity. A third commenter stated that
will be able to verify photos on all
prohibition on Internal Revenue Service E-Verify is inadequate because it does
identity documents that an employee
sharing of Employer Identification
not prevent identity theft.
may present during the Form I–9
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00014
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67663
process. The photo tool has identified
employee’s work status and therefore,
organization to solicit, assess, and
numerous cases of document and
made the employer more likely to hire
prioritize with the user community
identity fraud and prevented
immigrants.
implementation of needed system
unauthorized workers from gaining
3. Comment: One commenter stated
enhancements and corrective actions.
employment. Accordingly, the Councils
that DHS needs to reduce the number of
A university requested establishment
consider the E-Verify process superior
documents acceptable to prove
of an E-Verify Ombudsman to assist
to the current I–9 process for identifying authorization to work to reduce identity
with the expected higher than average
and deterring document fraud and
theft and confusion. The same
error rates for foreign nationals on
identity theft.
commenter also stated that E-Verify
college and university campuses.
2. Comment: Many commenters stated does not have the ability to determine
Another university commented that
a concern that E-Verify’s inability to
if an SSN is being run through its
DHS should provide Federal funding
prevent identity theft leaves employers
system multiple times.
assistance to employers for initial setup
that use E-Verify vulnerable to
Response: The number of documents
of record retention capabilities and staff
sanctions. Additionally, many
acceptable for demonstrating
training and initial and ongoing
commenters stated that the threat of
authorization to work is governed by the verification of expenses.
penalties resulting from the use of E-
INA and by the regulations on the Form
Response: DHS has informed the
Verify or pressure to comply with the
I–9. The E-Verify program requires
Councils that it is continually looking at
system would encourage employers to
documents with a photograph when the
ways to improve the E-Verify system,
forego hiring certain workers.
employee presents a ‘‘List B’’ document
and believes that support is already
Response: The Councils disagree with for Form I–9 purposes. See 8 U.S.C.
provided to employers in a consistent
these comments. As explained above,
1324a note, Sec. 403(a)(2)(A)(ii). The
and effective way. E-Verify provides
the E-Verify system makes an employer
requested change to further restrict the
general assistance through information
more, not less, able to prevent document documents that may be used for the
found on the Web site and trained staff
fraud and identity theft. If a Federal
Form I–9 or for E-Verify would be better to address questions before or during
contractor participating in the program
directed to DHS than to the Councils,
the registration process in addition to
obtains confirmation of identity and
and is outside of the scope of this
continued support after an employer
employment eligibility in compliance
rulemaking.
with the terms and conditions of the
registers as an E-Verify participant. The
E-Verify is fully capable of detecting
program the contractor will have the
MOU provides points of contact. The
multiple uses of SSNs. Through the
benefit of establishing a rebuttable
program also goes beyond this general
USCIS Monitoring and Compliance unit,
presumption that the contractor has not
support to provide presentations and
steps are taken to identify those
violated INA 274A(a)(1)(A) with respect
system demonstrations to individuals or
instances where suspected fraud has
to the hiring. See 8 U.S.C. 1324a, note,
groups such as employers, Federal, State
occurred and corrective action is taken
Sec. 402(b). Moreover, no Federal
and local governments, community-
where appropriate. Additional methods
contractor participating in the E-Verify
based organizations, and various
to combat identity theft, including
program can be held civilly or
industry associations. The E-Verify
methods to determine if a single SSN is
criminally liable under any law for any
program has participated in outreach
being used in different geographic
action taken in good faith reliance on
events designed to provide information
locations, are under investigation with a
information provided through the E-
to the public and interested
focus on suspected or clearly identified
Verify system. Id. at 403(d). USCIS and
stakeholders regarding the program. The
fraudulent use of SSNs, based on the
ICE may also use law enforcement
program conducts demonstrations,
number of times and geographic areas in
discretion in relation to specific
participates in conferences and outreach
which a number has been used. The
instances of good faith operation of the
events, hosts webinars for interested
Councils note that an employee could
program. Accordingly, the Councils do
parties, and created public awareness
have more than one job, in different
not view the stated concern over
campaigns nationally and on the web
locations.
employer sanctions resulting from
and on radio, print and billboard in the
identity theft as an impediment to
g. Communications
states of Arizona, Georgia, Mississippi,
implementing this final rule.
Comment: A professional association
and the metro Washington, DC area. The
With respect to the comments
commented that certain materials
E-Verify Outreach branch has
regarding selective hiring, an evaluation should be made available prior to
coordinated closely with the Small
of the E-Verify program, publicly
enrollment (e.g., user manual) and that
Business Association since April 2008
available on the Internet at http://
E-Verify should create a list of items for
to conduct outreach events to ensure
www.dhs.gov/E-Verify under ‘‘Program
employers.
specific concerns relating to small
Highlights’’/‘‘Findings of the Web-Based
Response: Currently, E-Verify does
businesses are heard and addressed.
Basic Pilot [E-Verify] Evaluation—
provide many materials on the
With regard to the request for
September 2007,’’ included an analysis
program’s Web site at http://
financial assistance, the Westat
of employer’s confidence in hiring
www.dhs.gov/E-Verify including the E-
evaluation reports that the majority of
certain workers with information
Verify Users Manual, a ‘‘How Do I Use
employers reported that they spent $100
collected directly from E-Verify
E-Verify’’ guide, and a copy of the E-
or less for initial setup costs for E-Verify
employers. Most employers who use E-
Verify MOU among other informational
and a similar amount annually for
Verify stated that they are neither more
materials. E-Verify continues to engage
operating the system. There is no
nor less willing to hire immigrants.
in employer outreach to further educate
additional record retention beyond
When use of the program was reported
employers regarding their
Form I–9 requirements, with the
as impacting employer hiring practices,
responsibilities under the program.
exception of those employers who are
employers almost always stated that the
presented with green cards (I–551s) or
provision of an additional means to
2. User Liaison Organizations and Other EADs (I–767) and need to retain
determine work authorization through
Assistance to Contractors
photocopies of these documents for the
E-Verify resulted in increased
Comment: One industry association
photo tool as long as they are retaining
confidence and security in the
requested establishment of a user liaison the Form I–9.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00015
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67664
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
3. Staffing
its own workforce to meet the demands
E-Verify to all employers and cited
a. SSA and DHS Staffing for E-Verify
of a nationwide mandatory system that
statistics that would apply to such an
would be used by approximately 7
expansion. Based upon their
Comment: Many commenters raised
million employers. However, the SSA
exaggerated projections, the commenters
various concerns over the
reports that the numbers of employers
assert that there is a high probability
overburdening of both SSA and DHS if
and the workloads associated with this
that disputes will not be resolved in a
E-Verify is expanded. Many commenters FAR rule would be far less than they
timely manner. But the numbers of
commented that the rule would
would be under a nationwide
employers and workloads associated
overwhelm DHS and SSA as neither
mandatory system. This is especially
with this FAR rule would be far less
organization is adequately staffed to
true given the recent improvements
than they would be under a nationwide
deal with the increased number of
made to the E-Verify system and the
mandatory system, and they would not
tentative nonconfirmations expected.
effect those have had in reducing the
be difficult to absorb. The Councils, in
Some of these commenters wrote that
numbers of people contacting SSA.
consultation with DHS and SSA, are
there is a substantial difference between
confident that the system will be able to
the current number of E-Verify
b. Effect on Other Agency Functions
accommodate the required greater
employers and the number of E-Verify
Comment: Some commenters were
volume of enrollments and queries
employers that would use the system as
specifically concerned with the effect
within the time allotted. The
a result of the rule. Those commenters
that the rule would have on SSA’s
Verification Information System (VIS),
were concerned with the scalability of
ability to fulfill its primary mission of
which is the database that supports E-
staff to handle the increased number of
administering benefits.
Verify, underwent vigorous load testing
employers.
Response: Since E-Verify uses a
in July 2007 in partnership with the
Response: The Councils disagree with system separate from other SSA
SSA data systems. Those tests
these comments. DHS (and its
verification services, increases in E-
conclusively showed that the existing
predecessor agencies) and SSA have
Verify queries would have no effect on
VIS will scale to meet even the most
worked closely for more than a decade
disability claims. As stated above, SSA
demanding current estimate of VIS
to improve the E-Verify process. Since
and DHS are sufficiently staffed to
operation, considering peak volumes for
SSA does not receive appropriated
handle E-Verify, therefore there should
both queries and registrations.
funding for E-Verify, it is reimbursed by
be no adverse impact on carrying out
Currently, VIS is capable of handling 40
DHS for labor costs associated with
any of the other core functions of these
million queries annually. The testing
resolving mismatches with SSA field
agencies.
found that the E-Verify system has the
offices. These costs include salaries and
capacity to accommodate at least 240
overhead for SSA field office employees 4. System Technology Issues
million queries annually, four times the
who resolve mismatches in the field,
Comment: Many commenters
projected 60 million new hire queries
and salaries and overhead for SSA
suggested that the E-Verify program
per year that would result from
employees who staff the SSA 1–800
would be unable to handle the increased mandatory E-Verify legislation
number to answer calls from employees
strain on its system, and specifically on
applicable to all U.S. employers. It is
and employers. DHS has worked hard to the transactional database. Several of
also worth noting that the employer
decrease E-Verify related work
those commenters stated that the
registration process is automated, and
undertaken by SSA field offices.
requirement to check all new hires will
testing indicates that E-Verify is capable
In May 2008, the E-Verify program
overwhelm the current system and lead
of handling up to 145,500 registrations
launched the inclusion of naturalized
to an increase in workforce disruption.
per day, well over the estimated 4,000
citizen data as part of the initial E-Verify Several other commenters argue that E-
per day that would occur under a
check. E-Verify now automatically
Verify is ill-equipped to handle a vast
nationwide all U.S. employer use
performs an initial query to check
increase in users, queries, transactions,
scenario.
information against the USCIS
and communications volumes. Some
As of September 13, 2008, over 85,500
naturalization databases for all U.S.
commenters suggested that the E-Verify
employers representing over 446,000
citizen new hires. In the short time
program and its system needs further
sites are registered for E-Verify. This
since this new routine was put into
study of its capabilities and needed
calendar year, approximately 10 percent
place, E-Verify tentative
functionalities, that problems with the
of all new hires nationwide have been
nonconfirmations for naturalized
present technology have not been
run through the E-Verify system. In
citizens have decreased by 30 percent.
addressed, that the requirements of the
fiscal year 2008 to date, E-Verify has run
In the event a naturalized citizen
rule would require major E-Verify
over 6.2 million new hires through the
receives a SSA tentative
system changes, and that the system is
program, which is nearly double the 3.2
nonconfirmation due to citizenship
unable at present to handle the
million new hires run through the
status, that individual now also has the
anticipated increases in usage absent the program in all of fiscal year 2007. Both
option of calling DHS to reconcile the
rule. Another commenter was
SSA and DHS agree the current system
citizenship status mismatch rather than
concerned with the availability of an
is more than adequate to handle the
physically visiting SSA. DHS’s efforts in Internet-based system in the event of a
volume increase associated with the
this area will further reduce the number
natural disaster that would inhibit the
FAR rule.
of E-Verify mismatches for naturalized
ability of an affected company to access
With respect to comments regarding
citizens, thus reducing the instances of
a computer and Internet access to use
contingency plans in the event of a
‘‘walk-ins’’ to SSA offices for
E-Verify.
failure of information technology
naturalized citizens.
Response: The commenters are correct systems in a natural disaster, the
Many commenters in addressing this
that the FAR rule is expected to
Councils believe that the agencies and
issue did so in terms of a nationwide
significantly add to the number of
the Government generally have
mandatory expansion of E-Verify to all
queries run through the E-Verify system. standards and requirements for such
employers and cited statistics that
However, many commenters in
circumstances. USCIS and SSA are
would apply to such an expansion. It is
addressing this issue did so in terms of
required to follow Federal Government
likely that SSA would need to increase
a nationwide mandatory expansion of
policies and procedures related to
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00016
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67665
information technology continuity of
system to continue for the purpose of
disabilities, as required by law, in
operations and emergency planning. In
maintaining a status quo in which
relation to the E-Verify program. These
any event, section 403(a)(3)(B) and the
illegal employment is common is a valid include telephonic means of verifying
MOU provide for an extension of the
reason not to implement the system as
employment authorization. These
three day period if E-Verify systems are
to all Federal contractors when a more
alternative employment authorization
down.
effective system is available that will
verification methods will permit
create a more stable and dependable
compliance with E-Verify while
5. Other Impacts on Society
cadre of Federal contractors.
accommodating user religious beliefs
a. Macroeconomic Impact
As to driving employers to hire more
and disabilities.
Comment: Many commenters, notably illegal workers ‘‘off the books,’’ the
c. Employment Discrimination
community organizing groups and
Councils’ position is that all Federal
1. Comment: One commenter stated
religious societies, an agricultural
contractors are bound to comply with
Federal, State and local laws, and that
that E-Verify creates grave risks for
employer, trade associations, a human
they should continue to do so should
immigrant women, particularly those
resources society and several individual they wish to continue to contract with
who are victims of domestic violence,
employers stated that the rule will have
the Federal Government.
human trafficking, sexual assault and
a ‘‘devastating effect’’ on the United
other criminal activity to the extent the
States economy, will lead to increased
b. Religious and Disability
program requires employers to enter the
discrimination and an unwillingness to
Accommodation
name, SSN and other identifying
hire workers who look or sound foreign,
Comment: One commenter stated that
information of each employee into the
and will lead contractors who need
requirements to access the Internet
E-Verify database, which is then
workers to hire them ‘‘off the books.’’
violate some religious tenets, making
available to the public. The commenter
One commenter stated that ‘‘the
the rule discriminatory. Other
alleged that, as such, E-Verify does not
economic impact of this regulation
commenters indicated that the
adhere to Violence Against Women Act
could be devastating to the point where
requirement that employees present a
(VAWA) and Trafficking Victims
agriculture in the United States will
photographic identification unduly
Protection Act (TVPA) confidentiality
cease to operate as it does today.’’ In
burdens certain religious beliefs.
provisions.
this same vein, several commenters
Another commenter requested
Response: The Councils agree that the
stated that this is not an appropriate
confirmation that the E-Verify system
E-Verify program should be conducted
time for this rule, given a recent
would accommodate persons with
in compliance with all Federal laws,
‘‘meltdown’’ of the American economy,
visual disabilities.
rules and regulations related to privacy
the mortgage crisis, and the resulting
Response: While the Councils remain
and confidentiality of personally
difficulties currently faced by United
sensitive to the concerns of different
identifiable information. USCIS and the
States employers and employees.
religious groups, they must balance
SSA do comply with all of those
Response: The Councils consider
those concerns against the need to have
requirements in the administration of E-
these comments as outside of the scope
stable and dependable Government
Verify program. Contractors are required
of this rulemaking. The Councils are
contracting and to minimize document
by MOU to safeguard confidential
implementing a directive from
fraud in the E-Verify program in support information, and means of access to it
Executive Order 12989 that Federal
of that goal. In particular, photographs
(such as PINS and passwords) to ensure
contractors agree to use an electronic
serve a unique and essential function
that it is not used for any other purpose
eligibility verification system designated and significantly minimize the
and as necessary to protect its
by the Secretary of Homeland Security
opportunities for document fraud,
confidentiality, including ensuring that
to verify the employment eligibility of
unlike fingerprints, by allowing a
it is not disseminated to any person
all persons hired during a contract term
contractor to immediately compare the
other than employees of the employer
by a contractor to perform employment
picture embedded in the document
who are authorized to perform the
duties within the United States and of
against the employee. IIRIRA Section
employer’s responsibilities under the
all persons assigned by the contractor to 403(a)(2)(A)(ii), 8 U.S.C. 1324a note,
E-Verify MOU. The Councils direct the
perform work within the United States
thus requires photo identification from
commenter to the E-Verify program
on the Federal contract. Decisions
employees of employers participating in systems of records notice published by
related to the potential impact of this
the E-Verify program. In order to be
USCIS in accordance with the Privacy
directive on the entirety of the United
consistent with these standards, the
Act for more information regarding the
States economy or on individual sectors
E-Verify MOU requires all employees of
program’s collection and use of
within the United States economy are
Federal contractors participating in
personally identifiable information. 73
not delegated to or exercised by the
E-Verify to present a photographic
FR 10793, Feb. 28, 2008.
Councils in this rulemaking.
identification document.
2. Comment: A Federal Government
Moreover, these comments obviously
The Councils recognize that there may agency requested that the Councils
assume that the existing Form I–9
be occasions where U.S. citizens assert
supplement the proposed rule and that
process does not verify employment
that religious beliefs preclude their
USCIS supplement the proposed MOU
authorization, and that there will be a
being photographed and, as a result,
to add a specific reference to Title VII
significant change in the number and
they may not be able to present the
of the Civil Rights Act of 1964 (Title
type of employees found authorized to
required photographic documentation.
VII), 42 U.S.C. Section 2000e (1964), as
work in the United States with the
The E-Verify program complies with all
amended, when discussing relevant
implementation of E-Verify for Federal
applicable civil rights laws and will
prohibitions against illegal
contractors. This should not be the case. provide accommodations where
discrimination.
E-Verify is merely a better means of
appropriate, as required by law, on a
Response: USCIS has supplemented
verifying the work eligibility of the
case-by-case basis.
the MOU to add specific reference to
Federal contractor workforce. The
DHS is also implementing other
Title VII. The Councils supplement the
Councils are not persuaded that
processes and procedures to
statements in the preamble to the NPRM
permitting a less effective verification
accommodate religious beliefs and
to clarify that Title VII, as well as INA
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00017
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67666
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
Section 274B, 8 U.S.C. 1324b, prohibits
rule. As was stated above, contractors
unauthorized worker. There are thus
unlawful discrimination against any
who use the E-Verify system to
many legitimate nondiscriminatory
individual in hiring, firing, or
unlawfully discriminate against
reasons why these databases might
recruitment or referral practices because individuals in hiring or employment
produce a greater percentage of tentative
of his or her national origin. Such illegal violate Title VII, as well as INA Section
nonconfirmations for one group of
practices can include selective
274B, and are subject to civil penalties
persons than another. However, these
verification or use of E-Verify in a
and termination of participation in the
tentative nonconfirmations can be
manner not provided for in paragraph
E-Verify program after suspension and
contested and resolved prior to final
16 of the MOU; discharging, refusing to
debarment procedures. Such illegal
confirmation or nonconfirmation of
hire, or assigning or refusing to assign
practices can include selective
employment eligibility. Contractors
to Federal contracts qualified
verification; discharging, refusing to
must agree not to take an adverse action
employment eligible employees because hire, or assigning or refusing to assign
against an employee based upon the
they appear or sound ‘‘foreign’’; and
to Federal contracts to qualified
employee’s perceived employment
premature termination of employees
employment eligible employees because eligibility status while SSA or DHS is
based on tentative nonconfirmations. As they appear or sound ‘‘foreign’’; and
processing a verification request unless
such, Title VII applies to all
premature termination of employees
the contractor obtains knowledge (as
employment actions not otherwise
based on tentative nonconfirmations.
defined in 8 CFR 274a.1(l)) that the
protected by IIRIRA Section 403(d), 8
Contractors are protected from civil or
employee is not work authorized. A
U.S.C. 1324a note, or precluded by other criminal liability under IIRIRA Section
tentative nonconfirmation, or the
law.
403(d), 8 U.S.C. 1324a note, when
finding of a photo non-match, does not
3. Comment: Several commenters
taking actions in good faith reliance on
establish and cannot be interpreted by
expressed concern that the photo
information provided through the E-
the contractor as evidence that the
identification requirements in the
Verify confirmation system. This,
employee is not work authorized.
proposed rule will result in lawfully
however, does not permit contractors to
Accordingly, the tentative
present immigrants and U.S. citizens
unlawfully discriminate against
nonconfirmation provided by the DHS
being terminated from or denied
applicants or employees in other aspects and SSA databases does not necessarily
employment because they cannot
of the employment relationship.
lead to an employee’s termination from
present photo identification.
The Councils are not aware of any
employment or any other adverse
Response: The Councils disagree with opportunity to discriminate in use of the action. In fact, the employee is protected
the premise of this comment. There is
E-Verify system that is any greater than
from such actions during the process.
no requirement that an employer
the potential for discriminating against
The Councils therefore do not view the
terminate an employee who cannot
employees in application of the Form
possibility of disparate impact claims as
present photo identification. The MOU
I–9 process. Contractors may also
an impediment to issuing this final rule.
will be amended to instruct contractors
unlawfully select out candidates for
to contact USCIS regarding possible
employment because of foreign
The MOU
accommodation. The contractor is
sounding names or other ‘‘foreign’’
1. Need for the MOU
prohibited from taking adverse
characteristics because they do not
employment action against the
believe those employees will be able to
Comment: One commenter urged that
employee until the contractor receives a
complete the I–9 process. There is thus
the proposed rule be modified to make
final nonconfirmation.
no reason to believe that the E-Verify
explicit its linkages to the required
4. Comment: Many commenters, and
program will spur any greater disparate
MOU. Another commenter suggested
in particular immigrants rights
treatment discrimination than the
that the proposed rule, and all prime-
advocates, religious associations,
current Form I–9 process. See Chicanos
and sub-contracts issued under the
employers, unions, chambers of
Por La Causa, Inc. et al. v. Napolitano
proposed rule, should set forth with
commerce, and employer groups
et al., Civil No. 07–17272, 2008 WL
specificity the sanctions and
commented that verification through the 4225536 at *8 (9th Cir. 2008) (‘‘Congress enforcement protocols provided for by
use of E-Verify will result in increased
requires employers to use either E-
the MOU. One commenter suggested
disparate treatment employment
Verify or I–9, and appellants have not
that MOU use is not necessary, and that
discrimination. Some of these
shown that E-Verify results in any
the new contract clause created by this
commenters speculate that contractors
greater discrimination than I–9.’’).
rulemaking should be sufficient to detail
will give preference in hiring and
With respect to comments related to
E-Verify’s compliance requirements.
assignment of work to applicants they
disparate impact claims potentially
Response: The Councils do not agree.
believe ‘‘look like’’ U.S. citizens and
arising from differing tentative
As noted above, the purpose of the FAR
discriminate against applicants who
nonconfirmation issuance rates for
clause is solely to require contractors to
sound or dress ‘‘foreign’’ or have
foreign-born U.S. citizens and U.S.-born
agree to use E-Verify and to specify
‘‘foreign sounding’’ names.
citizens, the Councils agree that DHS
when the program will be used. The
Several commenters stated that use of
and SSA should improve their database
clause is not intended to duplicate the
E-Verify will lead to disparate impact
administration to help alleviate all
E-Verify program’s internal terms of use.
discrimination claims because
instances of tentative nonconfirmations. Those program use requirements are
approximately 10 percent of foreign-
As one commenter observes, ‘‘myriad
appropriately addressed under the
born U.S. citizens receive tentative
reasons’’ account for errors in the SSA
MOU. DHS has statutory responsibilities
nonconfirmations for work eligibility
database, including clerical errors made
and law enforcement authorities that are
versus 0.1 percent for native-born U.S.
by agency employees and an employer’s addressed under the MOU and those
citizens.
or a worker’s own errors when
responsibilities and authorities are
Response: The Councils oppose
completing Government forms.
inappropriate to address either in the
unlawful discrimination in any form
Moreover, an error may stem from a
FAR or in a contract clause. For the
and, in particular, unlawful
name change due to marriage, divorce,
same reasons that industry and Federal
discrimination that undermines the
or naturalization. An error may also
standards are not required to be
intent and purpose of this E-Verify final
come from the misuse of an SSN by an
incorporated in full into each contract
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00018
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67667
that requires adherence to them, it is not associated with running E-Verify
2. Comment: One commenter stated
necessary to incorporate the E-Verify
queries of its existing workforce that the that the language referencing the
MOU requirements in each covered
already-established contractor has
‘‘rebuttable presumption’’ that an
contract. Incorporating by reference
previously incurred. The Councils note,
Employer has not violated Section 274
laws, regulations, industry standards,
however, that this small ‘‘barrier to
(a)(1)(A) of the Immigration and
and other FAR clauses is normal
entry’’ is no different from the myriad
Nationality Act exists only in the draft
practice in Federal contracting.
other such ‘‘barriers’’ that new
MOU and not in the FAR rule and that
contractors must face to come into
2. Public Comments on the MOU
the MOU must be altered to include
compliance with the unique
additional time for cases involving an
Comment: One commenter asserted
requirements for Federal contracting
SSA no match.
that the public should be afforded an
that are codified in the FAR.
Response: The commenter is correct
opportunity to comment on the
USCIS retains its authority to
that certain provisions mentioned by the
provisions in the E-Verify MOU.
investigate violations of the E-Verify
commenter do not exist in the current
Response: The Councils placed the
program. DHS and SSA may terminate
clause contained in the rule. This is not
proposed MOU reflecting the program
a contractor’s MOU and deny access to
required by the FAR. With respect to the
participation requirements for Federal
the E-Verify system in accordance with
recommendation that the MOU be
contractors into the public docket, and
the terms of the MOU. If DHS or SSA
changed to allow additional time for
discussed the requirements under that
terminates a contractor’s MOU, the
addressing SSA ‘‘no-match’’ cases, the
document in the preamble of the
terminating agency will refer the
comment appears to confuse the time
proposed rule. See 73 FR 33376–77. In
contractor to a suspension or debarment allotted under the MOU to contact SSA
response, the Councils received many
official for possible suspension or
(or DHS) to start resolving a mis-match
comments related to the MOU in general debarment action. During the period
with the time allotted under DHS’s no-
and as to specific provisions within the
between termination of the MOU and a
match rule for an employee to complete
MOU, which are addressed in greater
decision by the suspension or
the process of resolving a mis-match.
detail later in this section. Accordingly,
debarment official whether to suspend
commenters were afforded an
3. Comment: A building trade’s
or debar, the contractor is excused from
opportunity to comment on the
association commented that several
its obligations under paragraph (b) of
provisions of the MOU and, in fact, did
provisions of the draft FAR MOU is
the clause at 52.222–54. If the contractor
provide such comments to the Councils.
using the same disclaimer language as
is suspended or debarred as a result of
A final version of the MOU will be
previous versions of the MOU and that
the MOU termination, the contractor
available on the E-Verify Web site
that language has not been subjected to
will not be eligible to participate in E-
http://www.dhs.gov/E-Verify.
judicial review.
Verify during the period of its
Response: The commenter is correct
3. Specific MOU Provisions
suspension or debarment. If the
that the provisions of the draft MOU
suspension or debarment official
1. Comment: Three commenters
determines not to suspend or debar the
have not been subjected to judicial
expressed concern with provisions of
contractor, then the contractor must
review. However, the provisions
the draft MOU regarding those
reenroll in E-Verify.
contained in that draft MOU closely
employers who may one day wish to
The Councils appreciate the
follow language in MOUs currently in
become Federal contractors. One
recommendations of the commenter
use by over 80,000 employers, which
commenter commented that employers
with respect to the ability of employers
have gone unchallenged over the life of
will be terminated from E-Verify for
to resolve a tentative nonconfirmation
the program, and which have been
technical violations of the (MOU)
on behalf of those employees whose
drafted consistent with the controlling
thereby becoming an obstacle to an
work authorization stems from J–1,
law related to the E-Verify program.
employer’s later participation in Federal H–1B or O–1. The system is designed to
4. Comment: A chamber of commerce
contracts. Another comment stated that
give the employee the responsibility to
commented that current employees of
those employers who are not currently
handle their own case to reduce
Federal contractors should be allowed
Federal contractors will not be
employer burden, allow the employee to to opt out of work prior to being verified
permitted to query existing workers
maintain their own documents
in E-Verify.
thereby harming the interests of those
regarding their status and protect
Response: The rule does not seek to
employers who may be preparing to
employee privacy. Additionally, it is
tell employers which current employees
enter the Federal marketplace. A
important to note that the responsibility
they should assign to Federal contract
comment observed that greater clarity is
of providing documents for employment work, or what privileges or rights
needed with respect to when
eligibility purposes is on the employee.
employees may have relating to which
termination or suspension can be
The instructions accompanying Form
tasks they are assigned in their
invoked. One commenter commented
I–9 currently require employees to
workplace. Unless there is something in
that the FAR rule materially changes the present original documents. Placing the
the specific contract relating to that, that
MOU between USCIS, SSA and
burden on the employee to resolve
is an internal business and labor
companies participating in E-Verify. A
tentative nonconfirmations is consistent management decision for the contractor
university suggested that the employer
with the requirement that the employee
to make subject to its normal processes
have the ability to resolve DHS tentative provide documents establishing his or
and requirements. Therefore, it would
nonconfirmations on behalf of their
her employment eligibility. Privacy
be inappropriate to include provisions
employees.
concerns, including confidentiality
relating to employees ‘‘opting out’’ of
Response: The Councils agree that
related to certain visa status, preclude
work on Federal contracts.
employers who seek to obtain their first
employers from resolving tentative
a. Reporting Change in Status
Federal contract may be at some
nonconfirmations on behalf of
disadvantage in relation to employers
employees. Nothing prohibits an
Comment: There is no comment listed
who already hold Federal contracts
employer from assisting an employee
for this topic but the Councils
covered by this rule, since the new
with this process at the request of the
nonetheless address this issue in the
entrant would face the start-up costs
employee.
response below.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00019
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67668
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
USCIS does not require that
resolving his or her tentative
for employees to contest and resolve any
employees report a change in status to
nonconfirmation—not the time allotted
issues that arise. E-Verify, through the
E-Verify. E-Verify is able to determine
for a tentative nonconfirmation to be
MOU and its internal practices and
whether an employee is work
finally resolved. Most SSA tentative
procedures, which are published on the
authorized using numerous databases
nonconfirmations are resolvable within
E-Verify program Web site, has provided
without receiving information directly
two days, and DHS statistics show that
a system that protects the rights of
from an employee. Once an employee
SSA resolves 96.6 percent of cases
employees while providing the means to
has been verified through E-Verify, he or within 7 days of the date the individual
verify the work authorization status of
she does not need to be re-verified in
first contacts SSA. In a few cases, the
those persons. The MOU prohibits the
E-Verify until employed by a new
SSA has extended the time period in
Employer from discharging, refusing to
employer.
order to allow for the employee
hire, or assigning or refusing to assign
A related matter is the Form I–9. If the sufficient time to obtain a required
to federal contracts employees because
document presented by an employee
document.
they appear or sound ‘‘foreign’’ or have
(who indicated that he or she is an alien
With respect to employees who reside received tentative nonconfirmations.
authorized to work) when completing
in remote locations, it is important to
The Employer is further warned in the
the Form I–9 has expired, the employer
note that employees who receive a
MOU that any violation of the unfair
is required to update the Form with the
tentative nonconfirmation from DHS are immigration-related employment
new document establishing that
not required to visit a USCIS office.
practices provisions in section 274B of
employee’s work authorization. The
Moreover, in most cases, a DHS
the INA could subject the Employer to
new document should be listed under
tentative nonconfirmation can be
civil penalties, back pay awards, and
Section 3 (‘‘Updating and re-
resolved over the phone using a toll-free other sanctions, and violations of Title
verification’’) of the Form I–9. The
number. In an effort to make the process VII could subject the Employer to back
Employer may opt instead to complete
simpler for many employees living in
pay awards, compensatory and punitive
a new Form I–9 with the new document. remote areas, DHS has made system
damages. The MOU agreed to by the
enhancements to E-Verify. As a result,
b. Resolution of Tentative
Employer also states that violations of
in most instances, naturalized U.S.
