When Arizona launched the nation’s toughest immigration reform law for employers this year, complete with mandatory document verification and penalties up to the loss of a business license for knowingly hiring undocumented workers, Anna Johnson cheered.
As president of Super Embroidery Inc., Johnson employs 45 people at her Phoenix production facility to churn out shirts, hats, bags and other items emblazoned with logos for business customers. So far, the new law has worked out just fine for her, she says, noting that she has allies in the local business community who agree.
"I think it is good law because it makes sure we are using legal employees," Johnson says. "It makes sure the guy down the street doesn’t have an edge on me by hiring illegals."
Johnson’s reaction is what Arizona lawmakers were hoping for when they decided to tackle immigration reform last year. But so far, the law has done as much to stir the debate as to settle it. Johnson finds herself allied against some of the state’s most powerful business groups, who oppose the law. A coalition that includes hoteliers, restaurateurs, farmers, contractors and the Arizona Chamber of Commerce has joined in a federal lawsuit aimed at overturning the law, which they view as unwieldy, unfair and an improper use of state authority to resolve a matter reserved for the federal government.
Other states, companies and national organizations are watching closely as Arizona tries to put its new law into action. How the Arizona experience plays out could offer insights into how workplace rules and employer sanctions will be deployed in the future to control illegal immigration—possibly state by state.
Arizona is hardly alone in trying to tackle the nation’s illegal immigration problem. After Congress failed to enact a national overhaul last year, states across the country began dabbling in immigration reform.
"The problem is that the states are frustrated with the collapse of comprehensive immigration reform last year," says Mike Aitken, director of government affairs at the Society for Human Resource Management. "We have seen 29 different state legislative efforts."
But no state has gone quite as far as Arizona. Julie Pace, a Phoenix immigration lawyer who represents businesses in the court challenge to the Arizona law, says she regularly gets calls from businesses around the country wanting to know what’s happening in Arizona, either because they have operations in the state, are facing a similar measure in their own state, or they simply want to be prepared for the future. One of the key concerns is that state-by-state legislation would require companies to deal with differing hiring practices on the same question of legal status.
"This country did not envision 50 different laws for every human resources office to have to go through," Pace says.
In Arizona, business owners such as Johnson who praise the law are often drowned out by others who complain that it adds a costly and time-consuming burden on employers trying to hire new workers. Critics have voiced concerns about the accuracy of the federal document verification program, called E-Verify. They say the Arizona law’s focus on the workplace will spook workers and business owners, prompting a flight of investment capital and labor to other states.
"Everything is on hold here," Pace says. "Acquisitions of companies have dropped, expansions have dropped. It has caused a lot of long-term workers to get nervous and leave."
Arizona’s experiment in immigration control revolves around its position as a state with a 350-mile mile border with Mexico. The state saw a rise in illegal border crossings from Mexico over the last few years as federal agents clamped down in Texas and California, prompting new routes to open through the Arizona desert. Illegal immigrants newly arrived from Mexico began showing up in increasing numbers on Arizona’s streets, prompting calls for action to control the border.
When Congress failed to pass its own immigration reform measure last year, largely over gridlock on how to deal with the millions of illegal immigrants already living in the country, U.S. Sen. John McCain, the Arizona Republican who is his party’s presumptive nominee for president, famously noted that what people wanted was to regain control of the border before dealing with those already here.
McCain’s home state is now trying to do exactly that by shutting off the job incentive that draws illegal aliens.
Arizona employers, like those in other states, already are required by federal law to check the legal status of all new hires. They must fill out federal Form I-9 to show that each worker holds federally acceptable residency documents, like a driver’s license or Social Security card. Employers are only required to do a cursory check of those documents rather than verify their authenticity.
Employers can go one step further and participate in E-Verify, in which information from I-9 documents can be checked through databases at the Social Security Administration or the Department of Homeland Security. But the program is voluntary, and relatively few businesses nationwide have opted to sign up.
"Three or four times a week, we get a call about a policeman or a sheriff's deputy showing up at a company site or stopping a company driver. Suddenly employers feel like they have a bull's-eye on them.
Phoenix immigration lawyer
Arizona’s new law makes E-Verify mandatory for every new hire in the state. Employers are not required to go back and verify the status of existing workers. The law also provides tough penalties for employers caught knowingly hiring undocumented workers, including the loss of business licenses for repeat offenders. The law has led to some raids by local law enforcement officials on workplaces, particularly in the Phoenix area, but so far no charges have been filed against any employer.
