E-Verify
Hotels which want government conference business may have to “E-Verify” at least some of their staff—and may have to E-Verify all of their staff, if new federal rules are adopted, opening up serious labor cost implications for the industry.
The federal government proposed in June 2008 to amend the Federal Acquisition Regulations (FAR), the rules which governs federal contracts and those who accept federal contracts, to require contractors and subcontractors to use the Dept. of Homeland Security's (DHS) E-Verify system as the means of verifying that certain of their employees are eligible to work in the United States.
The E-Verify system is an Internet-based system operated by DHS that allows participating employers to electronically verify the employment eligibility of newly hired employees. It is currently a free and voluntary system based on an employee’s Social Security number.
However, President Bush signed an Executive Order (EO 12989) on June 9, 2008 requiring federal contractors to participate in E-Verify when awarded federal contracts worth $3,000 or more. Contractors would have to use E-Verify for all of their employees working on those contracts as well as any new employees hired for the duration of the contract—whether they work on the contract or not.
It is unclear if hotels which are awarded federal government contracts in excess of $3,000 for things such as the hosting of government meetings will be considered as a “contractor” under the rule and thus be required to use E-Verify.
AH&LA believes that government workers staying at hotels for typical room nights will not trigger the E-Verify requirement because they are agreements, not contracts, and because they fall under the $3,000 threshold.
AH&LA also submitted comments in July 2008 to DOL about E-Verify’s applicability to H-2B visa applicants and the uncertainty introduced by the department to a hotel’s labor requirements if an applicant is rejected. The comments were submitted in response to a May 22, 2008 Federal Register notice.
The House passed a five-year reauthorization of the E-Verify program on July 31, 2008. The House bill (H.R. 6633) maintains E-Verify as a voluntary program, even though some states have mandated its use. The bill also authorizes two GAO studies, one to examine the cause and effect of errors in the program, while the second study will look at the experiences small businesses, non-profits and municipalities have had using the E-Verify program. The bill was not taken up by the Senate before the 110th Congress ended.
The government published the proposed regulations in the Federal Register on June 12, 2008. It released its Final Rule on Nov. 13, 2008.
What remained unclear in the original proposal is whether a hotel that receives in excess of $3,000 from a government entity (e.g., a meeting among government employees) would trigger the rule, and if so, what would be the scope of the requirement. It appeared that determination would be subject to the interpretation of what constitutes a “contractor” in the context of the proposed regulations and current Federal Acquisition Rules (FAR).
Complicating this are the rules in effect for E-Verify that prevent employers from re-verifying current employees. An hotelier (or any other employer) cannot E-Verify existing staff. The new rule would create an exception to that by requiring employees who work on a government contract in excess of $3,000 to be E-Verified.
Given the complexities of a hotel, the original rule was unworkable if applied to our industry. For example, while it may be simple to determine the catering manager who will liaison with a particular group, a hotel could not determine beforehand which bellman would take a government employee’s luggage to their room, which housekeepers would clean government employees’ rooms, which cooks would prepare their meals (an especially difficult task when applied to in-room dining), which employee would launder their towels and sheets, which employee would answer the phone and provide what service, etc. The requirements get even worse when one factors in turnover rates and sick time for employees.
In addition, if a corporate-owned hotel hosted a meeting that trigged the rule, would the person at corporate who receives any revenue or handles paperwork from the event be covered? Who else at the corporate level would be covered by virtue of the contract?
Hotels are being forced into a dilemma: They cannot verify existing staff unless they work on the contract, but they must E-verify those existing staff that work on the contract. But given how a hotel operates on a daily basis, it appears a hotel couldn’t tell specifically whom is working on what and when. The penalties for non-compliance are steep and can also lead to the loss of federal contracts, so these questions must be answered by DHS before it finalizes its rule
AH&LA submitted comments to DHS by the August 11, 2008 deadline asking these questions and others specific to hotel operations.
September 2009 Update: Federal contractors as of September 8, 2009, are now required to use the rules as the result of the conclusion of court case. Read here for more information.
DHS released its Final Rule on Nov. 13, 2008. The department released this paragraph in response to AH&LA's August submitted comments:
Comment: One commenter commented on the difficulty of applying E-Verify to hotel employees. This commenter stated that it is impossible to determine beforehand which specific employee would be interacting with a guest, since many of the individual interactions are initiated by the guest and could involve one of many possible employees in each instance. Further, hotels do not have segregated areas for Government employees nor do they assign specific employees to serve Government employees. This situation is further complicated by the fact that employers are specifically prohibited from screening existing employees through EVerify, except for those employees assigned to the Government contracts.
Response: First, the revision to the proposed rule that will make the clause inapplicable to contracts that will have a period of performance of less than 120 days may eliminate almost all hotel contracts from being subject to the rule. Second, the decision to allow contractors the option of using E-Verify for all existing employees, rather than just those assigned to the contract, will likely resolve any remaining issue.
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For more information, please contact Shawn McBurney, AH&LA senior vice president for governmental affairs, at smcburney@ahla.com or (202) 289-3123.
(Updated September 2009)