Nonconfirmations
either section 274B of the INA or Title
citizens who receive a tentative
VII may also lead to the termination of
Comment: Five commenters indicated nonconfirmation from the SSA are no
its participation in E-Verify. If the
that they were concerned that a
longer required to personally visit a SSA employee believes that s/he has been
tentative nonconfirmation might not be
office. Naturalized citizens are now able discriminated against, he or she should
resolved within the time allotted by
to contact DHS directly (over the
contact OSC at 1–800–255–7688 or
E-Verify. Of those, four commenters
phone). USCIS believes that this process 1–800–237–2515 (TDD). Employers that
commented that employees had
will greatly limit the number of
have questions relating to the anti-
insufficient time to resolve a tentative
employees who must make personal
discrimination provision should contact
nonconfirmation particularly if the
visits to a SSA office thereby easing the
OSC at 1–800–255–8155 or 1–800–237–
employees are in remote areas that lack
burden on those who are in remote
2515 (TDD). Concerns regarding the
access to transportation and to a nearby
locations.
judicial remedies are better framed to
SSA office. The other commenter also
The Councils also note that these
other offices within the Executive and
expressed concern that an SSA tentative comments relate to a previous E-Verify
legislative branches of Government.
nonconfirmation could not be resolved
process that has since been replaced by
The E-Verify program offers
in 90 days.
a more efficient one. It is true that at one employees who receive a tentative
Response: Under the program rules
time, the way an employer verified that
nonconfirmation the opportunity to
for E-Verify, after a tentative
a tentative nonconfirmation was
contest the finding and clarify their
nonconfirmation has been generated,
successfully resolved was to re-query
records with either SSA or DHS. This is
the employer must provide that notice
the system. However, beginning in
a form of due process protection. If an
to the employee. Once the employee
October 2007, SSA and DHS began
employee does contest the tentative
actually receives the tentative
using a new automated system known
nonconfirmation and is not able to
nonconfirmation and decides to contest
as EV–STAR to provide automated
clarify his or her record with additional
it, the employer initiates a referral
feedback to employers concerning the
documentation, he/she will be issued a
through the E-Verify system. Once a
status and resolution of any tentative
final nonconfirmation. Employers or
case is referred, then the employee has
nonconfirmations received by
employees may contact the E-Verify
eight Federal Government work days to
employees. Since that time, there has
program if additional time is needed to
contact the appropriate agency. He or
been no need for employers to re-query
provide such documentation or if they
she can do so by simply contacting SSA
the system.
believe a final nonconfirmation was
or DHS. Once the employee has
received in error. The E-Verify program
initiated the process of contesting the
c. Due Process
may delay a final nonconfirmation
tentative nonconfirmation, the
Comment: An immigrant rights
finding on a case by case basis in those
employee may continue working until
advocacy group and a union commented cases where employees have
the case has been resolved.
that workers have insufficient due
experienced delays in receiving needed
The Councils believe that providing
process procedures in place to allow
documentation that will help prove
the employee with eight days is a
them redress. One commented that there their employment eligibility, and the
sufficient amount of time for the
are insufficient judicial remedies in
program will work with the employer
employee to contact SSA or DHS to
place to provide relief to an aggrieved
and/or employee to research the case
begin working out any discrepancy,
employee.
and identify the reason for the final
even taking into account remote
Response: The Councils recognize the
nonconfirmation.
locations. It is important to note that the due process concerns raised by the
The E-Verify program is committed to
eight-day timeframe in the E-Verify
commenters, but believe that the
protecting the rights of employees who
program rules is the time allotted for the processes in place with the E-Verify
feel that they have been discriminated
employee to initiate the process of
system provide adequate opportunity
against or who believe they have
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00020
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67669
erroneously received a tentative
requirement to verify current employees commenters sought clarification that the
nonconfirmation. On the E-Verify Web
on covered projects extends beyond
rule would not be applicable to their
site, on all tentative nonconfirmation
those working exclusively at project
products because they believed their
letters that employees receive, and in
sites, or whether it extends to others
products qualify under the definition of
the MOU that E-Verify users sign when
working off-site but dedicated
COTS. These commenters
joining the program, E-Verify provides
exclusively to the covered project. The
recommended that the Councils make
the contact information to OSC. In
commenter suggested that the
clear that the rule would not apply to
addition, E-Verify registered employers
regulations must provide a high degree
the items they believed to be COTS.
are also required to display two posters
of specificity on this issue, as the costs
Specifically, the commenters asked that
which apprise the employees of their
and employment administration
the final rule clarify the definition of
rights and how to contact the OSC in the ramifications are significant.
COTS so that packaged agricultural
event of perceived discrimination: (1)
Response: The Councils have
products are clearly excluded from the
The ‘‘You Should Know Your Rights
removed the definition of ‘‘assigned
definition of bulk cargo so as to avoid
and Responsibilities under E-Verify’’
employee’’ and provided instead a
deliveries of fruit and other food stuffs
poster produced by USCIS and (2) the
definition of ‘‘employee assigned to the
from being considered ‘‘bulk cargo’’ and
‘‘Employee Rights Poster’’ produced by
contract’’ because that is the term used
therefore outside of the definition of
the OSC. Once a complaint has been
in the final rule. The revised definition
COTS items.
made, the Office of Special Counsel is
makes it clear that an employee is not
Response: The Councils concur and
able to investigate any case brought to
considered to be directly performing
have amended the final rule in response
its attention. The Councils believe that
work under the contract if the employee to these comments to clarify the
these due process protections are
normally performs support work, such
definition of COTS to explain that a
sufficient to ensure that the E-Verify
as indirect or overhead functions, and
cargo subject to ‘‘mark or count’’ is not
system promotes economical and
does not perform any substantial duties
bulk cargo. Nearly all food and
efficient Federal Government
under the contract. The Councils do not
agricultural products should fall within
contracting.
believe it is appropriate to try to
the definition of COTS. The only likely
establish a mathematical definition of
Content of FAR Rule
exceptions would be bulk shipments of
an assigned employee. Contractors will
grains in ship holds. The final rule has
1. Definitions (22.1801 and 52.222–
instead have to interpret the definition
added an exception for bulk cargo as
54(a))
stated in the final rule as it applies to
well as COTS items.
various individual situations.
a. ‘‘Assigned to the Contract’’ and
The Councils note that it is
c. ‘‘Contract’’ and ‘‘Contractor’’
‘‘Directly Performing the Work’’
immaterial whether services are
Comment: Several commenters
provided intermittently or for only a
1. Comment: Commenters requested
commented that there is no guidance as
small portion of an individual
that the Councils define ‘‘contract’’ to
to how to identify an employee who is
employee’s time as long as the work is
exclude agreements that are not
‘‘directly performing’’ work under a
done in the United States in direct
governed by the FAR, such as grants and
contract and expressed concerns that
support of a contract. However,
cooperative agreements.
this could result in inconsistent
tangential involvement, if it is in terms
Response: The Councils do not concur
application of the rule and
of indirect involvement instead of
with this request. The FAR already
disagreements over which existing
directly working on a contract, does not
defines the term ‘‘contract’’ and the term
employees must be run through the
necessarily trigger the E-Verify
does not include grants or cooperative
E-Verify system.
requirement. For example, a mailroom
agreements. A grant or cooperative
One employer suggested that ‘‘directly clerk who delivers mail to a program
agreement that is not governed by the
performing work under a contract’’ be
office supporting a contract as well as to FAR is not required to include the
clarified to mean a person customarily
all other offices served by the mailroom, clause in this rule.
performing more than 50 percent of his/
would not be required to go through the
2. Comment: Several commenters
her time in direct support of the covered E-Verify process. Other non-FAR
suggested that the Councils more clearly
contract or multiple covered contracts.
requirements, however, would
define the term ‘‘contractor’’ to exclude
A university commented that the
necessitate that the employer vet the
subsidiaries of a parent where the
proposed rule is too unclear as to how
mailroom clerk at hiring through the
parent holds the contract but the
to treat overhead employees who
I–9 process.
subsidiaries do not.
perform some work that benefits a
The Councils also note that working
Response: Whoever signs a contract is
contract and requests that the Councils
on a proposal, as opposed to working on the contractor. Only the legal entity that
clarify this situation.
an awarded contract, does not constitute
Many other commenters expressed
signs the contract and is bound by the
work under the contract in question and
concern over whether the E-Verify
performance obligations of the contract
would not trigger E-Verify requirements.
requirement applies to employees who
is covered by this E-Verify term. If
There is nothing in the definition of
are only tangentially involved with
ambiguity remains, this issue will have
‘‘employee assigned to the contract’’
covered contracts. Specifically, they
to be handled on a case-by-case basis
that would imply that it makes a
inquired whether agreements to provide
consistent with traditional FAR
difference where that employee is
service, support, or maintenance on an
principles.
working, as long as it is in the United
‘‘as needed’’ basis would be covered
States.
3. Comment: One commenter was
even if employees would spend only a
concerned about the effect of mergers
small portion of their time on these
b. ‘‘Commercially Available Off-the-
upon implementation of the E-Verify
contracts. Commenters also asked
Shelf (COTS) Item’’
program.
whether employees working to prepare
Comment: Various commenters
Response: If a novation agreement
a bid or proposal be covered.
advised that the definition of COTS
takes place, then the merged entity
One commenter requested
items was not sufficiently clear with
becomes the contractor. Otherwise,
clarification as to whether the
respect to ‘‘bulk cargo.’’ Several
there is no impact.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00021
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67670
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
d. ‘‘Subcontract’’ and ‘‘Subcontractor’’
have amended the rule at 22.1801 and
obligations would not foster the stability
Comment: A number of commenters,
the clause at 52.222–54 to include the
and dependability across the entire
in addressing the proposed rule’s
definitions ‘‘subcontract’’ and
Federal contractor community in the
subcontractor flowdown requirement,
‘‘subcontractor,’’ found at FAR 44.101.
manner envisioned by Executive Order
expressed concern as to the definition of
12989. Using E-Verify at the beginning
e. ‘‘Period of Performance’’ vs. ‘‘Life of
‘‘subcontract’’ and ‘‘subcontractor’’ and
of the contract should reduce the
Contract’’
the extent to which the rule might apply
number of ‘‘no match’’ letters received
Comment: One commenter requested
to their activities. This was a concern
by the employer later in the process.
that the ‘‘Period of Performance’’ should
common to agricultural and dairy
be defined as ending on the date that
b. Non-Citizens
interests. Two agricultural associations
delivery is complete. Another
Comment: Another commenter
noted that there are numerous sales and
commenter questioned the use of the
suggested that contractors should only
supply arrangements that may or may
term ‘‘life of the contract’’ in the
verify non-citizen employees using E-
not fall within the rule’s coverage. There preamble to the proposed rule.
Verify to reduce employer burden.
are direct sales by a producer of an
Response: The Councils do not agree.
Response: Executive Order 12989, as
agricultural commodity; direct sales by
The term ‘‘period of performance’’ is
amended, directs the Councils to
a packing operation that obtains fruits or used throughout the FAR and various
implement the President’s procurement
vegetables or other commodities from
contracts further refine the definition of
policy through a FAR rule that requires
other producers and then sells the
that period individually for that
federal contractors to agree, as part of
product directly to the Government;
contract. In general, the period of
their contract performance, to verify all
sales by a broker or handler of
performance would start at the award
new hires without differentiating
agricultural products who purchases the date of the contract and extend through
between citizens and non-citizens.
products from a producer or producers
the date delivery is complete, unless
Modifying the rule to require
but who directly contracts with the
otherwise specified in the contract. The
verification only of non-citizens would
Government; and processors of
period of performance does not extend
not satisfy the requirements of this
agricultural products that purchase
to the date of contract closeout. The
presidential directive. Moreover, the
them from producers and sell them to
Councils concur that for the sake of
Councils believe that verifying only
the Government after processing them.
consistent terminology, the term
those who do not claim to be U.S.
One commenter requested clarification
‘‘period of performance’’ is the correct
citizens would be discriminatory and
that farmers providing food for canning
term to express the required period of
would not meet the ultimate goal of
are not ‘‘subcontractors’’ and that
required compliance with E-Verify, not
fostering a more stable and dependable
truckers hauling processed food are not
‘‘life of the contract.’’
Federal contractor workforce.
subcontractors for purposes of
Verifying only those employees who
application of this clause.
f. Distinction Between Products and
attest to work-authorized alien status
In addition, it was noted that the
Services
would defeat the basic purpose of E-
proposed rule does not adequately
Comment: One commenter stated that
Verify and this rule. E-Verify is
address the distinct marketing
the rule should make a clearer
designed to guard against identity and
characteristics of agricultural
distinction between products and
immigration fraud in the paper-based I–
cooperatives. Several commenters
services.
9 process, which may take the form of
pointed to the distinction between
Response: The Councils do not concur false claims of U.S. citizenship backed
farmer cooperatives and their farmer
with this comment. Contracts for
up with either false or fraudulently
members and referred to court decisions services are clearly defined in Part 37 of
obtained driver’s licenses, birth
highlighting this distinction.
the FAR.
certificates, social security cards and/or
Another commenter stated that many
2. Mandatory Enrollment (22.1802 and
other Form I–9 documentation other
employers hold contracts with delivery
52.222–54(b)(1)(i))
than DHS immigration status
companies, suppliers, maintenance
documents. An alien-only verification
companies, and others who may
a. Noncompliant Employers Only
system would not only fail to deter this
perform work in support of the Federal
Comment: Several commenters stated
kind of fraud, but it would encourage it.
contract, and noted that it was unclear
that the rule should be restricted in its
Using E-Verify only for non-citizens
from the proposed rule whether these
applicability only to contractors who
would likely violate the anti-
subcontractors would also be required
have engaged in the knowing
discrimination provisions of the
to enroll in E-Verify.
employment of unauthorized foreign
Immigration and Nationality Act (INA),
Response: With respect to agricultural nationals or who have shown that they
8 U.S.C. 1324b, which prohibits
and dairy products, the referenced items routinely shirk their obligations under
discrimination with respect to hiring,
appear to fall within the definition of
I–9 procedures, such as those who
firing, or recruitment or referral for a
COTS or bulk cargo. COTS suppliers
receive multiple ‘‘no-match’’ letters
fee, on the basis of national origin or, for
would not be subject to the E-Verify
demonstrating that their concern for the
certain classes of protected individuals,
requirements because they are supplies,
work eligibility of their workforce may
on the basis of citizenship status.
which are not covered at the subcontract be lacking. Alternatively, the
Employers may not treat individuals
level. With respect to the comment
commenters recommended application
differently on the basis of national
regarding potential coverage of delivery
of E-Verify only to verify employees
origin, and U.S. citizens, recent
companies, suppliers, maintenance
whose work eligibility may be in
permanent residents, temporary
companies, and others who may
question due to receipt of a ‘‘no-match’’
residents, asylees and refugees are
perform work in support of the contract, letter.
protected from citizenship status
it was determined that the existing FAR
Response: The Executive Order
discrimination. This anti-discrimination
definitions of subcontractor when read
12989, as amended, does not authorize
provision is enforced by OSC. If an
in conjunction with previous
such a limited approach. In any event,
employee believes that he or she has
applicability discussions would address restricting the applicability of the rule to been discriminated against during the
the concerns noted above. The Councils
employers who routinely shirk their
employment eligibility verification
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00022
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67671
process, he or she should contact OSC
also monitor system usage to identify
b. Existing Employees Assigned to the
at 1–800–255–7688 or 1–800–237–2515
when registered employers have not
Contract
(TDD). Employers that have questions
used the system within an appropriate
i. No Verification
relating to the anti-discrimination
time period given the size of the
provision should contact OSC at 1–800– organization.
Comment: Many commenters
255–8155 or 1–800–237–2515 (TDD).
requested that the rule eliminate the
3. Application to Employees
requirement for verification of
c. Increase in Program Abuse
(22.1802(b)(2) and (c), and 52.222–54(b)) employment of existing employees
Comment: Several commenters were
assigned to the contract. One
a. All New Hires During Period of
concerned that mandatory use will
commenter states that there is no policy
Performance of the Contract
increase abuse of the program. One
reason why Federal contractors should
commenter stated that preliminary
Comment: Several commenters
be so radically different from all other
reports from Arizona’s mandatory use of suggested that it is inappropriate to
employers who participate in the
E-Verify suggest that some employers
require an entire company to be subject
program. More detailed reasons for
are violating the terms of the MOU and
to E-Verify for all new hires when the
opposition to verification of existing
engaging in illegal employment
company has only a small number of
employees are also separately addressed
practices such as verifying existing
Federal contracts that comprise a small
in the following paragraphs.
employees, rather than verifying only
Response: The Councils do not agree
proportion of its business. They argued
new hires and that they are doing so in
with this approach. The final rule
a discriminatory way. The commenters
that the proposed rule is an overbroad
reflects the requirements stated in
believed that implementation of the
use of the procurement authority to
Executive Order 12989, as amended,
proposed rule will exacerbate the
cover new hires that are not associated
that the FAR incorporate a rule that will
situation regarding discriminatory use
with performance of a contract and
require verification of all existing
of the program. Also, some commenters
stated that the rule should apply only to employees assigned to a contract.
claimed that employers do not
new hires at a work site that is
Verification of existing employees who
understand the ways in which E-Verify
performing a contract.
work under contracts is a critical
is to be implemented in the workplace,
Response: Applying the duty to verify element of this rule, and the elimination
and that as a result they take mistaken
all new hires of the entire organization
of that aspect of the rule would be
actions, such as firing workers when
of the contractor is a requirement of
contrary to the Executive Order.
they are not required to do so (or are
Executive Order 12989, as amended. If
prohibited from doing so).
ii. Burdensome To Track Which
the requirement were limited only to
Response: The rule is clear in its
Employees Have Been Verified
new hires at locations doing
requirements to verify existing
Government work, the rule would be
Comment: Many commenters were
employees. All who are assigned to a
impractical and too easy to undermine
concerned about the burden of
contract must be verified. This provides
identifying employees assigned to the
by transferring employees from non-
no latitude for discrimination. Also, the
contract, including time and money
E-Verify program MOU will actually
contracting work sites to contracting
required to develop new systems. For
serve to reduce confusion over employer work sites. Not all hires of a contractor
example:
responsibilities when workers are in the are hired through the location where
• One commenter observed that
process of clearing up questions as to
they work. It is very common for a
assigned employees may work on
their authorization to work in the
contractor to hire through a central site
several projects at once and it is
United States. The MOU gives clear
that has no connection to various work
burdensome to require them to be
descriptions that prohibit employers
sites. In addition, there are few Federal
tracked to determine which ones have
from firing workers during that period
contractors who have segregated their
been verified by E-Verify.
or from taking other adverse actions.
workforces in the manner suggested in
• Another commenter stated that the
To address employer abuse and/or
the comments. Modern technology,
chance of a single employee being
fraud, the E-Verify program has created
most notably email, has broadened and
‘‘dedicated’’ to a single contract—
a Monitoring and Compliance unit that
facilitated doing work in multiple
whether for a private customer or a
can detect, deter, and remedy improper
dispersed locations through a national
Government agency—is the rare
use of the system. The Monitoring and
and even international network of
exception in a large company. A large,
Compliance unit also works to safeguard collaborators. Thus, defining the work
multi-jurisdictional company will be
personal privacy information; prevent
site would be too unwieldy for an
challenged to identify which employee
the fraudulent use of counterfeit
effective rule, making enforcement of
in fact ‘‘directly performs work’’ under
documents; and refer instances of fraud, this aspect of the rule too difficult and
a covered contract.
discrimination, and illegal or
too easy to misinterpret or undermine.
• Another commenter recommended
unauthorized use of the system to
verifying all employees at all hiring
enforcement authorities. Once fully
With respect to providers with few
sites.
staffed, the E-Verify’s Monitoring and
Government contracts, the rule does
• Another commenter stated that in
Compliance unit will carry out its
include an exception for COTS to
normal circumstances it will impose
mission by educating employers on
recognize that COTS providers will
considerable burdens and take months,
compliance procedures and guidelines
generally be predominantly commercial, if not years, to put in place the required
and providing assistance through
with only a small proportion of business tracking processes.
compliance assistance calls. The unit
with the Government, as well as
• Several university commenters
will also conduct follow-up with desk
exceptions for institutions of higher
stated that these requirements would
audits and/or site visits to unresponsive
education; State and local governments
impose significant financial and
employers if necessary, and refer cases
and governments of Federally
organizational burdens on all affected
of fraud, discrimination, and illegal use
recognized Indian tribes; and for
employers, including substantial costs
to the OSC or ICE, as appropriate. The
sureties performing under a takeover
associated with developing new
Monitoring and Compliance unit will
agreement.
software systems.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00023
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67672
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
• Another commenter stated that
on verification of existing employees as
verify existing employees unless the
employers would need to create a new
to Federal contractors, because the
contract was actually awarded to that
process for screening current employees Executive Order and this final rule
contractor.
and a process for tracking which
require the use of E-Verify to confirm
v. Permitting Multiple Alternatives
employees already have been through
the employment eligibility of existing
the E-Verify screening process every
employees who are assigned to Federal
Comment: Another commenter
time an employee is assigned to work on contracts. If a contractor that was
requested that if the proposed current
a Federal contract.
already using E-Verify enrolls in E-
employee verification system is to
Response: With regard to tracking
Verify as a Federal contractor, then that
remain a part of these regulations, the
which employees have been verified,
contractor may need to sign a new
Councils should provide an option for
the Councils do not believe this is a
MOU, which will allow the use of
employers in the regulations so that
problem that warrants a change to the
E-Verify for existing employees.
they can adopt a compliance method
proposed rule. Modern personnel and
that meets objectives with the least
payroll systems identify numerous
iv. Selective Verification Issues
disruption or cost to contractor
qualifications and attributes for each
Comment: Some human resources
operations. Suggested examples
employee. It is a minor effort to add one
organizations stated that selective
included allowing an employer to verify
more attribute to those already included screening verification of existing
all employees at all hiring sites, all
in the accounting and payroll systems.
employees increases an employer’s
employees at any hiring site that
For example, each employee is typically exposure to allegations of
services a covered contract, or only
identified against a wage rate, security
discrimination based on document
those employees assigned to work on
level, FLSA coverage or not, vacation
abuse, citizenship status discrimination, the contract.
records, professional qualifications,
national origin discrimination or other
Response: Consistent with Section
labor category, etc. Personnel/payroll
characteristics protected by Title VII
8.(a) of Executive Order 12989, as
systems that track these sorts of data
and the anti-discrimination provision of amended, which requires
typically permit ready modification and
the Immigration and Nationality Act
implementation of the Order ‘‘in a
expansion in the number and type of
(INA), 8 U.S.C. 1324b. Another
manner intended to minimize the
attributes that are tracked. It is typically
commenter questioned whether
burden on participants in the Federal
a simple operation to add an attribute to employers might register or bid for
procurement process,’’ the Councils
such a system.
contracts only so they can verify
have included a provision in the final
Further, contractors can recover
existing employees.
rule permitting contractors a voluntary
associated costs incurred to comply
Response: The requirement to ensure
alternative: The option to verify all
with this program in their proposed
that any employee who is assigned to
existing employees of the contractor,
prices as they already do with other
work directly on a contract in the
provided the contractor initiates
overhead costs. However, the Councils
United States is, in fact, authorized to
verification within 180 days of notifying
recognized that the task of identifying
work in the United States is not
DHS of its decision to verify its entire
which employees are assigned to the
discriminatory as that term is defined by workforce. The Councils believe that
contract may be more problematic for
Title VII and case law. However, the
this alternative best prevents
some employers. Should the employer
Councils agree that it is appropriate to
opportunities for discrimination or the
find the task of identifying which
limit as much as possible opportunities
appearance of discrimination, relative to
employees have been assigned to the
for unscrupulous companies to abuse
other possible alternatives, while
contract and tracking those employees
the E-Verify system. That is why the
potentially reducing the burden of
who have already been verified unduly
rule clearly specifies which employees
compliance for some contractors.
burdensome, the Councils have
must be verified by the employer. It is
vi. Workforce Stability
amended the rule consistent with
also important to note that OSC
Section 8. (a) of Executive Order 12989
investigates allegations of national
Comment: Several commenters stated
to permit a contractor to verify its entire
origin and citizenship status
that requiring verification of current
workforce.
discrimination in the workplace, as well employees will severely impact
as demands for additional
workforce stability due to expected
iii. Conflicts Between Public and Private documentation in the employment
errors, delays, and other disruptive
Contracts
eligibility verification process
effects such as employer misuse of
Comment: Several commenters stated
(‘‘document abuse’’) and retaliation
tentative nonconfirmations. The
that employers are currently prohibited
under the anti-discrimination provision
commenters stated that the decision to
from using E-Verify to confirm the
of the Immigration and Nationality Act
extend the E-Verify requirement to
employment eligibility of existing
(INA), 8 U.S.C. 1324b. The E-Verify
existing employees actually undermines
employees not assigned to a Federal
MOU makes clear that an employer may the FAR Council’s stated view that the
contract. They believe that the proposed not use E-Verify procedures for pre-
Federal Government’s procurement
rule therefore poses potential problems
employment screening of job applicants. interests are advanced by a stable
for firms that hold both public and
In addition, an employer cannot verify
workforce with less turnover. The
private contracts.
only certain employees selectively—for
commenters claim that subjecting
Response: The current MOU required
example on the basis of perceived
existing employees to E-Verify is
to be signed by all employers that
national origin—and may be subject to
guaranteed to exacerbate, rather than
register for E-Verify does prohibit the
penalties under the anti-discrimination
alleviate, the posited problem of
use of E-Verify to confirm the
provision of the INA if it prescreens
instability and turnover in the
employment eligibility of existing
employees on the basis of perceived
workforces of Federal contractors and
employees. Upon promulgation of this
national origin or citizenship status.
subcontractors.
rule, however, there will be a revised
With regard to an employer bidding
Response: The Councils do not
MOU with requirements applicable to
on a Government contract just to use E-
concur. The Councils consider that the
Federal contractors. The revised MOU
Verify to verify existing employees, the
additional time allowed in the final rule
does not contain the same prohibition
employer would not be authorized to
should alleviate the commenters’
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00024
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67673
concerns regarding expected errors,
rule. The proposed rule was not to be
process accounting system because no
delays, and other disruptive effects. The applicable to all employees hired after
one individual charges to a particular
Councils do not believe that the
November 6, 1986. However, because of
job (contract).
concerns that E-Verify will exacerbate
concerns by some contractors that
Response: The Councils agree with
instability and turnover in the
determining and tracking employees
these comments and have amended the
workforce are well founded, assuming
assigned to the contract is too difficult,
proposed rule. In situations where a
that employers are currently complying
the final rule does provide an option to
with existing law and only employing
contractor does not believe it has an
contractors to verify all employees hired
individuals who are actually authorized
economical or efficient way to identify
after November 6, 1986.
to work in the United States.
employees who perform work
c. All Employees of the Contractor
principally under a particular contract,
vii. Employees Hired After November 6,
or if the contractor believes it is more
1986
Comment: Several commenters
efficient to verify all employees, the
Comment: A university commenter
believe that the contractor might have to final rule will give the contractor the
believed that the proposed rule is
verify all existing employees to achieve
option to initiate verification of the
applicable to all employees hired after
compliance and recommended that the
employment eligibility of all existing
November 6, 1986. The commenter
rule should provide additional
employees, within 180 days, rather than
stated that its concerns are magnified by flexibility to allow this. Some employers limiting the employees who can be
the proposal in the proposed rule that
may find it easier to verify all existing
verified only to those who are assigned
the E-Verify program be extended to all
employees and new hires, rather than
to work under a contract. This approach
employees hired after November 6, 1986 attempt to distinguish between those
is entirely at the option of the
and that this requirement greatly
who are and who are not working on
contractor.
expands the cost and process burden on
Federal contracts, thus ensuring
employers far beyond the current pilot
compliance. Another company
The Council notes that the great
program.
commented that it would be very
majority of ‘‘process accounting’’ would
Response: The commenter is mistaken burdensome to create a mechanism to
be under COTS contracts, which are
about the requirements of the proposed
identify ‘‘assigned employees’’ under a
exempt from the rule.
Job order costing—work is broken into jobs; each job is tracked sepa-
E.g., auto mechanics, carpenters, painters, print shops, computer re-
rately.
pair.
Process costing—a large quantity of identical or similar products are E.g., auto assembly plants, hot dog manufacturing, any large mecha-
mass produced.
nized production facility.
Each cost accounting system gathers
i. Re-Verification of Existing Employees
Verify does require it. The contractor
and reports on the same information.
Comment: Many commenters stated
will have to devise a process to collect
The method used depends on the needs
that the requirement of re-verification of and authenticate SSNs for many
of the business. Process costing traces
existing employees working on Federal
employees, especially those who started
and accumulates direct costs, and
contracts is unnecessary because those
as foreign national legal immigrants,
allocates indirect costs, through a
employees who have been hired after
who were not required to have a number
manufacturing process. Costs are
November 6, 1986, have already been
when they started work.
assigned to products, usually in a large
through the employment eligibility
• The E-Verify process requires a
batch, which might include an entire
verification (I–9) process. For example,
picture identification document.
month’s production. Eventually, costs
one commenter asked the Councils to
Another commenter remarked that the
have to be allocated to individual units
eliminate the requirement to use E-
money spent re-verifying employees
of product.
Verify for employees assigned to work
who are assigned to work directly on a
Accordingly, the final rule will permit on contracts because such employees
Federal project would be much better
a contractor to choose between two
who were hired after November 1986
spent in fundamental research being
alternative approaches. The rule will
will have already been through an
conducted by the commenter.
permit the Federal contractor to choose
employment eligibility verification
Response: Executive Order 12989, as
either to run only existing employees
process.
amended, requires the re-verification of
who are assigned to the contract and all
The following are some of the
existing employees assigned to the
new employees through E-Verify, or to
objections raised to re-verification for
Federal contract, even if the employees
run all existing employees and all new
employees whose I–9s were completed
were screened previously using the I–9
employees of the company through E-
long ago:
process. The E-Verify process is
Verify.
• A contractor may have accepted
expected to achieve a much higher level
of accuracy in verification than was
d. Need for Re-Verification
documents to demonstrate identity
(drivers’ licenses) or work authorization
achieved under the I–9 process alone; E-
Background: It is important to
(passports or green cards) that have now Verify has built-in tools for accessing
distinguish what commenters mean by
expired.
databases to further verify the
re-verification. They may mean re-
• Until 2007, it was permissible for
employment eligibility of an employee,
verification of employees who have
naturalized U.S. citizens to present
whereas the documents submitted by
been verified by a system other than E-
certificates of naturalization to prove
employees under the I–9 process were
Verify, or they may mean re-verification
work eligibility, and many employees
probably subjected to very little
of employees who have been verified
chose to use these forms in the I–9
additional verification if they looked
through E-Verify, by another employer
process. Those certificates are not
acceptable on their faces.
or by the same employer. Each of these
usable as part of the E-Verify process.
