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By: Mahsa Aliaskari
Arizona initiated state-led
immigration enforcement measures in 2008 with a law mandating the use of
E-verify and establishing licensing penalties for employers who hire
unauthorized workers. On May 26, 2011, in a 5-3 decision, the U.S. Supreme
Court upheld the law.
Divided across what appeared to be
party lines, the Supreme Court's majority noted that employers who act in good
faith will not be impacted by the law's licensing provisions because those
sanctions are limited to employers who knowingly or intentionally employ
unauthorized workers. With the Supreme Court's final say, Arizona and many
other states and localities following in Arizona's footsteps were vindicated.
With this win, Arizona and states like Arizona will continue on a path to what
they believe will ensure increased enforcement of U.S. immigration laws and
stem the flow of undocumented workers into the U.S.
How did we get here?
In 2007, Arizona passed the Legal
Arizona Workers Act (LAWA). The measure was signed into law by Democrat Janet
Napolitano, then the governor of Arizona and now the Secretary of the
Department of Homeland Security. LAWA took effect on January 1, 2008. LAWA
mandates the use of E-Verify by Arizona employers and empowers the State of
Arizona to suspend or revoke employers' business licenses if they are found to
have knowingly or intentionally employed aliens who are not authorized to work
in the U.S. The law was challenged by the Chamber of Commerce of the United
States and various business and civil rights organizations ("Chamber").1
The Chamber filed a federal preenforcement suit against Arizona, arguing that
the state law's license suspension and revocation provisions were both
expressly and impliedly preempted by federal immigration law, and that the
mandatory use of E-Verify was impliedly preempted. On September 17, 2008,
the U.S. Ninth Circuit Court of Appeals affirmed the U.S.
District Court ruling upholding LAWA.2
Three years after the law went into effect, affirming the Ninth Circuit
decision, the Supreme Court concluded that Arizona's law is not expressly or
impliedly preempted by federal immigration law.
LAWA's provisions authorizing the
state to sanction employers through licensing has its roots in the savings
the Immigration Reform and Control Act (IRCA). IRCA, a federal law, makes it
unlawful to employ aliens who do not have work authorization in the U.S. IRCA
also restricts the ability of states to control the employment of unauthorized
workers through state legislation that authorizes civil or criminal actions
against employers. However, there is one limited exception to this restriction
referred to as the savings clause and found within the passage which states -
"[t]he provisions of this section preempt any State or local law imposing civil
or criminal sanctions (other than through licensing and similar laws)
upon those who employ, or recruit or refer for a fee for employment,
It is the Supreme Court's interpretation of the savings clause that serves as
the underpinning of the Court's decision in upholding LAWA.
Under the Constitution, federal law
is the supreme law of the land. An express preemption provision indicates
Congress' intent to prevent States from enacting laws that interfere with
federal laws. When a state law clashes with federal law, it is up to the courts
to decide whether the state law is preempted by the federal law. Under this
doctrine of preemption, if either specific provisions or the law in whole is
deemed to be preempted by federal law, it will then be deemed unconstitutional.
LAWA passed the test with the Supreme Court concluding that all provisions of
the Arizona law were carefully construed within the confines of IRCA and the
savings clause. With that, LAWA will remain intact and fully enforceable.
The Claims and the Court's Response
A review of the Court's conclusions
in response to the arguments against the licensing sanctions and E-Verify
mandates provides employers across the nation with valuable insight into both
the tolerance and expectations of the Supreme Court when it comes to the
enforcement of U.S. immigration laws and the challenging hurdles the nation
faces with a broken immigration system. Understanding the foundation of this
decision is critical for employers who are making decisions day-to-day on the
time, personnel and budget that should be or can be dedicated to ensuring
compliance with federal and now state and local immigration laws.
LAWA's Licensing Provisions
One of the primary arguments against
LAWA was that the law was expressly preempeted because the licensing provisions
went beyond what is authorized by IRCA's savings clause. The Chamber argued
that IRCA's savings clause should apply only to certain types of licenses or
license revocation, and given the overbroad definition of "license," LAWA
overstepped the limited confines of the exception.
In addition, the filing challenged
the ability of any state law to utilize the savings clause when it is not
contingent on a prior federal determination, i.e., the State cannot revoke a
license unless there is a finding at the federal level first that the employer
has knowingly or intentionally hired undocumented workers. In particular, IRCA
created a centralized enforcement mechanism of procedures and standards for
receiving complaints and investigating complaints related to the employment of
unauthorized workers. Pursuant to IRCA, the relevant government agencies, the
administrative law judge and the employer all work within the same rubric. The
goal and purpose is to ensure that U.S. immigration laws are enforced
uniformly. LAWA steps outside of these confines by providing a state court with
the authority to make a determination on whether or not an employer knowingly
or intentionally employed undocumented workers and by implementing its own
penalties through the licensing provisions.
