Bloomberg News

E-Verify Website Dark as U.S. Shutdown Severs Links to Companies

October 02, 2013

The Internet-based system that employers use to check whether job applicants may legally work went dark as U.S. agencies limited or cut off electronic communications companies use in everyday tasks.

Websites that shut down yesterday included the E-Verify site run by the Department of Homeland Security’s U.S. Citizenship and Immigration Services, and the agency sites of the Census Bureau, Agriculture Department, National Aeronautics and Space Administration, Library of Congress and the federal and international trade commissions.

Closing of the E-Verify system, which checks information provided by employees against millions of government records, was one result as the government went into its first shutdown in 17 years.

“Business people are making decisions,” said Agriculture Secretary Tom Vilsack, whose department will stop issuing crop reports and processing loans for small rural businesses.

“They have to make decisions today, and the reality is that they are faced with this enormous uncertainty,” Vilsack said. “The fact is, when you’re faced with uncertainty, you pull back. You don’t make decisions you might otherwise make. You don’t expand, you don’t invest.”

More than 409,000 employers use E-Verify to check eligibility, according to the government website for the program aimed at stopping employment of undocumented immigrants. Participation is voluntary for most companies, though some must use it by state law or federal regulation.

Builders Hobbled

In some states that require employers to use E-Verify -- such as Utah and Arizona -- builders won’t hire help as long as the system is down, Jerry Howard, chief executive officer of the National Association of Home Builders, said in an interview.

“It’s a problem for businesses, which slows down their ability to build a house, and therefore it’s a problem for manufacturers” and a “drag on the financial sector” as homes aren’t completed, Howard said.

The Small Business Administration shuttered its most widely used loan program, according to the agency’s shutdown plan.

Consequences will be felt immediately, Robert Tobias, director of the Key Executive Leadership Programs at American University in Washington, said in an interview.

“If I need a loan I need it now, or I wouldn’t be applying for it,” Tobias said.

Imports Slowed

Import and export permits from the Commerce Department also may be slowed, Tobias said. “If I have stuff on a dock in Shanghai and I need permits to bring it in -- I need it today, I don’t need it tomorrow,” he said.

A prolonged shutdown would mean some home loans won’t be completed, because lenders won’t be able to verify borrowers’ income and other data with the Internal Revenue Service and the Social Security Administration.

Fannie Mae and Freddie Mac require proof of borrowers’ income for the mortgages they buy and package into securities, and direct verification from the IRS is considered the safest way to do it, Pete Mills, senior vice president of the Mortgage Bankers Association.

“If we go beyond a week, it’ll start to get dicey,” Mills said in an interview yesterday.

The Federal Communications Commission said it would suspend consideration of deals involving purchases of airwaves licenses and television stations -- transactions affecting AT&T Inc. (T:US), Gannett Co. Inc., Tribune Co. (TRBAA:US) and Sinclair Broadcast Group Inc. (SBGI:US)

Gas Leases

The Interior Department said it will stop issuing new onshore oil and gas leases, as well as permits for drilling and renewable energy projects. New permits for offshore leases will continue.

Work on federal construction projects will slow because contractors can’t reach government employees to ask questions or get approval of changes to work orders, according to officials with Associated General Contractors of America, a Washington-based trade group.

The group yesterday said it couldn’t publish its monthly report on U.S. construction spending because the Census Bureau stopped the release of the data it analyzes.

“Depending on how long the government is closed, construction workers are likely to miss out on new job opportunities,” Stephen E. Sandherr, the association’s chief executive officer, said in a statement. “This shutdown poses a real risk of undermining the industry’s long-awaited recovery.”

Patent Disputes

The shutdown of the International Trade Commission’s website means companies, attorneys and the public can’t gain access to documents in pending cases, including patent disputes between companies like Ericsson AB and Samsung Electronics Co.

Lockheed Martin Corp. (LMT:US), the largest U.S. defense contractor, will keep its facilities open and pay its workers unless directed to do otherwise, said Jennifer Allen, a spokeswoman.

Federal contractors who continue working even though they haven’t been told to stay on the job are doing so “at their own risk,” said Dan Gordon, an associate dean for procurement law at George Washington University Law School in Washington. Gordon previously served as President Barack Obama’s top procurement official.

Vendors that are told not to work probably won’t get paid, he said. Companies directed to keep working are “absolutely, positively guaranteed to be paid. They just might be paid late,” Gordon said in a phone interview.

Airline Inspectors

Federal contractors will be able to file protests of lost awards by e-mail during the shutdown -- only nobody will be around to read them. The Government Accountability Office’s protest unit, which arbitrates contracting disputes, is closed.

Airline safety inspectors who check aircraft after flights and oversee repair shops were sent off the job. Those furloughed at the Federal Aviation Administration included 2,490 from its Office of Aviation Safety, the agency said in its plan for the partial shutdown.

“We’re pretty outraged and our members just can’t understand,” Kori Blalock Keller, a spokeswoman for the Professional Aviation Safety Specialists union that represents the workers, said in an interview. “They don’t understand how you can take a critical workforce like this, and just bench them.”

The safety workers are to be recalled incrementally over two weeks, the Transportation Department, which houses the FAA, said in a planning document.

“We do not expect airline operations to be impacted” because “front-line employees” aren’t subject to the furloughs, Vaughn Jennings, an FAA spokesman, said in an e-mail.

To contact the reporters on this story: Todd Shields in Washington at tshields3@bloomberg.net; Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Stephanie Stoughton at sstoughton@bloomberg.net


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