With respect to the process for re-
types of re-verification will be
• The I–9 process does not require an verifying existing employees, the draft
separately addressed.
employee to provide an SSN, but E-
MOU contemplated and addressed the
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00025
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67674
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
matters raised by the commenter.
verification process, he or she should
verify an existing employee when the
Employers may use a previously
contact OSC at 1–800–255–7688 or 1–
employee is assigned to work on a
completed Form I–9 as the basis for
800–237–2515 (TDD). Employers that
contract. One commenter concluded
initiating E-Verify verification of an
have questions relating to the anti-
that by mandating that Federal
assigned employee as long as that Form
discrimination provision should contact contractors verify or re-verify existing
I–9 complies with the E-Verify
OSC at 1–800–255–8155 or 1–800–237–
employees each time they are assigned
documentation requirements and the
2515 (TDD).
to work on a new contract, the proposed
employee’s work authorization has not
In addition, it is not technically
rule too radically restructures the E-
expired, and as long as the employer has correct that certificates of naturalization
Verify program, making it
reviewed the Form I–9 with the
were acceptable until 2007. They were
unmanageable and unworkable for
employee to ensure that the employee’s
taken off the acceptable document list in employers.
stated basis for work authorization has
the regulations in 1997, but DOJ and
not changed (including, but not limited
then DHS had a policy not to enforce
Response: The proposed rule clearly
to, a lawful permanent resident alien
violations of this regulation until it
stated that a contractor is not required
having become a naturalized U.S.
updated the Form I–9 instructions to
to perform additional employment
citizen). If the Form I–9 does not
reflect this change, which did not
verification using E-Verify for any
comply with the current E-Verify
happen until 2007. With respect to
employee whose employment eligibility
requirements, or the employee’s basis
SSNs, the Councils do not anticipate
was previously verified through E-
for work authorization has expired or
that the commenter or other employers
Verify by that contractor. It is not
changed, the employer shall complete a
should have significant difficulty
necessary to run the employee through
new I–9. If the Form I–9 is otherwise
obtaining their current employees’
the E-Verify program again each time
valid and up-to-date but reflects
SSNs, as they already should have these the employee is assigned to work on a
documentation (such as a U.S. passport
on file for other business purposes.
new contract. When, however, an
or Form I–551) that expired subsequent
existing employee is assigned to a
to completion of the Form I–9, the
ii. Re-Verification of Employees Verified contract and that employee has not
Employer shall not use the photo
by Another Employer
previously been verified through the E-
screening tool, subject to any additional
Comment: One commenter believed
Verify system, then that employee must
or superseding instructions that may be
that employees covered by a collective
provided on this subject by USCIS.
bargaining unit should not have to be re- be processed through E-Verify at the
While in some cases these procedures
verified each time they switch to a new
time of assignment to work on the
will place on employers and employees
company, e.g., in the construction
contract. The end result of this
the initial burden of completing a new
business.
procedure is that for any single
Form I–9, they are designed to avoid the
Response: The commenter’s point
company, no employee, whether
greater burden of unnecessary tentative
appears to relate to the existing statutory existing or newly hired, needs to be
nonconfirmations resulting from the use provision regarding employment
verified through the E-Verify system
of stale data to run E-Verify queries.
pursuant to a collective bargaining
more than once.
Some contractors that are submitting
agreement in section 274A(a)(6)(A) of
In addition, the Councils have revised
an E-Verify query for a current
the INA, which provides that in certain
the final rule to exempt employees who
employee may be put in the position of
cases a subsequent employer is deemed
hold an active U.S. Government security
asking that employee to produce an
to have complied with the Form
clearance for access to confidential,
I–9 document that is different from what I–9 requirements by virtue of
was presented during the initial I–9
secret, or top secret information in
verification by another employer within
process. It is important that contractors
accordance with the National Industrial
the agreement. If a previous employer
not engage in illegal discrimination
Security Program Operating Manual.
within such an arrangement has
during this process, such as by
The rule also exempts employees for
completed the Form I–9 and E-Verify, a
selectively requesting or rejecting
subsequent employer does not have to
which background investigations have
documents during the verification or
reverify, as long as the employment is
been completed and credentials issued
reverification process with the purpose
within the scope of the statutory
pursuant to HSPD–12, promulgated by
or intent of discriminating against
provision.
the President on August 27, 2004.
employees on the grounds that they
4. Time Periods (52.222–54(b))
appear or sound foreign. See 8 U.S.C.
iii. Re-Verification of Employees
1324b. If an employee believes that he
Already Verified by the Contractor
Background: The proposed rule set
or she has been discriminated against
Comment: Many commenters were
forth the following timeframes:
during the employment eligibility
concerned about the requirement to re-
Timeframe
Start point
Required action
Within 30 calendar days .....................................
After contract award .........................................
Enroll in E-Verify.
Within 30 calendar days .....................................
After enrollment ................................................
Initiate verification of employees assigned to
the contract at time of enrollment.
Within 3 business days ......................................
After date of assignment to the contract; or
Initiate a verification of each assigned em-
Within 30 calendar days .....................................
Of the award of the contract.
ployee who is assigned to the contract after
enrollment in the E-Verify program.
1. Comment: Many commenters were
timeframes because employers would
• Extend the registration period to 90
concerned that the timeframes provided
need to develop complex systems to
days after contract award, to allow time
were insufficient for compliance. These
track and report employees. Among the
for orderly transition and provide time
commenters requested longer
various recommendations:
for employers.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00026
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67675
• Permit larger organizations to
Federal contractor). Contractors will
applicability standard should be
implement E-Verify in stages across
likely have to make adjustments to
proportionate to its requirement.
worksites;
current employee information systems
•
• Another commenter proposed
Allow a 6-month phase-in period to to be able to identify employees
raising the threshold from $3,000 to
allow for registration, training and
assigned to the contract and to track
$50,000.
implementation and verification;
whether employees have been vetted
• Add a 90-day transition period
through E-Verify. 90 days after award of
Response: The Councils have raised
before a contractor must begin verifying
a contract that contains the clause
the threshold for inclusion of the clause
employees, after the date of contract
should be sufficient for this.
in a prime contract from the micro-
award.
—Thereafter, verify the employee 30
purchase threshold to the simplified
• Provide a time period to initiate
days (instead of 3) after an employee
acquisition threshold. The statute at 41
verification of assigned employees that
is assigned to work under a contract.
U.S.C. 427 directs the FAR to provide
is no less than 60 days from enrollment
—180 days for initiation of verification
for simplified acquisition procedures for
and 30 days from assignment to a
of all existing employees (if chosen at
purchases of property and services for
contract, respectively.
the option of the contractor).
•
amounts not greater than the simplified
Extend the phase-in period
The Councils did not extend the 30-
acquisition threshold. In order to
applicable to verification of existing
day period to enroll in E-Verify. Very
promote simplified processes for such
employees for employers who are
few commenters argued that this
small acquisitions, the Councils have
already signed up for E-Verify. Three
timeframe was insufficient. The
revised the final rule to exempt all
days is not long enough to change
Councils also considered that employers prime contract awards under the
systems to handle verification of
already enrolled on the Federal E-Verify simplified acquisition threshold from
existing employees.
program should not need additional
Response: The Councils carefully
application of this rule.
time to continue verification of new
considered all the requested extensions
employees within three business days of
According to Federal Procurement
and concur that some of the timeframes
hire. The Councils also did not make
Data System (FPDS) data, during FY
need to be extended. The Councils
amendments to timeframes that are
2007, there were approximately 2.8
recognize that some of the periods for
required by the MOU rather than the
million contract awards (new contracts,
contractor action in the proposed rule
FAR clause.
not orders) Governmentwide totaling
did not all allow sufficient time. The
2. Comment: One commenter
approximately $9 billion for which the
Councils have substantially extended
suggested that E-Verify should provide
basic contract value were less than or
various periods to permit contractors
employers with an option to mark that
equal to the simplified acquisition
more latitude on when they must begin
an SSN has been ‘‘applied for’’ when
threshold ($100,000) each. This is less
verifying employees.
foreign nationals are waiting on SSN
than 3 percent of total obligations made
The Councils also noted concerns that cards that could take weeks to receive.
during FY 2007. Therefore, the
the requirements for a contractor that is
Another commenter expressed concern
exclusion of such low dollar value
already enrolled as a Federal contractor
over the fact that SSNs are not required
contracts should have minimal impact
in E-Verify were not clear. These
on the Form I–9 and the SSN is the basis on achieving the objectives of the
requirements were only addressed in
for the electronic verification.
Executive Order, while being of great
the policy section of the proposed rule,
Response: DHS has informed the
benefit to small businesses, since
not in the clause. Nor did the proposed
Councils that the MOU will be amended acquisitions below the simplified
clause specify whether the enrollment
to provide that notating the Form I–9
acquisition threshold are generally set
referred to was as a non-Federal
satisfies ‘‘initiating verification’’ in the
aside for small business.
contractor or as a Federal contractor
narrow situations where (1) the
(which will become important as the
employee has applied for an SSN from
In addition, the Councils have added
implementation of the rule progresses).
SSA and is waiting to receive a SSN;
to the final rule a threshold relating to
The Councils have added specific
and (2) the employee has requested an
length of the period of performance of
instructions applicable to contractors
accommodation from the photo
the contract. Since contractors have 30
already enrolled as Federal contractors
identification requirement from the E-
days to enroll in E-Verify and another
in E-Verify and amended the time
Verify program and is in the process of
90 days to initiate verification of
periods in the clause by which the
resolving the issue. The employer still
employees, the Councils concluded that
contractors must have taken various
has an obligation to work in good faith
it was not practical to require
actions.
to follow through on that process and
compliance with the clause in contracts
The Councils have simplified the
ultimately verify the employee with the
that have a period of performance of less
policy section and added more details
system.
than 120 days.
in the clause. The changes in time
periods in the final rule are summarized 5. Threshold for Applicability in Prime
6. Subcontractor Flowdown
as follows:
Contracts (22.1803(b))
(22.1802(b)(4) and 52.222–54(e))
• After new enrollment in E-Verify as
Comment: A number of commenters
Comment: Analysis of the comments
a Federal contractor, 90 days to initiate
requested an increase in the dollar
relating to the subcontractor flowdown
verification of new employees within
threshold for applicability of the clause.
requirements (22.1802(b)(4) (22.1802(c)
three business days of hire. This allows
Commenters state that there is no
in proposed rule) and 52.222–54(e))
a contractor time to set up a new
rationale for the $3,000 threshold.
system, or modify an existing system
• For example, several commenters
discloses five general concerns from a
from the non-Federal to the Federal
proposed increasing the dollar threshold broad range of commenters.
form of E-Verify.
for applicability of the proposed
a. Definitions
• 90 days (instead of 30) to initiate
contract clause from the micro-purchase
verification of existing employees after
threshold of $3,000 to the simplified
For concerns relating to the
enrollment into the program (or after
acquisition threshold of $100,000. One
definitions of ‘‘subcontract’’ and
contract award, if already enrolled as a
of these commenters stated that the
‘‘subcontractor,’’ see G.1.d.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00027
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67676
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
b. Flowdown Thresholds
that an early finishing subcontractor or
an exception to this general consensus,
Comment: Various commenters
supplier to a Federal prime construction one commenter suggested that it would
recommended limitation of subcontract
contractor should not, without
be appropriate to require prime
flowdown as follows:
exception, be bound to the duration of
contractors to obtain written assurances
• The flowdown threshold of $3,000
the prime contract.
from contractors that they are
Response: When flowing down the
is extraordinarily low, and that an
complying with all Federal rules,
clause to the subcontractor, it would be
explanation and justification for this
including verification of employment
effective only for the duration of the
dollar threshold should be provided to
eligibility.
subcontract. By the very nature of
Response: The Councils believe that
the public.
•
subcontract to prime contract, many
prime contractors are responsible for all
Raise the threshold to $10,000 and
subcontracts are of shorter duration than aspects of contract performance
make it applicable only to first tier
the prime contract. However, the
including subcontract requirements.
subcontractors whose subcontracts meet Councils decided not to extend the 120- The methods used to assure compliance
the stated criteria, consistent with the
day limitation on flowdown. The period are also the responsibility of the prime
flowdown requirement for the annual
of performance of the subcontract is not
and the subcontractor. The contractor
EEO–1 report and affirmative action
within the control of the Government. If
should perform general oversight of
obligations under Executive Order
the subcontractor does not have any
subcontractor compliance in accordance
11246 and Section 503 of the
subcontract running longer than 30
with the contractor’s normal procedures
Rehabilitation Act.
•
days, the subcontract term would end
for oversight of other contractual
Raise the threshold to $100,000.
•
before the subcontractor would be
requirements that flow down to
If the flowdown requirement is
required to register with E-Verify.
subcontractors. Prime contractors are
maintained, limit it to (1) first tier
However, if the subcontract period runs
not expected to monitor the verification
subcontractors, or (2) subcontracts
beyond 30 days, the subcontractor
of individual subcontractor employees.
valued at more than the threshold for
would be required to enroll in E-Verify,
Nor is the prime contractor responsible
obtaining cost or pricing data under
and if the subcontractor continues to
for the subcontractor’s hiring decisions.
FAR 15.403–4, currently $650,000.
receive subcontracts it will be obligated
However, the prime contractor is
• Remove the flowdown requirement to begin using E-Verify for its new hires. responsible for ensuring by whatever
or, at a minimum, limit it to major
means the contractor considers
subcontracts exceeding $5 million.
d. Prime Contractor Responsibility for
appropriate, that all covered
Response: The Councils do not agree.
Subcontractor Violations
subcontracts at every tier incorporate
Although the selection of the
Comment: There was broad concern
the E-Verify clause at 52.222–54,
appropriate threshold is always
raised by commenters (covering the
Employment Eligibility Verification,
somewhat subjective, unless specified
service, construction, educational,
and that all subcontractors use the
by statute or Executive order,
transportation, and agriculture sectors)
E-Verify system.
rulemakers seek to achieve balance
regarding the extent to which a prime
Further, these roles and
between achieving the policy objectives
contractor may be held accountable for
responsibilities are adequately
and not unduly burdening smaller
violations by its subcontractors. A
addressed in the Federal Contractor
subcontracts. With respect to
number of commenters suggested that
MOU. Accordingly, the MOU contains a
subcontract actions, the flowdown is
the prime contractor’s flowdown
provision that the employer (prime
already limited by the proposed rule to
obligation was too difficult to monitor.
contractor and subcontractors alike)
only subcontracts for construction and
One commenter noted, for example, that acknowledge that compliance with the
for services. These types of subcontracts subcontractors do not have privity of
MOU is a performance requirement
often involve lower dollar amounts and
contract with the Government, thus they under the terms of the Federal contract
increasing the threshold would leave
are not normally required to be
or subcontract and that the employer
too high a portion of the targeted
identified in a Government contract as
consents to the release of information
subcontracts not covered by the rule.
a party. There was substantial concern
relating to compliance with its
There is no particular logic that would
among these commenters with respect
verification responsibilities under the
tie this threshold to EEO reporting, the
to the prime contractor’s compliance
MOU to contracting officers or other
simplified acquisition threshold (which
assurance responsibilities. Specifically,
officials authorized to review the
applies only to prime contracts), or the
these comments focused on the extent to employer’s compliance with Federal
cost or pricing data threshold. There is
which the prime contractor is
contracting requirements.
no compelling reason to either eliminate responsible for subcontractor failure to
The Councils consider that it would
or limit the flowdown requirement since comply with the contract obligation to
be an unnecessary information
the obligation to include the clause at
use the E-Verify program. Many
collection to impose a requirement that
52.222–54(f) is not any more
commenters questioned how a prime
the prime contractor obtain written
burdensome than many other flowdown contractor could monitor subcontractor
assurances from subcontractors that
requirements, and the objectives of the
compliance and the extent to which a
they are complying with all Federal
Executive Order 12989, as amended,
prime contractor would be accountable
rules, including verification of
will not be adequately met without
for a lower tier subcontractor’s non-
employment eligibility.
extensive subcontractor flowdown. The
compliance.
Councils have therefore maintained the
Many commenters argued that the
e. Notice to Subcontractors
subcontractor flowdown for services
prime contractors’ flowdown
Comment: One commenter
and construction to all tiers of
responsibilities should be limited to
recommended that the proposed clause
subcontracts above the threshold of
ensuring that the clauses are included in impose a requirement for a prime
$3,000.
their subcontracts and that their
contractor, and any higher-tier
subcontractors should be responsible for subcontractor, to provide a notice along
c. Period of Performance
initiating the E-Verify enrollment
with its requests for bids from
Comment: One commenter urged that
process and carrying through with use
prospective subcontractors and
consideration be given to recognizing
of E-Verify for employee verification. As suppliers on the Federal construction
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00028
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67677
contract. Such notice should make
fear litigation from employees who are
The E-Verify statute (IIRIRA Section
explicit to prospective subcontractors
fired as a result of the E-Verify process
403) does not distinguish between new
and suppliers that the prime contract is
and file claims of wrongful discharge
hires and existing employees in the
subject to the proposed new FAR
because E-Verify provided wrong
immunity protections it provides
Subpart 22.18 (Employment Eligibility
answers in the verification process.
employers. IIRIRA section 403(d). The
Verification) and that the requirements
Several commenters believed that the
Councils find that the statutory
of the proposed new clause (FAR
revised MOU for E-Verify leaves
protection from liability for actions
52.222–54, Employment Verification)
employers to face any such legal
taken by employers in good faith
will be imposed on a subcontractor at
liability on their own. Article V,
reliance on information provided by the
any tier, if the subcontract falls within
‘‘Parties’’ paragraph E of the revised
E-Verify system provides sufficient
the reach of proposed new FAR
MOU reads: ‘‘Each party shall be solely
protection.
22.1802(b)(4).
responsible for defending any claim or
Issues with respect to compliance
Response: The Councils do not
action against it arising out of or related
with E-Verify and adverse actions taken
endorse the need for a separate notice to to E-Verify or this MOU, whether civil
as a result of such actions are the
subcontractors, apart from the notice
or criminal, and for any liability
responsibility of DHS and not the
that is provided by flowing down the
wherefrom, including (but not limited
contracting officer. Therefore, the
clause to the appropriate subcontractors. to) any dispute between the Employer
proposed safe harbor language is not
Many requirements flow down to
and any other person or entity regarding appropriate for inclusion in the FAR.
subcontractors, and it is the
the applicability of Section 403(d) of
9. Enforcement and Sanctions for Non-
responsibility of the subcontractor to
IIRIRA to any action taken or allegedly
Compliance
review all requirements associated with
taken by the Employer.’’
the requests for bids or proposals.
Comment: Several commenters
Other companies claimed that they
However, the Contractor may write such
requested clarification in the rule of
enjoy immunity as a result of the
a notice.
how MOU violations would warrant
language in the MOU that states ‘‘no
contract sanctions, and if so, what
7. Waiver (22.1802(d))
person or entity participating in a pilot
procedures for contract suspension or
Comment: The proposed rule allows
program authorized [by IIRIRA] shall be
termination would apply in that
the head of the contracting activity to
civilly or criminally liable under any
circumstance.
waive the clause requirement in
law for any action taken in good faith
Response: USCIS retains its authority
exceptional cases. Several commenters
reliance on information provided
to investigate violations of E-Verify
noted that the proposed rule did not
through the confirmation system.’’ This
program. DHS may terminate a
define the term ‘‘exceptional cases’’ and
immunity language was also repeated in contractor’s MOU and deny access to
proposed that a definition and/or
the preamble to this rule. However,
the E-Verify system in accordance with
standards for using the waiver be added
there is concern that these immunity
the terms of the MOU. If DHS terminates
to the final rule. One commenter
provisions may not apply to situations
a contractor’s MOU, DHS will refer the
proposed that the term be defined to
where an adverse employment action is
contractor to a suspension or debarment
include national security emergencies,
taken against an existing employee.
official for possible suspension or
natural disasters, acts of terrorism
As a result of these litigation
debarment action. During the period
against the United States, urgent
concerns, commenters requested that
between termination of the MOU and a
military war fighter needs, and FAA
the rule provide protection from both
decision by the suspension or
emergencies.
DHS enforcement actions, as well as
debarment official whether to suspend
Response: The term ‘‘exceptional
discrimination lawsuits, if employees
or debar, the contractor is excused from
cases’’ is intentionally not defined in
are terminated after the employers have
its obligations under paragraph (b) of
the rule in order to allow the head of a
properly complied with program
the clause at 52.222–54. If the contractor
contracting activity the flexibility to use
requirements. They recommended that
is suspended or debarred as a result of
this waiver as unique situations arise
provisions be included in the rule that
the MOU termination, the contractor
within each agency. Each head of the
would indemnify the employer with full will not be eligible to participate in E-
contracting activity will be accountable
disclosure of this indemnification to the Verify during the period of its
to the agency leadership to
employee. As one commenter stated, the suspension or debarment. If the
appropriately balance the needs of the
rule should be revised to provide a safe
suspension or debarment official
agency and the policies and goals of the
harbor that explicitly protects
determines not to suspend or debar the
Executive Order 12989.
contractors and subcontractors from
contractor, then the contractor must re-
penalties or other reprisals under state
enroll in E-Verify.
8. Safe Harbor
law related to the use of the E-Verify
Comment: Public comments indicated system. The commenter recommended
10. Process for Resolving Disputes
numerous concerns over the mechanics
that the preamble immunity language be About Applicability of the Clause
and operability of the E-Verify system.
inserted into the regulatory text as a
Comment: One commenter expressed
Specifically, employers expressed
clear safe-harbor to make it clear that it
concern that a decision about what
concerns about potential litigation that
applies to all employees.
contracts are required to include the
could be brought against them as they
Response: The applicable statute,
clause will be left entirely within the
rely on E-Verify to verify not only newly section 403(d) of IIRIRA, provides broad discretion of the contracting officer. The
hired employees, but also to verify
legal protection to employers
commenter was concerned that the
existing employees. For example, one
participating in E-Verify. The MOU
presumption would be in favor of
commenter cited the legal risk in the
language in Article V. E. only clarifies
including the clause even though it is
event that an unauthorized worker
that the Government does not guarantee
not required with certain types of
erroneously verified by E-Verify is later
any level of legal protection under this
contracts, such as those for purchase of
found to have committed identification
or any other statute to employers, and
COTS items. The commenter was
fraud and was therefore improperly
will not defend or indemnify claims that concerned that there is no method for
employed. Likewise, some companies
may be brought against employers.
disputing the applicability of the clause.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00029
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67678
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
Response: The Councils do not concur H.3.f. on applicability at the subcontract
One commenter requested that the
with the commenter’s concerns. As an
level.)
Councils add services to the definition
initial matter, the contracting officer’s
of COTS.
C. Applicability of FAR Rule
conclusions about whether the clause
Response: The Councils concur in
applies will be informed by what the
1. Commercial Items
part with this comment. Although the
Government is acquiring with the
a. Commercial Items Exemption
definition of COTS is statutory and does
contract. The contracting officer will
not include services, the Councils agree
take into consideration whether the
Comment: Several commenters
that the clause should not apply to
contract is for services or supplies, and
recommended that the rule should
certain types of services:
whether the supplies are COTS items.
exempt all commercial items, not just
• The services must be procured at
The contracting officer will then
COTS items, claiming that such a
the same time as the COTS item is
evaluate whether any applicable
change would be consistent with
procured.
exceptions apply such that compliance
procurement reforms facilitating
• The services may be provided only
with E-Verify is not required. Therefore, government access to commercial
by the COTS item supplier. That will
the Councils do not agree with the
products and services.
eliminate services provided by other
commenter’s statement that the
Response: The Councils do not concur contractors who are in the service
contracting officer has ‘‘complete
with this comment. The final rule
business. By covering the COTS
discretion’’ to decide whether the E-
intentionally covers commercial item
provider services, the Councils intend to
Verify clause will be inserted in the
contracts that are not for COTS items.
reduce the regulatory burden for
contract.
The intent of the rule was to cover as
companies who provide only COTS
Further, the Councils do not agree
many contractors and contractor
items that do not require use of E-Verify.
that it is necessary to develop dispute
employees consistent with the mandate
The services must be performed only on
resolution procedures, because
in Executive Order 12989. The only
or for the COTS item. This means that
appropriate procedures already exist in
reason COTS items are exempt is
we do not exempt services that are
the FAR. If a contractor disagrees with
because the Councils believe that COTS
‘‘custom.’’
a contracting officer’s conclusion about
providers may choose not to do business
• Third, the services must be typical
the applicability of the clause in
with the Government rather than
or normal for the COTS provider.
advance of award, the contractor may
changing their practices to use E-Verify.
obtain review by submission of a protest
c. Applicability of COTS Exception to
The Councils concluded that this could
to the Contracting Officer, Agency Head
Food Products
result in an unacceptable reduction in
or GAO in accordance with FAR Part 33.
• FAR 33.101, Protest, defines a
the Government’s access to items it
Comment: Several commenters
protest as a ‘‘written objection by an
needs in order to operate. On the other
representing various agricultural
interested party to * * * [a] solicitation
hand, contractors who provide
interests commented that the rule will
or other request by an agency for offers
commercial items that are not COTS
have far reaching and detrimental
for a contract for the procurement of
items are providing commercial
effects on the agriculture industry, most
property or services.’’
products that are custom-made for the
particularly growers and harvesters.
• FAR 33.102(a) states that upon
Government or services that are
Examples of sectors of the agriculture
receipt of a protest, the contracting
categorized as commercial items. These
industry that were highlighted as
officer ‘‘shall consider all protests and
contractors have decided to be part of
problematic are: Fruit growers, fruit
seek legal advice * * *’’ The
the Government marketplace. These
harvesters, suppliers of fruit to Federal
requirement to seek legal advice after
contractors have established procedures
school lunch programs, and distributors
receipt of a protest ensures that the
and sometimes created organizations
of fruit. These commenters wanted to
contracting officer’s conclusion about
designed to do business with the
make sure that the rule was not
applicability will be reviewed.
Government. The Councils determined
intended to apply to them or, if it was
If a contractor’s disagreement with the that the requirement for these
intended to cover them, they requested
contracting officer’s conclusion about
contractors to use E-Verify would not be that it be made inapplicable to them.
the applicability of the clause arises
sufficient to drive them from the
Response: The Councils do not
after award and during administration
Government market. Also, to the extent
believe that any of the examples of
of the contract, the process for resolving
such a business incurs added cost to
agricultural products cited by these
the dispute is set forth in FAR 33.202,
comply with the E-Verify contract
commenters would be covered by the
Contract Disputes Act of 1978. Again,
clause, it is free to include that added
rule as originally proposed or as
upon receipt of a claim, FAR 33.211
cost in its proposed contract prices, but
promulgated in this final rule.
requires the contracting officer to
will be required to take into account the
First, all food products described by
‘‘secure assistance from legal and other
pricing practices of its competitors if it
the commenters would fall under the
advisors.’’ The FAR also requires the
wishes to be awarded the contract.
definition of commercially available off-
contracting officer to seek input from
b. Exempt COTS-Related Services
the-shelf (COTS) items or a minor
other agency officials, including that of
modification to a COTS item, which are
agency counsel, and therefore the
Comment: Various commenters
exempt from the clause. COTS items are
contracting officer’s conclusion about
pointed out that COTS suppliers
defined as ‘‘any item of supply’’ (food
the applicability will be legally
typically sell services along with their
is an item of supply) that is ‘‘a
reviewed.
COTS items and that the exemption of
commercial item’’ (the foodstuffs
Despite commenter’s statements, the
COTS items from the rule would not be
described by the commenters are
FAR specifies when the E-Verify
adequate unless it also exempts related
commercial items) ‘‘offered to the
requirement shall be included in a
services. COTS suppliers who must
Government, without modification, in
contract and the FAR also provides a
provide services along with their COTS
the same form in which it is sold in the
method for resolving disputes about
items would gain no benefit from the
commercial marketplace’’ (the
applicability, both pre-award and
COTS exemption if the services are not
foodstuffs described by the commenter
during contract performance. (See also
also exempt.
meet these standards).
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00030
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67679
Secondly, most of the concerns
rule does not apply only to commercial
• Some comments argued that the
relayed by the commenters centered on
items. It applies to both non-commercial burden is even greater on small
the growers and harvesters. Neither the
and commercial items (although COTS
businesses that are subcontractors. SBA
proposed rule nor the final rule require
items are excluded).
Office of Advocacy expressed concern
flowdown of the clause to
• An exception has been added to
that the compliance cost burden on
subcontractors which provide supplies
permit State and local governments to
small business subcontractors could be
such as food. The only subcontracts that limit their use of E-Verify only to
disproportionate, because such
are covered by this rule are services or
employees assigned to the contract
businesses have fewer contracts among
construction subcontractors. In the
(allowing them to exclude new hires not which they can spread the cost of doing
unlikely event that a contractor enters a
assigned to the contract).
business.
contract with the Government for food
• Also, the requirements to use E-
Some of these commenters were
products that do not meet the definition
Verify only occur when a contract
concerned that some small businesses
of a COTS item or a minor modification
includes the FAR clause. There is no
would not have the resources to
of a commercial item, the subcontractors mechanism for the FAR to require
implement E-Verify and may therefore
who sold the food to that contractor
insertion of the clause in any grants or
exit the Government market. For
(farmers, or harvesters or distributors)
contracts that use non-appropriated
example, one commenter noted that E-
are not required by this rule to have the
funds that are not covered by the FAR.
Verify requires both infrastructure and
contract clause in their subcontracts.
Whether the clause would apply to a
an investment of employee expertise.
This means that they are not covered by
contractor providing carnival services
Small businesses that do not have the
the rule when they are subcontractors
will depend on several factors; the
resources to implement may decide not
because no subcontracts for supplies are location of the contract performance
to pursue Government contracts.
covered by the rule for any
alone will not be determinative, unless
Further, a small business council was
subcontractor. The only providers of
the contract is performed outside the
concerned that to stay competitive,
supplies who are covered by this rule
United States.
small businesses would not be able to
are prime contractors, not
2. Small Business
pass the extra costs of E-Verify on to the
subcontractors. The Councils purposely
Government, and will therefore be
excluded all subcontracts for supplies
a. Unfair Impact on Small Business
deterred from bidding.
from application of this rule for many of
Comment: Many commenters were
Several commenters expressed
the same reasons that prompted the
concerned that E-Verify may impose
concern about the detrimental effect that
concerns of the agriculture industry
significant and costly administrative
loss of participation by small businesses
commenters.
requirements on small business, and
will have on the Government and the
Nevertheless, the Councils have
that the rule will have a
taxpayers. One commenter noted that
further modified the COTS-related
disproportionate adverse impact on
through the loss of competition by small
exception to address these concerns.
small business.
businesses, the Government loses out on
The exception in the clause prescription
• For example, one commenter noted the innovative ideas of small businesses
at 22.1803 for COTS-related items has
that few small businesses have specific
that exit the market. Another
been expanded also to exempt items
human resource departments to manage
commenter stated that the Federal sector
that would be COTS items but for being
the increased workload, and many more will lose the benefit from the ‘‘ingenuity
bulk cargo. By incorporating this
lack the necessary equipment to run the
and flexibility’’ that small businesses
expanded exception for COTS-related
program.
bring to the table.
items, the Councils intend to exempt
• Another commenter noted that
Several commenters noted that
foodstuffs such as grains, oils, produce
small businesses do not have the luxury
Congress has expressed concern about
and all other agricultural products
of large staffs to prevent lost
the potential impact of E-Verify on
shipped as bulk cargo, to the extent they productivity while employees resolve
small businesses. For example, various
are otherwise classified as COTS items.
tentative nonconfirmations.
commenters cited to the mandated
• Commenters suggested that small
study of impact on small business in
d. Acquisitions of Commercial Items
businesses may also face accessibility
H.R. 6633, a bill passed by the House of
Under the FAR
issues, such as lack of access to high-
Representatives that would have
Comment: Several commenters
speed internet.
extended the E-Verify program for
requested that the final rule make it
• The SBA Office of Advocacy stated another 5 years.
clear that the rule applies only to
that small businesses may lack the
Response: The Councils do not agree
commercial acquisitions under the FAR. financial resources and human capital
that this rule imposes an unfair burden
According to these commenters, many
to adapt their technology infrastructure
on small businesses. The economic
grant recipients and State and local
systems to changing requirements being
analysis found that total compliance
governments may incorrectly assume
imposed by the Federal Government.
costs increase as the size of the
the rule applies to them. One comment
• The SBA Office of Advocacy also
contractor increases. For example, a 10-
also sought clarification of whether the
noted that small business Federal
employee firm may only need one
rule would apply to a carnival operator
contractors operate on very thin profit
person trained to execute E-Verify
hired to provide services on a military
margins and these types of technology
queries, but a 100-person firm may need
installation.
systems require capital outlays that
2 or 3 employees trained in E-Verify.
