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New Immigration Regulation Eased After Firms Complain
Homeland Security Measure Requires Checks of New Hires

By Spencer S. Hsu
Washington Post Staff Writer
Saturday, November 15, 2008

In a concession to business groups, the Homeland Security Department will significantly scale back its planned crackdown this winter on federal contractors that hire illegal immigrants.

Under a rule published yesterday, the agency said only contractors that do more than $100,000 in federal work will be required to use an electronic government system to check the work documents of new hires. Originally, officials had proposed that companies doing $3,000 in federal work must comply.

The agency also said it would require federal contractors to check only laborers used on specific contracts, instead of their entire workforce.

The revisions significantly reduce the number of companies that will be subject to the program, which will apply to federal contracts and solicitations issued after Jan. 15. The Bush administration had hoped to make the work eligibility system, called E-Verify, mandatory for nearly 200,000 government contractors, covering about 4 million U.S. workers over 10 years.

The government did not say how many companies would be exempted, but stated that it awarded 2.8 million new contracts last year at or below the $100,000 threshold. The contracts, mostly set-asides for small businesses, were worth $9 billion, or less than 3 percent of federal obligations.

In any case, the program will usher in a new degree of employee scrutiny in a wide swath of corporate America that does federal business, including industrial giants with household names such as General Electric, Lockheed-Martin and Boeing, as well as Beltway mainstays such as computer services firms CACI, ManTech International and SRA International.

The change came after months of intense lobbying by business groups, which argued that the requirement singled out contractors, was unduly burdensome and was so big that it would overwhelm the government system. Randel K. Johnson, vice president and spokesman for the U.S. Chamber of Commerce, said that the Bush administration "had been responsive to a substantial amount of business concerns," particularly by limiting the rule to large contractors, but that the chamber is reviewing its legal options.

In a statement, the Bush administration said it took into account 1,600 comments and made changes "designed to lighten the burden on small businesses who decide to accept federal contracts, and to provide contractors with flexible means of complying with the basic requirement that all persons working on federal contracts be electronically verified."

Still, critics accused the lame-duck administration, which has made E-Verify a centerpiece of its immigration reform effort, of trying to force through the program before the new Democratic administration takes office.

The proposal "vastly understates the burden imposed on employers, and leaves unanswered a number of fundamental questions," said Eric Bord, a lawyer at Morgan, Lewis & Bockius who represents companies facing immigration investigations.

Mike Aitken, top lobbyist for the Society for Human Resource Management, a trade association for U.S. hiring managers, said DHS has repeatedly flouted congressional intent that E-Verify be voluntary, underestimated the program's costs and made business responsible for enforcing immigration law.

Congress created a worker-verification system in 1996, and participation has remained voluntary, although 13 state legislatures have passed similar measures for state contractors.

With E-Verify, human resources officials can use an Internet-based system to check federal Social Security and immigration databases and determine whether an employee is authorized to work.

The federal program was expanded nationwide in 2003, with enrollment growing from 3,000 to 92,000 companies. However, it still covers less than 2 percent of an estimated 6 million U.S. employers and about 11 percent of annual hiring.

In early June, President Bush proposed doubling the number of companies, mandating participation by 169,000 federal contractors and requiring them for the first time to verify the eligibility of existing employees, not just new hires.

Business groups mobilized in protest. The U.S. chamber said the rule would cost $10 billion to implement, 100 times the government's estimate.

The Professional Services Council, an Arlington-based trade group for 330 government services contractors, complained that the proposal singles out federal contractors for greater administrative headaches and potential liability for discrimination and other lawsuits by workers.

"It was the uncertain process, it was the uncertain liability, it was the uncertain scalability of the E-Verify system to handle the size and scope of what the president's executive order was demanding," said Alan Chvotkin, top lobbyist and counsel for the council. With the changes, "I think we're getting closer to a system that is executable in practice, rather than just in theory, but it will remain to be seen whether we will be able to implement this rule."

One concern is database errors. The government acknowledged that the system initially rejects about 5 percent of workers, which could threaten the jobs of 220,000 contractor employees in coming years. U.S. officials estimate that only 2 percent of legal workers, or about 4,000, who were erroneously rejected will choose to quit or give up their jobs, rather that correct mistakes.

Though the announced changes will slow E-Verify's expansion, federal officials stood by their prediction that the initiative will eventually cover more than 20 percent of U.S. hiring, DHS spokeswoman Laura Keehner said.

Grandfathered contracts will eventually expire, Keehner said, and big employers also may choose under the rule to verify the immigration status of all employees, not just those working on federal business.

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