To E-Verify or Not To E-Verify, That Is the Question

E-Verify is a free Internet-based system that compares information from an employee’s Form I-9 to data supplied by  the federal government to confirm whether the individual is authorized to work in the United States. According to the Department of Homeland Security (DHS), more than 387,000 employers, large and small, across the United States use E-Verify to check the employment eligibility of new employees, and about 1,200 new businesses sign up for the service each week.

While the program is optional for most US employers, some are required by federal or state law to utilize the E-Verify system. E-Verify is mandatory for federal contractors and subcontractor if the contract contains the Federal Acquisition Regulation E-Verify clause. In addition, all employers in Alabama, Arizona, Mississippi and South Carolina are currently required to use E-Verify. Many other states require employers of certain sizes, state agencies and/or state contractors to use the system.

If federal or state law does not require a business to use E-Verify, the employer may make a strategic decision whether or not to use the system. Below are some benefits and drawbacks of utilizing E-Verify.

Benefits of E-Verify
At the federal level, the main advantage to using the E-Verify system is that the company may reduce its exposure to DHS violations and fines. If an employer in good faith hires an individual who is not authorized to work in the US, but successfully verifies the employee through the E-Verify System, the employer will not be held liable by the DHS.  At the state level, many states offer safe harbor provisions with respect to state income tax liability for employers who utilize the E-Verify system. In these states, if the company knowingly hires an individual not eligible to work in the United States and deducts any expenses associated with that employee when calculating state income taxes, the company is in violation of state law and could be liable for back-taxes, penalties and interest.  However, if the employee was verified through the E-Verify system, the company will be sheltered from liability in this regard.

Drawbacks to E-Verify
There are several drawbacks to utilizing the E-Verify system. First, although the system is free, it takes some time for the company to enroll online in the program and to verify each new hire’s information. There have also been a few glitches in the system, including inaccurate data. Although the DHS has issued recent press releases regarding improvements in the accuracy of the data housed in the system, employers are still receiving, on occasion, false positives through E-Verify. Another major area of concern for employers is the documentation provided by the system. If the company opts to hire an individual who fails the E-Verify process, using the system further documents the company’s noncompliance. Unless the company is completely committed to disqualifying unverified job candidates, the use of the system is not recommended. Another major drawback is that information obtained by the DHS through the system may be used for I-9 audits and/or work site investigations.

We recommend that employers consider both the benefits and drawbacks of utilizing the E-Verify system and make a tactical decision regarding its use.