Response: The Councils do not
cannot be easily recouped by passing
However, when compliance costs are
concur. There are several parts to this
the cost to the client and are costly to
considered as a percent of revenue, the
question, addressing both the
the small business owner.
impact on smaller contractors is greater
application of the rule to commercial
• Another commenter stated that
than the impact on larger contractors
items and the question of acquisitions
small companies that do not have the
since smaller firms have less revenue
under the FAR versus ‘‘non-
means to set up systems and staffing
available. The Small Business
acquisitions.’’
with adequate training to monitor
Administration publication The Impact
• The commenters misunderstand the nonconfirmations may find themselves
of Regulatory Costs on Small Firms
applicability to commercial items. The
at risk for noncompliance.
(2005) shows that on a per employee
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00031
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67680
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
basis, smaller firms have a larger
threshold. As a result of this change, a
thresholds and exceptions are consistent
regulatory compliance cost burden than
substantial quantity of contracts below
with their mandate to implement
larger firms. The SBA study states: ‘‘On
that threshold will be exempt from the
Executive Order 12989 in a way best
a per employee basis, it costs about
E-Verify clause, and will be available to
calculated to improve the efficiency and
$2,400, or 45 percent, more for small
small business contractors that do not
economy of the Federal contracting
firms to comply than their larger
wish to participate in the program.
system. The Councils do not believe
counterparts.’’ Consequently, the results Since the FAR currently requires set-
providing exemptions for small
of the economic analysis that show a
aside of contracts below the simplified
businesses based on the number of
relatively higher regulatory impact
acquisition threshold for small business
employees will further that goal and
burden on the smaller entities than the
participation, contracting opportunities
note that other revisions, discussed
larger entities are not unusual or
that do not necessarily require E-Verify
above, will likely ease the burden on
specific to this final rule.
use will remain available for small
small businesses.
The requirement for entities (both
businesses.
large and small) to enroll in E-Verify
c. Alternatives To Lessen the Burden on
only applies to contractors and
b. Small Businesses Exemptions
Small Businesses
subcontractors who choose to perform
Comment: Various commenters
Comment: Various commenters
certain work for the Federal
suggested exemption or waiver for some suggested other ways to reduce the
Government. Presumably, entities
or all small businesses. For example:
burden on small businesses that
which do not receive the desired return
• Exempt all small businesses: The
participate in E-Verify under this rule,
on revenue to justify the expense of
SBA Office of Advocacy recommended
for example:
participating in E-Verify would choose
that, until better data is available, small
• Allow small businesses more time
not to be a Federal contractor or
businesses should be exempted from the to initiate the clearance process for new
subcontractor.
requirements of the rule. Another
assigned employees (see G.4).
It has been the law since 1986 that all
commenter recommended consideration
• Raise the thresholds to the
employers must verify the eligibility of
of exempting all small businesses that
simplified acquisition threshold (or
new hires to work in the United States.
qualify under the size standards
other thresholds more than $3,000).
E-Verify provides a tool that will make
established by SBA.
Response: Most of these comments are
this verification easier and more
• Exempt small businesses with less
discussed elsewhere in the report in
reliable. Although the E-Verify system
than 15 employees: One commenter
more detail. The Councils have agreed
does require the employer to have
recommended that the applicability
to the above modifications to the E-
access to some equipment such as a
standard should be proportionate to its
Verify rule which will lessen the burden
computer, Internet access, a printer, and requirements and suggested that this
on small businesses, as well as other
either a scanner, photo copier, or a
rule should follow E.O. 13201, under
revisions, such as:
digital camera, the Councils believe that which the Notice of Employee Rights
• Lengthening other time periods for
this equipment is not prohibitively
Concerning Payment of Union Dues
compliance (See G.4).
expensive. Almost all small businesses
does not apply to contractors with less
• Applying a period of performance
doing business with the Government
than 15 employees.
of 120 days (See G.5).
would already have such equipment or
• Exempt small businesses with less
In addition, the USCIS E-Verify
be able to readily acquire it. The
than 75 employees: Several commenters Program’s outreach office has
equipment for a small business to
recommended exemption for businesses coordinated closely with the Small
implement E-Verify need not be
with less than 75 employees. One
Business Administration since April
particularly sophisticated or complex.
commenter asserted that small
2008 to conduct outreach events to
H.R. 6633, which has been passed by
enterprises do not have the
ensure specific concerns relating to
the House allows 2 years for the GAO
administrative capacity to comply with
small businesses are heard and
study of the impact of E-Verify Pilot
this contract clause. Another commenter
Program on small businesses, including
addressed.
stated that applying the new verification
specific details on small entities
requirements only to locations
3. Agriculture
operating in States that have mandated
employing at least 75 individuals full-
a. Applicability to Agricultural
the use of E-Verify. The bill has not
time would allow for sufficient
Cooperatives
been passed by the Senate, but it does
personnel to manage the system and
not request that any implementation of
ensure compliance and consistency.
Comment: Some commenters asked if
E-Verify be suspended pending
• Waive the requirement for certain
the agricultural cooperative is the prime
completion of the study. In addition,
small businesses: Several commenters
contractor under a FAR contract,
Congress reauthorized E-Verify and
recommended waivers for certain small
whether the grower member is
appropriated $100 million for the
businesses for which compliance with
considered the prime contractor as well
program for fiscal year 2009 in the
the system would be burdensome.
for purposes of checking the status of
Consolidated Security, Disaster
Response: The goal of this rule is to
grower employees. Commenters also
Assistance, and Consolidated
apply verification broadly, to the extent
asked whether the answer would be the
Appropriations Act, 2009, Public Law
feasible and consistent with Executive
same when the agricultural cooperative
110–329 (Sept. 30, 2008), without
Order 12989, in order to enhance the
is a marketing cooperative.
requiring this study, and it does not
stability of Government contractors’ and
Response: The Councils have made
appear that there will be any additional
subcontractors’ workforces and to assist
clear in the final rule that virtually all
legislative developments on E-Verify in
them in compliance with the
food products are COTS and COTS
the 110th Congress.
immigration laws of the United States.
contracts are exempt from the rule.
The Councils have endeavored to
Nonetheless, the Councils have inserted
Therefore, the Councils believe these
limit the impact of this rule on small
certain dollar and contract duration
concerns have been addressed.
businesses by raising the threshold of
thresholds for applicability and have
However, there are various types of
applicability of the clause to contracts
provided specific exceptions because
cooperatives, and many are
in excess of the simplified acquisition
the Councils have concluded those
corporations. Some cooperatives buy the
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00032
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67681
agricultural product from the grower
c. Implementation During Harvest
supplies. A subcontractor for supplies
and resell to the Government. In this
Comment: Some commenters stated
that has an E-Verify clause in the
case, the grower is a subcontractor and
that implementing the rule in some
subcontract should contact the prime
would be exempt from the rule
agriculture sectors will be unworkable
contractor or next higher tier
because—
because of the rapid pace required for
subcontractor that included the clause.
• This involves a supply rather than
harvest. Seasonal laborers will move out If unable to obtain resolution, the
a service; and
to another job long before employer is
subcontractor may contact the
• Supplies are exempt from
able to obtain verification of
contracting officer for assistance in
subcontract flowdown.
employment status. Seasonal laborers
resolving the issue.
Other cooperatives involve pooling
need to work on harvesting/packing, not 4. Institutions of Higher Education;
arrangements that are not subcontracts,
traveling to and spending time at the
State and Local Governments and
but rather under which there is one
Social Security office.
Governments of Federally Recognized
prime contract between the Government
Response: The Councils have made
Indian Tribes; and Sureties
and the cooperative (on behalf of the
clear in the final rule that virtually all
growers). In this case the answer is more food products are exempt.
a. Institutions of Higher Education
difficult. If the growers are considered
d. Government Sales
Comment: Seven universities and two
prime contractors for other purposes of
associations opposed the application of
Government contracting, then they
Comment: Some commenters noted
the rule to educational institutions. In
would be so for purposes of E-Verify
that the increased costs, and risks of
general, the universities supported
application. If, on the other hand, the
losing large percentage of workforce,
efforts to encourage improvements to
cooperative alone is the prime
would be too great for some growers to
compliance with requirements to
contractor, then the growers are not the
continue selling to the Government.
demonstrate work authorization and
prime contractor. Applicability of the
Increased grower costs and less
citizenship, but recommend an
clause to each contract and different
competition would increase the
exemption for research and higher
types of agricultural producers is a fact-
Government’s costs. If food growers stop education institutions, arguing that the
based analysis that cannot be
selling to the Government, commenters
rule would impose an unnecessary
definitively answered by the Councils.
claim that foreign countries will become financial and administrative burden.
the source of food for U.S. servicemen
b. Rural Farms
The commenting associations predicted
and school children.
that including academic institutions
Comment: Some commenters pointed
Response: The Councils have made
within the scope of this rule would
out that many growers are small farms
clear in the final rule that virtually all
place stress on the E-Verify system.
located in remote rural areas. Many
food products are exempt, therefore the
The several commenters emphasized
farms hire seasonal workers at field sites concerns expressed by the commenters
various aspects of the interrelated
that are not in an office, and so
have been addressed.
problems that universities face, as
electronic or telephonic use of E-Verify
e. Agricultural Employees
follows:
is not readily available to the employer.
Comment: One commenter noted that
• One of the largest universities
In addition, employer and employees
the Westat study data on recently
contended that E-Verify is difficult to
are not near the Social Security office.
enrolled users showed that recently
use and that the proposed rule
Response: The Councils have made
enrolled users were more likely than
underestimates the time and resources
clear in the final rule that virtually all
long-term users to have a small
required by an organization of its size to
food products are exempt from the
percentage of foreign born employees.
implement E-Verify, and its impact on
requirements of this rule. The
This is different from U.S. agricultural
U.S. citizens and lawful permanent
commenters concerns about access to
employers, where according to a recent
residents.
technology necessary to use E-Verify or
USDA study, over a third of hired farm
• Another university described its use
the remote location of the contractor
workers do not have citizenship status,
of a ‘‘sponsored pool accounting
have been raised by other commenters
and of those 90 percent list Mexico as
system’’ to facilitate frequent changes in
as well and addressed in this rule.
the birth country.
researchers’ and staff members’ funding
The Councils believe that most
Response: The FAR Council notes that sources, and how its separation of
entities involved in Federal contracting
agricultural employees are more likely
contract administration and human
at any level, or their designated agents,
to have immigration issues than most
resources processes complicates E-
will have access to basic office
other kinds of employees. Nevertheless,
Verify’s clearance procedure.
equipment such as a telephone,
because of the exception for COTS, non-
• Another university that employs a
computer, and internet access. The
agricultural employers are much more
large number of foreign nationals
employer is not required to visit the
likely to be covered by the electronic
claimed to have a strong program to
Social Security office; only the
verification requirements of the rule.
monitor work authorizations. It stated
employee must visit if an SSA tentative
that the added procedural burden on the
nonconfirmation is received, and he or
f. Shift to Foreign Agricultural Growers
university and its employees will
she is afforded eight Federal
Comment: One commenter noted that
hamper its ability to attract highly
Government working days in which to
prime contractors might not want to hire sought foreign nationals, impacting the
contact SSA or USCIS. As noted above,
U.S. agricultural growers as
quality of its research programs.
when the employee is a naturalized
subcontractors because of wanting to
• Another estimated that modifying
citizen, the employee may choose to call avoid E-Verify problems. Also, the
its existing employment eligibility
USCIS directly to resolve a citizenship-
prime contractors might force
monitoring system to comply with the
based tentative nonconfirmation, rather
subcontractors to use E-Verify even
proposed 3-day clearance requirement
than visit the SSA office. DHS tentative
when the FAR would exempt the
would cost $1 million because new
nonconfirmations can be handled with
subcontract.
processes would need to be
a telephone call rather than a personal
Response: The E-Verify clause does
implemented outside the payroll system
visit.
not flow down to subcontracts for
it currently uses. In addition, the
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00033
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67682
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
commenter claimed that employee
Response: The Councils do not find
entrepreneurs under Randolph-
relations issues would be a major
the comments about value, accuracy, or
Sheppard.
impact, and notes that Federal contracts
capacity of the E-Verify system to be
c. Sureties
are only 2 percent of its business.
bases to exempt educational institutions
• Another university described
from the rule, for reasons addressed
Comment: A sureties association
universities as low-risk employers
elsewhere in this final rule. Moreover,
requested a de minimis exception.
because their international population is other Government contractors also
Government construction contracts
already subject to oversight through the
attract a foreign talent base that supports require that contractors obtain
Federal visa approval processes and
U.S. science and technology
performance and payment bonds in
their own internal recruitment and other capabilities.
accordance with the Miller Act, 40
mechanisms.
However, the Councils recognize that
U.S.C. 3131 et seq. A performance bond
• Another university was most
coverage of a large number of
secures the contractor’s performance in
explicit about the other internal
educational institutions was not
the event of a default. If the construction
mechanisms that reduce the
anticipated in the proposed rule. These
contractor defaults, the surety steps in
vulnerability of educational institutions
entities have a large number of students
to complete the contract using one of
to immigration violations. According to
with intermittent employment, which
three methods.
• Sureties can enter into a takeover
this comment, research organizations
may complicate these institutions’
agreement with the Government and
operate in an environment of strict
efforts to comply with E-Verify
then the surety completes the project
regulation and control, including export requirements. Most Federal funding of
using a completing construction
control and intellectual property as well universities is in the form of Federal
contractor.
as immigration and employment
grants, and there are relatively few
• The second method involves the
requirements. These contribute to their
Federal contracts, but under the
surety obtaining bids for completion of
high level of regulatory compliance and
proposed rule, a single contract could be the project after which the Government
they rarely encounter problems with
sufficient to require an entire university
contracts with the winning bidder to
document fraud or with employees
to use E-Verify for all its new hires.
The Councils are also concerned that
complete the project.
lacking proper documentation of their
including universities under this broad
• The third method permits the
employment authorization.
surety to reimburse the Government for
•
rule may increase incentives for
Another university also
academic institutions to insist on grant
the excess costs incurred by the
recommended exempting universities
funding rather than agreeing to enter
Government to pay a completing
from the proposed contract term, but
into contracts. This would increase
contractor.
also expressed concerns about the
costs and performance risks to the
The first method, where surety enters
impact on grants and cooperative
Federal Government.
into a takeover agreement directly with
agreements as well. (Grants and
Accordingly, the Councils have
the Government, is frequently selected.
cooperative agreements are not covered
reduced the burden on institutions of
Sureties are concerned that if the rule
by FAR, so the requirements do not in
higher education by revising the
applies to sureties who enter into
fact apply.)
applicability of the E-Verify
takeover agreements, then many sureties
• One association cited, as an
requirements to cover only those
will select one of the other options to
example of potential stress on the E-
employees assigned to a Government
avoid the cost of complying with the
Verify system’s resources, the fact that
contract. In order to focus this
FAR rule. Additionally, issuing
the University of California employs
exception, it is limited to institutions of
performance bonds on Federal
approximately 170,000 faculty and staff. higher education as defined at 20 U.S.C. construction contracts is often a very
The demand on system resources at a
1001(a).
small portion of each surety’s business
university is subject to annual spikes at
because the sureties often sell other
the beginning of the academic terms,
b. State and Local Governments and
types of insurance such as auto,
according to another association.
Governments of Federally Recognized
homeowners and general liability. If the
Association commenters were also
Indian Tribes
FAR rule applies to all employees
concerned about the potential impact of
Comment: One commenter was
performing activities unrelated to bonds
this rule on international personnel at
concerned about whether the rule might as well as new hires of the surety after
colleges and universities who face
be misconstrued when applied to
the effective date of the takeover
delays in securing SSNs. Its members
contracts under the Randolph-Sheppard agreement, sureties may conclude that it
report that many international
Program. The concern was whether the
is too expensive to enter into takeover
employees were incorrectly denied
State licensing agency, which signs the
agreements. The commenter also noted
SSNs by the SSA. According to these
contract with the Federal Government
that when a surety enters into a takeover
commenters, many who eventually
on behalf of the blind entrepreneur
agreement with the Government, the
received SSNs did so only after repeated would be required to enroll in E-Verify.
actual work of completing the
interventions by institutions and after a
Response: The State licensing agency
construction project is performed by a
process that took, in many cases, several would be considered the contractor, but
construction contractor hired by the
months. These delays may be as long as
the Councils have decided that State
surety and not by the surety itself. The
some student workers or staff members
and local Governments, as well as the
sureties requested a de minimis
are employed by the institution. Such
Governments of federally recognized
exception ‘‘under which companies
individuals can be employed in a range
Indian tribes, should only be required to whose contracts with the Federal
of positions, from short-term work-study use E-Verify to verify the employment
Government are a small portion of the
jobs in smaller offices to long-term
eligibility of employees assigned to the
company’s total revenues need only
research projects in large laboratories.
Government contract. The clause would
verify the eligibility of employees
The commenters claimed that delays
be included in the contract, however,
involved with the contract.’’
resulting from E-Verify use could
and would flow down to covered
Response: The Councils, while not
jeopardize both the individuals and
subcontractors for services or
agreeing to an across-the-board de
employers.
construction, including the blind
minimis exception, have individually
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00034
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67683
considered the issues and agree that an
E-Verify to hotel employees. This
b. Hiring Halls and Intermittent Work
exception applicable to sureties is
commenter stated that it is impossible to
appropriate. E-Verify use will not be
determine beforehand which specific
Comment: One commenter requested
necessary unless a surety provides a
employee would be interacting with a
clarification about how new hires are
performance bond, the contractor
guest, since many of the individual
impacted if they are not full time
defaults and the surety subsequently
interactions are initiated by the guest
employees, such as ‘‘hiring hall’’
enters into a takeover agreement with
and could involve one of many possible
laborers hired for short time work on a
the Government to complete the project. employees in each instance. Further,
specific project.
Prompt completion of construction
hotels do not have segregated areas for
Response: The INA requires
projects using the most appropriate
Government employees nor do they
employers to verify the work eligibility
method available is a priority and it is
assign specific employees to serve
of all new hires. There is no exception
not in the Government’s interest to
Government employees. This situation
for short-term or part-time employment,
create an obligation that will discourage
is further complicated by the fact that
as long as the situation involves
sureties from entering into a takeover
employers are specifically prohibited
agreement with the Government if such
‘‘employment’’ as defined in 8 CFR
from screening existing employees
an agreement is appropriate. Therefore,
274a.1(h). When the employer
through E-Verify, except for those
E-Verify compliance will apply only to
completes the Form I–9 process, it
employees assigned to the Government
those employees of the surety directly
should also use E-Verify to verify
contracts.
assigned to the takeover agreement and
employment eligibility. If the
to the construction contractor(s) that are
Response: First, the revision to the
employment is for less than three days,
hired by the surety. The full clause
proposed rule that will make the clause
the I–9 must be completed at the time
requirements will flow down to the
inapplicable to contracts that will have
of hire, as opposed within the three
construction subcontractors.
a period of performance of less than 120 days after hire that is allowed for longer-
days may eliminate almost all hotel
term employment. In either situation,
5. Financial Institutions
contracts from being subject to the rule.
the E-Verify query must be initiated
1. Comment: Several commenters
Second, the decision to allow
when the I–9 process is completed. In
recommended that banks and other
contractors the option of using E-Verify
addition, there is an existing statutory
financial institutions whose contracts
for all existing employees, rather than
provision regarding employment
are limited to serving as issuing and
just those assigned to the contract, will
pursuant to a collective bargaining
paying agents for U.S. savings bonds
likely resolve any remaining issue.
agreement in section 274A(a)(6)(A) of
and savings notes or being insured by
7. Other
the INA, which provides that in certain
the FDIC should be excluded from the
cases a subsequent employer is deemed
e-verification requirement. One
a. Security Clearances
to have complied with the Form I–9
commenter requested similar treatment
for financial institutions that are parties
Comment: Several commenters
requirements by virtue of verification by
to financial agency agreements (FAAs)
recommended that the rule permit
another employer within the agreement.
with the Federal Government because
employees who hold security clearances If a previous employer within such an
FAAs are not subject to the FAR. This
or HSPD–12 identification to be an
arrangement has completed the Form I–
commenter stated that FAAs explicitly
equivalency for use of E-Verify.
9 and E-Verify query, a subsequent
state: ‘‘This FAA is not a Federal
Response: HSPD–12 mandates that a
employer does not have to reverify, as
procurement contract and is therefore
person must be suitable (minimum of a
long as the employment is within the
not subject to the provisions of the
national agency check with inquiries
scope of the statutory provision.
Federal Property and Administrative
(NACI)) in order to be issued an HSPD–
c. Applicability To Change Orders and
Services Act (41 U.S.C. Sections 251–
12 card. Specifically, HSPD–12 imposes
Material Modifications
260), the Federal Acquisition
certain credentialing standards prior to
Regulations (48 CFR Chapter 1), or any
issuing personal identity verification
Comment: Various commenters
other Federal procurement law.’’
cards, including verification of name,
requested that the rule should
Response: Agreements or activities
date of birth, and social security number specifically clarify whether and how the
performed by financial institutions that
(among other data points) against
new requirements would apply to
are not subject to the FAR are not
Federal and private data sources. The
change orders or material modifications
required to comply with the E-Verify
Councils agree that the degree of
entered into after the effective date of
provisions and clauses of the FAR.
scrutiny applied to individuals granted
2. Comment: One commenter
the regulations on base contracts that
HSPD–12 credentials provides sufficient
requested clarification that the rule
were entered into before the regulations
confidence that any such person is
applies to ‘‘contracts in which a Federal
take effect. Another commenter
likely truthful about his or her
agency is purchasing goods or services,
recommended that the rule should be
authorization to work in the United
and does not apply to companies who
revised to specifically disallow
States that additional investigation
purchase goods or services from the
inclusion of this E-Verify clause in such
through E-Verify is not necessary.
Federal Government.’’
amendments, so that existing
Response: Contracts for purchase of
With regard to security clearances, the contractors are allowed to complete
goods by companies from the Federal
degree of scrutiny applied to
their current contracts under the same
Government are not subject to the FAR
individuals granted security clearances
terms that were initially agreed upon.
and therefore are not required to comply also provides sufficient confidence that
Response: Inclusion of the E-Verify
with the E-Verify provisions and clauses any such cleared person is likely
clause in change orders or material
in the FAR.
truthful about his or her authorization to
work in the United States that
modifications will be implemented on a
6. Hospitality Industry
additional investigation through E-
bilateral basis.
Comment: One commenter
Verify is not necessary if the security
commented on the difficulty of applying clearance is active.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00035
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67684
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
D. Implementation Schedule
implement the Executive Order 12989,
working until a final nonconfirmation is
as amended.
issued. After the final nonconfirmation,
1. Effective Date
if the employer has grounds to believe
a. More than 30 Days After Publication
c. Finalization of the ‘‘No-Match’’ Rule
the final nonconfirmation is in error, the
of the Rule
Comment: One commenter asked that
employer may still allow the employee
the effective date be delayed until the
Comment: Several commenters asked
to work, but the employer must inform
‘‘no-match’’ rule is finalized. It pointed
that the effective date be some time
DHS of its decision to retain the worker,
out that the 2007 proposed rule
more than the usual 30 days after
and if the worker is later found to be
regarding safe-harbor steps associated
publication of the final rule.
unauthorized, the employer will be
•
with SSA’s no-match program would
Some commenters asked for an
subject to a rebuttable presumption that
provide up to 90 days for employers to
extension, but did not ask for a specific
the employer knowingly employed an
resolve discrepancies within their
time period.
illegal alien. See IIRIRA Section
•
records.
Many commenters asked for 120
403(a)(4)(C). Employers or employees
Response: The Councils disagree. As
days after publication.
may contact the E-Verify program if
•
an initial matter, DHS’s No-Match Rule
Some universities and a personnel
additional time is needed to provide
has been finalized with the publication
council asked for a minimum of 180
of the Supplemental Final Rule on
such documentation or if they believe a
days. One commenter justified this
October 28, 2008. More significantly,
final nonconfirmation was received in
because it needed time to hire and train
the comment confuses two separate and
error. The E-Verify program may delay
new staff to use E-Verify, time to
independent programs. The DHS No-
a final nonconfirmation finding on a
develop new processes to support
Match Rule provides guidance to
case by case basis in those cases where
compliance, and time to evaluate
employers that receive a no-match letter employees have experienced delays in
equipment and computer software
from SSA on how to conduct
receiving needed documentation that
upgrades.
appropriate due diligence and settle
will help prove their employment
Response: The rule will be effective
questions raised by the no-match letter
eligibility, and the program will work
on January 15, 2009. The timelines for
regarding the work authorization of
with the employer and/or employee to
initial verifications have been increased. employees identified by the letter.
research the case and identify the reason
In the proposed rule, verification
Employers that follow the steps set forth for the final nonconfirmation.
queries on new and existing employees
in DHS’s No-Match Rule are guaranteed
assigned to the contract had to be
f. Inaccuracies in the DHS and SSA Data
a safe harbor from the use of the no-
initiated within 30 calendar days of
Bases Are Fixed
match letter as evidence of the
enrollment; whereas in the final rule it
employer’s violation of INA section
Comment: Several commenters asked
will be 90 calendar days.
274A.
Also note that the burden on some of
the rule be delayed until DHS and SSA
the commenters (agriculture and
d. Finalization of the Revised MOU and
fixed alleged inaccuracies in their data,
education in particular) will not be as
Training
which could stem from name changes,
severe as the commenters expected.
incorrect data entry, and delayed
Comment: One commenter noted that
Agriculture will mostly be unaffected,
citizenship status updates.
DHS needed to finalize the MOU prior
due to the COTS exception. Institutions
to the effective date of the FAR rule.
Response: Some of these inaccuracies
of higher education will be able to
Another commenter expanded upon this cannot be fixed until the employee takes
choose to only verify the existing
point to assert that DHS needs to
steps to correct the problem, and the
employees and new hires that are
finalize the E-Verify Web site, training
employee will discover the problem
assigned to the contract. The impact on
materials, and program manual prior to
when the employer initiates a
sureties has also been minimized.
the effective date of the FAR rule. A
verification query and receives a
b. Congressional Action
chamber of commerce wanted DHS to
tentative nonconfirmation. The actual
undertake a nationwide program to
numbers of inaccuracies can only be
Comment: Several commenters felt
educate and train contractors prior to
estimated, and the estimates vary
the final rule should not be published
the rule’s effective date.
significantly according to the estimator.
until Congress reauthorized the E-Verify
Response: The Councils concur that
As noted above, DHS has implemented
program, which at the time was set to
implementation of the final rule must
several improvements to the E-Verify
expire in November 2008. Another
coincide with finalization of the MOU
system to avoid tentative
commenter wanted Congress to study
and other necessary systems revisions.
nonconfirmation responses resulting
the rule, or enact comprehensive
The Councils expect that the MOU and
from out-of-date citizenship data. The
immigration reform. One commenter
other DHS systems and procedures will
Councils do not agree that the rule
suggested that a one year postponement
be ready in time for the effective date of
should be delayed.
would give an opportunity for Congress
the final rule.
to consider the consequences of a
g. Implementation of the Westat Report
mandatory program.
e. Establishment of a Post-Final
Recommendations
Response: Congress reauthorized E-
Nonconfirmation Process
Verify and appropriated $100 million
Comment: One commenter
Comment: One commenter, citing its
for the program through the end of fiscal
recommended that the Westat report
experience with E-Verify, asked that
year 2009 in the Consolidated Security,
recommendations be implemented
DHS adopt processes for a post-final
Disaster Assistance, and Consolidated
before the E-Verify system is expanded.
nonconfirmation process, initiated by
Appropriations Act, 2009, Public Law
either the employee or the employer, so
Response: DHS’s continues to
110–329 (Sep. 30, 2008). If in the future
that performance of contracts is not
improve and further develop the E-
Congress fails to extend E-Verify and the hampered by unnecessary termination
Verify system. Many of the Westat
program is terminated, the rule will
of work-authorized employees.
recommendations have already been
need to be reconsidered at that time.
Response: Under E-Verify rules, an
implemented. There is no need to delay
Otherwise, the Councils must
employee must be permitted to continue the rule.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00036
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67685
h. GAO Study Completed
• New employees of prime
date of the final rule in accordance with
Comment: Some commenters asked
contractors;
FAR 1.108(d).’’ Under the final rule,
•
that the rule be postponed until GAO
New employees of subcontractors;
Departments and agencies should, in
completed its study called for under the
following this, the Councils should
accordance with FAR 1.108(d)(3),
pending five-year re-authorization
evaluate the success of the program for
amend existing indefinite-delivery/
legislation. One commenter felt the
new employees before proceeding to:
indefinite-quantity (IDIQ) contracts to
• Existing employees of a prime
studies mandated by H.R. 6633 (if
include the clause for future orders if
contractor assigned to a new Federal
enacted) might offer insights on ways to
the remaining period of performance
contract; and then
strengthen the program. The first study
extends at least six months after the
• Existing employees of new
is an examination of the causes of
effective date of the final rule and the
subcontractors.
tentative nonconfirmations, and the
amount of work or number of orders
Response: The Councils must
second is an assessment of the impacts
expected under the remaining
implement the Executive Order
on small businesses.
performance period is substantial.
expeditiously. The time periods for
Response: The Councils have decided
1. Comment: One commenter
verification have been lengthened, to
not to postpone the rule. H.R. 6633,
suggested that not applying the rule to
ease the burden on employers.
which has been passed by the House of
existing IDIQ contracts would enable a
Representatives, allows two years for
c. From Largest to Smallest Contractors
more even rollout of the program.
the GAO study of the impact of E-Verify
or Contracts
Response: The Councils have been
Pilot Program on small businesses,
advised that DHS and SSA are prepared
Comment: Several commenters
including specific details on small
to process E-Verify queries of contractor
recommended phased implementation,
entities operating in States that have
employees subject to the rule, including
over periods of up to 7 years, based on
mandated the use of E-Verify. The bill
those performing under existing IDIQ
number of employees of the contractor,
has not been passed by the Senate, but
contracts.
or the number of employees required to
it does not request that any further
2. Comment: The same commenter
effectuate the contract.
implementation of E-Verify be held up
•
objected to applying the rule to existing
The first year of the program would
pending completion of the study. In
IDIQ contracts because companies made
be for the largest noncommercial
addition, Congress reauthorized E-
business decisions to bid on these
contracts, and gradual rollout over the
Verify and appropriated $100 million
contracts initially without
next four years in descending order of
for the program through the end of fiscal
contemplating the significant cost that
size, measured by the number of
year 2009 in the Consolidated Security,
will be incurred as a result of this new
employees who would be required to
Disaster Assistance, and Consolidated
requirement.
effectuate the contract.
