E-Verify is a free online information verification system that lets an employer know whether or not a new hire is eligible to work in the United States. The system compares information provided in the employee’s Form I-9 to Department of Homeland Security (DHS) and Social Security Administration (SSA) data to verify employment eligibility. It returns results quickly and is reported to be 98.95% accurate. Although federal contractors are mandated to use the E-Verify system to confirm eligibility of every worker they hire, the system is utilized by other businesses too, as evidenced by the more than 750,000 companies across the United States currently enrolled in E-Verify.
Although it is considered voluntary on a federal level for employers without federal contracts or subcontracts, 22 states have enacted legislation requiring some or all employers to confirm legal work status when hiring new employees. The level of participation varies widely from state to state, with some states mandating full participation and other requiring only public agencies or employers meeting specific criteria to comply.
For example, Arizona requires all employers to use E-Verify, whereas Minnesota requires just state contractors and subcontractors to use the system and only when a contract exceeds $50,000. Penalties for noncompliance can be steep. The Tennessee Lawful Employment Act requires private employers with 50 or more employees under the same FEIN to use the E-Verify system; nonemployees, defined as “individuals who, while not employed directly, are paid directly by the employer for labor or services,” are included in that number as well. Tennessee employers who fail to enroll in E-Verify face a $500 fine. Additionally, first-time offenders are subject to a $500 company fine plus $500 per unverified worker; repeat offenders may face fines up to $2,500 for the company plus $2,500 per worker who was not verified through the E-Verify system.
Information for each state’s employment verification law can be found in the state resources below. Because employment legislation is evolving across the country, it is advised to regularly check with your state and your legal advisor to stay informed of changes affecting your business.