In January 2009, we reported on the postponement of a controversial federal regulation resulting from a legal challenge filed by Proskauer Rose on behalf of several trade organizations, including the U.S. Chamber of Commerce. The rule, the result of an executive order signed by then-President George W. Bush, requires most federal contractors and subcontractors to verify their employees’ work eligibility using the Department of Homeland Security’s E-Verify system. On July 8, 2009, President Barack Obama’s Administration announced its plan to go forward with the rule. Immediately after this announcement, the U.S. Senate approved legislation that would codify the rule into law.
E-Verify is a joint effort between the Department of Homeland Security and the Social Security Administration that provides an Internet-based verification system for employers to determine the work status of their employees. Concerns have been raised about the burdens on both employers and employees under the mandated use of E-Verify. Employers are concerned about the cost of yet one more obstacle to hiring and maintaining employees and about the possibility of losing qualified employees or potential employees as a result of E-Verify’s 5 percent error rate. Employees face losing current or potential jobs as a result of these false negatives, which are caused by either clerical errors or identity theft. And because E-Verify doesn’t screen against identity theft, some commentators have expressed concern that its increased use will incentivize illegal workers to engage in such theft as an alternative to using false or fabricated information.
On December 23, 2008, Proskauer filed a complaint—on behalf of the U.S. Chamber of Commerce; Associated Builders and Contractors, Inc.; the Society for Human Resource Management; the American Council on International Personnel; and HR Policy Association—in the United States District Court for the District of Maryland, claiming that the Federal Contractor Rule is an unconstitutional usurpation of Congress’s power and is in conflict with Congressional statutes. In response to this litigation, the federal government has delayed the implementation of the contractor rule several times. On January 28, 2009, the government moved for the district court to stay the proceedings until the Obama Administration could review the rule and determine whether it wanted to implement or abandon it. The court granted the motion and agreed to stay the proceedings, ultimately extending the stay until August 17, 2009.
Six months later, the Obama Administration has decided to move forward with the implementation of the rule. In a press release on July 8, 2009, Department of Homeland Security Secretary Janet Napolitano announced the Administration’s intent to implement the rule, praising its ability to aid in immigration law enforcement. The rule is scheduled to take effect on September 8, 2009. The press release also announced the Administration’s plans to propose a new regulation which would rescind the 2007 “No-Match” Rule, which requires employers to take action against employees who provide information on their W-2 form that does not match information in the Social Security Administration’s database.
Following Homeland Security’s official announcement, the government has reported to the district court its intentions to “retain the Final Rule and its current applicability date of September 8, 2009” and “defend this litigation as appropriate upon the termination of the stay.” In order to “facilitate a ruling on the pending motion prior to the Final Rule taking effect,” the court issued an order lifting the stay. Litigation is scheduled to resume with briefs to be filed this month and a summary judgment hearing on August 28, 2009.
Elsewhere in Washington, D.C., the United States Senate has also weighed in in favor of E-Verify. On July 8, 2009, Senator Jeff Sessions of Alabama succeeded in amending a Department of Homeland Security appropriations bill to make E-Verify a permanent program and to mandate federal contractors use the system. Senator David Vitter of Louisiana also successfully moved to amend the bill to forbid the Department of Homeland Security from rescinding the Federal Contractor Rule or the No-Match Rule. The Senate version of the bill with these two amendments was approved of by a vote of the Senate on July 9, 2009. Conferees from the House of Representatives and the Senate will determine whether these amendments remain in the final bill to be presented to President Obama for his signature.
The pending case is Chamber of Commerce of the U.S. v. Napolitano, No. AW-08-344 (D. Md. filed Dec. 23, 2008). The DHS appropriations bill is H.R. 2892, 111th Cong. (2009).
Proskauer summer associate Shawn Ledingham contributed to this post.