It is surprising that only months after taking office on a platform of smaller government, House Republicans appear poised to enact a program that some consider to be quite a big government solution to illegal immigration. The legislation is H.R 2164, sponsored by House Judiciary Committee Chair Lamar Smith (R-Texas). It bears watching in the coming weeks.

E-Verify is an electronic employment verification that allows employers to send, generally speaking, the name and social security number of a potential new hire and get back an answer from the federal government as to whether that individual is legally authorized to work in the United States.

The key issue is not whether such a system should exist. The issue is whether the federal government should require every employer in America to use E-Verify, as mandated in H.R. 2164.

In theory it may make sense to have such a system for checking new hires. But in practice it may be an entirely different story. A new report I completed details some of the problems with making E-Verify mandatory. (A copy of the report can be found here.)

First, it is unclear whether the system will actually reduce illegal immigration in any significant way. A government report by the consulting group Westat found about half of illegal immigrants show up in the system as work authorized, primarily, it’s assumed, by using a false identity. In addition to identify fraud the system could be thwarted by employers that decide not to submit the names of employees suspected of being illegal immigrants.

Second, the errors in the databases are likely to affect individuals here lawfully who seek jobs but are mistakenly shown by the system to be not authorized to work. This could be a major problem, since even under the current system employers often go against protocols and “pre-screen” applicants. That means individuals may not even realize why they are not called back after a job interview.

Misspellings of names and naturalization can lead to errors in the database. It is not surprising that someone with the name Mukherjee or Chidambaram is more likely to have a database error than a guy named Smith or Jones.

By some estimates foreign-born individuals are far more likely to experience problems with the Social Security or U.S. Citizenship and Immigration Services databases than native-born. “E-Verify error rates are 30 times higher for naturalized U.S. citizens and 50 times higher for legal nonimmigrants than for native-born U.S. citizens,” according to Congressional testimony by Tyler Morgan of the National Immigration Law Center.

Third, employers should be aware that H.R. 2164 vastly increases fines not only for employing illegal immigrants but also for what may be considered paperwork violations or a failure to submit an individual through the E-Verify system. The legislation puts in place a system more complex than simply checking new hires. An employer is also required to check existing employees under certain circumstances, including if an employee starts working on a state or federal contract or is within 30 days of work authorization expiring. A government allegation that workers were misclassified as independent contractors (and not required to be checked through E-Verify) rather than as employees could potentially trigger fines of at least tens of thousands of dollars.

The House legislation provides a short window for this to be up and running. The largest employers would be required to use E-Verify within 6 months, employers with between 20 to 499 employees within 18 months, and those with 1 to 19 employees would be required to use E-Verify within 24 months. A Senate bill, sponsored by Senator Charles Grassley (R-IA) has a shorter window – one year for all employers – and requires all existing employees to be verified as well.

The House legislation could be marked up in the Judiciary Committee as early as this month. If it became law it could mark an enormous change in the operation of the U.S. workplace. Supporters of the bill view that as a good thing. Others are not so sure.