Companies in Arizona May Have Business Licenses Revoked for Hiring Unauthorized Aliens

Chamber of Commerce of United States v. Whiting (SCOTUS 5/26/2011)

Since January 1, 2008, all employers in Arizona have been required to use the E-Verify system to check the employment eligibility of new employees. E-Verify is a federal electronic database program whereby an employer may check the immigration status of a job candidate electronically. The electronic database is maintained by federal agencies including the Department of Homeland Security and the Social Security Administration. If a job candidate does not “clear” the database, the employer is supposed to terminate the employee. Failing to terminate an employee who is not cleared by the E-Verify creates a presumption that the employer knowingly hired an unauthorized alien. Arizona requires that an employer who is found to have knowingly hired an unauthorized alien may have its business license revoked or suspended by an Arizona court.

Since its inception, the Arizona law met with concentrated resistance. Several trade organizations, immigration advocacy groups, and construction contractor associations sued the state of Arizona to prevent enforcement of the new law. The lawsuit alleged that the law was unconstitutional because the federal immigration statutes already in place preempts, or trumps, the Arizona law. The federal law in question, commonly known as the Immigration and Control Act (“IRCA”), provides for monetary fines and sanctions against employers who “knowingly” employ unauthorized aliens. IRCA specifically preempts any State or local law imposing civil or criminal sanctions (other than through licensing or similar laws) upon those who employ, or recruit for employment, unauthorized aliens. Also, Congress has the exclusive authority to make laws regarding immigration policies such as who may enter or reside in the United States. The states have very limited authority to decide immigration issues. Thus, the organizations contend that Arizona is encroaching on the IRCA because Arizona seeks to influence immigration policies.

The organizations also argued that the Arizona law is unconstitutional because it mandated the use of the federal E-Verify system. They pointed out that the federal law which implemented the E-Verify system provided that use of the system was strictly voluntary, and in fact, prohibited the U.S. Attorney General from mandating its use. The organizations contended that the Arizona law overstepped the federal statute in that it makes using E Verify mandatory when Congress expressly intended it to be voluntary.

The U.S. Supreme Court, upholding a ruling by the9th Circuit Court of Appeals, rejected the organizations’ constitutional arguments and upheld the Arizona law. The Court found that the federal immigration statutes did not preempt the Arizona law. IRCA has a clause which expressly provides that states may continue to enact laws which prohibit companies from hiring unauthorized aliens through the use of licensing or similar laws. The Arizona law fits within the parameters of IRCA’s expressed exemption. The Arizona law does not purport to regulate immigration in the sense that it determines who may work or live in the U.S. Rather, its purpose is to ensure that businesses which are licensed by Arizona and which operate in Arizona’s jurisdiction do not hire aliens who are not authorized to work in the U.S. The key point is that the federal government determines who is unauthorized or not. The Arizona law prohibits employers from hiring employees who the federal government has not determined to be authorized. For this reason, the Arizona law does not overstep the federal statutes. If anything, the Arizona law does exactly what Congress expected the States to do regarding the regulation of their business licenses, and operates within the framework of IRCA.

The Court also found that the Arizona law does not conflict with the federal statute in that it requires employers to use the E-Verify system. The Court reasoned that although the federal statute prohibits the U.S. Attorney General from mandating the use of E-Verify, it is silent on whether other government entities may do so. Therefore, a state government such as Arizona may mandate the use of E-Verify without overstepping the federal statute. The E-Verify system was meant to be voluntary at the federal level, but the statutes and regulations which established E-Verify do not prohibit individual States from requiring its use.

For these and other reasons, the Court rejected the arguments of the organizations that the Arizona law was unconstitutional. Therefore, as of today, all employers in Arizona are required to use E-Verify to check on the immigration status of new employees. More importantly, any employer who is found to have knowingly hired an authorized alien is subject to its business license being revoked, which is a de facto death sentence for many businesses.

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One Response to “Companies in Arizona May Have Business Licenses Revoked for Hiring Unauthorized Aliens”

  1. I love reading an article that will make people think.
    Also, thank you for permitting me to comment!

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