E-Verify Compliance as a Growing False Claims Act Risk for Contractors

Attorneys from Warner Norcross & Judd highlight in an article that recent US Department of Justice (DOJ) activity has elevated E-Verify compliance from an administrative chore to a material False Claims Act (FCA) exposure point. Their analysis explains that the DOJ’s second FCA settlement this year, tied to employment eligibility verification, signals a sustained enforcement posture. The introduction of employment-related FCA theories into contract oversight means risk managers must reassess how verification failures translate into potential liability.

The authors explain that the FCA imposes civil penalties, including treble damages, when contractors knowingly submit false or fraudulent claims for payment. In the employment-eligibility context, the DOJ has argued that billing for work performed by individuals not authorized to work in the United States constitutes an implied certification that the labor costs meet material contract terms. 

The DOJ may not pursue this theory in all cases, but Warner Norcross & Judd reports that the DOJ is applying it in recent matters. The September $4 million settlement with a New Jersey shipbuilder, following a January resolution involving a Louisiana shipyard, demonstrates the government’s willingness to scrutinize labor authorization across sectors.

The article emphasizes that federal contractors subject to FAR 52.222-54 must align their hiring, onboarding, and subcontractor management processes with E-Verify requirements administered by the Department of Homeland Security. Those obligations include timely enrollment, accurate and prompt case creation, adherence to tentative non-confirmation procedures, and documented oversight of covered subcontractors.

The authors note that FCA exposure can arise if primes are aware or should be aware that subcontractors are not meeting their obligations.

E-Verify compliance now touches core False Claims Act risk. Strengthening verification workflows, tightening subcontractor controls, and maintaining auditable documentation are practical steps to reduce exposure and demonstrate a defensible compliance posture.