One particular sentence in the
majority decision highlights and explains the Court's stance and final decision
concerning this preemption challenge - "[r]egulating in-state businesses
through licensing laws has never been considered such an area of dominant
Disagreeing with all of the challenges presented, the Court noted that there
are no such limits in the statute and concluded that LAWA falls within the
plain text of the savings clause. In addition, the Court concluded that the
State procedures "simply implement the sanctions that Congress expressly
allowed Arizona to pursue through licensing law."6
Furthermore, the Court found that there is no requirement in the plain text of
the law that state licensing sanctions be contingent on a prior federal
Understanding that the licensing
provisions of LAWA remain fully intact, Arizona employers should take note of
the full definition of "license" under LAWA. The law defines license as "any
agency permit, certificate, approval, registration, charter or similar form of authorization
that is required by law and that is issued by any agency for the purpose of
operating a business . . . ," the definition includes "documents such as
articles of incorporation, certificates of partnership, and grants of authority
to foreign companies to transact business in the State."7 While
this may appear to go beyond the limits of IRCA's savings clause, the Supreme
Court held that "even if a law regulating articles of incorporation,
partnership certificates, and the like is not itself a 'licensing law,' it is
at the very least 'similar' to a licensing law, and therefore comfortably
within the savings clause."8
LAWA's E-Verify Mandate
In its filing, the Chamber also
argued that the state's mandate that all employer's use E-Verify, a voluntary
federal system, impedes the purpose of the program. Among many other concerns,
the Chamber pointed to the fact that E-Verify is still considered to be an
evolving program prone to errors and is in essence still a pilot program.
Therefore, to mandate its use is in direct contradiction to the language of the
statute clearly identifying its voluntary nature. Once again, the Supreme Court
disagreed with the Chamber's contentions. While E-Verify is not mandatory, the
Federal government encourages its use and has a public outreach program designed
to educate and promote the program nationwide. The Court also highlighted the
fact that the only consequence under LAWA of not using E-Verify is identical to
the consequence of not using the system when in limited circumstances it is
required by federal law - the employer loses the rebuttable presumption that it
complied with the law. Given this, the Court concluded that Arizona's
requirement does not obstruct the goals of the federal government and is in
line with the goals of expanding its use.
What Does This Mean for Your
With this decision, the patchwork of state and local immigration mandates is
expected to continue and increase.
Across the board we expect to see an
increase in other states' use of IRCA's savings clause to address the
employment of undocumented workers. In addition, local governments in states that are unlikely to follow
Arizona will continue to adopt similar laws. The decision is also likely to
increase support for and speed up potential legislation surrounding E-Verify.
With the release of the decision, House Judiciary Committee Chairman Lamar
Smith (R-Texas) released a statement in support of the decision and confirmed
his commitment to introduce legislation expanding E-Verify and making it
As noted in Justice Breyers'
dissenting opinion and echoed by many commentators, it is possible that "either
directly or through the uncertainty it creates, the Arizona statute will impose
additional burdens upon lawful employers and consequently lead those employers
to erect ever stronger safeguards against the hiring of unauthorized aliens --
without the counterbalancing protection against unlawful discrimination."
For companies conducting business in
Arizona, if your house is not in order, it is time to take a comprehensive look
at company protocols, procedures and policies. It is clear that LAWA allows the
Superior Court of Arizona to suspend or revoke business licenses of employers
who knowingly or intentionally hire unauthorized workers. What should be
of concern is how the Arizona courts will come to that conclusion and what fact
patterns will lead to a finding of knowing and intentional. What is more
important for good-faith employers is that under LAWA, good-faith compliance
with IRCA I-9 requirements provides employers with an affirmative defense against
these potential claims. In addition, proof of the use of E-Verify on employees
found to be undocumented provides employers with a rebuttable presumption that
the employer did not knowingly employ an unauthorized worker. Given these two
factors, the key for every employer is to take all necessary and possible steps
that will protect the company from a charge and a subsequent finding of
knowingly or intentionally hiring unauthorized aliens. While all employers may
not be able to guarantee a clean workforce, everyone can and should take steps
to provide an affirmative defense and a presumption of good faith compliance
should charges be filed pursuant to LAWA.
What are the options now that LAWA
is here to stay?
Enroll in E-Verify.
All Arizona employers should have
enrolled in this program as of January 2008, pursuant to LAWA. However, U.S.
Citizenship and Immigration Services has acknowledged that not all Arizona
employers have actually enrolled in the program. Employers can enroll specific
worksites in the E-Verify program, or they may enroll all of their worksites.
National employers are NOT required to sign up operations located
outside the State of Arizona unless other state statutes require participation.
Regardless of an employer's decision
on the E-Verify mandate, compliance with Form I-9 IRCA requirements is not
optional. All employers, regardless of industry or size, must make a concerted
effort to understand the importance of compliance, and make strategic business
decisions to limit liability. Employers continue to be advised to invest the time
and resources necessary to develop and implement a compliance policy. In
particular, it is recommended that all businesses consider and take action on
Employers need to be proactive and
need to act now to review immigration compliance routinely, and perhaps for the
first time, confirm and discuss expectations of these policies with business
partners. Survival contingency plans may be key as some industries experience
instability in their workforce and their resources throughout the community.
The issue is not one of losing some workers, but rather one of businesses losing
their licenses and shutting down permanently. Contingency plans will be crucial
to helping your company take every step possible to survive the ebb and flow of
business closings and the limited number of available workers in general. To
attempt to mitigate the impact of both state and federal enforcement actions,
employers must take whatever steps now possible to ensure, at a minimum, that
they are in compliance with federal immigration laws.
GT will continue to report on the
enactment and implementation of various laws impacting employers as more and
more states and localities adopt increasingly strict measures aimed at
controlling the employment of undocumented workers and the flow of illegal
1Chicanos Por La Causa v. Napolitano, 558 F.3d 856 (9th Cir. 2008).
3 8 U.S.C. § 1324a(h)(2).
4 Id. (emphasis added).
5 Chamber of Commerce of the U.S. v. Whiting,
No. 09-115, slip op. at 19 (U.S. May 26, 2011).
6 Id. at 15.
7 A.R.S. § 23-211(9).
8 Whiting, No. 09-115, slip op. at 11.
9 8 U.S.C. § 1324a(b)(5).
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