April 24, 2008 - As the H-1B Cap lottery receipts arrive and it becomes known which petitions will be selected for processing and which will be rejected, many employers are wondering if they can benefit from the new OPT Extension and Cap-Gap Relief rule issued by the Department of Homeland Security (DHS). (Please see our Client Alert of April 7, 2008 for additional details regarding the new rule. http://www.usabal.com/news/2008/08Apr07.html.) One aspect of the new rule allows F-1 students with specific technical degrees to apply for 17 additional months of OPT when certain criteria are met. Among the requirements is the need for the student to be working for, or have a job offer from, an employer who is participating in the E-Verify program at the time the student files the application for the 17 month OPT extension.

Presently, E-Verify is still voluntary except in Arizona, which has mandated its use, and some states which require its use in limited circumstances, such as for state contractors and public employers. A very small percentage of employers are currently enrolled. The E-Verify component of the new rule is prompting many employers to consider registering for E-Verify in order to benefit from extended employment of F-1 students with OPT work authorization. While there are benefits to using the program, there are also factors which each employer should consider carefully before enrolling.

This Alert provides an overview of E-Verify and factors that employers should consider when evaluating whether to enroll in the program.

What is E-Verify?

The E-Verify program (formerly the Basic Pilot Program) is an internet-based system, jointly administered by the DHS and the Social Security Administration (SSA), designed to help employers verify employment eligibility for all new hires. Participating employers must verify employment eligibility of new hires by checking the employee’s I-9 information against the SSA and DHS databases.

The Registration Process

To participate in E-Verify, an employer must register online and enter into a Memorandum of Understanding (MOU) with the DHS and SSA to comply with the program’s rules. Companies with multiple hiring sites can choose to use E-Verify for all or only selected work sites. Once enrolled, E-Verify must be used for all new hires at registered sites. Companies may also choose to outsource submission of verification queries by using a “Designated Agent.”

Employer Responsibilities

To participate in E-Verify, employers must agree to certain responsibilities in the MOU, including:

• All program users must complete an online tutorial

• Employers must use E-Verify for all newly hired employees, both U.S. citizens and non-citizens, after hire and within the first three business days of the start date

• E-Verify may not be used to prescreen applicants for employment, go back and check employees hired before the company signed the MOU, or re-verify employees who have temporary employment authorization

• Employers must verify employees in a non-discriminatory manner

• Employers must post a notice announcing participation in the program, as well as an Anti-Discrimination Notice issued by the Department of Justice’s Office of Special Counsel for Immigration Related Unfair Employment Practices

• I-9 forms must include Social Security numbers, and must use List B documents that have ID photos

• Employers must follow designated procedures in response to Tentative Non-Confirmations (TNC’s) from the SSA and DHS databases

• During the case resolution process, employers cannot take adverse action against employees

• Employers must agree to allow DHS and SSA officials access to E-Verify related records and to interview the employer’s designated agents and employees who use the E-Verify process

Some Advantages to Using E-Verify

E-Verify is meant to help employers maintain a legal workforce. E-Verify can provide a framework for an efficient employment eligibility verification program and reduce document and identity fraud. It eliminates current SSA No-Match letters and instead provides Tentative Non-Confirmation promptly.

In addition, enrollment in E-Verify enables hired foreign national students with Science, Technology, Engineering or Mathematics (STEM) degrees to apply for 17 month OPT extensions beyond the initial 12 month period. This opportunity may present a significant benefit to employers who recruit heavily from U.S. universities for individuals with degrees in Science, Technology, Engineering and Mathematics. With this new “carrot” to promote use of E-Verify, companies may want to reevaluate the pros and cons of E-Verify once they learn if qualified STEM U.S. graduates failed to make the lottery.

Some Concerns About Using E-Verify

The E-Verify process is a systematic one which requires an administrative commitment from those who use it. Entering the I-9 data into E-Verify may require duplicative data entry, unless an employer uses an electronic I-9 solution which links directly to E-Verify. For example, BAL offers an electronic I-9 completion and storage tool that facilitates submission of the E-Verify information, necessitating only the click of an icon to submit the E-Verify information once the I-9 data has been secured.

Timely compliance with the program’s steps and follow-up requirements involve diligent oversight by users who must first receive adequate training. Compliance therefore comes with added administrative costs to the employer.

In addition, there are known errors in the SSA and DHS systems that cause TNC’s for employees with legitimate work authorization. TNC’s prompt the formal steps of the resolution process, which at a minimum result in increased administrative workloads and the employee’s time to seek resolution with government agencies. When TNC’s cannot be resolved and a Final Non-Confirmation results, employers must either terminate the employee or notify DHS if they choose to continue employment, rendering themselves subject to legal scrutiny regarding unauthorized employment.

Also, participation in E-Verify may lead to increased exposure to government audits. The MOU requires employers to agree to make E-Verify records available to SSA and DHS officials, and to allow those officials to interview company agents and employees about their experiences with the program. While it is unclear when and how often government officials will initiate this kind of inspection, employers using E-Verify should be aware of the exposure and make sure they are managing a fully compliant program.

Further concerns have been raised about the technical inferiority of the government’s electronic databases, particularly the SSA system, which has known errors and was not designed to handle the amount of traffic that will ensue as more employers utilize the E-Verify program. The SSA and DHS offices may also have trouble managing the increased inquiries to be made at local offices as employees with TNC’s arrive to resolve discrepancies. These additional burdens on the SSA and DHS may result in delays and unknown issues with using the system in the future.

BAL Recommendations

BAL encourages employers to examine their existing employment eligibility verification process and consider whether the benefits, including the option of employing F-1 students with extended periods of OPT, outweigh the additional burdens and exposure that come along with E-Verify enrollment. Before enrolling, BAL recommends conducting a comprehensive internal audit of current I-9’s to identify any liability the company may already have, and to implement changes, if needed, to create a streamlined and compliant program.

If desired, BAL can assist employers in this effort by using our electronic solution, converting all paper I-9’s into electronic format and providing an audit report which will identify all errors on the I-9’s. Once a company has identified the errors, reasonable steps can be taken to mitigate liability by correcting the errors before signing a Memorandum of Understanding to participate in the E-Verify program.

Recent events in the immigration enforcement arena point to the increasing importance of complying with employment eligibility verification laws. Worksite enforcement raids are on the rise, state and federal legislation is on the table to mandate the use of the E-Verify federal program, and criminal liability penalties have increased. More and more companies are thus recognizing the need to review internal procedures, and turning to an electronic solution to complete and store their I-9’s, as well as link them directly into the E-Verify program.

Please contact clientservices@usabal.com for additional information and guidance related to I-9 electronic completion and storage or E-Verify.