Response: The contracts would be
Appropriations Act, 2009, Public Law
• Apply the first year to contractors
modified on a bilateral basis. The
110–329 (Sep. 30, 2008), without
and subcontractors with 2,000 or more
contractor will be able to decide
requiring this study, and it does not
employees. Do not count harvest-time
whether it wishes to accept the clause.
appear that there will be any additional
employees as if they were year-round
There can be no unilateral imposition of
legislative developments on E-Verify in
employees in measuring the number of
the clause on any pre-existing IDIQ
the 110th Congress.
employees for a phase-in.
contract without the contractor’s
Response: The Councils do not expect
2. Phased Transition
consent.
agricultural employers to be
a. General
significantly affected by this rule,
b. Cost Recovery for Modified Contracts
Comment: One commenter suggested
because of the COTS exemption.
Comment: Two commenters asked for
that because of the existing ‘‘error rates’’ Implementation of the suggested phase-
the rule to spell out the amount
and capacity concerns, the Government
in would be very difficult, and the
contractors would receive to implement
should take a more measured or phased
Councils have decided against this
compliance on existing IDIQ contracts.
approach in increasing E-Verify
proposal. The dollar threshold
Response: The FAR does not normally
participation, rather than implementing
exception for prime contracts has been
spell out the amount of consideration it
a rule that will encompass almost all
raised to $100,000 (which will
expects the Government to pay on a
Government contractors within a very
especially help small business) and the
contract negotiation. This is a contract-
short period. Another commenter
verification deadlines lengthened.
by-contract issue determined by
argued that USCIS indicated the current
d. By Agency
individual contracting officers.
issues could be adequately addressed in
four to five years, which suggests that
Comment: One commenter suggested
c. Meaning of ‘‘Substantial’’
neither DHS nor SSA anticipated that
a phase-in over a period of time or
Comment: One commenter asked the
the agencies would be required to
perhaps by agency.
Councils to define ‘‘substantial work’’ or
Response: The phase-in by agency is
immediately implement full coverage
‘‘substantial number of orders.’’
an interesting suggestion. However, the
for all contractors at one time and
Response: The interpretation of
Councils do not believe it is necessary
instead contemplated a more realistic
‘‘substantial’’ will be within the
to phase-in by time or agency. DHS and
implementation period of anywhere
discretion of the contracting officer. The
SSA are prepared to support
from four to five years.
normal use of the word applies.
Response: The Councils have decided
implementation of this rule as revised.
d. Meaning of IDIQ Contract.
that a delay in the implementation of
3. Applicability to Indefinite Delivery/
the rule is not necessary. DHS and SSA
Indefinite Quantity Contracts
Comment: One commenter stated that
have stated that they are ready to handle
the FAR proposed rule would require
a. Existing IDIQs
full implementation.
re-verifying all employees currently
Background: The proposed rule’s
employed under ‘‘indefinite delivery/
b. Four-Phase Transition
preamble stated that the proposed rule:
indefinite quantity’’ contracts, and that
Comment: One commenter
‘‘Applies to solicitations issued and
most university Federal grants are
recommended a four-step phase-in—
contracts awarded after the effective
multiyear agreements under which
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00037
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67686
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
thousands are employed. Another
2. Cost Estimates
Sullivan, Chief Counsel for Advocacy,
commenter discussed a multiyear
a. On Contractor
Small Business Administration,
contract it had with HHS to provide
testifying on the RFA by noting that
social services on a national level to
1. Comment: Commenters, including
‘‘the RFA * * * does not require
victims of human trafficking, where
the SBA Office of Advocacy, argue that
agencies to analyze indirect impacts.’’).
HHS paid for services, up to a certain
the Initial Regulatory Flexibility
2. Comment: A commenter stated that
amount, and for a fixed period, to
Analysis (IRFA) did not consider all of
OMB guidelines direct agencies to
victims of trafficking on a per capital
the relevant costs. They state that profit
account for all regulatory (i.e., non-
basis. This commenter asserted that—
margins vary by industry, and even very budgetary) costs and that, in general,
•
low compliance costs could be
Its contract was not IDIQ;
costs that are not within the discretion
significant for some businesses. For
•
of an agency to avoid or prevent are
A contract extension is not a new
example, in the architecture and
properly attributable to the statute, and
contract; and
engineering contracting environment,
•
an agency may assign them accordingly.
A Federal contract for the provision the maximum allowable profit margin is The commenter further stated that,
of mainly social services to victims of
six percent. Commenters also claim that
nevertheless, all regulatory (i.e., non-
trafficking is not an IDIQ contract.
the analysis did not consider costs such
budgetary) costs must be accounted for
Response: The commenters may be
as the social welfare cost or the cost of
and must be included in the IRFA.
somewhat confused about what a FAR
penalties and lawsuits.
Response: The commenter has
IDIQ contract is. A grant is not an IDIQ
Response: The IRFA fully complied
confused the requirements of the
contract; grants are not covered by the
with the requirements of the Regulatory
Regulatory Flexibility Act, 5 U.S.C. 601
FAR. A contract for social services to
Flexibility Act, 5 U.S.C. 603. The IRFA
et seq. (RFA), with the requirements of
victims of trafficking might be an IDIQ
compared estimated compliance costs
other administrative reviews. For
contract. The contract itself will say
for four distinct sizes of small business
example, the commenter is apparently
whether it is an IDIQ contract; if so it
(10, 50, 100, and 500 employees) to the
suggesting that the IRFA should comply
would contain an IDIQ clause, such as
respective revenue of these businesses,
with OMB Circular A–4 and Executive
52.216–22 ‘‘Indefinite Quantity.’’ IDIQ
using information obtained from the
Order 12866. These analyses are not
contracts are described in the FAR at
Small Business Administration.
required by the RFA, nor are they
Subpart 16.5, especially at 16.504.
The Councils do not agree that a
mandated for this rule under any other
compliance cost burden of 0.03 percent
provision of law. The internal,
E. Regulatory Flexibility Analysis and/or of revenue could typically be regarded
managerial nature of this and other
EO 12866/Regulatory Impact Analysis/
as a significant economic impact. The
similarly-worded Executive Orders has
Paperwork Reduction Act
Councils further disagree that it would
been recognized by the courts, and
1. Benefit Analysis Issues
be appropriate to add additional cost
actions taken by an agency to comply
factors such as the ‘‘upcoming three
with the Executive Order are not subject
Comment: Several commenters
percent mandatory IRS withholding’’
to judicial review. Cal-Almond, Inc. v.
believe this rule will increase the
when these costs are not direct
USDA, 14 F.3d 429, 445 (9th Cir. 1993)
Government’s cost of doing business
compliance costs of the rule.
(citing Michigan v. Thomas, 805 F.2d
because many contractors will pass back
With regard to the full social welfare
176, 187 (6th Cir. 1986)). Although the
to the Government their costs of using
cost of the rule, Regulatory Flexibility
requirements of the RFA analysis is
E-Verify. Also, commenters claim that
Analyses are only to include the direct
fairly compatible with many of the
this rule will mean fewer businesses
impacts of a regulation on a small entity analytical requirements under OMB
will want to bid on Government
that is required to comply with the
guidance, the comments invoking
contract work.
regulation. Mid-Tex Electric Coop. v.
Executive Order 12866 and OMB
Response: The Councils concur that
FERC, 773 F.2d 327, 340–343 (D.C. Cir.
Circular A–4 standards to identify
this rule may result in additional
1985) (holding indirect impact of a
alleged deficiencies in the IRFA are
compliance costs for contractors, and
regulation on small entities that do
misplaced.
these additional costs could be passed
business with or are otherwise
3. Comment: A commenter stated that,
back to the Government. However,
dependent on the regulated entities not
upon hiring a new worker or upon
Executive Order 12989, as amended,
considered in RFA analyses). See also
assigning an employee to Federal
requires that contractors use an
Cement Kiln Recycling Coalition v. EPA, contract work, and running the
electronic employment eligibility
255 F.3d 855, 869 (D.C. Cir. 2001) (In
employee against E-Verify, the employer
verification system designated by the
passing the Regulatory Flexibility Act,
who receives a tentative
Secretary of Homeland Security to
‘‘Congress did not intend to require that
nonconfirmation for an employee must
verify the employment eligibility. The
every agency consider every indirect
continue to pay and train the new
President has found that Executive
effect that any regulation might have on
employee, only to possibly find out later
Order 12989 ‘‘is designed to promote
small businesses in any stratum of the
that the worker cannot resolve the
economy and efficiency in Federal
national economy. * * * [T]o require an nonconfirmation and must be
Government procurement. Stability and
agency to assess the impact on all of the
terminated. According to the commenter
dependability are important elements of nation’s small businesses possibly
the IRFA should have taken these costs
economy and efficiency. A contractor
affected by a rule would be to convert
into account.
whose workforce is less stable will be
every rulemaking process into a massive
Response: The economic analysis
less likely to produce goods and
exercise in economic modeling, an
included a cost of $5,000 in termination
services economically and efficiently
approach we have already rejected.’’).
and replacement expenses for each
than a contractor whose workforce is
See, also, Regulatory Flexibility
authorized employee that is terminated
more stable.’’ Consequently, the
Improvements Act, Hearing before the
or resigns employment due to this rule.
President has made the finding that the
Subcommittee on Commercial and
This $5,000 estimate is meant to include
increased economy and efficiency to the Administrative Law, Committee on the
the full range of the direct costs of
Government as a result of this rule
Judiciary, on H.R. 682, 109th Cong., 2nd termination, such as administrative
outweighs the cost of the rule.
Sess. (2006), at 13 (Statement of Thomas expenses and training costs.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00038
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67687
4. Comment: The SBA Office of
significant economic impact on a
prohibition on illegal employment
Advocacy claimed that the economic
substantial number of small entities. For applies only until the employee has
analysis did not distinguish between
the final rule, the Councils have
filled out the Form I–9. While it may be
prime small business contractors and
prepared a Final Regulatory Flexibility
that many employers have taken a
small business subcontractors and that
Analysis. The proposed rule, at 73 FR
misguided ‘‘see no evil’’ approach under
there is a disproportionate compliance
33379, explained the alternatives that
which they hope to avoid learning
cost burden on small business
were considered in order to minimize
inconvenient truths about the legal
subcontractors.
the impact of the rule on small entities.
status of their existing workforce, that is
Response: It is not clear how the
The Councils have considered
not an approach that is countenanced by
direct cost of complying with the rule
additional alternatives in the FRFA
the INA.
would materially differ depending on
based on public comments.
While the cost of terminating or
whether the contractor was a prime
7. Comment: Many commenters
replacing unauthorized workers cannot
contractor or a subcontractor. The
argued that the assumption contained in properly be considered a cost of this
commenter did not give any specific
the economic analysis that the costs
rule, some turnover involving legal
examples of how a subcontractor’s
related to unauthorized workers, such as workers that are unable or unwilling to
direct compliance costs would differ
the turnover and replacement costs and
resolve their tentative non-
from a prime contractor’s direct
lost productivity costs due to the
confirmations can be counted as a cost
compliance costs.
employment of unauthorized workers
of the rule. Such turnover costs for legal
5. Comment: The SBA Office of
‘‘are attributable to the Immigration and
workers were estimated in the IRFA and
Advocacy stated that some contractors
Nationality Act, not to the Federal
Final Regulatory Flexibility Analysis
in the construction or manufacturing
Acquisition Regulation’’ would be true
(FRFA).
industries, for example, can have
only if the Immigration and Nationality
8. Comment: A commenter stated that
hundreds of employees and still be
Act imposed on employers a continuing
the economic analysis assumes that the
considered small. The commenter
duty, post-hire, to investigate the
employee would bear the cost of driving
claimed that it is doubtful that DHS’
immigration status of existing
to SSA, ‘‘but it will be the employer
$419 figure is an accurate statement of
employees. The commenters are of the
who likely will bear the salary cost of
the costs of the rule to these small
opinion that the Act imposes no such
that time.’’ In addition, the commenter
businesses.
duty, and that Congress deliberately
believed that contractors and
Response: The economic analysis did
decided against imposing such a duty
subcontractors will suffer far larger lost
not state the cost to a contractor with
when it enacted IRCA in 1986. They
opportunity and productivity costs than
‘‘hundreds of employees’’ would be
argue that an employer who is currently
those included in the economic
$419. The economic analysis presented
employing unauthorized employee Jane
analysis.
information showing how the rule
Roe, after having hired her in 2002 in
Response: The Councils disagree with
would impact four sizes of small entities full accordance with I–9 procedures,
the commenter. The economic analysis
(10, 50, 100, and 500 employees) by
and who has no knowledge or
actually assumes the employer would
comparing their estimated compliance
suspicions as to Roe’s immigration
incur a lost productivity cost 100% of
costs to their respective revenues. The
status, is not breaking any law and is
the time an authorized employee
estimate of $419 was for a contractor
not illicitly avoiding any cost of doing
needed to visit SSA to resolve the
with ten employees. The economic
business by keeping Roe in its employ
tentative non-confirmation and used
analysis estimated the compliance cost
without periodically investigating her
‘‘fully-loaded’’ wages to estimate lost
to a company with 500 employees to be
status. Therefore, the commenters
productivity. A fully-loaded wage
$8,964, so the Councils agree with the
conclude that any new regulation that
includes such benefits as retirement and
commenter that a contractor with
would force the employer to investigate
savings, paid leave (vacations, holidays,
hundreds of employees would be
Roe and acquire the knowledge that
sick leave, and other leave), insurance
expected to incur more than $419 in
would require the employer to terminate benefits (life, health, and disability),
compliance costs.
her and replace her would impose a cost legally required benefits such as Social
6. Comment: The SBA Office of
on the employer.
Security and Medicare, and
Advocacy stated that if, after reviewing
Response: The Immigration and
supplemental pay (overtime and
the comments received regarding its
Nationality Act expressly prohibits
premium, shift differentials, and
RFA certification, the FAR Council has
employers from knowingly continuing
nonproduction bonuses). The Councils
reason to believe that it can no longer
to employ an alien who is not
used data from the Bureau of Labor
certify that the proposed rule will not
authorized to work in the United States.
Statistics in order to estimate the fully-
have a significant economic impact on
INA section 274A(a)(2), 8 U.S.C.
loaded wage. Nevertheless, in practice
a substantial number of small entities,
1324a(a)(2). How an employer obtains
we believe some employers may not
then the FAR Council should examine
knowledge of an employee’s illegal
incur lost productivity or opportunity
feasible alternatives that would lessen
status is immaterial—employers that
cost if the employee takes personal time
the burden on small entities. In that
have actual or constructive knowledge
to resolve their non-confirmations. Also,
event, the commenter stated that the
of their employees’ illegal work status
to the extent employers have the
FAR Council should also publish an
are statutorily obligated to cease their
capability to plan around employee
IRFA detailing those alternatives,
employment, and any costs that result
absences and other employees are
describing the scope and impacts of the
are attributable to the statute, not to this
available, the productivity losses
proposed rule on small entities, and
rulemaking.
estimated in the economic analysis
provide another opportunity for small
The commenters suggest that they
could be higher than what employers
businesses to comment prior to
would not have discovered the illegality may actually incur. Given the fact that
publication of the final rule.
but for their compliance with this rule,
the economic analysis estimated a lost
Response: The Councils did prepare
and that the consequences of their
productivity cost 100 percent of the
an Initial Regulatory Flexibility
discovery should be accounted as a cost
time an authorized employee needed to
Analysis. The Councils did not certify
of this rule. This argument appears to
visit SSA at the fully loaded wage rate
that the rule would not have a
rest on the belief that the INA’s
for a full eight hour day, the Councils
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00039
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67688
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
do not believe that the lost-productivity
example, many contractors may send
confirmation (for whatever reason),
cost estimate for going to SSA is
out an e-mail to their employees or
multiply the 3,831,992 employees
unreasonable.
otherwise communicate to alert them
vetted through E-Verify times 0.106
9. Comment: Commenters stated that
that human resources may be contacting percent to get 4,060 authorized
the economic analysis did not allocate
them in the future to validate the
employees, not the 370,000 stated by the
costs for the time required for employers information on their I–9. However, there one commenter, nor the 70,000 ‘‘fired’’
to identify covered employees and
will be occasions when a face-to-face
as stated by the other commenter.
manage compliance with E-Verify. For
meeting will have to be arranged
11. Comment: A commenter stated the
new employees, commenters noted that
between the human resources specialist
RIA subtracted 10 percent of contract
these costs are admittedly nominal, as
and an employee (to review E-Verify
dollar volume but did not provide any
new employees are self-identified, and
acceptable work authorization
basis for that assumption.
the E-Verify process goes hand-in-hand
documents for example). Assuming an
Response: Page 21 of the RIA stated
with the I–9 process already required.
average of 20 minutes for a human
that 10 percent was the approximation
But the commenters stated that this is
resources specialist to review an
for contracts with no work performed in
not the case for current employees
existing I–9 and either call an employee
the U.S. The Federal Procurement Data
because—
to validate this I–9 or meet with the
System—Next Generation was the
• To comply with current employee
employee to review documents and an
source of that information.
requirements, the employer must first
employee’s average opportunity cost of
12. Comment: A commenter stated the
take steps, through performance file
10 minutes to discuss the I–9
economic analysis assumes that labor
review or manager interviews, to
information, the RIA will be updated. In turnover at Government contractors
determine which employees are subject
addition, the RIA will include an
mimics the annual labor turnover rates
to the current employee obligation;
assumption that 10 percent of the time
in private industry. Multiplying the
• Once the covered employees are
a second 20 minute contact (phone call
calculated number of employees (1.5
identified, the employer must then
or meeting) between the employee and
million) by 1.4 yields 2.2 million
ascertain if an E-Verify query is
human resources specialist could be
contractor employees, a number that is
required, by checking E-Verify or I–9
necessary to resolve any additional I–9
compounded at a 5 percent annual rate
records to see if a prior query was
issues related to E-Verify.
for future years. The commenter stated
obtained;
10. Comment: A commenter stated the that this appears to be a reasonable first
• If not, the employer must then
economic analysis estimates 3.5 million
approximation because contractors are
proceed to obtain the information
Government contractor employees will
not burdened by civil service rules that
necessary to conduct an E-Verify query
be required to be vetted through E-
effectively forbid employee termination.
for all such employees.
Verify in 2009. Using the Government’s
The problem is that this assumption is
Response: The rulemaking requires
own estimate, the commenter stated that logically inconsistent with the previous
existing employees assigned to the
about 370,000 employees will be
assumption that contractor labor and
contact to be vetted through E-Verify.
terminated even though they are legally
Government labor earn the same wages
The economic analysis accounted for
entitled to work in the United States.
and salaries. The commenter concludes
the marginal cost of the time it would
Another commenter stated that in the
that, if this were true, turnover in
take to execute the queries for the
economic analysis of the proposed rule,
Government employment would be no
existing employees; however, the
the assumption is made that 3.8 million
different than private sector turnover.
Councils agree that additional time
employees of Federal contractors will be
Response: The economic analysis
should be added to account for the time
required to be run through E-Verify as
stated ‘‘in order to adjust for turnover
needed to identify the covered existing
a result of this rule for the first year the
we assumed an annual turnover rate of
employees.
rule is in effect. Based on prior
40.7 percent as the Bureau of Labor
Contractors will incur an opportunity
statements by DHS, the commenter
Statistics (BLS) estimated the annual
cost of time to determine which of their
notes that two percent of these workers
turnover rate for all industries and
existing employees will actually need to will ultimately be fired because of their
regions in 2006 at 40.7 percent.’’ We
be vetted. After those employees have
inability to resolve a tentative non-
disagree that it is ‘‘logically
been identified, the contractor will
confirmation with the SSA or DHS.
inconsistent’’ to assume for the
review the employee’s previously
Thus the commenter calculates that, as
purposes of the economic analysis that
completed I–9 form to see if the I–9
a conservative estimate, approximately
Federal Government contractors have a
complies with the terms of E-Verify
70,000 lawfully authorized workers will turnover rate that is equivalent to the
enrollment. If the I–9 meets the criteria
be fired as a result of this rule.
turnover in ‘‘all industries and regions’’
for E-Verify enrollment, the human
Response: The economic analysis
in the U.S. It is not entirely clear if the
resources specialist is expected to
estimated that two percent of the cases
commenter believes the turnover rate
contact (by telephone for example) the
where the tentative non-confirmation
used in the economic analysis is too
employee to ensure that the information was not resolved could potentially
high or too low as the commenter did
on the existing I–9 is still accurate (such result in an authorized worker either
not suggest a specific turnover rate that
as the stated basis for work
choosing to resign instead of working
should be used in place of the 40.7%
authorization).
diligently to resolve the tentative non-
rate used in the economic analysis.
Some commenters appear to have
confirmation or the employee being
According to the BLS publication Job
assumed that each I–9 required a ‘‘face-
terminated. The economic analysis
Openings and Labor Turnover: January
to-face’’ meeting between the employee
indicated that 5.3 percent of the time
2007 (which is the same source used for
and a company representative. A ‘‘face-
there was a tentative non-confirmation
the 40.7% turnover estimate), the
to-face’’ meeting may not be necessary
that was not resolved. Multiplying 2
turnover rate for the federal government
if the I–9 does not need to be updated.
percent times 5.3 percent equals 0.106
was 25%. It is very possible that the
Contractors will not normally need to
percent. In order to estimate the number turnover rate for the federal government
spend several minutes with each
of authorized employees that choose to
contract workforce more closely
employee discussing the need to
get employment elsewhere or otherwise
resembles the 25% turnover in the
confirm their Form I–9 information. For
do not resolve the tentative non-
federal workforce than the 40.7% ‘‘all
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00040
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67689
industries and regions’’ turnover rate
Secondly, the sensitivity analysis varied large employers and with few
used in the economic analysis and that
the number of covered contractors and
exceptions the portion of their revenue
we have overestimated the number of
subcontractors (holding all else
derived from Federal contracts is
employees vetted through E-Verify.
constant) that have to be enrolled into
significantly less than 25 percent. The
However, there are more factors
E-Verify and determined how the
commenter believes many more
involved with turnover than simply pay. overall cost of the rule would be
employees will be vetted through E-
For example, the perceived increased
impacted. Finally, the sensitivity
Verify than has been estimated by the
job security of federal employment
analysis varied both the number of
Government. Thus the commenter
compared with the private sector likely
employees and the number of
concluded that the costs have been
influences the federal turnover rate.
contractors simultaneously in order to
understated.
Also, the pension a federal employee
get an overall sense of how uncertainty
Response: The Councils agree that
receives is based on age and years of
in these two key variables impacts the
there are numerous businesses which
service and likely serves to encourage
overall cost.
contract with the Federal Government
federal workers who have accrued
The model developed by the Councils but derive a relatively small portion of
significant amount of federal service not to estimate the number of employees
their revenue from the Federal
to leave federal employment. Many
vetted through E-Verify included
Government. However, there are also
federal employees also choose to work
variables that were informed by
many contractors that have enough
for the federal government in order to
professional judgment. Such variables
Federal contracting business that they
serve the public good. Consequently, we include the contract percentage for labor have organized themselves into business
did not feel it was appropriate to
(26 percent), overhead (26 percent),
units that concentrate on Federal
assume that federal contractor turnover
material expenses (26 percent), general
contracting sales. The estimate takes
rate was equivalent to the federal
and administrative (12 percent),
into account both businesses that do
government turnover rate since there are subcontractors (20 percent), and the
both relatively little Federal contracting
nonwage considerations involved with
average wage of a Federal contract
and those that do extensive Federal
job turnover. If federal contract
worker ($66,705). (Some of these figures contracting.
employees do have a turnover rate
are percentages of others.) Changes in
Many commenters appear to be
closer to the federal government of 25%
any of these variables would impact the
interpreting the term ‘‘contractor’’ in an
rate than the 40.7% estimated in the
estimate of the number of employees
overbroad fashion. Only the legal entity
analysis, the amount of turnover and
vetted through E-Verify. As the estimate
that signs the contract is bound by the
number of employees vetted through E-
of the number of employees vetted
E-Verify obligation, not necessarily all
Verify have been overestimated in the
through E-Verify is directly influenced
affiliates or subsidiaries of that entity.
economic analysis and the costs of the
by these variables, we believe it is
Each contractor has the ability to
rule are therefore an overestimate.
useful to show how the overall costs of
organize or incorporate itself as it
13. Comment: A commenter stated the the rule could change if the number of
chooses, and questions of whether
RIA includes what is described as an
employees vetted changed. The
certain entities are a part of the
uncertainty analysis, but in fact it
Councils continue to believe its estimate contracting legal entity can only be
consists of merely a numerical
of the number of employees vetted
answered in specific factual contexts.
sensitivity analysis with respect to two
through E-Verify is reasonable; but the
Regarding the commenter’s belief that
assumptions: (1) The number of
sensitivity analysis does show how the
the number of employees vetted through
contractors and subcontractors affected
costs would change if the number of
E-Verify is understated, there were
by mandatory E-Verify; and (2) the
employees estimated were varied by 50
several assumptions made when
number of contractor and subcontractor
percent using a triangular distribution.
conducting the economic analysis that
employees that would be vetted through
The estimate of the number of
may mean the actual number of
mandatory E-Verify. The commenter
primary contractors within the scope of
employees vetted has been
stated that ‘‘[t]he product of this
the rule is based on a query of the
overestimated. The proposed rule does
‘uncertainty analysis’ is a series of
Federal Procurement Data System-Next
not apply to any employees hired prior
impressive looking, but substantively
Generation and is not based on a
to November 6, 1986, as these
and presentationally misleading color
professional estimate. However, the
employees are not subject to
graphs.’’ The commenter also claimed
number of covered subcontractors that
employment verification under INA
that this analysis violates Office of
are not otherwise a prime contractor is
section 274A, 8 U.S.C. 1324a. The
Management and Budget’s Guidelines
not available and this variable is a
economic analysis did not remove any
for Ensuring and Maximizing the
professional estimate. The sensitivity
of these workers from the estimate of the
Quality, Objectivity, Utility, and
analysis shows how the costs would
number of employees vetted.
Integrity of Information Disseminated by change if the number of covered
In addition, several States have laws
Federal Agencies (2002); Notice and
contractors estimated were varied by 25
that already require varying degrees of
Republication.
percent using a triangular distribution.
E-Verify use. There are also Federal
Response: The Regulatory Flexibility
Both the 25 percent and 50 percent
contractors that have already chosen to
Act does not require any sensitivity
ranges used in the sensitivity analysis
enroll in E-Verify that do not operate in
analysis or uncertainly analysis be
were selected based on professional
a State with an E-Verify requirement.
performed in an IRFA. However, the
judgment.
Since many Federal contractors are
RIA provided a sensitivity analysis
14. Comment: A commenter disagreed already enrolled in E-Verify or operate
simply to show how the costs of the rule with the Fiscal Year 2007 estimate that
in a State with an E-Verify requirement,
could change if the primary estimates of 3,475,730 employees will be vetted
these contractors have already incurred
two key cost drivers were varied. First,
through E-Verify. The commenter
many of the enrollment costs of this
the sensitivity analysis varied the
believes that the Government is
rulemaking and their newly hired
number of employees that are vetted
assuming that 75 percent of a
employees would be vetted through E-
through E-Verify (holding all else
contractor’s employees will be assigned
Verify even absent this rulemaking. The
constant) and determined how the
to a contract while only 25 percent will
economic analysis did not reduce the
overall cost of the rule would change.
not. The commenter knows of many
cost estimate to account for the costs of
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00041
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67690
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
employers who have already enrolled in Councils have utilized the best data
DHS cites the average annual revenue of
E-Verify.
available to produce the IRFA and the
a ten-person firm as approximately $1.4
Furthermore this final rule has
economic analysis. We continue to
million.
narrowed the scope of those required to
believe the estimates we provided are
Response: The estimate of 168,324
be vetted through E-Verify. For example, reasonable.
contractors impacted is the FY09 annual
the final rule clarifies that the E-Verify
16. Comment: A commenter stated
estimate. However, the 162,125 small
requirement does not apply to prime
that over 54 million people are currently business subcontracts is not an annual
contracts with performance periods of
employed by companies that work on
estimate. As noted in the proposed rule
less than 120 days and raises the
Government contracts (commenter cited at 73 FR 33378, ‘‘while there are no
threshold for prime contractors to the
Wall Street Journal Examines How
reliable numbers for subcontracts
simplified acquisition threshold
Federal Government Use of Contract
awarded to small businesses, the
($100,000) instead of the micro-
Workers Contributes to Number of
Dynamic Small Business database of the
purchase threshold ($3,000). However,
Uninsured U.S. Residents, Wall Street
Central Contractor Registration—a
the estimate of the number of employees Journal, 26 March 2008). The
database of basic business information
vetted through E-Verify has not been
commenter assumed an 8 percent error
for contractors that seek to do business
reduced. We believe for these reasons
rate for E-Verify, and claimed that as
with the Federal Government—gives a
the cost estimates are not understated.
many as 432,000 legal employees could
number of 324,250 small business
15. Comment: Other commenters,
have their employment disrupted.
profiles that are registered. Assuming
including the SBA Office of Advocacy,
Response: The article cited by the
that 50 percent of these small businesses
that believed that the number of
commenter stated there were ‘‘5.4
contract with the Federal Government at
contractors that will be vetted through
million Federal service-contract
either the prime or subcontract level,
E-Verify has been underestimated
workers’’ not the 54 million contract
then that number is 162,125 small
criticize the fixed factors (e.g., 26
workers cited by the commenter. We
businesses.’’ Registration with the
percent for labor) used in the economic
note that the 5.4 million estimate may
Central Contractor Registration (CCR)
analysis as well as the estimate that the
include contracts that are not covered
does not mean the small business is
number of subcontractors is assumed to
by the rule. For example, the scope of
currently or ever will be a Federal
equal 20 percent of the number of prime the rule excludes contracts that do not
contractor; it simply means the
contractors. One commenter claims that
include any work that will be performed registrant seeks to do business with the
the estimates used by the Councils are
in the United States.
