Homeland Security Secretary Janet Napolitano announced on July 8, 2009, that the Obama administration intends to rescind regulations and procedures for employers that receive employee “no-match” letters from the Social Security Administration. At the same time, Napolitano reasserted the administration’s support of a regulation that would require federal contractors and subcontractors to use E-Verify—the electronic employment verification system operated by U.S. Citizenship and Immigration Services. 

Napolitano said that the U.S. Department of Homeland Security (DHS) will soon propose a regulation to rescind the no-match rules, which were promulgated in 2007 during the administration of President George W. Bush. A federal court issued a temporary injunction blocking enforcement of the no-match rules shortly after they were published.

One day after Napolitano’s announcement, the Senate moved to block the DHS from rescinding the controversial no-match rules by approving an amendment that prohibits using federal funds to withdraw the regulation. The amendment was attached to the DHS appropriations bill (H.R. 2892), which passed the Senate late on July 9, 2009.

Observers say that the DHS decision to rescind the no-match rules and to push for implementing the federal contractor regulation reflects a new immigration enforcement approach to target employers who hire illegal immigrants rather than individual employees who don’t have the right to work in the United States.

“E-Verify is a smart, simple and effective tool that reflects our continued commitment to working with employers to maintain a legal workforce,” said Napolitano in a written statement. “Requiring those who seek federal contracts to use this system will create a more reliable and legal workforce. The rule complements our department’s continued efforts to strengthen immigration law enforcement and protect critical employment opportunities.”

The effective date for E-Verify contractor regulation has been delayed several times, with the rules now set to take effect on Sept. 8, 2009. However, a lawsuit to block implementation of the regulation must be resolved.

Several business groups, including the U.S. Chamber of Commerce and the Society for Human Resource Management, filed a lawsuit in the U.S. District Court for the District of Maryland seeking to block the new rules from taking effect.

The Bush administration promulgated the controversial regulations during the summer and fall of 2008. Under an executive order signed by President Bush in June 2008, approximately 170,000 federal contractors were supposed to begin using E-Verify in January 2009. The regulations, if implemented, would amend the government’s acquisition processes by requiring federal contracts to stipulate that businesses must use E-Verify to determine if all new hires and existing employees performing work on federal contracts are authorized to work in the United States.

“We believe that we have a very strong and perfectly viable lawsuit that the federal government must respond to before the DHS can proceed with putting the regulation into effect,” Lawrence Z. Lorber, a partner with the Washington, D.C., office of Proskauer Rose, which is representing the employer groups, told SHRM Online on July 8, 2009.

Lorber said that Napolitano’s announcement could signal the Obama administration’s intention to resolve the lawsuit before the Sept. 8, 2009, effective date. The two sides in the lawsuit have set Aug. 16, 2009, as a deadline to respond to motions filed with the district court.

“DHS officials can certainly say that they support the implementation of the regulation and intend to proceed with the September 8 effective date,” Lorber said. “But the bottom line is there is litigation pending, and it must be resolved before the government can act to enforce the regulation.”

The E-Verify federal contractor rule also has become a hot topic on Capitol Hill. Sen. Jeff Sessions, R-Ala., on July 7, 2009, offered an amendment to the DHS appropriations bill (H.R. 2892) that would create a federal law requiring federal contractors use E-Verify. The White House asked that the proposal be tabled; however, the Senate rejected the White House’s request and approved the Sessions amendment by a voice vote on July 8, 2009.

The full Senate approved the DHS spending bill with the Sessions amendment attached. A conference committee must now resolve the differences between the Senate version of the bill and the spending package approved by the House on June 24, 2009, which did not include provisions to block rescinding the no-match rule or to require federal contractors to use E-Verify.