The Department of Homeland Security (DHS) announced the so-called ‘no-match’ rules (which told employers what to do if the Social Security number provided by a new hire didn’t match the number in the feds’ database) in 2007. Controversy and legal battles have prevented the rule from ever going into effect.

Now, it’s officially off the books. A regulation was published in the Federal Register on October 7 rescinding the rule.

The DHS announced it will focus on promoting the use of E-Verify as the mechanism for preventing the employment of illegal immigrants.

To clear up some of the confusion, U.S. Citizenship and Immigration Services (USCIS) has published answers to a few of HR’s most common questions about federal contractors and E-Verify:

1. Who’s affected by the rule?

Companies will be required to use E-Verify when they enter into federal contracts with a performance period longer than 120 days and a value of more than $100,000. Also, subcontractors are covered by the rule when the prime contract meets the above requirements and the subcontract is for services or construction with a value over $3,000.

2. Which employees must be verified?

Covered contractors are required to verify all new hires, as well as any existing employees assigned to the government contract. That includes employees who perform “substantial duties” under the contract, as opposed to those performing overhead or support work.

3. When do we have to enroll?

The rule went into effect on September 8. Any applicable federal contract signed after that date must include an “E-Verify clause” that requires contractors to use the system.

Companies not already signed up for E-Verify have to enroll within 30 days after they’re awarded a contract with that clause, and they must begin verifying new hires and current employees working on the contract within 90 days.

However, all companies can sign up for E-Verify whenever they want, so current or prospective federal contractors might as well enroll before they’re required to.

4. What if we already have a government contract?

You won’t be required to sign up for E-Verify until you sign a new contract that contains the E-Verify clause.

For more information from USCIS, click here.

A new regulation was recently enacted requiring companies with federal contracts to verify employees using the federal government’s E-Verify system. However, the rule was delayed from taking effect when a coalition of business groups sued, claiming the reg was illegal.

It was set to take effect on Feb. 20, depending on the outcome of the court case.

But an order from the new presidential administration has pushed the effective date back further to May 21, allowing the White House to review the pending regulation.

Of course, that effective date still depends on the outcome of the pending court case.

The rule, issued by the Department of Homeland Security (DHS), will require most employers with federal contracts to use E-Verify for new hires, as well as current employees assigned to work on new contracts.

Covered employees included those with contracts valued at more than $120,000, lasting longer than 120 days and involving work done in the U.S.

A coalition of business groups, including the Society for Human Resource Management and the U.S. Chamber of Commerce, filed a lawsuit at the end of last month to block the regulation. They claim E-Verify was enacted as a strictly voluntary program, and that requiring companies to use it violates the law Congress passed to authorize it.

We’ll keep you posted on the outcome of the suit. For now, though, the rule’s effective date has been pushed back to Feb. 20.

State mandates

E-Verify is already mandatory for some or all employers in 11 states:  Arizona, Arkansas, Colorado, Georgia, Mississippi, Missouri, North Carolina, Oklahoma, Rhode Island, South Carolina and Utah.

The laws vary from state to state: Some only apply to companies that contract with the state government, while the mandates in Arizona, Mississippi, Missouri and South Carolina apply to all companies.

Arizona’s rule was recently challenged by businesses and immigration advocacy groups, but it was upheld in court.

Will E-Verify last?

Meanwhile, the future of the E-Verify program itself is uncertain.

Funding was set to expire last November, before Congress extended it until March 6. That was after a five-year extension was passed by a wide margin in the House of Representatives but failed to make it through the Senate.

President-elect Obama has expressed support for E-Verify. We’ll keep you posted on whether that translates into another extension for the program.

The new rule applies to companies with contracts lasting more than 120 days, valued at more than $120,000 and involving work done in the United States.

Companies not already using E-Verify will have to:

• enroll in the program within 30 days of being awarded a federal contract
• start verifying all new hires within 90 days of enrollment
• verify existing employees who are assigned to work on the contract, and
• continue using E-Verify for the duration of the contract.

One concern with the federal system is the possibility that an undocumented worker may have stolen another person’s name and social security number. In those cases, the system won’t see any problem — it’ll just verify that the name and SSN match.

Will employers be held liable if such an employee is hired?

No, according to the DHS. Companies only get fined when they knowingly violate immigration laws, said Homeland Security Secretary Michael Chertoff in a recent presentation at the Brookings Institute.

If a company is raided and it turns out E-Verify was properly used, the company won’t be fined.

