Federal agencies propose mandatory E-Verify for grant recipients

Federal agencies have proposed a rule that would require recipients of federal grants and certain other forms of federal financial assistance to enroll in and use the E-Verify system, potentially expanding immigration-related compliance obligations for a broad range of employers.

E-Verify is a Department of Homeland Security program that allows employers to electronically confirm a new hire’s authorization to work in the United States by comparing Form I-9 information against federal records.

While all employers must complete Form I-9s, E-Verify participation is currently mandatory only for certain federal contractors and in some states.

The proposed rule, issued as part of broader revisions to federal grant regulations, would require organizations receiving federal grants or similar federal financial assistance to participate in E-Verify as an additional safeguard for employment eligibility verification.

This could significantly expand the number of employers subject to mandatory E-Verify requirements, particularly nonprofit organizations, educational institutions, healthcare providers and other entities that receive federal funding but are not currently covered by federal contractor rules.

The proposal reflects a broader federal emphasis on immigration-related compliance and increased scrutiny of workforce eligibility verification practices.

Potential compliance impact for employers

For affected employers, mandatory E-Verify participation would add new onboarding and recordkeeping requirements beyond standard Form I-9 obligations.

Employers using E-Verify must follow specific timing, notice and documentation rules when creating verification cases and responding to tentative non-confirmations.

Non-compliance can create legal and operational risks, including possible consequences tied to continued eligibility for federal funding.

The proposal also raises practical questions for organizations that receive federal funding indirectly through subawards, grants or cooperative agreements and may not currently view themselves as subject to federal contractor-style compliance requirements.

Hiring and verification practices

Employers that receive federal grants or other federal financial assistance should assess whether the proposed rule could affect their hiring and onboarding processes.

Companies should review existing Form I-9 procedures, evaluate whether E-Verify enrollment may become necessary, and monitor further developments as the rulemaking process continues.