Federal Government. Consequently,
not based on ‘‘empirical data’’ and that
The Councils disagree that 432,000
dividing 50 percent of the small
the economic analysis was not explicit
legal employees will have their
business CCR registrants (162,125 small
regarding how these factors were
employment disrupted. The economic
businesses) by the FY 06 SBA estimate
determined.
analysis stated there was a 5.8 percent
of $61 billion in small business contract
Response: The dollar value of the
tentative non confirmation rate.
awards may yield $375,000, but the
contracts estimated to be within the
Multiplying 3,831,992 employees by 5.8 meaning of that statistic is not clear.
scope of the rule was found by querying
percent equals 222,256 employees (who
As explained in the economic
the Federal Procurement Data System
are both authorized and unauthorized)
analysis, the estimate of average annual
and does not rely on an estimate by the
that would receive a tentative non-
revenue of $1.4 million for a ten-person
Councils. Instead of simply providing a
confirmation under the projections in
firm is based on data from the Small
‘‘top-level’’ estimate, the Councils
the economic analysis. Current
Business Administration. We have no
developed a model to estimate the
experience with E-Verify shows that
reason to believe this data from SBA is
number of employees that would be
about 0.5 percent of employees
unreliable. We assume many small
expected to be vetted through E-Verify.
successfully take steps to resolve the
businesses have revenue from sources
The factors utilized (e.g., 26 percent for
tentative non-confirmation, which
other than Federal Government
labor) are all multiplied against the
equals 19,160 authorized employees
contracts. The economic analysis also
estimated dollar value of contracts.
who may be required to resolve a
made no claim that a ten-person firm
When describing the percentage
tentative nonconfirmation.
was the average size of a small business
estimates used to estimate factors
17. Comment: The SBA Office of
that received a Federal contract. Rather,
utilized, the economic analysis
Advocacy stated that the Regulatory
it presented information on how the
specifically stated ‘‘we understand these Planning and Review section of the rule
rule would impact four sizes of small
assumptions are rough and we welcome
states that the rule will impact 168,324
entities (10, 50, 100 and 500 employees)
public comment providing more precise businesses. The commenter further
by comparing their estimated
information.’’ However, the commenters stated that the regulatory flexibility
compliance costs to their estimated
have not provided better information.
analysis states that there will be 162,125 respective revenues.
We note that the analysis required by
small businesses affected by the rule.
18. Comment: Commenters noted that,
the Regulatory Flexibility Act need not
The commenter concludes that the
in order to comply with the E-Verify
produce statistical certainty. The law
public is left to assume that there are
MOU, employers agree to only accept
requires that the Councils ‘‘demonstrate
162,125 small business with prime
‘‘List B’’ documents listed on the Form
a ‘reasonable, good-faith effort’ to fulfill
contracts and subcontracts. The
I–9 that contain a photo. Commenters
[the RFA’s] requirements.’’ Ranchers
commenter cites data from the Small
stated that the cost of obtaining a photo
Cattlemen Action Legal Fund, 415 F.3d
Business Administration that in FY
ID for those employees should be
1078, 1101 (9th Cir., 2005). See also
2006 agencies awarded $60,703,667,336
included as a cost of this rule. In
Associated Fisheries of Maine v. Daley,
to small business subcontractors. The
addition, commenters stated that 11
127 F.3d 104, 114–15 (1st Cir. 1997).
commenter calculates that if this
percent of U.S. citizens do not currently
The IRFA and economic analysis
amount were distributed to 162,125
have a photo ID and cited the Brennan
produced by the Councils in this
small business subcontractors it would
Center for Justice’s report entitled
rulemaking meet that standard. The
mean that each business received on the ‘‘Citizens Without Proof, A Survey of
assumptions underlying the economic
average a contract valued at $375,000.
Americans’ Possession of Documentary
analysis are reasonable, and the
However, the commenter noted that
Proof of Citizenship and Photo
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00042
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67691
Documentation, Brennan Center for
identify those existing employees that
21. Comment: A commenter disagrees
Justice, New York School of Law,
need to be vetted through E-Verify.
with the estimate of the average wage of
November 2006.’’
Consequently, the estimated
a Federal contractor used in the
Response: The cost of obtaining a
implementation costs have increased for economic analysis. The commenter
photo ID should be included as a cost
the final rule relative to the costs
notes that the economic analysis
of the regulation, and it has been added
estimated for the proposed rule.
assumed the average yearly salary a
into the economic analysis. However,
Another category of implementation
Federal Government employee earns
the Councils do not agree that 11
costs was added to the economic
($66,705) is a reasonable proxy for the
percent of the employees covered by the analysis. This category, called
average annual salary of a Federal
requirements of the rule might not have
‘‘Miscellaneous Implementation Costs,’’
contractor and noted that, according to
a photo ID.
is estimated to be an additional 10
the Bureau of Labor Statistics, the
The entire study cited by the
percent of the total calculated
average wage rate in the U.S. is
commenter was only three pages and
implementation costs (such as employer approximately $40,000. The commenter
did not include many details such as
enrollment, reviewing and updating the
believed that the average salary a
survey methodology and how the results I–9’s of existing employees, the
Government contractor earns is less
were determined. In addition to the
purchase of a computer) to cover costs
than the average salary a Federal
Brennan survey cited by the commenter, companies may incur to execute the
employee earns and the BLS estimate of
a publicly available American
rulemaking requirements, such as
$40,000 is a better approximation of
University study entitled ‘‘Voter IDs Are planning.
Federal contractor pay than the $66,705
Not the Problem: A Survey of Three
20. Comment: A commenter stated
used in the economic analysis. The
States’’ was reviewed. (American
that the proposed rule requires
commenter concludes that the
University Center for Democracy and
contracting officers to modify covered
consequence of the annual salary of
Election Management, January 9, 2008.
existing indefinite quantity/indefinite
Federal contractors being overestimated
http://www.american.edu/ia/cdem/
delivery (IDIQ) contracts to add the
is an underestimate of the number of
pdfs/VoterIDFinalReport1-9-08.pdf).
proposed E-Verify contract clause.
contract employees and an
This survey of 2,000 registered voters in
Commenters believe the RIA excludes
underestimate of the costs of mandatory
Indiana, Maryland, and Mississippi
the cost of modifying these IDIQs and
E-Verify.
determined that, overall, only 1.2
that the Government will need to engage
Response: The Councils do not have
percent of the total respondents lacked
in negotiations with these IDIQ
data that shows the average wage of a
Government-issued photo identification. contractors. In addition, the commenter
contract employee on a Federal contract.
Comparing the results of the American
believes the Government will owe
Consequently, we had to rely on our
University study with the Brennan
‘‘consideration’’ to the contractors in
extensive knowledge of Federal
survey shows there appears to be
exchange for agreeing to include the E-
contracts and our knowledge of the
considerable disagreement among the
Verify contract clause. The commenter
personnel who perform work on those
estimates of the percentage of
believes, based on the professional
contracts to inform our estimate of a
Americans without a photo ID.
estimate of a former Federal
reasonable wage rate of a Federal
However, it is not clear how either the procurement official, that the number of contractor.
results of the Brennan study or the
existing IDIQ contracts that would need
The Councils continue to believe the
American University study is definitive
to be modified is approximately 10,000.
average U.S. wage rate of approximately
for the purposes of the final rule’s
Response: The Councils agree that the $40,000 annually is a poor proxy for the
economic analysis. The rulemaking is
economic analysis did not include the
average Federal contractor wage. As
regulating federal contractors. The
cost of modifying these IDIQ contracts,
explained in the economic analysis, the
universe of federal contractors is not
but disagree regarding the extent of the
average educational attainment level of
directly comparable to either the
cost burden of these modifications. For
the average Federal Government
population of ‘‘voting-age American
the purpose of the economic analysis,
employee is significantly higher than
citizens’’ (the Brennan survey sample)
the commenter’s estimate that 10,000
the educational attainment level of the
or ‘‘registered voters’’ (the AU study
existing contracts will need to be
general U.S. workforce. In addition,
sample). Both the ‘‘voting-age American
modified was used. However, extensive
according to the Bureau of Labor
citizen’’ and ‘‘registered voter’’
‘‘negotiations’’ between the Government Statistics, ‘‘Although the Federal
populations by definition include
and the contractors are not expected.
Government employs workers in every
people not in the workforce.
The final economic analysis uses a two-
major occupational group, workers are
Consequently, the final economic
hour opportunity cost of time for the
not employed in the same proportions
analysis will assume 0.5 percent of
contractor to process the modification
in which they are employed throughout
workers vetted through E-Verify will
and have discussions with the
the economy as a whole * * * The
need to obtain a photo ID and that
Government, if needed.
analytical and technical nature of many
employers will incur an eight-hour
The Federal Register does not
Government duties translates into a
opportunity cost so that the employees
normally spell out the amount or type
much higher proportion of professional,
can obtain a photo ID.
of consideration the Government
management, business, and financial
19. Comment: Commenters believed
expects to pay on a contract negotiation. occupations in the Federal Government,
that the costs of implementing the rule
This is a contract-by-contract issue
compared with most industries.
are underestimated.
determined by individual contracting
Conversely, the Government sells very
Response: The Councils agree in part,
officers. This is a pass-through cost to
little, so it employs relatively few sales
and have reviewed the economic
the Government. However, due to the
workers.’’ (see http://www.bls.gov/oco/
analysis with the E-Verify program and
statutory preference for multiple award
cg/cgs041.htm).
have increased certain enrollment and
IDIQs and the resultant competitive
As a result of the higher Government
training time cost estimates in the
pressures, the Councils expect that the
educational level, which is driven by
economic analysis for those contractors
amount of consideration required at
the higher proportion of professional,
that enroll in E-Verify. Additional costs
time of contract modification would be
management, business, and financial
have been added for employers to
negligible.
occupations in Government when
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00043
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67692
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
compared to the U.S. workforce, the
that earns more than the national
accepted practice when conducting
U.S. workforce’s average annual $40,000 average.
IRFAs. The IRFA requested comments
salary can not reasonably be used as a
23. Comment: A commenter stated
in the section of the analysis that
proxy for the work the Federal
that the economic analysis begins with
explained very methodically how the
Government is required to perform. The
a figure for the number of prime
number of employees impacted were
Councils believe the average wage rate
Government contractors in 2007 and
modeled and invited more precise
for employees performing the work the
assumes that this number will increase
information from the public to inform
Federal Government is required to
at a 5 percent compound annual rate
our model. None was received.
perform is certainly higher than the U.S. over the study period. No justification is
25. Comment: The SBA Office of
average wage rate and based on our
provided for this assumption.
Advocacy stated that the total number of
experience with contracts we continue
Response: The economic analysis
contracts is derived by making various
to believe that $66,705 is a reasonable
noted that it is difficult to project the
assumptions, such as assuming that
approximation of the average Federal
number of contractors over the ten-year
subcontractors have a 20 percent share,
contractor’s annual salary. This estimate period of analysis (FY 2009–FY 2018)
there are 20 percent new contracts per
is an approximation and the actual wage due to the number of variables that
year, and that the total number of
rate of a Federal contractor could be
could influence the amount of
contracts grows at five percent per year.
higher or lower than our estimate. The
Government spending and the amount
The commenter states if any of these
economic analysis includes a sensitivity of that spending that would be used to
assumptions were to change the total
analysis that shows how the cost of the
purchase contract support. The Councils number of contracts in the analysis
regulation changes based on increases or continue to believe that a 5 percent
would be affected. The commenter
decreases in the number of employees
growth rate is a reasonable assumption.
further states the proposal does not
being vetted through E-Verify.
24. Comment: The SBA Office of
indicate where the percentages came
Advocacy stated that the proposed rule
We further note there is some credible
from.
does not allow small businesses to fully
information that shows Federal
Response: Page 19 of the economic
assess the impact of the rule because the analysis stated ‘‘The 20 percent estimate
Government employees are significantly economic analysis lacks transparency.
of covered subcontractors is a ‘‘best
underpaid when compared to similar
The commenter argues that the
guess’’ provided by Government
private sector occupations. For example, economic analysis in the docket is
contracting professionals.’’ Page 20
according to the Federal Salary Council, problematic from a methodological
states ‘‘* * * the Federal Government
‘‘Federal employees make an average of
point of view because the proposal
does not have an estimate of the total
23 percent less than their private sector
includes only the number of contracts in number of assigned employees that
counterparts.’’ (see http://
FY06, total value of contracts in FY06,
perform work on Government contracts
www.govexec.com/story_page.cfm?
and the total value of contracts in FY07.
or an estimate of the number of new
articleid=38212&ref=rellink). While we
The commenter concludes that the
hires at a covered contractor or
did not increase the $66,705 average
remainder of the analysis amounts to a
subcontractor. In order to estimate the
Federal Government salary upward by
series of behavioral assumptions that are number of employees that will be vetted
23 percent to account for this ‘‘pay gap’’
neither substantiated nor justified.
through the E-Verify system, we must
when estimating the wage of Federal
Response: The Councils disagree that
make a series of assumptions that allow
Government contractors, commenters
the economic analysis is problematic or
us to estimate the amount of contract
should be aware of this information.
that it lacks transparency. The write-up,
labor being purchased by the
22. Comment: A commenter provided
accompanying tables, and sample
Government and then convert the
wage survey data that established the
calculations show exactly how the costs
amount of labor being purchased into
prevailing rate for many occupations
were calculated. In addition, the
Full Time Equivalent positions (FTE’s).’’
covered under the McNamara O’Hara
economic analysis included a section
Pages 21 through 23 explain the
Service Contract Act and the Davis
that showed how small entities of
calculations and clearly label which
Bacon Act for seven specific job titles.
various sizes (10, 50, 100, and 500
numbers are estimates.
The commenter provided hourly and
employees) would be impacted by the
The Councils agree that changes in
annual wage rates for the jobs:
specific cost categories of the rule (start- these assumptions would change the
Accounting Clerk I, Data Entry Operator
up and training costs, verification costs,
number of contractors and the number
I, Cook I, Food Service Worker, Janitor,
authorized employee replacement cost)
of personnel vetted through E-Verify.
Laborer, Grounds Maintenance,
and compared those costs to the
The economic analysis includes an
Computer Operator I. The commenter
estimated revenue of companies in
appendix that shows how the cost of the
noted that the wage rates for the seven
those respective sizes in order to get an
rule would change if the number of
specific occupations (selected by the
idea of the economic impact of the rule
contractors and the number of
commenter) were much less than the
on those sizes of small entities.
employees vetted through E-Verify
$66,705 average wage rate used in the
The economic analysis did use FY
change.
economic analysis.
2006 data to estimate the number of
26. Comment: A commenter stated
Response: While the Councils do not
contractors, but as explained in the
that the rule should consider the cost of
dispute that there are specific
economic analysis, the number of real
the rule on businesses that make a
occupations in which Federal
dollars spent on Federal contracts
business decision not to do business
contractors make less than the average
remained nearly the same in FY 2006
with the Federal Government due to the
wage rate of $66,705 used in the
and FY 2007. The commenter did not
rule.
analysis, the higher proportion of
provide any information to show why
Response: The Councils agree, but we
professional, management, business,
our assessment was incorrect or
note that under the Regulatory
and financial occupations in the Federal unreasonable, but just asserted that it
Flexibility Act, the economic analysis
Government, compared to the U.S.
was ‘‘problematic.’’ While there is not
need only include the direct impact of
workforce, means the work the Federal
‘‘empirical data’’ to support every
a regulation on a small entity that is
Government performs requires a
assumption in the economic analysis,
required to comply with the regulation.
relatively higher educated workforce
the use of professional judgment is
Nevertheless, the analysis provided
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00044
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67693
under the requirements of EO 12866 and reflect an average burden for all
will need to train their staff and change
the Regulatory Flexibility Act implicitly contractors that enroll in E-Verify.
their processes accordingly and then
takes this potential impact into account. Experiences of one company or a
will need to audit compliance with the
The analysis is conducted under the
specific group of companies may not
new standards.
assumption that every federal contractor accurately reflect the burden at the
The commenters consider that this
and subcontractor would choose to
typical contractor. However, the E-
on-going compliance obligation is
incur the cost of the rulemaking and
Verify program office has reviewed the
compounded by the fact that a large
continue to do business with the
commenter’s comments and has agreed
employer cannot simply distribute the
Federal Government. Businesses may
that some of the estimates used in the
information provided by the
choose not to incur the cost of
economic analysis should be increased.
Government about legal changes,
compliance with this rule, but would
The economic analysis assumed that
because each change must be translated
presumably only do so were the cost of
a human resources manager would take
into materials specific to the employer’s
compliance higher than avoiding doing
0.5 hours to read and sign the MOU;
processes and procedures.
business with the government. In such
that estimate has been increased to 1.5
Response: We disagree with the
cases, the analysis would actually have
hours. Also, the hours for attorney
characterization that E-Verify is a
overestimated the impact of the rule.
review are being increased from 1 hour
burdensome, constantly changing
27. Comment: A commenter believes
to 2 hours, and the estimate for a general program. The September 2007 Westat
the Federal Procurement Data System-
manager review will be raised from 0.5
report found that ‘‘The vast majority of
Next Generation (FPDS–NG), the source
hour to 1 hour. Note that in many
[E-Verify] employers (96 percent of
for the estimate of the number of FY
companies, especially the smaller
long-term users) disagreed or strongly
2006 prime contractors in the economic
entities; the human resources manager
disagreed that the tasks required by the
analysis, contains inaccurate data. The
is the same person as the general
system overburden their staff.’’ (pg. 65)
commenter believes the use of data from manager. We have assumed that, even
The report also stated that
the FPDS–NG in the economic analysis
though there is no requirement for more
approximately 97 percent of long-term
is ‘‘questionable’’ and that the number
than one person to be involved with
users found the indirect set-up and
of contractors in FPDS–NG is
registering the company and signing the
maintenance costs associated with the
underreported.
MOU, there may be multiple personnel
system were either no burden or only a
Response: The Councils disagree.
involved in some instances.
slight burden (pg. 106). DHS does not
FPDS is the comprehensive web-based
The initial training hours for the
require employers to sign a new MOU
tool for agencies to report contract
corporate administrator have been
when there is a change to the program.
actions. It collects, processes, and
increased from 1.5 hours to 2 hours, the
Currently, upon logging onto E-Verify,
disseminates official data on
program administrator initial training
users are greeted with a message board
Government contracts. It is therefore the hours have been raised from 2.5 hours
that contains all new enhancements to
best available source of data on
to 3 hours, and the general user initial
the system and any applicable policy
Government contract actions.
training hours are increased from 1.5
changes. The message board contains a
28. Comment: A commenter stated
hours to 2 hours.
full archive of all messages in the event
that multiple people would need to be
The 30-minute estimate for annual
that the employer has not logged on to
trained to run the E-Verify checks and
recurring training for the program
the E-Verify system in several months.
estimated that it would take ‘‘3 to 4
administrator and general user will be
Of all the recent enhancements to the
hours of time for one person to register,
increased to a full hour for each. This
program, only the addition of the Photo
understand the MOU and take the
‘‘recurring training’’ includes time to
Tool required E-Verify users to complete
tutorial.’’ The commenter questioned
review new additions to the user
additional training. This action was
estimates contained in the economic
manual.
atypical. This additional training was an
analysis such as: The ten-minute
In summary, while it could take three
unusual requirement for the program as
registration process, the training time
to four hours to register, understand the
changes to the program do not typically
needed for the different types of E-
MOU, and take the tutorial, these
require mandatory training. The
Verify Users (Corporate Administrator
activities only occur when the
analysis includes a full hour of ‘‘on-
and General User 1.5 hours and Program contractor initially enrolls. Staff later
going’’ training each year so that the
Administrator 2.5 hours; Program
registered by the contractor as general
user can keep current on any changes to
Administrators and General Users
users and program administrators will
E-Verify.
would also incur 0.5 hours of recurring
only need to take the tutorial to begin
Federal contractors who happen to be
training), and the estimate of the
utilizing the E-Verify system.
currently enrolled in E-Verify will be
amount of time needed to review the
29. Comment: Commenters believed
required to take a tutorial refresher that
MOU. The commenter further noted that that on-going compliance obligations
addresses the verification of existing
the economic analysis assumed that to
have been understated. The commenters employees. However, the economic
sign the MOU would take 30 minutes
stated that calculations did not include
analysis assumed that none of the
for a Human Resources Manager; if a
an analysis of coping with the
Federal contractors were currently
General Manager reviews the MOU
constantly changing program.
enrolled in E-Verify and consequently
(assumed to be 40 percent of the time)
Commenters argue that—
estimated the costs for the full training
the General Manager’s review would
• Every time the MOU changes, E-
module, not for the refresher module.
add another 30 minutes, and if an
Verify employers will have to analyze
To the extent that the contractor is an
attorney reviewed the MOU (assumed to whether they need to sign a new MOU;
existing E-Verify user, the economic
be 25 percent of the time), the attorney’s
• Every time the manual changes,
analysis likely overestimates the
review would add another one hour.
employers will need to spend time
training burden.
The commenter did not believe these
reviewing what has changed, whether it
30. Comment: A commenter noted the
estimates were accurate for a
impacts them, and how to accommodate challenges and costs of resolving
multinational corporation.
any required changes; and
tentative nonconfirmations are
Response: The burden estimates used
• Every time the photo tool changes
understated. Commenter states that, for
in the economic analysis are assumed to and expands, all E-Verify organizations
its members, consistency and
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00045
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67694
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
compliance are critical and must be
corrected. The members also report that
33. Comment: One commenter
built into the process from day one. This policies for handling this, e.g., does the
disagreed with the economic analysis
is especially important for
employee get paid time off to go to SSA, regarding the one-minute estimate to
implementing tentative
must be consistent and fair. One
resolve a final nonconfirmation.
nonconfirmation procedures. Based
member reports that its biggest issue
Response: The one-minute period
upon the experience of its members that actually happens after an employee gets
estimated for resolution of a final
are E-Verify users, the commenter
his or her record corrected by SSA. At
nonconfirmation refers solely to the
believes the RIA estimates are grossly
that point, the member states that the
time it takes for an employer to close the
understated. One large multinational
employer must spend weeks waiting in
case in the E-Verify system, not the
employer provided the following data
limbo. According to the employer, E-
external processes the employer may
on its experience with E-Verify when it
Verify instructed this employer to check take in response to a final
was hiring many student interns
the record weekly because it was still
nonconfirmation. The economic
between January 1, 2008 and May 22,
not clearing even after SSA fixed the
analysis includes a $5,000 termination
2008. Out of 598 queries submitted, it
error. The commenter notes that when
and replacement cost for an authorized
received tentative nonconfirmation
this occurs, the employer and employee
employee who leaves employment with
notices on 92 or 15.38 percent. Out of
are left in an awkward predicament
the employer (the employee is
the 83 DHS tentative nonconfirmations
because nothing happens—no approval
terminated or resigns). The cost of
(the remainder were SSA tentative
is issued, no new tentative
replacing unauthorized workers is
nonconfirmations), about 80 percent of
nonconfirmation is issued, and no final
attributed to the cost of current
those tentative nonconfirmations
nonconfirmation is issued.
immigration law and is not considered
required personal attention to resolve, at
Response: First, this rule does not
to be a cost of this rule.
a great cost to the employer and the
require that the employer compensate
34. Comment: Commenters stated that
impacted foreign nationals.
the employee for time away from work.
the eight-day timeframe provided to
Response: While the RIA estimated
Next, the September 2007 Westat report
employees for resolving a discrepancy is
that 5.1 percent of the employees would concluded that ‘‘[m]ost case study
likewise inadequate. They state that—
receive SSA tentative nonconfirmations; employees who had received tentative
• When an employer receives a
the employer in the example only
nonconfirmations reported no costs
tentative non-confirmation, the
received 9 SSA tentative
associated with resolving the finding
employer must notify the employee and
nonconfirmations (if 83 were DHS
* * *.’’ (pg. 101) Data capture methods
provide him or her with an opportunity
tentative nonconfirmations) out of 598
instituted for E-Verify with the new
to contest that finding;
total queries. This is 1.5 percent, or
electronic secondary process at SSA
• If the employee contests, he or she
significantly less than the 5.1 percent
show that the vast majority of SSA
then has eight business days to visit an
estimated in the RIA.
tentative nonconfirmations (94.9
SSA office or call USCIS to try to
However, the Councils agree with the
percent) are resolved within 24 hours of
resolve the discrepancy; and
commenter that the RIA estimate of ten
contacting the SSA Field Office.
• Eight business days does not
minutes to complete the tentative
32. Comment: A commenter stated
provide enough time for many
nonconfirmations should be increased.
that a number of the commenter’s
employees to visit an SSA office,
The Councils believe ten minutes is a
members have made arrangements to
particularly in cases where the
reasonable estimate solely for the time
electronically deliver tentative
employee is working on a remote jobsite
needed to review the tentative
nonconfirmations, and they inform the
potentially hundreds of miles away
nonconfirmation notice with the
commenter that it is not unusual for 24
from the closest SSA office and/or
employee and for the employee to
hours to pass before the tentative
where transportation is not readily
decide if he/she want to contest the
nonconfirmation even reaches the
available.
tentative nonconfirmation. If the
employee. The commenters state that
Therefore, the commenter suggested
employee decides to contest the
where companies conduct some of their
amending the requirement to allow
tentative non-confirmation, it should
E-Verify queries in-house and outsource employees thirty business days to try to
take an additional ten minutes for the
other queries to a third party, the
resolve the discrepancy with SSA or
employer to print out and provide the
amount of time needed to discuss a
DHS.
referral notice to the employee; this
tentative nonconfirmation will vary
Response: An employee who receives
additional time is being added to the
depending on who submitted the query.
a tentative nonconfirmation is given
estimate.
Response: A 24-hour or longer delay
eight Federal Government work days to
The employee must then contact the
in passing a tentative nonconfirmation
contact the appropriate agency. After
appropriate Government office within
notice to an employee does not impact
visiting SSA, or placing a phone call to
eight Federal working days. The
the eight-day timeframe for contacting
DHS, the applicable agency must also
employer is not required to spend any
DHS or SSA. The employee must be
provide a response to the employee
additional time on the resolution
given the tentative nonconfirmation
within two days.
process until the employee has resolved
notice in advance of an employer
The E-Verify statute (404(c) of IIRIRA)
the case with the appropriate Federal
referring a case to DHS or SSA. The
sets forth the design parameters for the
agency. This time commitment is part of employer must review the tentative
secondary confirmation system. It states
the verification process followed by all
nonconfirmation notice with the
that the Secretary of Homeland Security
E-Verify users and is not unique to
employee and ask the employee
shall specify a secondary verification
Federal contractors.
whether he/she chooses to contest the
system capable of providing a final
31. Comment: A commenter noted
tentative nonconfirmation. If the
confirmation or nonconfirmation within
that its members report that corrections
employee chooses to contest the
10 working days after the date of the
at the SSA usually take in excess of 90
tentative nonconfirmation, the employer tentative nonconfirmation. USCIS
days. The members report that
will then go back into the E-Verify
experience in administering the
employees must wait four or more hours system and initiate the referral in the
program shows that 95 percent of
per trip, with repeated trips to SSA
system, which begins the eight-day
secondary verifications are completed
frequently required to get their records
period.
within 2 days. In order for the system
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00046
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67695
to comply with the statutory
use the system and run verification
cost of a scanner—wherever employees
specifications, USCIS allows eight
queries. Those responsible for running
are hired—is not considered by the
working days for the employee to visit
queries (and passing the mastery test)
analysis.
SSA or contact DHS.
are not always the same as those who
Response: The economic analysis will
In cases where additional time may be have signed the MOU on behalf of the
add additional printing costs to the
required for resolving the discrepancy
entire company.
analysis. The analysis will add the cost
with SSA or DHS, the employer will
37. Comment: Commenters stated that of an ‘‘all-in-one’’ printer/copier/
receive a message through E-Verify
not all contractors have computers at all scanner/fax machine for the contractors
called ‘‘Case in Continuance,’’ which
sites at which they engage in hiring.
that may need to purchase a computer.
may extend beyond the ten-day
Consequently, they conclude that they
The economic analysis had already
resolution period. During this time, the
will incur costs to computerize and
considered certain photocopying costs.
employer may not take action against
establish Internet accessibility for every
However, the printer/copier/scanner/fax
the employee while the employee is
facility at which they hire employees.
machine that is being included provides
resolving his or her case.
Given the mobile nature of traveling
an alternative (such as scanning a
35. Comment: A commenter from an
carnivals and circuses, as well as the
document) to photocopying documents.
institution of higher education expected sporadic availability of Internet access
39. Comment: The SBA Office of
that most rejections will involve non-
in some rural areas, the commenter does Advocacy stated that contractors will be
immigrant post-doctoral associates and
not believe that all employers can have
required to sign a MOU that is an
fellows who have already undergone
reliable Internet access or even regular
agreement between them, the SSA, and
careful scrutiny in obtaining a visa to
access to a computer while traveling to
USCIS. The commenter stated that the
enter the United States.
conduct business. Being mobile, the
proposed rule provides the contractor
Response: The Immigration Reform
carnival industry would face additional
with an opportunity to negotiate the
and Control Act of 1986 (IIRCA)
costs associated with transporting this
terms of the MOU and that the cost of
requires all employers to verify the
equipment from location to location.
compliance includes a line item for the
identity and work authorization of any
Response: It would be unusual for a
contractor’s attorney to read the MOU.
employee working in the U.S. by having Federal Government contractor not to
The commenter recommended that the
the employee complete a Form I–9.
have Internet access and a computer.
cost of compliance should recognize the
While nonimmigrant post-doctoral
Still, employers have the option of using cost for an attorney to negotiate an
associates and fellows have already
an outside company or vendor to run
acceptable MOU.
obtained a visa to enter the U.S., this
their queries. Through this method of
Response: The terms of the MOU are
does not alleviate the employer of its
using E-Verify, the third party engages
not negotiable.
responsibility under IRCA. In addition,
in an MOU with the DHS and SSA on
40. Comment: A commenter stated
the fact that an alien has been issued a
behalf of its client. Employers could
that the rule does not take into account
visa has nothing directly to do with
also seek out other sources of Internet
the costs businesses would incur as a
whether the alien is work-authorized in
access, such as a public library. While
result of ‘‘erroneous nonconfirmations’’
the United States, as millions of aliens
the commenter offered no specific
that result from E-Verify database
who are issued visas and admitted to
information on the increased marginal
inaccuracies. The commenter stated that
the United States in B, F or certain other cost of transporting a laptop computer
Government-commissioned reports,
nonimmigrant categories are not
and printer, it does not appear to be
congressional testimony, and other
authorized to be employed in this
significant.
evidence support its opinion about the
country.
The economic analysis estimated that
unreliability of the E-Verify program.
