Are Employers Required to Use E-Verify? Federal and State Rules

Most private employers in the United States are not required to use E-Verify. At the federal level, the system is voluntary except for federal contractors and subcontractors whose contracts include the Employment Eligibility Verification clause. On top of that, roughly nine states require all or most private employers to use E-Verify, and a larger group of states require it for public employers, state contractors, or businesses receiving state incentives. So the answer to whether employers are required to use E-Verify depends on two things: whether you hold a covered federal contract, and which state you hire in.

The Federal Contractor Rule

The only federal mandate to use E-Verify applies to certain federal contractors and subcontractors. When a federal contract includes the Employment Eligibility Verification clause at FAR 52.222-54, the contractor must enroll in E-Verify and verify workers on that contract. The clause is inserted into federal solicitations and contracts that exceed $150,000, subject to exceptions.¹

The obligation reaches further than the contract itself. A covered contractor must verify not only employees assigned to the federal contract, but all new hires companywide, whether or not those new employees ever touch the contract work.²

Once enrolled, a federal contractor has 90 calendar days to begin using E-Verify for new hires. Employees assigned to a covered contract must be verified within 90 days of enrollment or 30 days of the employee’s assignment to the contract, whichever comes later.²

Contracts That Don’t Trigger the Rule

Several categories of federal contracts are exempt from the E-Verify clause:

Contracts with a performance period under 120 days.
Contracts valued at $150,000 or less.
Contracts where all work is performed outside the United States.
Contracts covering only commercially available off-the-shelf (COTS) items and related services.³

Employees You Don’t Verify

Even on a covered contract, some employees are off-limits or optional. Employers are prohibited from running E-Verify checks on employees hired on or before November 6, 1986, who have continuously worked for the same employer. Employees previously confirmed through E-Verify and still with the same employer are also exempt.³

Federal contractors may also skip verification for employees holding an active security clearance under the National Industrial Security Program, employees who completed a background investigation and received credentials under Homeland Security Presidential Directive 12, and support staff who don’t perform substantial work on the contract. New hires in support roles still have to be verified.³

State and local governments, institutions of higher education, federally recognized Indian tribal governments, and sureties performing under a federal takeover agreement get a narrower obligation. Even with a covered contract, these entities only need to run E-Verify on new hires and non-exempt employees working directly under that contract, not their entire workforce.³

State Mandates

State law is where E-Verify becomes mandatory for many employers who would otherwise never touch the system. About nine states require E-Verify for all or nearly all private employers, though several exempt small businesses below a specified employee count. A larger group of states require it only for public employers, state contractors, or businesses receiving certain state incentives. A handful of states have moved the opposite direction, restricting or discouraging local governments from imposing their own mandates.

State rules change often and their scope varies, so any employer expanding into a new state should check the current law there before making hires. Penalties for ignoring a state mandate can include loss of business licenses, ineligibility for state contracts, and separate state-level fines on top of anything federal law imposes.

If You’re Not Covered, Enrollment Is Voluntary

Every other employer can choose whether to use E-Verify. The system is free and runs online through the Department of Homeland Security in partnership with the Social Security Administration, comparing information from a new hire’s Form I-9 against government records at both agencies.⁴

Voluntary participation still carries rules. Once you enroll, you have to use E-Verify consistently and within the system’s boundaries. You cannot:

Screen job applicants before hiring them.
Run checks on employees who were already on the payroll before you enrolled, unless you’re a federal contractor with the FAR clause covering those workers.
Use E-Verify to re-verify employees whose work authorization has expired.⁵

You also cannot use E-Verify to discriminate against any applicant or employee based on national origin, citizenship, or immigration status. Selectively running the system on employees based on how they look or sound is the kind of practice that draws enforcement action.⁵

What Compliance Looks Like Once You’re In

Employers enrolled in E-Verify must create a case no later than the third business day after an employee starts work for pay.⁶ The case is built from the employee’s Form I-9, using information from both Section 1 and Section 2, so an accurately completed I-9 is a prerequisite.⁷

Most cases return “Employment Authorized.” When the system returns a “Tentative Nonconfirmation” (a mismatch), the employer has 10 federal government working days to notify the employee and complete the referral. The employee must say within that same window whether they intend to contest the mismatch. If they don’t respond by the end of the tenth day, the employer closes the case.⁸

While a contested mismatch is pending, the employer cannot take any adverse action against the employee. No termination, no suspension, no withheld pay, no delayed training, no pushed-back start date.⁹ This is where employers most often stumble. Sidelining a worker before the case reaches a final result exposes the employer to both discrimination complaints and program violations.

On recordkeeping, employers must record the E-Verify case verification number on each employee’s Form I-9 or attach a printed copy of the case details page. USCIS disposes of E-Verify records more than 10 years old, so employers who want long-term access should download the Historical Records Report and store it with their I-9 files.¹⁰ Separately, federal law requires all employers, E-Verify user or not, to keep each Form I-9 for three years after the date of hire or one year after termination, whichever is later.

Penalties for Non-Compliance

The financial penalties for employment eligibility violations sit in federal immigration law and apply to all employers, whether or not they use E-Verify. E-Verify participants who ignore the system’s procedures face additional scrutiny on top.

The statute sets these base penalty ranges, which DHS adjusts for inflation:

Paperwork violations (failing to properly complete or retain Form I-9): at least $100 up to $1,000 per form under the base figures. After inflation adjustments, current minimums and maximums are higher.
Knowingly hiring unauthorized workers, first offense: $250 to $2,000 per worker.
Second offense: $2,000 to $5,000 per worker.
Third or subsequent offense: $3,000 to $10,000 per worker.¹¹

These amounts get adjusted upward each year, so the fines actually assessed run significantly higher than the statutory floor. As of the most recent DHS adjustment, the inflation-adjusted minimum for a first knowing-hire offense was $716, with the maximum reaching $5,724 per worker.

Criminal penalties are available when the government can show a pattern or practice of violations. The statute authorizes fines up to $3,000 per unauthorized worker and imprisonment of up to six months for the overall pattern.¹¹

If you’re not a covered federal contractor and your state doesn’t require E-Verify, you can still be penalized for hiring unauthorized workers or for I-9 paperwork failures. What you avoid by staying out of E-Verify is the additional set of program obligations that come with enrollment, not your underlying duty to verify work authorization through Form I-9.

1
Acquisition.GOV. Subpart 22.18 – Employment Eligibility Verification
2
Acquisition.GOV. Federal Acquisition Regulation 52.222-54 – Employment Eligibility Verification
3
E-Verify. Exemptions and Exceptions
4
Social Security Administration. Additional SSN Verification Options – Section: E-Verify
5
E-Verify. E-Verify User Manual – 1.5 User Rules and Responsibilities
6
E-Verify. 2.2 Create A Case
7
U.S. Citizenship and Immigration Services. Handbook for Employers M-274 – 1.2 E-Verify The Web-Based Verification Companion to Form I-9
8
E-Verify. E-Verify User Manual – 3.3 Tentative Nonconfirmation (Mismatch)
9
E-Verify. Tentative Nonconfirmations (Mismatches)
10
E-Verify. E-Verify Records Scheduled for Disposal
11
Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens