In recent years, Arizona and several other U.S. states have enacted laws which mandate the use of the otherwise voluntary federal E-Verify system and increasingly impose sanctions for knowingly or intentionally employing unauthorized aliens. The U.S. Chambers of Commerce organization challenged Arizona’s law -- the Legal Arizona Workers Act of 2007 -- on the grounds that federal law should preempt state law in matters of immigration. However, in May 2011, the U.S. Supreme Court affirmed a decision by the Ninth Circuit Court of Appeals, which held that the federal law in question, specifically the Immigration Reform and Control Act (IRCA), does not preempt Arizona state law from mandating the use of E-Verify for employers or from suspending or revoking the business licenses of employers that knowingly or intentionally employ unauthorized aliens. This landmark Supreme Court ruling, Chamber of Commerce of the United States v. Whiting, 131 S. Ct. 1968 (2011), is likely to encourage other states to require the use of E-Verify by employers, and may lead to individual states expanding sanctions against non-compliant employers.
Enacted in 1986, IRCA makes it unlawful to knowingly hire unauthorized aliens, and requires that employers review certain documents in order to establish the employee’s eligibility for employment, subject to federal civil and criminal sanctions. The federal law limits the ability of states to bring charges against non-compliant employers, and instead reserves this authority for the Immigration and Customs Enforcement (ICE) Agency within the federal Department of Homeland Security (DHS). Indeed, IRCA expressly preempts “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, unauthorized aliens.”
The program that became E-Verify was created in 1996 by the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA). Launched in 2007, E-Verify is an internet-based system administered by DHS that allows an employer to verify an employee’s work authorization based upon information provided for the Form I-9 employment verification process, cross-checked against a Social Security Administration database. The E-Verify system has been criticized for being error-prone and unable to detect identity theft; however, by choosing to participate in the E-Verify system, the employer can establish a rebuttable presumption that it has not violated IRCA’s prohibition of the employment of unauthorized aliens.
Although IIRIRA generally prohibits the Secretary of Homeland Security from requiring participation in E-Verify outside the federal government, in Chamber of Commerce v. Whiting, the Supreme Court held (in a split decision of five to three) that state law may require employers to use the federal E-Verify system and that IRCA does not impliedly preempt the Arizona law from doing so. The Supreme Court also held that IRCA does not preempt state law from suspending or revoking business licenses for knowingly or intentionally employing unauthorized aliens.
In delivering the opinion of the Court, Chief Justice Roberts, joined in full by Justices Scalia, Kennedy and Alito, and in part by Justice Thomas, held that the Arizona law does not in fact allow Arizona to impose “civil or criminal sanctions,” which IRCA specifically prohibits to the states. The Court reasoned that, because the Arizona law – which defines “license” to specifically include articles of incorporation, certificates of partnership, and grants of authority to foreign companies to transact business in the state – is actually a business licensing law, and IRCA allows states to use such laws in immigration enforcement, it is not preempted. Moreover, the Court did not find any conflict between the Arizona law and federal immigration law. Therefore, the Court held that “Arizona’s licensing law falls well within the confines of the authority Congress chose to leave to the States and therefore is not expressly preempted.”
Regarding E-Verify, the Supreme Court held that Congress, in enacting IIRIRA, did not intend to prevent states from mandating participation in E-Verify at the state level, but only to limit the Secretary of Homeland Security in compelling the use of the E-Verify system beyond the federal government at the national level. The Supreme Court also rejected arguments from the Chamber of Commerce about the reliability of the E-Verify system, as well as the Chamber’s contention that the federal system would be overwhelmed and rendered ineffective if all states followed Arizona’s lead in mandating E-Verify.
In her dissent, Justice Sotomayor reasoned that IRCA only preserves states’ authority to impose licensing sanctions after a final federal determination is made that an employer has violated IRCA. She also reasoned that federal law preempts Arizona state law from mandating the use of E-Verify, observing that Arizona has effectively made a decision for Congress regarding use of a federal resource. Justice Sotomayor referred to significant policy objectives motivating Congress to make E-Verify voluntary, including cost concerns.
In his dissenting opinion, Justice Breyer (joined by Justice Ginsberg) reasoned that the Arizona state law does, in fact, impose a civil sanction upon those who employed unauthorized aliens because the “statute strays beyond the bounds of the federal licensing exception” and is therefore pre-empted by IRCA. Justice Breyer also agreed with the Chamber of Commerce’s concerns about E-Verify’s reliability and the likelihood that employers will err on the side of discrimination rather than risk hiring unauthorized workers and thus possibly triggering the so-called “business death penalty,” i.e., having their corporate charters revoked by the state. The Court majority rejected this argument stating “Only far more egregious violations of the law trigger that consequence … An employer acting in good faith need have no fear of the consequences.”
This Supreme Court decision is a milestone in the ongoing struggle between the federal government and its immigration-related agencies and those states legislatures that believe that federal law is not stringent enough with respect to the regulation of immigration matters. Although the Court addressed only the Arizona law, the Whiting decision gives tacit approval to the actions of a growing number of states that require the use of E-Verify, or that impose penalties on employers for violations of federal law involving the employment of unauthorized workers. Given that cities, counties, and other jurisdictions are also enacting similar measures, it is critical for employers to be mindful of this complex patchwork of laws, and to develop strategies to ensure compliance in all employment matters. We will continue to update you on major developments in this regard.
If you have questions about your state’s E-Verify requirements, or about other immigration-related employment measures in your state, please do not hesitate to contact your designated Gibney representative. We would be pleased to advise on developing protocols and best practices concerning the use of E-Verify or other immigration-related onboarding processes.
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This immigration article is provided as general information for clients and friends of Gibney, Anthony & Flaherty, LLP. It does not constitute, and should not be construed as, legal advice. The contents of this article may be considered attorney advertising in some states.