White House Aims for Backdoor E-Verify Expansion in Grants Rule

The Trump administration is quietly pursuing the biggest expansion in decades of the federal electronic system used to verify workers’ employment eligibility via a proposal to overhaul its grant process.

Draft regulations released by the White House Office of Management and Budget would require all federal grant recipients to enroll in E-Verify, which first launched in 1997 to root out the unlawful employment of foreign workers.

Although the full scope of employers affected by the rule isn’t clear, “it’s going to be bigger than people expect,” said John Mazzeo, counsel in Seyfarth Shaw’s immigration practice.

“My biggest fear is that people just aren’t going to know this applies to them,” he said.

The mandate, part of a larger package of restrictions on federal grant funds, would add to the government’s workplace enforcement tools as the administration pursues a broader immigration crackdown.

The Department of Homeland Security has rolled out a sharp new focus on fraud and unauthorized hiring that would be aided by the E-Verify expansion, as well as other new policies that have upended employment-based immigration. It’s also raised the financial stakes for even minor errors on documents submitted to establish new hires’ employment authorization, meaning businesses could face thousands in fines of between $288 to $2,861 for each faulty I-9 form.

E-Verify compares data entered on those I-9 forms to records in federal databases. Enrollment in the program is generally voluntary for private businesses, but since 2009 it’s been a requirement for certain federal contracts. A growing number of Republican controlled-states have also passed new E-Verify mandates in recent years.

Although many grant recipients may already be participating in the program, the OMB proposal could cover a broad range of employers, including hospitals, universities, state parks departments, and local child services providers.

Administrative Headaches

Congressional lawmakers have debated a national E-Verify mandate since it was first introduced in 1997. While the prospects of passing such a requirement are dim, tying federal funds to participation offers a straightforward path to expanding the program, observers said. And DHS introduced a separate proposal this week that would require certain immigrants be employed by businesses using E-Verify in order to renew work permits.

The Immigration and Nationality Act has long required employers to verify new hires’ work authorization. The electronic system is supposed to improve the accuracy and efficiency of employment verification, but it’s been roundly criticized for introducing errors that can disrupt businesses’ operations and the jobs of authorized workers. In more recent years the error rate has declined significantly and the government has “improved the system tremendously,” said John Fay, director of product strategy at Equifax Workforce Solutions.

But it’s “not a silver bullet,” including for safeguarding against identity theft or other fraud, he said.

Moreover, false negatives can be significantly higher for certain populations like immigrants with humanitarian protections, and even a small error rate could affect thousands of authorized workers. For smaller organizations with shoestring human resources operations, the program comes with significant administrative challenges, attorneys said. The proposed expansion is “asking the same people to do more with the same bandwidth,” said Seyfarth’s Mazzeo.

Federal contractors are required to use the program for deals for more than $150,000, but there’s no such threshold for grant recipients in the OMB rule.

Employers that use the program tend to be large organizations that already have in-house infrastructure for HR compliance, said Jessie Hahn, senior counsel for labor and employment policy at the National Immigration Law Center. Even those that do can be exposed to raids and audits over immigration violations, she said.

“It really becomes this question of how are these smaller businesses going to bear the burden of navigating the verification processes and resolving mismatches and just absorbing all the compliance costs?” Hahn said.

Enforcement Tool

OMB didn’t respond to questions about the rule, but its proposal said the E-Verify provision is “intended to strengthen compliance with Federal employment eligibility requirements for individuals performing work under Federal awards” in line with the INA’s prohibition on employment of unauthorized immigrants.

While many grant recipients themselves may not employ unauthorized workers, the E-Verify expansion would apply to “subrecipients” as well, a term that’s not defined in the proposal but could encompass contractors or other entities paid with grant funds.

“The question is how far does it flow,” Eileen Lohmann, a partner at business immigration firm BAL, said of the mandate.

The E-Verify expansion would also come with new reporting requirements for grant recipients if the system is unable to confirm a worker’s employment authorization, potentially creating new targets for enforcement efforts.

When the program can’t match the information on an I-9 form with records from the Social Security Administration or DHS, an employer receives a notification known as a “tentative non-confirmation” and must tell the worker so they can contact the agencies to verify their work eligibility. If a worker doesn’t take action to address the issue or their work authorization can’t be verified, their employer will receive a final non-confirmation from E-Verify. The next step is terminating the worker to avoid any liability.

The OMB rule would require grant recipients to notify the federal agencies providing their funding of any final non-confirmation notices—or risk losing out on awards. That raises the stakes of compliance, adding “another obligation that no organization can get wrong,” said Equifax’s Fay.

“The government has been concerned about this for some time—that it’s requiring employers to use E-Verify, but if they don’t take action it’s not achieving its purpose,” he said.

The goal of the reporting requirement, which hasn’t previously been imposed, isn’t spelled out in the proposal. But it would likely aid further enforcement efforts by the Trump administration, said Jessica Abrahams, a partner at Faegre Drinker Biddle & Reath LLP.

“This is one more data point that could be used to pursue illegal immigrants,” she said.