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Posted: August 25, 2009

Employment verification rules changing

E-Verify goes into effect next month

Charles Lucy and John Scorsine

All employers are required to comply with a host of statutory and regulatory requirements when hiring new employees. Companies doing business with the federal and state government are required to observe additional employment law mandates, such as the payment of prevailing wage rates under the Davis Bacon Act or the Service Contract Act.

Last year, the federal government added a new requirement for all contractors—the E-Verify Program. The new program, which goes into effect on September 8, 2009, requires all contractors and any covered subcontractors to enroll in the E-Verify program within 30 calendar days after the contract or subcontract award date.  Contractors must also start sending employment verification inquiries within 90 days of contract award.

The Department of Homeland Security website states that,

“E-Verify (formerly the Basic Pilot/Employment Eligibility Verification Program) is an online system operated jointly by the Department of Homeland Security and the Social Security Administration (SSA). Participating employers can check the work status of new hires online by comparing information from an employee's I-9 form against SSA and Department of Homeland Security databases. More than 69,000 employers are enrolled in the program, with over 4 million queries run so far in fiscal year 2008. E-Verify is free and voluntary, and is the best means available for determining employment eligibility of new hires and the validity of their Social Security Numbers.”

Since August of 2006, Colorado has had a similar law on the books, requiring state contractors to verify the work status of their employees and subcontractors. That requirement was expanded in 2007 to include all Colorado employers. 

In addition, while the original law mandated the use of E-Verify, it was amended last year to permit an employer to participate in a Colorado Department of Labor Program in lieu of the federal system. This amendment, however, will not change the requirement to use E-Verify for Colorado based federal contractors. The Colorado program is also in addition to the current requirement to file an I-9 for all employees, regardless of citizenship.

Significantly, while the Colorado program has been in existence for the last two years, the Colorado Department of Labor has announced that it will be conducting a public hearing on its proposed rules. The hearing will be held on August 31st at 633 17th Street, Suite 200 in Denver and is accepting written comments until September 2nd.  The proposed rules are available on the web for anyone to review.

The proposed rules implement the statutory requirement that, within twenty days of hiring a new employee, the employer must complete various documentation requirements (i.e. complete a signed affirmation and obtain copies of supporting identity documents) to verify the employment eligibility of the new hire. Employers must maintain these records for the term of employment, pursuant to the existing law.

The proposed rules establish a system of compliance audits based upon complaints, random selection of employers, or in instances where employer compliance is questioned. The audit process is limited to the examination of compliance as to current employees; the examination of historical records of past employees is not contemplated since the law only requires record retention for the term of current employment. The audit examines the existence of employer affirmations and supporting documents for each employee.  Random audits may not be conducted more frequently than every two years.

As the rules now stand, a first offense of non-compliance would result in a fine of not more than $5,000. Fines for subsequent offenses could reach $25,000. 

Offenses include the failure, with reckless disregard, to submit documents required by the employment verification law and the submission, with reckless disregard, of false or fraudulent documents. Reckless disregard is not further defined, although the failure to respond to an audit is presumed to meet that standard.

It is important to remember that compliance with either the Colorado laws concerning public service contracts or employment eligibility verification is currently no substitute for compliance with separate federal verification requirements.  Employers still are required to complete an I-9 and retain them for three years after the date of hire or for one year after employment ends, whichever is greater. In addition, federal contractors still must use the E-Verify system to ascertain the employment eligibility of personnel working on a federal contract.

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Charles Lucy has 20 plus years of diverse federal regulatory, business and litigation experience and practices in Holland & Hart’s Colorado Springs office.  Mr. Lucy has technical expertise in commercial space law, university/government technology transfer programs, bid protests, ASBCA appeals, government contract audits, and general procurement matters. He can be reached at 719-475-6447 or clucy@hollandhart.com.  

John Scorsine is also in Holland & Hart’s Colorado Springs office and concentrates his practice in government contracting.  He has negotiated contracts and other agreements within both governmental and private sectors and is knowledgeable of FAR and DFARS, as well as having experience in SBIR and STTR programs. He can be reached at 719-475-6496 or jmscorsine@hollandhart.com.

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Readers Respond

I am an immigrtion attorney in Colorado and do a lot of work with employers on compliance issues. The statement in the article below is inaccurate. "Since August of 2006, Colorado has had a similar law on the books, requiring state contractors to verify the work status of their employees and subcontractors. That requirement was expanded in 2007 to include all Colorado employers." The state affirmation requirement (C.R.S. 8-2-122) has been in effect since January 1, 2007 and requires all Colorado employers to complete an affirmation form within 20 days of employment indicating that the employer has reviewed the documentation of the employee, has copied the documents, has not altered the documents and does not have unauthorized workers. However, the E-Verify requirement for the State of Colorado (C.R.S. 8-17.5-101) continues to apply ONLY to those employers who have state or public contracts. It does not apply to all State employers. Employers who do not have State contracts are not required to participate in E-Verify or the CODOL State administered program. It remains a voluntary program. By Jeff Joseph on 2009 08 26

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