Pennsylvania Mandates E-Verify for State Public Works Contractors and Subcontractors

On July 5, 2012, Pennsylvania’s Governor Tom Corbett signed into law Act No. 127 (formerlySenate Bill 637), The Public Works Employment Verification Act.  The bill was introduced in early 2011 and had languished in legislative sessions for a year and a half before being passed on June 30th by both the state Senate and House (almost unanimously).

What the Law Mandates

The law mandates all public works contractors and subcontractors with the state enroll and use E-Verify, effective January 1, 2013.  “Public work” is defined in the Pennsylvania Prevailing Wage Act of 1961 as:

Construction, reconstruction, demolition, alteration and/or repair work other than maintenance work, done under contract and paid for in whole or in part out of the funds of a public body where the estimated cost of the total project is in excess of twenty-five thousand dollars ($25,000), but shall not include work performed under a rehabilitation or manpower training program.

The state has assigned the Department of General Services to conduct random audits and audits arising out of credible complaints from individuals.  Under this law, public works state contractors and subcontractors must verify their employees using the federal E-Verify System.  Failure to do so would lead to the following penalties:

  • First Offense: warning to violator and posting on Pennsylvania’s website;
  • Second Offense: 30 day debarment from state public works contracts;
  • Third Offense: 180 days or up to one year debarment from state public works contracts;
  • Willful violators (as determined by a court) may be debarred for up to three years.

State public works contractors and subcontractors will also be required to sign a statement (verification form) affirming their enrollment in E-Verify and acknowledging their responsibilities under this new law.  Willful violators who misrepresent themselves on the statement may be subject to a civil fine of $250 or up to $1,000 per violation. The law also contains protections for whistleblowers and an anti-discrimination clause (based on race, ethnicity, color or national origin) as well as a “Good Faith” defense clause.

The Potential Impact to Employers in Pennsylvania

Although the law does not go into effect until January 1, 2013, reports indicate the proposed cost to the state in the first year of implementation would exceed $1.3 million.  This would require the Pennsylvania Department of General Services to expand its personnel in order to be able to comply with the auditing provisions of the law.  What impact might this law have on applicable employers in Pennsylvania? Valentine Brown, Partner at Duane Morris, LLP in Philadelphia (and a regular guest to this blog), said, “The burden on state and public works contractors will be heavy as they struggle to enroll in E-verify to maintain their active contractor status.”  Elise Fialkowski, Partner at Klasko, Rulon, Stock & Seltzer, LLP, agrees the law will have a broader impact on all state contractors and subcontractors.  Because the public works contracts are set at a low dollar value ($25,000 or more), Ms. Fialkowski explains:

Most contracts paid by public funds will require E-Verify.   The definition of ‘subcontractor’ is even broader and includes any person or entity that performs work for the public works contractor on the qualifying contract.  There is no dollar threshold for subcontracts so even subcontractors performing very limited work will be required to comply.

What Pennsylvania Employers Should Do to Prepare

“As the enforcement mechanism has not yet been determined by the Pennsylvania Department of Labor,” Ms. Brown warns, “Contractors should maintain careful records of compliance with the law, so that they will be prepared in case of a compliance audit.” There’s more to E-Verify than just enrolling.  Ms. Fialkowski explains, “Employers must not only comply with the state E-Verify laws but also with federal E-Verify and I-9 requirements.   It is important to note that E-Verify does not insulate an employer from I-9 enforcement actions.” Any employer who enrolls in E-Verify must also sign a Memorandum of Understanding (MOU) in order to utilize the federal system.  Ms. Fialkowski cautions, “Should employers enroll in E-Verify they must develop comprehensive training and compliance programs.  As the E-Verify MOU subjects an employer’s I-9 records to scrutiny, internal I-9 audits are essential.” More importantly, employers who are investigatingelectronic I-9 and E-Verify software should carefully consider asking the right questions of vendors to ensure the software is compliant with current legal requirements.

The Outlook for Future Legislation

The bill is a win for many proponents of a mandatory E-Verify requirement.  So, what does this portend for private employers in Pennsylvania? The potential impact this new law might have on future legislative plans to expand E-Verify as a requirement for all employers in Pennsylvania may very well be significant.  Ms. Brown commented:

The passage of SB 637 makes it much more likely that Pennsylvania will see a mandatory E-Verify requirement for all employers in the near future. This is due to the number of different E-verify and other immigration-related bills that have been introduced in the legislature this year as well as the Republican majority make-up of the legislature.

Clearly, as E-Verify laws continue to evolve, employers should consider partnering with seasoned legal counsel to ensure they properly prepare for the changes ahead.  You can contact our guest attorneys at their respective websites or follow Ms. Brown’s blog and Ms. Fialkowski’s blog online.