Can Local Governments Require Contractors To Use E-Verify?

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Sejal Zota is the School of Government Immigration Law Specialist.

Community development and other local government agencies in North Carolina occasionally ask whether they can require contractors to use the E-Verify program. E-Verify is a web-based system that allows participating employers to electronically verify the employment authorization of newly hired employees. It is operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA).

The North Carolina General Statutes since 2007 have required all state agencies, departments, institutions, universities, and local education agencies to use E-Verify to check the work authorization of new employees. Earlier this year, the General Assembly enacted legislation requiring counties, municipalities and certain private employers to also use the federal E-Verify program (my bulletin analyzing this legislation can be found here). Government contractors are currently not required to use E-Verify, though they may voluntarily elect to do so. Can local governments require use of the program by contractors? Until recently, there was a question as to whether state and local governments could legally require private employers or government contractors to use E-Verify, or whether such an action would violate federal law. That issue was addressed by United States Supreme Court earlier this year in Chamber of Commerce of U.S. v. Whiting.

The question the Court considered was whether Arizona’s requirement that all employers participate in E-Verify conflicted with federal immigration law. E-Verify is structured as a voluntary program operated by DHS and SSA.  DHS encourages the use of E-Verify, but the agency is not allowed to require employers, other than federal agencies and contractors, to use it. The Court concluded that the federal law did not, however, limit state action—there was no indication that Congress intended to prevent the states from requiring participation in E-Verify. The Court further found no conflict between Arizona’s E-Verify requirement and federal law, as the only consequence of not using E-Verify was the same under both laws—an employer forfeits the rebuttable presumption that he did not knowingly employ an unauthorized alien.

Under Whiting, it appears that E-Verify laws similar to Arizona’s do not conflict with federal law and will withstand legal challenge. It is worth noting that in Arizona, employers faced no sanction for failure to comply with the E-Verify requirement. The Court noted this lack of penalty as support for finding no conflict between the state E-Verify requirement and federal law. It is unclear from the opinion whether this was a significant consideration for the Court and whether imposing a sanction, such as a fine or loss of contract, for failure to use E-Verify would create any conflict with the federal law.

The bottom line: Nothing appears to prohibit a local government from requiring its contractors to promise to use E-Verify as a condition of being awarded a contract, but imposing sanctions on a non-compliant contractor after the contract has already been awarded could be problematic. Accordingly, any such E-Verify requirement should be developed in consultation with the local government’s attorney.

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