If you take a look at any job application, there is always one question the applicant is required to answer: “Are you legally eligible to work in the United States?” By asking this, the employer is abiding by a federal requirement to make sure that the candidates are legally authorized to work in the United States.  New employees prove their identity and eligibility by showing one of the following: a Social Security card, U.S birth certificate, a US passport, naturalization certificate, permanent resident card, employment authorization card and/or I-94 card.

But a Committee in the House of Representatives has another method of verifying legal eligibility in mind.  An electronic employment verification system, or “E-Verify,” is a service provided by the federal government to employers to check self-reported employment eligibility information across federal records. All federal contractors are already required to use E-Verify, and a handful of states require most employers to use E-Verify. In 2010, four percent of US employers used this system. Proponents of E-Verify claim it provides consistency across all industries and employers and ensures a legal workforce.

In September, the House Judiciary Committee approved H.R. 2885, the Legal Workforce Act, which will require every employer in the United States to use E-Verify, with the exception of seasonal agriculture employees. If enacted, employers would be required to use E-Verify prior to hiring; right now it is used after hiring.  If an employer unknowingly hires an illegal employee, the bill takes into account a “good faith” defense. However, if the employer knowingly hires an unauthorized worker, current penalties will be increased. Two other Committees are also examining this bill--the House Ways and Means, and Education and Workforce Committees.

There is no doubt that the immigration system has room for improvement. This legislation, a “one size fits all” verification system, may be beneficial to some employers, but is a paperwork headache for small businesses.  While larger employers already have human resource departments and standardized hiring systems in place, small businesses do not. 

Although the E-Verify database is provided at no cost to employers, this certainly does not mean use of the system comes without a price tag. Bloomberg Government released a study assessing the costs of E-Verify for employers and taxpayers. If E-Verify had been mandated in 2010, it would have cost US employers an additional $2.7 billion, with small businesses accounting for $2.6 billion of the cost. This averages out to around $147 to run a new hire query, compared to $73 currently (2010 data). Most of these costs come through either contracting out the searches to vendors, or training and certifying staff to use the E-Verify system.

Costs to employers aside, there are still additional downsides to a national mandate. E-Verify requires the use of high speed internet, which could be an issue particularly in rural communities. Also, according to the CBO, E-Verify would decrease federal revenues by $17.3 billion over 10 years. The operator of E-Verify, the Department of Homeland Security, estimates that it would require government spending of $765-$838 million over four years to operate E-Verify. And lastly, no system is perfect. According to the Bloomberg report, around 3.3% of unauthorized workers were found authorized, and .7% of authorized workers were mistakenly found unauthorized.

When E-Verify was initially launched in 2008, the SBA Office of Advocacy encouraged lawmakers to exempt small businesses from mandate requirements, citing the burden it would place on them.  A system that would standardize the hiring process may be great for large employers, but a regulatory and financial burden on small businesses.  It is surprising that in the House, where the emphasis has been largely on removing regulatory burdens, they are proposing to mandate another time- consuming requirement on small employers. 

Click here to view an overview of the Bloomberg report, and here to go directly to the E-Verify website.