36. Comment: The SBA Office of
two percent of contractors did not have
The commenter also stated that the
Advocacy was concerned about its
a computer or Internet connection at
recent reauthorization of the program by
ability to successfully complete the on-
their hiring site. The economic analysis
the U.S. House of Representatives
line tutorial, required by the MOU that
stated ‘‘If we do not receive comments
specifically acknowledged this fact by
contractors will be required to sign. The
indicating that covered Federal
requiring further study by the GAO of
commenter states that, while the
contractors or subcontractors would
the erroneous tentative nonconfirmation
proposed rule acknowledges the
need to purchase a computer and/or
rate.
tutorial, it does not acknowledge the
internet connection, we may eliminate
Response: The Westat report in 2007
requirement that a proficiency test at the this category of costs in the final rule.’’
found that the erroneous tentative
end of the tutorial needs to be taken and As such comments were received, that
nonconfirmation rate for all workers
a 71 percent pass rate achieved. The
cost will be included in the final rule.
from October 2004—March 2007 was
commenter is concerned about the cost
38. Comment: Commenters noted the
0.6 percent. (Westat report pg. 57, table)
implications to an employer who does
E-Verify MOU requires the employer to
This means that 0.6 percent of workers
not pass the test, stating that the costs
make photocopies of certain documents, that were found work-authorized by the
involved have more dimensions than
and to print certain documents if a
system initially received a tentative
just the opportunity cost.
tentative non-confirmation occurs. The
nonconfirmation during the verification
Response: The E-Verify program
commenters stated that the analysis fails process. A system that correctly verifies
knows of no situation in the history of
to consider the additional cost of
authorized workers as work-authorized
the program where an employer was
printing and copying equipment an
99.4 percent of the time cannot
ultimately unable to participate because
employer must acquire and maintain at
reasonably be termed ‘‘unreliable.’’
it could not pass the mastery test. The
each hiring site under the rule. Further,
Further, the economic analysis did
cost and burden associated with the
the commenters noted that the E-Verify
estimate the cost to employers of
tutorial is more than adequate to also
MOU requires, under certain
resolving the tentative
cover the mastery test as well.
circumstances, that the employer either
nonconfirmations.
Employers are able to retake the
scan certain documents provided by the
41. Comment: A commenter stated
mastery test as many times as is
employer for electronic submittal to
that there are no reliable figures to
necessary to pass. Taking the tutorial
DHS or use an express mail account.
report the number of erroneous final
and the mastery test is a requirement to
The commenters stated that the added
nonconfirmations because there is
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00047
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67696
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
currently no process in place to appeal
Verify system in May 2008 to re-check
could be some authorized employees
such an outcome. The commenter
against DHS naturalization databases
who are terminated, but this should
submits that most employers will
any citizens that SSA cannot verify
occur only under unusual
simply fire individuals with a final
because of a citizenship mismatch. This
circumstances. The authorized worker
nonconfirmation report from E-Verify.
change prevents naturalized citizens
has an economic incentive to ensure
Response: Employers or employees
from receiving a tentative
his/her information properly matches
may contact the E-Verify program if
nonconfirmation if their information is
SSA’s records both to preserve his/her
additional time is needed to provide
available in the more current DHS
job and to ensure the employee receives
such documentation or if they believe a
database. However, new citizens remain full credit for contributions made into
final nonconfirmation was received in
responsible for updating their records
Social Security. The analysis estimated
error. The E-Verify program may delay
with SSA when they are naturalized.
that 2 percent of the 5.3 percent
a final nonconfirmation finding on a
Moreover, the E-Verify MOU makes
unresolved tentative nonconfirmation
case by case basis in those cases where
clear that employers are prohibited from cases (2% × 5.3% = .106%) represent an
employees have experienced delays in
discharging, refusing to hire, or
authorized employee who either
receiving needed documentation that
assigning or refusing to assign to federal
resigned or was terminated.
will help prove their employment
contracts employees because they
44. Comment: A commenter stated
eligibility, and the program will work
appear or sound ‘‘foreign’’ or have
that, so far this year, the commenter has
with the employer and/or employee to
received tentative nonconfirmations.
initiated nearly 1,400 new-hire queries
research the case and identify the reason The MOU also notifies an employer that through E-Verify and anticipates that
for the final nonconfirmation. Where an
any violation of the unfair immigration-
new-hire queries will approximate 3,000
employer or employee has questions
related employment practices
a year. The commenter states that its E-
about a final nonconfirmation, DHS or
provisions in section 274B of the INA
Verify tentative non-confirmation rate
SSA can place such cases ‘‘in
could subject the Employer to civil
far exceeds the estimated rate of non-
continuance’’ for resolution by either
penalties, back pay awards, and other
confirmations published by E-Verify
SSA or DHS.
sanctions, and violations of Title VII
and USCIS. The commenter notes that
42. Comment: A commenter states
could subject the Employer to back pay
all of its tentative nonconfirmations
that according to a June 7, 2008,
awards, compensatory and punitive
have ultimately been cleared by E-Verify
Government Accountability Office
damages. Violations of either section
as work authorized, but only after
Report, the existing electronic
274B of the INA or Title VII may also
significant investment of time and
verification systems in place at DHS and lead to the termination of the
money.
SSA are frequently unable to provide
employer’s participation in E-Verify. If
Response: Employers’ tentative
the ‘‘instant’’ verification that E-Verify
the employee believes that he or she has nonconfirmation rates will vary
is supposed to provide. The commenter
been discriminated against, he or she
depending on the makeup of their
quotes this report as finding that in
should contact OSC at 1–800–255–7688
workforces. While the majority of SSA
eight percent of the cases, ‘‘[r]esolving
or 1–800–237–2515 (TDD). Employers
tentative nonconfirmations are resolved
these nonconfirmations can take several
that have questions relating to the anti-
within ten days, E-Verify does
days, or in a few cases even weeks.’’
discrimination provision should contact accommodate employees whose cases
June 7, 2008 GAO Report, ‘‘Electronic
OSC at 1–800–255–8155 or 1–800–237–
cannot be resolved within that
Verification: Challenges Exist in
2515 (TDD).
timeframe provided that they have
Implementing a Mandatory Electronic
43. Comment: A commenter stated
contacted SSA and have followed all of
Verification System,’’ p. 3. The
that the FAR Council says that the only
the requirements.
commenter states that the delays are
currently employed lawful workers who
USCIS continues to partner with SSA
attributable to several factors, including
will be casualties of its proposed rule
in the implementation of the E-Verify
USCIS’s failure to promptly update its
are those who ‘‘choose not to take the
program, especially in diminishing
database when it receives new
steps necessary to resolve a tentative
database errors and resolving mistaken
citizenship information. The commenter nonconfirmation,’’ and who thereafter
final nonconfirmations. It is the
claims that, in those circumstances, an
are fired. 73 FR at 33377. The
responsibility of individual citizens to
authorized worker will be terminated
commenter states that that assertion is
update their records with SSA; this
under the proposed rule even if he or
premised on the notion that there are no includes the most common updates of
she promptly attempts to correct the
errors in the relevant databases that
name change due to marriage and
database error.
cannot be quickly corrected in the eight- change in citizenship status due to the
Response: Employees are not
day period provided for in the Proposed naturalization process.
penalized if their case requires
Rule. The commenter contends that that
45. Comment: A commenter stated
additional time to resolve. As long as
notion is undeniably false—as the GAO
that mandating contractors to use the
they contact the appropriate agency
Report makes clear when it says that it
Basic Pilot/E-Verify program will not
within the required eight-day timeframe sometimes takes ‘‘weeks’’ to correct an
eliminate the U.S. economy’s demand
and begin the process of contesting a
error under the E-Verify system.
for unauthorized workers. According to
tentative nonconfirmation, they must be
Response: The commenter appears to
the commenter, contractors who need
permitted to continue working until
misunderstand the eight-day period
workers will continue to hire them ‘‘off
their case is resolved.
under the E-Verify program for an
the books.’’
Contrary to the commenter’s
employee with a tentative
Response: The INA prohibits hiring or
assertions, DHS does update its database nonconfirmation to contact SSA or DHS. continuing to employ aliens whom the
when immigrants are naturalized as
Employees are not expected to resolve
employer knows are not authorized to
citizens. However, when naturalized
their tentative nonconfirmations within
work in the United States. INA section
employees properly state that they are
eight days—they are only required to
274A(a)(1), (a)(2). Any employment of
citizens, their information is verified
contact the appropriate agency within
aliens whom the employer knows are
against the SSA database, which may
that timeframe in order to challenge the
not authorized to work in the United
not yet reflect their naturalized status.
tentative nonconfirmation. The
States is a violation of the law. We
USCIS implemented a change to the E-
economic analysis does assume there
disagree with the implication that
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00048
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67697
employers will find a way to violate the
However, 4 percent of long-term users
understood as a lower-bound for the
law anyway, so lax enforcement of the
said they spend $500 or more for start-
true social cost of forced unemployment
law is in the U.S. economy’s best
up costs, and 11 percent spent $500 or
of authorized workers.
interest.
more annually for operating costs.’’ The
Response: The Councils disagree that
46. Comment: A commenter stated
report does not segregate the employers
there will be any significant ‘‘forced
that smaller businesses may find it
that reported a high level of cost into
unemployment’’ cost caused by this rule
financially more difficult to comply
large and small employers. However,
on authorized workers. If the E-Verify
with Executive Order 12989. According
the report does state on page 106 that
program issues a tentative non
to the commenter, the proposed rule
‘‘[n]ot surprisingly, maintenance costs
confirmation to an employee, the
indicates that the costs of participation
were higher for employers that verified
employer cannot fire, prevent from
in the E-Verify program will likely
employees at multiple locations than for working, or withhold or delay training
include startup registration costs,
those that verified at only one location
or wages for that employee during the
opportunity costs of the time spent on
($1,653 versus $490).’’ So, to the extent
resolution process. All employees
training, opportunity costs of the time
that small employers are less likely to
receiving tentative nonconfirmations are
spent on employee verification,
verify employees at multiple widely
given the opportunity to contest and
productivity costs when employees
distributed locations, their costs would
correct their records.
need to leave work to visit SSA/USCIS
be expected to be lower than the average
A limited case study in the 2007
to correct information, and employee
provided in the report.
Westat report notes that ‘‘Most
turnover costs. The commenter quotes
Separate from this final rule, the E-
employees reported positive
statistics drawn from a survey of
Verify program is working to identify
experiences correcting their paperwork
employers who have used the system to
and address issues that may result in an
with SSA or USCIS’’ and ‘‘Overall,
demonstrate that the startup process for
employee not fully understanding the
employees who contested SSA findings
E-Verify can be burdensome.
opportunity to contest an initial
did so quickly: The record review
Response: The statistics reported by
mismatch, e.g., the Plain Language
showed an average of only 2.1 days
the commenter in the example from
Initiative. The program currently
between the referral to SSA and the date
page 60 of the September 2007 Westat
provides program materials in English
the SSA representative signed the
report are incorrectly drawn from the
and Spanish and is currently working to referral letter (if one was provided to the
table in the report. In fact, 72.9 percent
produce documents in nine additional
employee)’’ (Appendix E pages E–13
of employers disagreed with the
languages.
and E–14). This 2.1 day average time to
statement ‘‘the on-line registration
47. Comment: Commenters stated that resolve a tentative non-confirmation
process was too time consuming’’; only
the RIA assumes that 2 percent of
suggests the resolution process is not an
13.4 percent agreed with the statement
authorized workers for whom E-Verify
unreasonably difficult burden for those
(of which 2.4 percent strongly agreed).
generates a tentative nonconfirmation
that choose to utilize the process.
Also, 75.9 percent of employers
will not resolve their records to the
As there is no law that compels an
surveyed disagreed with the statement
Government’s satisfaction. Commenters
authorized worker to resolve a tentative
‘‘the on-line tutorial was hard to use,’’
believe that failing to resolve a tentative
non-confirmation, the Councils believe
an additional 21.2 percent of employers
nonconfirmation leads inexorably to a
it is reasonable to add a cost for an
surveyed strongly disagreed with the
final nonconfirmation, which results in
employer to replace an authorized
statement, only 2.8 percent agreed (of
employee termination. The commenters
worker who does not resolve the
which 0.2 percent strongly agreed).
note that the RIA claims that these
tentative non-confirmation. For the
Finally, 67.9 percent of employers
workers ‘‘choose not to resolve the non
purpose of the economic analysis, the
disagreed with the statement ‘‘the
confirmation,’’ but no evidence is
Councils assumed that 2 percent of the
tutorial takes too long to complete;’’
provided showing that the lack of
5.3 percent unresolved tentative non-
only 21.6 percent of employers agreed
records resolution is the result of worker confirmations were authorized workers
(of which 3.8 percent strongly agreed).
choice. Furthermore, the commenters
leaving employment with the employer
The statistic on the importance of
note that the RIA does not explain why
(2% × 5.3% = .106%). The employer
passing the mastery test and the
workers would intentionally choose a
would incur employee replacement
perceived burden was correctly drawn
path that leads to termination. The
(turnover) costs whether the authorized
from the table.
commenters believe that a more
employee resigned or was terminated.
System set up and maintenance costs
plausible explanation is that these
Due to the economic incentive to ensure
are a concern for the program and
workers have unusually difficult
one’s records are correct with SSA and
especially their impact on smaller
problems to resolve or they are less
to continue employment, it would be a
employers. Therefore, questions on
capable than their peers at navigating
very unusual circumstance for an
these costs have been and will continue
multiple Government bureaucracies or
authorized worker not to work
to be asked in the independent
they are marginal workers for whom the
diligently to resolve the tentative non-
evaluations of the program. The
burden of resolving records exceeds the
confirmation.
statistics cited in the example are
gain from remaining in the formal labor
We disagree with the commenter’s
accurately quoted from the Sept. 2007
market. Whatever the cause(s), the
assertion of a ‘‘$10 billion’’ present
Westat report, however, it must be noted commenters believe E-Verify will be
value cost estimate of ‘‘forced
that the average start-up and
responsible for these terminations and
unemployment.’’ The commenter’s $10
maintenance costs are calculated from a
the RIA acknowledges this and
billion estimate is apparently premised
very widely skewed distribution of cost
includes, as a cost to employers, the
upon assuming a 15 year period of
data. As stated on pg. 104 of the Westat
additional recruitment and training that
analysis of ‘‘forced unemployment’’ and
report, ‘‘Eighty-four percent of
are required to replace these employees. a ‘‘disemployment rate’’ of ‘‘1.060%.’’
employers that used the Web Basic Pilot However, commenters believe the RIA
We assume the ‘‘disemployment rate’’
for more than a year reported spending
ignores the opportunity cost of
used by the commenter was meant to be
$100 or less for start-up costs, and 75
termination to the employees
the ‘‘.106%’’ estimate in the RIA for the
percent said they spend $100 or less
themselves. The $10 billion present
proposed analysis of people who are
annually to operate the system.
value cost estimate should be
authorized to work but either resign or
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00049
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67698
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
are terminated for failure to resolve the
agencies to vet newly hired state
six months used in the proposed rule’s
tentative non-confirmation. If true, this
employees through E-Verify.
economic analysis. However, given that
would cause an order of magnitude
In fact, there is data that suggests
the economic analysis did not conduct
error in the commenter’s calculations.
there could be fewer tentative non-
a ‘‘statistical survey,’’ the commenter’s
Also, the economic analysis assumed
confirmations among the federal
purpose in stating that the economic
the 2% replacement rate for authorized
contractor population than in the
analysis did not comply with OMB
workers who do not resolve their
general population. The September 2007 ‘‘statistical survey’’ guidelines is not
tentative non-confirmations included
Westat report stated on page 41 (note
clear.
any and all reasons an authorized
that E-Verify was formerly known as
50. Comment: The SSA provided
employee potentially leaves
‘‘Basic Pilot’’): ‘‘* * * establishments
additional information regarding the
employment, such as voluntary
registering for the Web Basic Pilot differ
marginal cost of the rule to SSA.
resignation.
significantly from employers not
Response: The economic analysis will
Finally, the E-Verify program knows
enrolled in the program. More
be revised to incorporate the cost
of no information that supports the
specifically, pilot participants tend to be estimates provided by SSA. For
commenter’s assertion that workers who larger than most establishments, have
example, the economic analysis
do not resolve their tentative non-
higher proportions of foreign-born
estimated the cost to SSA in FY09 to be
confirmations have ‘‘unusually difficult
employees, and be more concentrated in $622,699, while the SSA estimated its
problems to resolve, or they are less
certain industries and locations.’’ The
FY09 costs to be $1,023,294.
capable than their peers at navigating
report also stated, ‘‘* * * it appears
b. On Federal Acquisition Workforce
multiple government bureaucracies, or
currently that citizens are
they are marginal workers for whom the
underrepresented in the Web Basic Pilot
Comment: A commenter stated that
burden of resolving records exceeds the
program compared to the nation. Since
the proposed rule assumes only
gain from remaining in the formal labor
citizens are more likely than noncitizens $1,547,194 in costs that the Federal
market.’’
to be authorized automatically and less
Government will incur in 2009 as
48. Comment: Commenters stated the
likely to get an erroneous tentative
‘‘operating costs from each query that an
RIA extrapolates to a coerced
nonconfirmation, it is reasonable to
employer executes’’ and ‘‘resolving
population of Federal contractors from
expect that a program that verifies all
tentative nonconfirmations.’’ According
the current E-Verify population, which
new hires nationally would have a
to the commenter, the proposed rule has
higher percent verified automatically
consists of volunteers. In this case, the
not considered costs associated with
and a lower erroneous tentative
commenters believed volunteers are
contracting officer time and effort.
nonconfirmation rate than is currently
Response: Contracting officer duties
likely to be firms for which
the case, if nothing else changes.’’ (pg.
under the final rule consist almost
participation in the program is actually
134) Consequently, we could reasonably exclusively of inserting the clause into
beneficial. The commenters concluded,
expect that tentative non-confirmation
appropriate solicitations and contracts.
if this were the only criterion for
rates for federal contractors could be
The marginal effort associated with that
participation, then they would expect
lower than the rates experienced by
duty is so slight as to be practically
data from these firms to be ‘‘better’’ than current E-Verify enrollees.
immeasurable. Further, there is no
data the Government will obtain once it
49. Comment: A commenter stated
reason to believe that additional
makes participation mandatory.
that the calculations from the sample
contracting officers will need to be hired
Response: The economic analysis
should be treated with caution because
due to the impact of this rulemaking.
used actual information regarding the E- the sample consisted of a six-month
Verify authorization process (i.e.,
season that did not include Spring- and
3. Reasonable Alternatives
percentage of tentative non-
Summer-hires. The commenter further
Comment: The SBA Office of
confirmations, percentage of final
stated that seasonal workers would be
Advocacy suggested that the
nonconfirmations, etc.) generated by the covered by E-Verify but are excluded
Administration should examine feasible
entities that were using the E-Verify
from this sample. In addition, the
alternatives to the proposed rule, if
program during October 2006–March
commenter stated that if a Federal
comments received indicate that the
2007 in order to estimate costs.
agency had proposed to collect data
proposed rule would have a significant
The rate of tentative non-
from volunteer E-Verify participants and economic impact on a substantial
confirmations, percentage of final
use them to predict results from a
number of small businesses. Another
nonconfirmations, and other operational mandatory E-Verify program, the Office
commenter wrote that the
statistics may be different for entities
of Management and Budget would have
Administration’s analysis of reasonable
that choose to be Federal contractors
been compelled by law and its own
alternatives is flawed for failure to take
than for the existing E-Verify
regulations to disapprove the
into account all reasonable alternatives,
population, but there is no evidence to
information collection on the ground
and for failure to adequately address the
support the theory that data from the
that it lacked practical utility
lone alternative taken into account.
existing E-Verify enrollees would be
(commenter cited in footnote 24—
Response: The Council has
‘‘better’’ (lower tentative
‘‘OMB’s information collection rule
considered all reasonable alternatives,
nonconfirmation rates) than data the
forbids it from approving a statistical
as addressed herein and in the FRFA,
Government will obtain once additional
survey ‘that is not designed to produce
and has adopted all the alternatives that
Federal contractors join E-Verify. We
valid and reliable results that can be
fulfill the objective of the Executive
note there are many states that currently generalized to the universe of study.’ ’’
Order.
require certain employers to participate
See 5 CFR 1320.5(d)(2)(v); 60 FR 44988.
in E-Verify. For example, Arizona and
Response: The Council agrees a full
4. Paperwork Reduction Act
Mississippi are currently requiring all
year’s worth of data would provide a
Comment: An immigration lawyers
employers to enroll in E-Verify and
better indicator of the likely impacts of
association commented that the
authorize the work status of newly hired the final rule. Therefore, for the final
proposed rule violated the Paperwork
employees. Also, Idaho, Minnesota, and
rule’s economic analysis, a full 12
Reduction Act by imposing an
North Carolina require state government months of data are used, instead of the
additional information collection
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00050
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67699
burden on employers and because
In addition, a number of changes have they know is not authorized to work in
employers who fail to keep such records been made in the final rule to lessen the
the United States (section 274A(a) of the
will face significant liability.
impact on small businesses; they should Immigration and Nationality Act of
Response: The Councils recognized in also benefit large businesses in reduced
1952, as amended (INA), 8 U.S.C. 1324a;
the proposed rule that the rule contains
compliance costs. Specifically, the
8 CFR part 274A). Many aliens,
information collection requirements
timelines have been significantly
including lawful permanent residents,
over and above the burden hours
extended (see Section B., ‘‘Changes
refugees, asylees, and temporary
already approved for the E-Verify
Adopted in the Final Rule’’, paragraph
workers petitioned by a U.S. employer,
System. 73 FR 33379. The Councils
1., ‘‘Significantly Extended Timelines’’,
are authorized to work in the United
have requested and received approval
for the precise changes); the threshold
States (see 8 CFR 274a.12, listing classes
from OMB for this new information
for prime contracts has been raised from of work-authorized aliens).
collection requirement. Accordingly, the $3,000 to the simplified acquisition
The new contractual requirement to
information collection requirements of
threshold ($100,000); contracts with a
use the E-Verify System will enhance
this rule fully comply with the
performance period of less than 120
the Government’s procurement system
requirements of the Paperwork
days are exempted; the COTS-related
by decreasing the employment of
Reduction Act.
exemption has been expanded (see
unauthorized aliens in the
Government’s supply chain and thereby
F. Final Regulatory Flexibility Act
Section B., ‘‘Changes Adopted in the
fostering a more stable and dependable
Analysis
Final Rule’’, paragraph 9., ‘‘Expanded
COTS-related exemptions for:’’ of this
Federal Government contracting
This Section F constitutes the Final
rule); contractors are offered the option
community.
Regulatory Flexibility Act Analysis
of using E-Verify on all existing
This rule will impact many small
(FRFA), as required by the Regulatory
employees so as to eliminate the
entities in the Federal contractor base.
Flexibility Act, 5 U.S.C. 604. The issues
necessity of segregating employees
Major exceptions are contractors
covered here are also addressed in detail performing directly on a Federal
providing commercially available off-
in the Regulatory Impact Analysis for
Government contract from those who
the-shelf (COTS) items and items that
FAR Case 2007–013, available at
are not; and contractors may exempt
would be COTS items but for minor
http://www.regulations.gov.
employees with an active, current
modifications, entities that enter into
This final rule implements Executive
security clearance or for whom
contracts with a value less than
Order, 12989, as amended, to enhance
background investigations have been
$100,000, and subcontractors that
the stability and dependability of
completed and credentials issued
provide supplies rather than services or
Federal Government contractor
pursuant to Homeland Security
construction. In Fiscal Year 2006, there
workforces by requiring them to use the
Presidential Directive (HSPD) 12.
were over 100,000 small businesses that
USCIS’ E-Verify system as the means for
Executive Order 12989, as amended,
received direct Federal contracts. While
verifying employment eligibility of
prohibits Federal agencies from
there are no reliable numbers for
certain employees.
contracting with companies that
subcontracts awarded to small
The Councils expect this rule to
knowingly hire employees not eligible
businesses, the Dynamic Small Business
impact nearly every small entity in the
to work in the United States and
database of the Central Contractor
Federal contractor base. However, the
instructs Federal agencies to contract
Registration—a database of basic
direct cost this rule imposes does not
with companies that agree to use an
business information for contractors that
appear to have a significant economic
electronic employment verification
seek to do business with the Federal
impact on a substantial number of small system to confirm the employment
Government—gives a number of 324,250
entities, within the meaning of the
eligibility of their workforce. The E-
small business profiles that are
Regulatory Flexibility Act, 5 U.S.C. 601,
Verify System is the best available
registered. Assuming that 50% of these
et seq. Nevertheless, the Councils have
means for contractors and
small businesses contract with the
not formally certified the rule as not
subcontractors to verify employment
Federal Government at either the prime
having a ‘‘significant economic impact
eligibility. Consequently, this final rule
or subcontract level, then that number is
on a substantial number of small
is being promulgated to institute a
162,125 small businesses.
entities,’’ as allowed under section
contractual requirement for contractors
The Councils have placed in the
605(b) of the Regulatory Flexibility Act.
and subcontractors to utilize E-Verify as
public docket a detailed Regulatory
In addition to the costs of this final
the means of verifying that (1) all new
Impact Analysis of the compliance
rule, the Councils expect this rule to
hires of the contractor or subcontractor
requirements of this rule. Generally,
carry certain benefits to employers in
and (2) all employees directly engaged
employers will incur opportunity cost of
that it provides an economical, web-
in performing work under covered
the time their employees will spend
based method for performing
contracts or subcontracts are eligible to
complying with the requirements of the
verification of employment eligibility of
work in the United States. The final rule regulation. Employees will need to be
employees, improving the reliability of
adds a new FAR Subpart 22.18 and a
trained in order to be able to operate the
the employment verification procedures new clause.
E-Verify system, as well as spending
employers are already required to
The prohibition against Federal
time on processing employee
perform. Federal contractors’
agencies contracting with companies
verifications. Employers will incur start-
participation in E-Verify is also
that knowingly hire employees not
up costs from enrolling in the E-Verify
expected to reduce the likelihood that
eligible to work in the United States has
program, including costs such as
contractors will discover, long after the
existed since 1996. Virtually all
reviewing and updating USCIS Form I–
fact, that they have hired unauthorized
employers in the United States,
9 (Employment Eligibility Verification)
aliens, thereby sparing contractors the
including Federal Government
for existing employees and potentially a
cost of terminating and replacing
contractors and subcontractors, are
cost to modify an existing personnel or
employees not authorized to work under prohibited from hiring an individual
payroll system to be able to record the
Federal immigration law after resources
without verifying his or her identity and E-Verify status of their employees. We
have been expended on the training of
authorization to work and from
believe a small number of employers
those employees.
continuing to employ an alien whom
may need to purchase a computer,
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00051
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67700
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
internet connection, and printer for
Presumably, entities that do not receive
aspect of the economic analysis once the
their hiring site. Certain employee
the desired return to justify the expense
final rule has been in effect and useful
replacement (turnover) costs may also
of participating in E-Verify would
data becomes available.
be incurred due to this regulation.
choose not to be a Federal contractor or
The Councils are unaware of any
In order to further inform our
subcontractor.
duplicative, overlapping, or conflicting
understanding of the economic impact
The SBA Office of Advocacy claims
Federal rules. There are current
of this rule on small entities, we
that the initial analysis did not consider
requirements for all employers, not just
considered hypothetical contractors
costs such as the social welfare cost or
Federal contractors and subcontractors,
with 10, 50, 100, and 500 employees
the cost of penalties and lawsuits.
to verify the employment eligibility of
and estimated the economic impact of
However, the IRFA fully complied with
their newly hired employees. These
the rule on those four sizes of entities
the requirements of § 603 of the
requirements have existed since 1986.
in their initial year of enrollment. The
Regulatory Flexibility Act. The IRFA
Arguably related rules include DHS’s
initial year a contractor enrolls in E-
compared estimated compliance costs
‘‘No-Match’’ rule, which provides
Verify is expected to be the year with
for four distinct sizes of small business
guidance to employers on how best to
the highest compliance cost, as the
(10, 50, 100, and 500 employees) to the
respond to the Social Security
contractor is incurring both the start-up
respective revenue of these businesses,
Administration’s (SSA) no-match
costs of enrolling in E-Verify as well as
using information obtained from the
letters, through which employers are
the majority of the costs of vetting its
Small Business Administration, and
alerted annually about their employees
existing employees through the E-Verify identified a compliance cost burden of
whose names and Social Security
system.
0.03 percent of revenue for the small
numbers submitted on tax forms do not
The estimated average direct cost of
entity with 10 employees. The Councils
match up to the information in the
this rule to a contractor with 10
do not agree that 0.03 percent would
SSA’s database. Although this ‘‘No-
employees is $1,254 in the initial year.
typically be regarded as a significant
Match’’ rule concerns the SSA’s letters
For a contractor with 50 employees, the
economic impact. Further, with regard
generated from one of the data sources
estimated average direct cost of
to the full social welfare cost of the rule, used by the E-Verify system, the ‘‘No-
participating in E-Verify is $3,163 in the regulatory flexibility analyses need not
Match’’ rule is not directly associated
initial year. For a contractor with 100
include anything other than the direct
with use of the E-Verify System. The
employees, the estimated initial-year
costs of a regulation on a small entity
two rules interact insofar as use of E-
impact is $5,615. A contractor with 500
that is required to comply with the
Verify—and the resulting strengthening
employees is expected to have an initial
regulation.
of Federal contractors’ employment
year impact of $24,422. This level of
The SBA Office of Advocacy believes
verification processes—is expected to
direct cost burden is well under 1% of
that the Councils underestimated the
reduce the incidence of SSA ‘‘No-
the expected annual revenue of these
number of contractors that will be
Matches’’ in the Federal contract
four sizes of entities and does not
vetted through E-Verify and criticizes
workforce resulting from the
appear to represent an economically
the fixed factors (e.g., 26 percent for
employment of unauthorized alien
significant impact on an average direct
labor) used in the economic analysis, as
workers. But the ‘‘No-Match’’ rule is
cost per contractor basis. To the extent
well as the estimate that the assumption designed to assist employers to ensure
that some small entities incur direct
that the number of subcontractors is 20
that their entire existing workforce
costs that are significantly higher than
percent of the number of prime
remains work-authorized, while this
the average estimated costs, those
contractors. It claims that the estimates
amendment to the FAR is designed to
employers may reasonably be expected
the Councils used are not based on
ensure that unauthorized aliens are not
to face a significant economic impact.
‘‘empirical data’’ and that the economic
brought into the Federal Government’s
As discussed previously, the Councils analysis was not explicit regarding how
contractor workforce.
do not consider the cost of complying
these factors were determined. The
In addition to the alternatives
with preexisting immigration statutes to
Councils respond that the dollar value
discussed above in the response to
be a direct cost of this rulemaking.
of the contracts within the scope of the
public comments—particular, the
Thus, while some employers may find
rule was found by querying the Federal
section entitled ‘‘Small Business,’’ and
the costs incurred by replacing
Procurement Data System and does not
its subsections including ‘‘Alternatives
employees that are not authorized to
rely on an estimate by the Councils.
to Lessen the Burden on Small
work in the United States to be
Instead of simply providing a ‘‘top-
Businesses’’—the Councils considered
economically significant, those costs of
level’’ estimate, the Councils developed
the following alternatives in order to
complying with the Immigration and
a model to estimate the number of
minimize the impact on small business
Nationality Act are not direct costs
employees that would be expected to be
concerns:
attributable to this rule.
vetted through E-Verify. The factors
• Whether to exempt small
In addition, the requirement for
utilized (e.g., 26 percent for labor) are
businesses entirely from the
entities (both large and small) to enroll
all multiplied against the estimated
requirement to use E-Verify. The SBA
in E-Verify only applies to contractors
dollar value of contracts. When
Office of Advocacy was concerned that
and subcontractors that choose to
describing the percentage estimates
small businesses do not have the
perform certain work for the Federal
used to estimate factors utilized, the
financial resources and human capital
Government. When an entity’s
economic analysis specifically stated
to adapt their technology infrastructure
leadership determines that participating ‘‘we understand these assumptions are
systems to rapidly change requirements
in E-Verify would impose a significant
rough and we welcome public comment being imposed by the Federal
economic impact on the operation, the
providing more precise information.’’
