Washington — All colleges and universities entering into federal-government contracts will be required to use the Department of Homeland Security’s E-Verify system to establish the immigration status of newly hired employees and all employees working on such contracts, under an executive order signed this week by President Bush.

E-Verify is the federal government’s automated system for allowing employers to verify job applicants’ eligibility to work as U.S. citizens, legal permanent residents, or authorized immigrants. When an employer submits an applicant’s name and personal information for eligibility verification, E-Verify checks that information against Social Security Administration and Homeland Security Department databases.

A proposed rule, published on Thursday in the Federal Register, states that all employees of federal contractors who are newly hired or who are directly engaged in work on those contracts would need to have their work eligibility checked through E-Verify. The rule applies to contracts of more than $3,000 with work performed within the United States, including those with colleges and universities.

It is unclear how many colleges will be affected by the new rule, although it could hamper colleges seeking to hire foreign scholars or to engage foreign graduate students. Users of the E-Verify system will have to foot the costs of using it, including start-up and training expenses, according to the notice.

Ada Meloy, general counsel at the American Council on Education, said educators were concerned about E-Verify because of error rates in the federal database used to verify employees’ eligibility. “We think this is going to cause some angst,” Ms. Meloy said.

E-Verify has been problematic since it was established, in 1996, as a voluntary pilot program. About 7 percent of queries to E-Verify cannot be verified immediately by the Social Security Administration, and about 1 percent cannot be immediately confirmed by the U.S. Citizen and Immigration Services, according to the Government Accountability Office. The GAO also found that the E-Verify system cannot protect against workers’ using stolen identity information and stolen Social Security numbers.

Public comments on the proposed rule are due by August 11. —Karin Fischer