Said Chertoff: “If you operate in good faith, and you use that system, even if it turns out that someone has managed to gain the system by stealing a real identity, you’re not going to get fined or punished.”

The company, Howard Industries, was the target of the largest immigration raid at a single location in U.S. history — despite using E-Verify for new hires, as mandated by state law.

How could so many undocumented workers have been hired? One big explanation could be the timing. The investigation started two years ago, a year before the company was using E-Verify.

Also to blame might be the fact that E-Verify doesn’t do much to prevent identity theft. If an undocumented employee uses another person’s name and social security number, the system won’t tell employers that — it only matches names and SSNs.

E-Verify is set to expire in November, unless Congress approves an extension. The House of Representatives passed a bill to extend the program for five more years, but the Senate has yet to take action.

Experts say situations like Howard’s are likely to up the ante in the debate on whether to scrap it, keep it as a voluntary or make it mandatory for employers. We’ll keep you posted.

The latest state to pass a law requiring employers to use E-Verify is South Carolina. The new law requires all companies in the state to participate in the program and use the system to verify new hire eligibility, or only hire employees with valid driver’s licenses or state ID cards.

Employers with 100 or more employees must comply with the law by July 1, 2009. Other companies have until July 1, 2010.

The law also imposes stricter penalties on employers that hire unauthorized workers, ranging from a $100-$1,000 fine to permanent revocation of the license to employ workers in South Carolina.

The state joins others, such as Missouri, Arizona and Mississippi, that require all companies to use E-Verify.

State governments and the feds are putting more and more pressure on companies to avoid hiring unauthorized workers. One possible side effect of that pressure: an increase in national origin discrimination claims.

On one hand, employers can be severely penalized for hiring illegal workers. And on the other, the law says they can’t treat employees differently based on where they’re from.

Staying out of trouble on both sides requires consistency and strict compliance with the government’s rules and regs. Here are two big areas companies need to watch out for:

E-Verify

One part of the push against illegal immigration is the expansion of the Department of Homeland Security’s E-Verify system. A bill extending the program for five more years is currently working its way through Congress, and President Bush recently signed an executive order requiring federal contractors to use the system.

Additionally, 10 states and counting have passed laws requiring some or all employers to use E-Verify.

Improperly using the system, though, can get a company dragged into court to fight a discrimination suit. Here are some E-Verify dos and don’ts, courtesy of the DHS:

• Use the program for all new hires. Selectively seeking verification when a company is suspicious of one person is an easy way to get hit with a bias claim.
• Don’t use it as a pre-screen, or to check on current employees. E-Verify is for new hires only. Verification can take place only after the employee fills out an I-9 form and no later than three days after his or her start date.
• Don’t act too quickly. As the program’s opponents point out, E-Verify has been known to return incorrect information. Getting a “Tentative Nonconfirmation” (TNC) is not grounds for termination. Employees must be notified of the TNC as soon as possible, referred to the Social Security Administration (SSA) and given eight business days to resolve the discrepancy by contacting the SSA.

No-match letters

Similar to E-Verify discrepancies, receiving a no-match letter from the SSA (notice that the name and SSN reported by an employer don’t match the records in the SSA’s database) doesn’t mean an employee needs to be fired.

To avoid a charge of discrimination, employers need to treat all no-match situations the same and follow the DHS’s safe harbor guidelines after receiving a letter:

• Within 30 days, verify there was no recordkeeping error on your part.
• Then, ask the employee to confirm the info given to you was correct.
• If it was, direct the employee to the SSA to resolve the issue.

If the problem isn’t resolved within 90 days and the employee isn’t terminated, the company risks getting slammed for knowingly employing an unauthorized worker.

However, if an employee’s fired before then, it may look like the company merely assumed the employee was unauthorized — which could be grounds for a national origin bias suit.

This November, the DHS’s E-Verify program is scheduled to end unless Congress passes legislation to continue it.

Though a House of Representatives committee had previously shot down an amendment to extend funding for E-Verify, a different extension bill was recently introduced.

The bill, which extends the program for five years, was passed by the full House at the end of July. There’s no word yet on when the Senate will vote on its version of the bill.

The vote doesn’t mean lawmakers are happy with E-Verify, though.

The law would allow Congress to change the program at any time during those five years. And many legislators (including the bill’s author, Rep. Gabrielle Giffords, D-Arizona) have testified that the program should continue — but needs to be reformed to correct accuracy and security issues.