The current administration’s focus on immigration played out in a recent False Claims Act (“FCA”) matter in which a federal contractor was alleged to have billed for unauthorized workers in violation of FAR 52.222‑54 (Employment Eligibility Verification, “E-Verify”).
On September 18, 2025, the Department of Justice (“DOJ”) announced that Bayonne Drydock and Repair Corporation (“Bayonne”) agreed to pay $4,043,810.56 to resolve allegations that unauthorized workers worked on Bayonne’s Navy contracts over multiple years.
According to DOJ’s press release, in 2016, the Department of Homeland Security (“DHS”) sent a “Notice of Suspect Documents” to a subcontractor controlled by Bayonne’s Risk Manager, questioning the work authorization of certain subcontractor employees. While the Risk Manager terminated the unauthorized employees, she re-hired some of them through another subcontractor that she controlled. Bayonne’s settlement agreement with DOJ asserts that between 2016 and 2020, Bayonne billed the government for the work of approximately 52 unauthorized employees working for entities owned or controlled by Bayonne’s Risk Manager. The settlement agreement also confirmed that the Risk Manager pled guilty to criminal charges stemming from her role with Bayonne and its subcontractors.
This settlement highlights the importance of contractors’ E-Verify obligations.
What FAR 52.222‑54 Requires
- Enrollment and use: Covered contractors must enroll in E‑Verify and use it to confirm employment eligibility. FAR 52.222-54(b).
- Who must be verified: All new hires working in the United States, and all employees “assigned to the contract” working in the United States (even if not new hires), must be verified within 30 days of assignment. The prime contractor is responsible for verifying its own employees and subcontractor employees that are “assigned to the contract.” Certain entities (e.g., higher education, state/local governments, tribes, sureties) need only verify employees assigned to the contract. In practice, many contractors vet all new hires through E‑Verify to standardize and simplify compliance. Id.
- Flow-down: Prime contractors must flow down FAR 52.222‑54 to certain service and construction subcontractors where the subcontract value exceeds $3,500. FAR 52.222-54(e).
Potential FCA Theories for Failure to Follow E-Verify Procedures
- Factually false claims: A contractor who submits invoices for laborers that it knows lack work authorization could render those invoices false.
- Implied false certification: Even if a contractor does not have specific knowledge of a worker’s authorization status, invoices could be said to impliedly certify the contractor’s compliance with its obligations under FAR 52.222‑54 to confirm employment eligibility through E‑Verify.
Practical Considerations for Federal Contractors
- Confirm E‑Verify enrollment and settings.
- Ensure timely queries for new hires and employees assigned to federal contracts.
- Implement a robust tentative non-confirmation (“TNC”) process for workers who do not clear E-Verify at first pass, clearly document all resolutions, and terminate employment when issues remain unresolved within required timelines.
- Map workforce to contracts to understand which prime and subcontractor employees have been assigned to the contract.
- Flow down FAR 52.222-54 as required.
- Consider options for monitoring compliance by subcontractors such as securing attestations and/or spot-checking records.
- Train human resources, recruiting, program managers, and subcontract administrators; align policies with FAR 52.222‑54.
- Retain records for current personnel and for the requisite period following contract closeout.
Bottom Line
E‑Verify compliance is not optional, and DOJ is paying attention. The Bayonne FCA settlement reminds contractors to treat FAR 52.222‑54 as a priority compliance obligation and proactively shore up their E-Verify practices.
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