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Texas Governor Signs Bill Mandating E-Verify: New Law is Limited to State Agencies, Not Businesses That Contract With Them

15 Jun

On Wednesday, June 10th, 2015, Texas Governor Greg Abbott signed Senate Bill 374 into law.  Effective September 1st of this year, the new law requires that all state agencies register and participate in E-Verify to verify information of all newly hired agency employees and will be enforced by the Texas Workforce Commission.  The definition of state agency includes a department, commission, board, office, or other agency of any branch of state government, including an institution of higher education as defined by Section 61.003 of the Education Code.  The law does not apply to contractors or sub-contractors providing services to these agencies.

In a bill-signing statement, Governor Abbott declared, “This bill adds appropriate checks on the hiring of individuals not lawfully present in this nation by state agencies, incentivizes lawful immigration and assures taxpayers that their hard-earned dollars are being used responsibly.”  Governor Abbot did not mention former Governor Perry or RP-80, the executive order on E-Verify issued his predecessor just before leaving office.  However, the bill codifies, clarifies and supersedes Perry’s executive order, effectively clearing up months of questions and concerns raised by business and community leaders by establishing that:

  1. E-Verify enrollment is mandatory for all state agencies, not simply those agencies subject to the Governor’s direct control;
  2. The E-Verify mandate does not apply to businesses that contract with state agencies; and
  3. Only employees hired after the employer’s enrollment in E-Verify may be verified through the E-Verify system.

As first reported by Foster in December of 2014, former Governor Perry’s executive order RP-80 mandated that state agencies under the Governor’s direction as well contractors or sub-contractors providing services to those agencies use E-Verify to confirm the information of all current and prospective employees.  This immediately led to questions regarding which state agencies were subject to the order.  Critics also complained that the order violated anti-discrimination laws that limit the use of E-Verify to new employees unless the employer is a federal contractor subject to a special FAR clause in a federal contract.

In April, the Office of Special Counsel for Immigration-Related Unfair Employment Practices of the U.S. Department of Justices released a rare Technical Assistance Letter which addressed “the apparent conflict between federal E-Verify rules and the provisions of RP-80.”  This prompted many contractors and sub-contractors in Texas to disregard new provisions appearing in state bid proposals requiring participating bidders to enroll in E-Verify and process their existing workforce and prospective employees through the E-Verify system.  One of the bill’s sponsors, State Rep. Tony Dale, R-Cedar Park, educated fellow legislators on the issue and summed up these concerns, stating, “The main issue I had with the Executive Order is (that) it said you had to use it on all existing employees, which is not appropriate,” Dale said.

E-Verify participation requires employers to enter into a binding agreement called a Memorandum of Understanding (MOU) with the Federal Government in addition to the steps already required of the employer in fulfillment of the employer’s Form I-9 Employment Eligibility Verification obligations.  Among other requirements, the typical MOU requires employers to share information on all new hires with a government database and to commit to self-reporting of violations.  Prior to enrolling in E-Verify, employers should consider conducting a pre-emptive audit of the employer’s existing workforce and employment eligibility verification policies in order to mitigate potential exposure.  Such proactive measures can help employers avoid unexpected labor disruptions resulting from the use of E-Verify while trying to fulfill contractual obligations.

While the mandatory E-Verify law passed last week applies only to new hires of Texas state agencies, strong support for the legislation could be a signal of even further expansion of E-Verify by the Texas legislature in the future.  After stalling for months, Senate Bill 374 cleared the legislature on May 27, 2017, passing 20-11 in the Senate on party lines and 122-21 in the House.   Several additional E-Verify bills were introduced earlier this year that would extend mandatory E-Verify enrollment even further.  Though unsuccessful, these bills will likely be re-introduced in the next legislative session.

If an employer has already enrolled in E-Verify and wishes to unenroll, please contact your Foster attorney for guidance.   For those employers who work with Texas state agencies or the federal government, employers are encouraged to check their contracts for any language requiring enrollment in E-Verify.

As always, Foster will continue to monitor changes in requirements and procedures that impact on immigration-related benefits and requirements and will provide future updates via our firm’s website at