Minnesota Governor Issues Executive Order Requiring State Contractors to Certify Compliance with Immigration Laws

On Jan. 7, 2008, Minnesota Gov. Tim Pawlenty announced a series of proposals designed, in his words, to "combat illegal immigration." Those proposals included Executive Order (EO) 08-01, which among other things requires all companies awarded state contracts in excess of $50,000 to verify the employment eligibility of newly hired employees through the federal government's "E-Verify" program. E-Verify is an Internet-based system operated by the U.S. Department of Homeland Security (DHS), the U.S. Citizenship and Immigration Services (USCIS) and the Social Security Administration (SSA) that enables employers to compare some (but not all) work eligibility documents and some (but not all) photos with information in SSA and DHS databases. While acknowledging that "E-Verify may not be a perfect system," the executive order describes it as "the best technology currently available to employers for complying with federal laws requiring employers to verify legal work eligibility."

EO was published in the State Register on January 14, 2008, and under Minnesota rules took effect on January 29, 2008. The Minnesota Department of Administration is responsible for developing contract language and procedures for ensuring compliance with EO 08-01 and punishing violators.

What EO 08-01 Entails
The governor's executive order contains three key provisions:

• It requires "all hiring authorities within the executive branch of state government" to use E-Verify to assure that employees are legally eligible to work in the U.S. The order also calls for random audits within the executive branch to assure compliance.
• All state vendors as well as subcontractors must certify that they "do not knowingly employ persons in violation of the United States immigration laws." Both vendors and subcontractors must use or be in the process of implementing use of E-verify on the date they begin work for the state. Companies that knowingly employ individuals who are ineligible to work risk having their contracts terminated and possibly being banned from doing business with the state.
• All "recipients of business subsidies" must certify that they are in compliance with federal immigration laws governing the rights of individuals to work in the U.S. In addition, the Commissioner of Employment and Economic Development is charged with creating a "scoring incentive" that will be used in competitive programs for businesses and encourages the use of E-Verify.

Impact of EO 08-01
Minnesota state officials estimate that the E-Verify requirement of EO 08-01 will likely impact hundreds of companies in the first year the executive order is in effect. According to federal government reports, only a small percentage of employers nationally use E-Verify in hiring. Thus, it's safe to assume that the majority of companies bidding on state contracts are not currently enrolled in E-Verify. Some companies are averse to making this change in their hiring procedures, while others find E-Verify to be a helpful tool.

According to the Chief Procurement Officer for the State of Minnesota, in Fiscal Year 2007 the state awarded over 400 professional and technical contracts that exceeded $50,000 in value. The state also has over 1,300 goods and services contracts in effect at any given time. The E-Verify requirement of EO 08-01 will apply to companies seeking to extend contracts or solicit them anew.

Terminating State Contracts Due to Employment of Illegal Alien Workers
As noted above, EO 08-01 also authorizes the state to terminate contracts with employers found to knowingly employ foreign workers who are not authorized to work in the United States. Currently no information is available about how the state will investigate such matters or make findings to terminate a contract for employing illegal workers. Litigation efforts in other states to block laws requiring employers to use E-Verify have to date been unsuccessful.

Information on the E-Verify System
E-Verify (formerly known as the Basic Pilot/Employment Eligibility Verification Program) is operated by DHS and USCIS in partnership with the Social Security Administration. E-Verify allows participating employers to electronically verify the employment eligibility of newly hired employees. There is no government charge or fee to use E-Verify. Employers complete the E-Verify registration process and required staff training on-line.

Colorado and Georgia already have laws in effect that require all companies who contract with public entities there to use E-Verify. In Arizona, a state immigration law went into effect on January 2, 2008, that requires all employers in the entire state to sign up for E-Verify.

A detailed summary of the E-Verify system is available via this federal government link .

Minnesota's "Immigration Status Certification"
In late January, the Minnesota Department of Administration released a one-page form, State of Minnesota — Immigration Status Certification, that implements EO 08-01 and notifies vendors and subcontractors of their obligations, in terms immigration compliance, for all state contracts in excess of $50,000. A copy of the Certification is attached.

Employers should note that the Certification confirms a company's obligation to complete E-Verify employment verifications "for all newly hired employees in the United States who will perform work on behalf of the State of Minnesota." But the E-Verify requirements are broader than that, pursuant to the agreement every employer must make when registering with the federal government to use E-Verify:

• When an employer registers for E-Verify, the company must sign a Memorandum of Understanding (MOU) with DHS and SSA. A sample copy of an E-Verify MOU is attached.
• In the registration process, an employer can choose to use E-Verify at select locations (for example, all Minnesota facilities, or one St. Paul location).
• For any location selected and registered under the MOU, the employer must complete E-Verify employment verifications on all newly hired employees.
• It's important for employers to understand that under the terms of the MOU, they cannot limit their use of E-Verify only to those newly hired employees who will work on a Minnesota state contract.

The legal reach of Minnesota's Immigration Status Certification extends only as far as the employees assigned to work on state contracts. Colorado and Georgia have had similar public contract/E-Verify requirements in place since 2006. Contracting employers in those states have occasionally confused the competing legal obligations between the state law requirement and the Memorandum of Understanding they signed with DHS and SSA when registering to use E-Verify. Once an employer signs the MOU, that company will need to use E-Verify for all new hires at the selected location—even those who won't be assigned to work on state contracts.

Minnesota EO 08-01 Questions Abound
The Materials Management Division of the state Department of Administration oversees all state contracts. That office has now started to field questions on how the executive order will be interpreted and enforced. For example, are contracts with Minnesota's state colleges and universities actually "state contracts" covered by the order? How are terms in the order (such as "vendor", "subcontractor, etc.) defined? How will the value of a contract be determined if it doesn't include a fixed price? These and other questions are already being forward to the Governor's office. But the current lack of clarity on fundamental questions about the executive order may delay its implementation or even open the door to litigation to prevent the order from being put into effect.