Government. The Councils limited the
leadership must make a business
However, no better information was
applicability of this rule to small
decision whether the revenue generated
provided in the comments. The SBA
businesses by raising the dollar
by doing business with the Federal
Office of Advocacy encouraged the FAR
threshold, limiting flowdown,
Government would provide a financial
Council to revisit the economic analysis
exempting COTS suppliers, and in
return sufficient to justify the cost of
as more data become available. The
various other ways discussed
such participation in E-Verify.
Councils will consider reviewing this
throughout this notice.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00052
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67701
• How to limit the compliance costs
confirmation of all workers assigned to
and the Office of Management and
for small businesses. The SBA Office of
a new Government contract was most
Budget (OMB) to determine whether a
Advocacy noted that small business
consistent with Executive Order 12989
regulatory action is ‘‘significant’’ and
Federal contractors operate on very thin
and with the Federal Government’s own therefore subject to review by OMB and
profit margins and the types of
obligation to use E-Verify when hiring
subject to the analyses directed by that
technology systems necessary here
Federal employees, and it would most
Executive Order. 58 FR 51735, October
require capital outlays that cannot be
effectively ensure that the Federal
4, 1993, as amended. The Councils have
easily recouped by passing the cost to
Government does not indirectly exploit
determined that this rule is a
the client and are costly to the small
an illegal labor force.
‘‘significant regulatory action’’ under
business owner. Although the E-Verify
• Whether to require contractors to
Executive Order 12866, section 3(f),
system does require the employer to
use E-Verify only for new hires that
because there is significant public
have access to some equipment such as
would be assigned to work under a
interest in issues pertaining to
a computer, Internet access, a printer,
Government contract and exclude all
immigration and because this is an
and either a scanner, photo copier, or a
other new hires of the contractor from
economically significant rule pursuant
digital camera, the Councils believe that the E-Verify requirement. Executive
to this Executive Order. Accordingly,
this equipment is not prohibitively
Order 12989, as amended, instructs
this final rule has been submitted to
expensive. Almost all small businesses
Federal contracting agencies to contract
OMB for review.
doing business with the Government
with employers that agree to use E-
This is a major rule under 5 U.S.C.
would already have such equipment or
Verify for all new hires of the
804.
be able to readily acquire it. The
contractor. The Councils decided that
A Regulatory Impact Analysis that
equipment for a small business to
requiring contractors to use the E-Verify
more thoroughly explains the
implement E-Verify need not be
program as part of standard hiring
assumptions used to estimate the cost of
particularly sophisticated or complex.
practices would simplify employment
this final rule is available in the docket
The Councils have made every effort to
verification, and conforms with the
as indicated under ADDRESSES. For
limit the cost of compliance.
requirements of Executive Order 12989
•
access to the docket to read background
How to limit appropriately the
and with a principal goal of the rule—
documents or comments received, go to
burden of compliance on
to ensure that the Federal Government
http://www.regulations.gov. A summary
subcontractors. The SBA Office of
does business with companies that do
of the cost and benefits of the final rule
Advocacy is concerned that there is
not employ unauthorized aliens.
follows:
disproportionality in the compliance
• Whether the use of E-Verify should
cost burden on small business
In the initial fiscal year the rule is expected
be required for all prime contracts or
subcontractors because there are fewer
to be effective (fiscal year 2009), the Councils
only for those contracts that do not call
avenues and fewer contracts among
estimate that there will be approximately
for COTS items or items that would be
168,624 contractors and subcontractors that
which the small businesses can spread
COTS items but for minor
will be required to enroll in E-Verify due to
the cost of doing business. The final rule modifications, as defined at FAR Part 2
this rule and that there will be an additional
adds a number of exemptions that will
(containing the definition of a
3.8 million employees vetted through E-
ease the burden on small business and
commercial item). Because COTS
Verify. In the initial year, the cost of the final
large business contractors; for example,
suppliers, by definition, do not
rule at 7% net present value is approximately
contractors will have the option of
specialize in serving the Federal
$245.4 million, and, over the ten-year period
verifying all existing employees, not just
of analysis (2009–2018), the cost of the final
Government, and because the
those performing directly on the
rule is approximately $1,105.4 million. In the
Government might lose access to COTS
contract. This eliminates the need to
initial year, the cost of the final rule at 3%
suppliers if they determine the cost of
develop a system to identify employees
net present value is approximately $254.9
complying with the rule outweighs their million, and, over the ten-year period of
assigned to the contract.
•
gains from Government business, the
analysis (2009–2018), the cost of the final
Whether to require E-Verify
Councils decided not to require the use
rule is $1,336.5 million. Compliance costs
participation as a preaward eligibility
of E-Verify for COTS items and items
from participating in the E-Verify program
requirement rather than as a postaward
that would be COTS items but for minor fall into the following general categories, and
contract performance requirement. The
modifications. As noted above, the
Table 1 below provides a summary of the
rule is distinct from the existing E-
costs:
Councils expanded the reach of this
Verify program, in that it would require
• Startup Costs: Employers must register to
exception for COTS items in response to
E-Verify queries to be performed on
use the E-Verify system and sign a
comments received on the proposed
certain existing employees of a
Memorandum of Understanding with USCIS
contractor, and the Councils believe that rule.
and SSA. Employers will also incur costs
• Whether the requirements of the
the obligations created by the rule
such as reviewing and updating USCIS Form
rule should flow down to all
I–9 (Employment Eligibility Verification) for
should be codified as a postaward
subcontracts or should be limited to
existing employees and potentially a cost to
contract performance requirement.
•
modify an existing personnel or payroll
Whether the use of E-Verify should
subcontracts for services or
system to be able to record the E-Verify status
be required for existing employees of
construction. The Councils determined
of their employees. A very small number of
the contractor who are assigned to work
to apply the rule only to subcontracts
employers may need to purchase a computer,
under the Government contract or
for commercial or noncommercial
internet connection and printer for their
should be limited only to the new hires
services, including construction. It does
hiring site if that hiring site does not already
of the contractor. Executive Order
not apply to subcontracts for material or have internet access.
12989, as amended, instructs Federal
to subcontracts less than $3,000.
• Training: Employees who use the E-
contracting agencies to contract with
Verify system are required to take an on-line
G. Statutory and Regulatory
tutorial. While USCIS does not charge a fee
employers that agree to use E-Verify to
Requirements
for this training, employers will incur the
confirm the work eligibility of their
opportunity cost of the time the employee
existing employees assigned to work on
Executive Order 12866
spends on the training, as the employee’s
Federal contracts. The Councils decided
Executive Order 12866, ‘‘Regulatory
time could have been spent on other
that requiring employment eligibility
Planning and Review,’’ directs agencies
activities.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00053
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67702
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
• Employee Verification: Employers will
nonconfirmation, given the incentives to do
current immigration law prohibits employers
incur the opportunity cost of the time spent
so, but we believe the economic analysis
from hiring or continuing to employ aliens
entering data into E-Verify and, if the
should reasonably account for such a
whom they know are not authorized to work
employee receives a tentative
possibility. Assuming that a small number of
in the U.S. The termination and replacement
nonconfirmation, employers would inform
authorized employees would not resolve
of unauthorized employees will impose a
the employee and spend time closing out the
their tentative nonconfirmations, and would
case after resolution of the tentative
either resign or be terminated, is simply a
burden on employers, but INA section
nonconfirmation. In addition, the employer
conservative analytical assumption in light of 274A(a), 8 U.S.C. 1324a(a), expressly
would incur lost productivity when an
the fact that there is no law compelling
prohibits employers from hiring or
employee needs to be away from work to
employees to resolve their tentative
continuing to employ an alien whom they
visit SSA to correct his/her information. As
nonconfirmations; thus, employers may incur know is not authorized to work in the United
estimated, the employee would bear the cost
some additional costs due to having to
States. Accordingly, costs that result from
of driving to SSA.
replace a small number of authorized
employers’ knowledge of their workers’
• Employee Replacement (Turnover) Cost:
employees. To the extent that the
illegal status are attributable to the
There may be a small percentage of workers
accompanying E-Verify rulemaking results in
Immigration and Nationality Act, not to the
who are authorized to work in the U.S. and
the termination or resignation of a worker
FAR rule.
who receive a tentative nonconfirmation but
authorized to work in the U.S., those
do not take the steps necessary to resolve it
associated employee replacement costs
• Federal Government Cost: The
(despite the strong economic incentives to do
would be considered to be a cost of the rule.
Government will incur operating costs from
so). The Councils cannot predict why an
However, the termination and replacement
each query that an employer executes and
authorized employee would not work
costs of unauthorized workers are not
will also incur costs from resolving tentative
diligently to resolve the tentative
counted as a direct cost of this rule because
nonconfirmations.
TABLE 1—10 YEAR COST OF FINAL RULE
[7% present value]
Employer Employee
Government
Year
Authorized em-
Total
Startup costs
ployee replace-
Verification cost Verification cost Verification cost
ment cost
2009 .............................................
$188,138,945 $15,041,464 $37,836,372 $2,436,863 $1,928,888
$245,382,532
2010 .............................................
72,368,319 7,798,427
19,616,690 1,263,415 998,560
102,045,411
2011 .............................................
71,015,802 7,652,663
19,250,187 1,239,831 979,895
100,138,378
2012 .............................................
69,688,407 7,509,622
18,890,355 1,216,654 961,579
98,266,617
2013 .............................................
69,443,845 7,369,253
18,537,018 1,193,865 943,606
97,487,587
2014 .............................................
68,145,775 7,231,511
18,190,724 1,171,588 925,973
95,665,570
2015 .............................................
66,872,076 7,096,345
17,850,716 1,149,689 908,670
93,877,497
2016 .............................................
65,621,976 6,963,703
17,516,996 1,128,187 891,691
92,122,553
2017 .............................................
65,041,291 6,833,541
17,189,537 1,107,092 875,028
91,046,490
2018 .............................................
63,825,632 6,705,812
16,868,275 1,086,406 858,677
89,344,803
Total ......................................
800,162,068 80,202,341
201,746,869 12,993,591 10,272,566
1,105,377,436
Because unauthorized workers are at
cannot rely on the continuing
the persons working on Federal
risk of being apprehended in
availability and service of those illegal
contracts, enhancing national security at
immigration enforcement actions,
workers. Such contractors inevitably
less expense to the Government than it
contractors who hire them will
will have a less stable and less
would cost for contractors to obtain
necessarily have a more unstable
dependable workforce than contractors
more rigorous security clearances that
workforce than contractors who do not
that do not employ such persons. Where may not be otherwise required by their
hire unauthorized workers. Given the
a contractor assigns illegal aliens to
contracts. This is likely to be
vulnerabilities in the I–9 system, many
work on Federal contracts, the
particularly beneficial where contractors
employers that do not knowingly
enforcement of Federal immigration
operate at sensitive national
employ illegal aliens nevertheless have
laws imposes a direct risk of disruption, infrastructure sites.
unauthorized workers, undetected, on
delay, and increased expense in Federal
their workforce.
contracting. Such contractors are less
H. Paperwork Reduction Act
This rule will promote economy and
dependable procurement sources, even
efficiency in Government procurement.
if the contractors did not knowingly hire
Under the Paperwork Reduction Act
Stability and dependability are
or knowingly continue to employ
of 1995, Public Law 104–13, 109 Stat.
important elements of economy and
unauthorized workers.
163 (1995) (PRA), all Departments are
efficiency. A contractor with a less
Contractors that use E-Verify to
required to submit to the Office of
stable workforce will be less likely to
confirm the employment eligibility of
Management and Budget (OMB), for
produce goods and services
the workforce are much less likely to
review and approval, any information
economically and efficiently than will a
face immigration enforcement actions
collection requests in a final rule. It is
contractor with a more stable workforce. and are generally more efficient and
estimated that this rule will increase the
Because of the Executive Branch’s
dependable procurement sources than
information collection burden hours
obligation to enforce the immigration
contractors that do not use that system
already approved for the E-Verify
laws, including the detection and
to verify the work eligibility of their
Program. The OMB control number for
removal of illegal aliens identified
workforce. Rigorous employment
the currently approved E-Verify
through worksite enforcement,
verification through E-Verify will also
Program Information Collection Request
contractors that employ illegal aliens
help contractors confirm the identity of
is 1615–0092.
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00054
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67703
Although the E-Verify Program has a
e. An estimate of the total number of
PART 22—APPLICATION OF LABOR
currently approved Paperwork
respondents and the amount of time
LAWS TO GOVERNMENT
Reduction Act clearance, we are seeking estimated for an average respondent to
ACQUISITIONS
OMB approval on the proposed
respond:
amendments to the current OMB
Implementation: 125,015 at 0.86
■ 3. Amend section 22.102–1 by
approved collection. The purpose of this hours per response.
removing from the end of paragraph (g)
notice is to allow 60 days for public
Training: 521,134 at 2.26 hours per
the word ‘‘and’’; removing the period
comments on the amendments to the E-
response.
from the end of paragraph (h) and
Verify Program collection of
adding ‘‘; and’’ in its place; and adding
ID/IQ Contracts: 3,333 at 2.00 hours
information, not on the amendments to
paragraph (i) to read as follows:
per response.
the FAR rule. Comments on the
Initial Query: 4,094,955 at 0.12 hours
22.102–1
Policy.
amendments to the E-Verify Program
per response.
should be submitted no later than
* * * * *
Secondary Query: 195,329 at 1.94
January 13, 2009. This process is
(i) Eligibility for employment under
hours per response.
conducted in accordance with 5 CFR
United States immigration laws.
1320.10.
For implementation, it is estimated
■ 4. Add Subpart 22.18 to read as
When submitting comments on the
that the number of responses per
follows:
information collection, they should
respondent will be 17. For all others, the
address one or more of the following
number of responses per respondent
Subpart 22.18—Employment Eligibility
four points:
will be one.
Verification
(1) Evaluate whether the collection of
f. An estimate of the total of public
Sec.
information is necessary for the proper
burden (in hours) associated with the
22.1800
Scope.
performance of the agency, including
collection: Approximately 3,882,482
22.1801
Definitions.
whether the information will have
burden hours.
22.1802
Policy.
practical utility;
All comments regarding this
22.1803
Contract clause.
(2) Evaluate the accuracy of the
information collection should be
agency’s estimate of the burden of the
22.1800
Scope.
directed to the Department of Homeland
collection of information, including the
Security, U.S. Citizenship and
This subpart prescribes policies and
validity of the methodology and
Immigration Services, Regulatory
procedures requiring contractors to
assumptions used;
Management Division, 111
utilize the Department of Homeland
(3) Enhance the quality, utility, and
Massachusetts Avenue, NW., 3rd Floor,
Security (DHS), United States
clarity of the information to be
Washington, DC 20529, Attention:
Citizenship and Immigration Service’s
collected; and
Chief, 202–272–8377.
employment eligibility verification
(4) Minimize the burden of the
program (E-Verify) as the means for
collection of the information on those
List of Subjects in 48 CFR Parts 2, 22,
verifying employment eligibility of
who are to respond, including through
and 52
certain employees.
the use of any and all appropriate
Government procurement.
automated, electronic, mechanical, or
22.1801
Definitions.
other technological collection
Dated: November 6, 2008.
As used in this subpart—
techniques or other forms of information Al Matera,
Commercially available off-the-shelf
technology, e.g., permitting electronic
Director, Office of Acquisition Policy.
(COTS) item—
submission of responses.
(1) Means any item of supply that is—
■ Therefore, DoD, GSA, and NASA
Overview of Information Collection
(i) A commercial item (as defined in
amend 48 CFR parts 2, 22, and 52 as set
for the E-Verify System (OMB Control
paragraph (1) of the definition at 2.101);
forth below:
Number 1615–0092):
(ii) Sold in substantial quantities in
■ 1. The authority citation for 48 CFR
a. Type of information collection:
the commercial marketplace; and
parts 2, 22, and 52 continues to read as
Revision of currently approved
(iii) Offered to the Government,
follows:
information collection.
without modification, in the same form
b. Title of Form/Collection: E-Verify
Authority: 40 U.S.C. 121(c); 10 U.S.C.
in which it is sold in the commercial
Program.
chapter 137; and 42 U.S.C. 2473(c).
marketplace; and
c. Agency form number, if any, and
(2) Does not include bulk cargo, as
the applicable component of the
PART 2—DEFINITIONS OF WORDS
defined in section 3 of the Shipping Act
Department of Homeland Security
AND TERMS
of 1984 (46 U.S.C. App. 1702), such as
sponsoring the collection: No form
agricultural products and petroleum
■ 2. Amend section 2.101 in paragraph
number. OMB Control Number 1615–
products. Per 46 CFR 525.1 (c)(2), ‘‘bulk
(b)(2), in the definition ‘‘United States’’,
0092; U.S. Citizenship and Immigration
cargo’’ means cargo that is loaded and
by redesignating paragraphs (6) through
Services.
carried in bulk onboard ship without
d. Affected public who will be asked
(8) as paragraphs (7) through (9),
mark or count, in a loose unpackaged
or required to respond, as well as a brief respectively, and adding a new
form, having homogenous
abstract: Primary respondents are
paragraph (6) to read as follows:
characteristics. Bulk cargo loaded into
business or other for-profit entities,
2.101
Definitions.
intermodal equipment, except LASH or
small business, or other organizations.
* * * * *
Seabee barges, is subject to mark and
The E-Verify Program allows employers
count and, therefore, ceases to be bulk
(b) * * *
to electronically verify the eligibility
cargo.
status of newly hired employees.
(2) * * *
Employee assigned to the contract
Certain Federal contractors and
United States * * *
means an employee who was hired after
subcontractors will also be required to
(6) For use in Subpart 22.18, see the
November 6, 1986, who is directly
perform queries on existing employees
definition at 2.1801.
performing work, in the United States,
assigned to the contract.
* * * * *
under a contract that is required to
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00055
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
67704
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
include the clause prescribed at
that are part of the purchase of a COTS
(2) Items that would be COTS items,
22.1803. An employee is not considered item (or an item that would be a COTS
but for minor modifications (as defined
to be directly performing work under a
item, but for minor modifications),
at paragraph (3)(ii) of the definition of
contract if the employee—
performed by the COTS provider, and
‘‘commercial item’’ at 2.101);
(1) Normally performs support work,
are normally provided for that COTS
(3) Items that would be COTS items
such as indirect or overhead functions;
item; and
if they were not bulk cargo; or
and
(ii) Construction.
(4) Commercial services that are—
(2) Does not perform any substantial
(c) Contractors may elect to verify
(i) Part of the purchase of a COTS
duties applicable to the contract.
employment eligibility of all existing
item (or an item that would be a COTS
Subcontract means any contract, as
employees working in the United States
item, but for minor modifications);
defined in 2.101, entered into by a
who were hired after November 6, 1986,
(ii) Performed by the COTS provider;
subcontractor to furnish supplies or
instead of just those employees assigned and
services for performance of a prime
to the contract. The contractor is not
(iii) Are normally provided for that
contract or a subcontract. It includes but required to verify employment
COTS item.
is not limited to purchase orders, and
eligibility of—
changes and modifications to purchase
(1) Employees who hold an active
PART 52—SOLICITATION PROVISIONS
orders.
security clearance of confidential,
AND CONTRACT CLAUSES
Subcontractor means any supplier,
secret, or top secret; or
distributor, vendor, or firm that
(2) Employees for whom background
■ 4. Amend section 52.212–5 by—
furnishes supplies or services to or for
investigations have been completed and
■ a. Revising the date of the clause;
a prime contractor or another
credentials issued pursuant to
■ b. Redesignating paragraphs (b)(26)
subcontractor.
Homeland Security Presidential
through (b)(41) as paragraphs (b)(27)
United States, as defined in 8 U.S.C.
Directive (HSPD)–12.
through (b)(42), respectively, and
1101(a)(38), means the 50 States, the
(d) In exceptional cases, the head of
adding a new paragraph (b)(26); and
District of Columbia, Puerto Rico,
the contracting activity may waive the
■ c. Redesignating paragraph (e)(1)(xi)
Guam, and the U.S. Virgin Islands.
E-Verify requirement for a contract or
as paragraph (e)(1)(xii), and adding a
new paragraph (e)(1)(xi) to read as
22.1802
Policy.
subcontract or a class of contracts or
follows:
(a) Statutes and Executive orders
subcontracts, either temporarily or for
require employers to abide by the
the period of performance. This waiver
52.212–5
Contract Terms and Conditions
immigration laws of the United States
authority may not be delegated.
Required to Implement Statutes or
and to employ in the United States only
(e) DHS and the Social Security
Executive Orders—Commercial Items.
individuals who are eligible to work in
Administration (SSA) may terminate a
* * * * *
the United States. The E-Verify program
contractor’s MOU and deny access to
Contract Terms and Conditions
provides an Internet-based means of
the E-Verify system in accordance with
Required to Implement Statutes or
verifying employment eligibility of
the terms of the MOU. If DHS or SSA
Executive Orders—Commercial Items
workers employed in the United States,
terminates a contractor’s MOU, the
(Jan 2009)
but is not a substitute for any other
terminating agency must refer the
employment eligibility verification
contractor to a suspension or debarment * * * * *
requirements.
official for possible suspension or
(b) * * *
(b) Contracting officers shall include
debarment action. During the period
l (26) 52.222–54, Employment Eligibility
in solicitations and contracts, as
between termination of the MOU and a
Verification (Jan 2009). (Executive Order
12989). (Not applicable to the acquisition of
prescribed at 22.1803, requirements that decision by the suspension or
commercially available off-the-shelf items or
Federal contractors must—
debarment official whether to suspend
certain other types of commercial items as
(1) Enroll as Federal contractors in
or debar, the contractor is excused from
prescribed in 22.1803.)
E-Verify;
its obligations under paragraph (b) of
* * * * *
(2) Use E-Verify to verify employment the clause at 52.222–54. If the contractor
(e)(1) * * *
eligibility of all new hires working in
is suspended or debarred as a result of
(xi) 52.222–54, Employment Eligibility
the United States, except that the
the MOU termination, the contractor is
Verification (Jan 2009).
contractor may choose to verify only
not eligible to participate in E-Verify
* * * * *
new hires assigned to the contract if the
during the period of its suspension or
contractor is—
debarment. If the suspension or
(End of clause)
(i) An institution of higher education
debarment official determines not to
■ 5. Add section 52.222–54 to read as
(as defined at 20 U.S.C. 1001(a));
suspend or debar the contractor, then
follows:
(ii) A State or local government or the
the contractor must reenroll in E-Verify.
52.222–54
Employment Eligibility
government of a Federally recognized
22.1803
Contract clause.
Verification.
Indian tribe; or
(iii) A surety performing under a
Insert the clause at 52.222–54,
As prescribed in 22.1803 and
takeover agreement entered into with a
Employment Eligibility Verification, in
12.301(d)(3), insert the following clause:
Federal agency pursuant to a
all solicitations and contracts that
Employment Eligibility Verification
performance bond;
exceed the simplified acquisition
(Jan 2009)
(3) Use E-Verify to verify employment threshold, except those that—
eligibility of all employees assigned to
(a) Are only for work that will be
(a) Definitions. As used in this clause—
Commercially available off-the-shelf (COTS)
the contract; and
performed outside the United States;
item—
(4) Include these requirements, as
(b) Are for a period of performance of
(1) Means any item of supply that is—
required by the clause at 52.222–54, in
less than 120 days; or
(i) A commercial item (as defined in
subcontracts for—
(c) Are only for—
paragraph (1) of the definition at 2.101);
(i) Commercial or noncommercial
(1) Commercially available off-the-
(ii) Sold in substantial quantities in the
services, except for commercial services
shelf items;
commercial marketplace; and
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00056
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
Federal Register / Vol. 73, No. 221 / Friday, November 14, 2008 / Rules and Regulations
67705
(iii) Offered to the Government, without
contract, within 3 business days after the
perform additional employment verification
modification, in the same form in which it
date of hire (but see paragraph (b)(3) of this
using E-Verify for any employee—
is sold in the commercial marketplace; and
section); or
(1) Whose employment eligibility was
(2) Does not include bulk cargo, as defined
(B) Enrolled less than 90 calendar days.
previously verified by the Contractor through
in section 3 of the Shipping Act of 1984 (46
Within 90 calendar days after enrollment as
the E-Verify program;
U.S.C. App. 1702), such as agricultural
a Federal Contractor in E-Verify, the
(2) Who has been granted and holds an
products and petroleum products. Per 46
Contractor shall initiate verification of all
active U.S. Government security clearance for
CFR 525.1(c)(2), ‘‘bulk cargo’’ means cargo
new hires of the Contractor, who are working
access to confidential, secret, or top secret
that is loaded and carried in bulk onboard
in the United States, whether or not assigned
information in accordance with the National
ship without mark or count, in a loose
to the contract, within 3 business days after
Industrial Security Program Operating
unpackaged form, having homogenous
the date of hire (but see paragraph (b)(3) of
Manual; or
characteristics. Bulk cargo loaded into
this section); or
(3) Who has undergone a completed
intermodal equipment, except LASH or
(ii) Employees assigned to the contract. For background investigation and been issued
Seabee barges, is subject to mark and count
each employee assigned to the contract, the
credentials pursuant to Homeland Security
and, therefore, ceases to be bulk cargo.
Contractor shall initiate verification within
Presidential Directive (HSPD)–12, Policy for
Employee assigned to the contract means
90 calendar days after date of contract award
a Common Identification Standard for
an employee who was hired after November
or within 30 days after assignment to the
Federal Employees and Contractors.
6, 1986, who is directly performing work, in
contract, whichever date is later (but see
(e) Subcontracts. The Contractor shall
the United States, under a contract that is
paragraph (b)(4) of this section).
include the requirements of this clause,
required to include the clause prescribed at
(3) If the Contractor is an institution of
including this paragraph (e) (appropriately
22.1803. An employee is not considered to be higher education (as defined at 20 U.S.C.
modified for identification of the parties), in
directly performing work under a contract if
1001(a)); a State or local government or the
each subcontract that—
the employee—
government of a Federally recognized Indian
(1) Is for—(i) Commercial or
(1) Normally performs support work, such
tribe; or a surety performing under a takeover
noncommercial services (except for
as indirect or overhead functions; and
agreement entered into with a Federal agency commercial services that are part of the
(2) Does not perform any substantial duties
pursuant to a performance bond, the
purchase of a COTS item (or an item that
applicable to the contract.
Contractor may choose to verify only
would be a COTS item, but for minor
Subcontract means any contract, as defined employees assigned to the contract, whether
modifications), performed by the COTS
in 2.101, entered into by a subcontractor to
existing employees or new hires. The
provider, and are normally provided for that
furnish supplies or services for performance
Contractor shall follow the applicable
COTS item); or
of a prime contract or a subcontract. It
verification requirements at (b)(1) or (b)(2),
(ii) Construction;
includes but is not limited to purchase
respectively, except that any requirement for
(2) Has a value of more than $3,000; and
orders, and changes and modifications to
verification of new employees applies only to
(3) Includes work performed in the United
purchase orders.
new employees assigned to the contract.
States.
Subcontractor means any supplier,
(4) Option to verify employment eligibility
distributor, vendor, or firm that furnishes
of all employees. The Contractor may elect to
(End of clause)
supplies or services to or for a prime
verify all existing employees hired after
[FR Doc. E8–26904 Filed 11–13–08; 8:45 am]
Contractor or another subcontractor.
November 6, 1986, rather than just those
United States, as defined in 8 U.S.C.
employees assigned to the contract. The
BILLING CODE 6820–EP–P ?≤
1101(a)(38), means the 50 States, the District
Contractor shall initiate verification for each
of Columbia, Puerto Rico, Guam, and the U.S. existing employee working in the United
Virgin Islands.
States who was hired after November 6, 1986, DEPARTMENT OF DEFENSE
(b) Enrollment and verification
within 180 calendar days of—
requirements. (1) If the Contractor is not
(i) Enrollment in the E-Verify program; or
GENERAL SERVICES
enrolled as a Federal Contractor in E-Verify
(ii) Notification to E-Verify Operations of
ADMINISTRATION
at time of contract award, the Contractor
the Contractor’s decision to exercise this
shall—
option, using the contact information
NATIONAL AERONAUTICS AND
(i) Enroll. Enroll as a Federal Contractor in
provided in the E-Verify program
the E-Verify program within 30 calendar days Memorandum of Understanding (MOU).
SPACE ADMINISTRATION
of contract award;
(5) The Contractor shall comply, for the
(ii) Verify all new employees. Within 90
period of performance of this contract, with
48 CFR Chapter 1
calendar days of enrollment in the E-Verify
the requirements of the E-Verify program
[Docket FAR 2008–0003, Sequence 4]
program, begin to use E-Verify to initiate
MOU.
verification of employment eligibility of all
(i) The Department of Homeland Security
Federal Acquisition Regulation;
new hires of the Contractor, who are working
(DHS) or the Social Security Administration
Federal Acquisition Circular 2005–29;
in the United States, whether or not assigned
(SSA) may terminate the Contractor’s MOU
to the contract, within 3 business days after
and deny access to the E-Verify system in
Small Entity Compliance Guide
the date of hire (but see paragraph (b)(3) of
accordance with the terms of the MOU. In
AGENCIES: Department of Defense (DoD),
this section); and
such case, the Contractor will be referred to
General Services Administration (GSA),
(iii) Verify employees assigned to the
a suspension or debarment official.
contract. For each employee assigned to the
(ii) During the period between termination
and National Aeronautics and Space
contract, initiate verification within 90
of the MOU and a decision by the suspension Administration (NASA).
calendar days after date of enrollment or
or debarment official whether to suspend or
ACTION: Small Entity Compliance Guide.
within 30 calendar days of the employee’s
debar, the Contractor is excused from its
assignment to the contract, whichever date is
obligations under paragraph (b) of this
SUMMARY: This document is issued
later (but see paragraph (b)(4) of this section).
clause. If the suspension or debarment
under the joint authority of the
(2) If the Contractor is enrolled as a Federal official determines not to suspend or debar
Secretary of Defense, the Administrator
Contractor in E-Verify at time of contract
the Contractor, then the Contractor must
of General Services and the
award, the Contractor shall use E-Verify to
reenroll in E-Verify.
Administrator of the National
initiate verification of employment eligibility
(c) Web site. Information on registration for
Aeronautics and Space Administration.
of—
and use of the E-Verify program can be
This Small Entity Compliance Guide has
(i) All new employees. (A) Enrolled 90
obtained via the Internet at the Department
calendar days or more. The Contractor shall
of Homeland Security Web site: http://
been prepared in accordance with
initiate verification of all new hires of the
www.dhs.gov/E-Verify.
Section 212 of the Small Business
Contractor, who are working in the United
(d) Individuals previously verified. The
Regulatory Enforcement Fairness Act of
States, whether or not assigned to the
Contractor is not required by this clause to
1996. It consists of a summary of the
VerDate Aug<31>2005
17:48 Nov 13, 2008
Jkt 217001
PO 00000
Frm 00057
Fmt 4701
Sfmt 4700
E:\FR\FM\14NOR3.SGM
14NOR3
mstockstill on PROD1PC66 with RULES3
