The U.S. Department of Homeland Security has announced (PDF version) that starting Jan. 15, 2009, all federal contractors will be required to use the E-Verify system to check the employment eligibility of all their employees. According to Craig Regelbrugge, government relations director for the American Nursery and Landscape Association, the overall effects of this requirement are not yet clear, but here are some early conclusions:

• The new rule takes effect January 15, unless it is for some reason blocked by the courts or Congress. It takes effect before the new Obama administration arrives, and there are doubts that the new administration would act to undo it. In any event, undoing it would take time and compliance with the Administrative Procedure Act;
• The good news for nursery and greenhouse growers is that federal purchases of agricultural products that are “marked” (e.g., labeled) and “counted” have been clarified to fall under the “commercial off the shelf” (COTS) exemption. We believe, on initial reading, that the “COTS” exemption would extend to nursery and greenhouse products purchased by the federal government.
• The picture for landscape contractors is less clear-cut. The final rule increases the threshold amount for which the rule applies to $100,000 (vs. $3,000 as originally proposed) for prime (direct) contracts. However, the threshold for subcontracts for services remains at $3,000.
• If you are providing a service solely in association with a COTS transaction, the service is exempt. It would appear that, for instance, if the federal contract or subcontract “service” were to install landscape trees, and no other work was involved, that the company providing the installation could be exempt from this new requirement. However, if the contract or subcontract involved other services as well, it appears it would be covered (if it meets the financial thresholds).

As attorneys continue to parse the meaning of this new regulation, we’ll share what we know.