The law was approved and signed by the governor in July 2007. Initially set to take effect in January 2008, it was delayed until March. The law was challenged in federal court the same month it was adopted, partly on grounds that it is an unlawful attempt by a state authority to regulate an issue—immigration—that falls under federal authority. It was upheld in the first round in federal court, and a three-judge appellate panel heard oral arguments on June 12 in San Francisco. A decision in the case may come later this summer.
Meanwhile, Arizona businesses have started signing up for E-Verify. As of May 31, almost 23,000 Arizona businesses had joined, a major jump from the 500 or so who were using it before the law was enacted, according to Marie Therese Sebrechts, a spokesperson for U.S. Citizenship and Immigration Services. The total is still just a fraction of the estimated 150,000 businesses in Arizona, an indication that many are waiting to see whether the legal challenge succeeds.
Arizona already has become the most active user of E-Verify in the nation, accounting for about 36 percent of the 69,000 businesses in the U.S. now using the system. The state has in effect become a laboratory for a new mandatory rule requiring employers to do more to verify the legal status of their workers. On June 6, President Bush gave a boost to E-Verify, signing an executive order making its use mandatory for federal contractors. An estimated 200,000 contractors must now use E-Verify to screen new hires.
One of the first questions raised about the new requirement in Arizona was technical: Would the federal computer system and bureaucracy be able to handle a rapid increase in E-Verify participation?
"People were looking hard at Arizona," Sebrechts says. "Many people predicted we would have major crashes. That did not happen."
Under E-Verify, an employer first must sign up and undergo training on the E-Verify system. Once approved, an employer can enter information from a new employee’s legal residency documents—essentially the same documents submitted under the I-9 process—to verify that the documents are real and that the names match up with federal records. Sebrechts says that most computer queries return a response within a few seconds, and that 97 percent of the responses confirm documents are real. Of those that are rejected, most turn out to be common errors like name misspellings.
"People were looking hard at Arizona. Many people predicted we would have major crashes. That did not happen." —Marie Therese Sebrehts, U.S. Citizenship and Immigration Services
Those that still have problems have proved to be mostly mistakes in federal records rather than phony documents, Sebrechts says. Workers must resolve those mistakes, typically with the Social Security Administration, and they cannot be fired while they are trying to clear up the problem.
Johnson says the system has worked exactly as advertised for her: a few clicks on the E-Verify Web site, a few items of worker information to type in, and a response comes back almost immediately. "It is so easy," Johnson says.
You won’t hear that sort of endorsement from opponents of the Arizona law, who see peril at every turn.
"We support employment verification under three conditions: it works; it is easy to use; and it doesn’t open employers up to new liability," says SHRM’s Aitken. "E-Verify doesn’t come close to meeting the test."
Aitken says that one of the key problems with E-Verify is its reliance on the Social Security Administration database, which he says is not up to the task of verifying millions of employee files. SHRM cites statistics indicating that 4.1 percent of Social Security records contain errors, which translates to potential verification problems for up to 6 million people.
Clearing up an error in a person’s Social Security record is not as simple as federal officials claim, and can sometimes take weeks or months to reach a final conclusion, Aitken says, a process that adds uncertainty to the whole hiring process.
Even if Social Security cleaned up its database, the E-Verify system would be no help in detecting certain kinds of identity theft, Aitken says. E-Verify simply matches information submitted by a prospective employee to the data in federal files. It does not confirm whether the employee submitting the document is actually that person. In other words, E-Verify cannot tell if the prospective employee is fraudulently submitting someone else’s name and valid Social Security number or passport.
The result of those flaws, Aitken says, is that employers using E-Verify could sometimes hire workers with fraudulent documents, or in other cases challenge the status of prospective employees who are in fact legal residents. In both instances, employers might be vulnerable to legal action despite following the rules. And in some cases, employers might end up losing their business licenses.
"I think E-Verify is one of those good intentions on the road to hell," says Jason LeVecke, CEO of Phoenix-based fast-food franchise company MJKL.
LeVecke says that when Arizona made E-Verify mandatory and added the penalty of loss of an employer’s business license for knowingly hiring undocumented workers, he decided to shelve a major expansion in Arizona. He had been planning to build more Carl’s Jr. restaurants in Arizona to add to the 70 he already has in the state. But after the Arizona law passed, he dropped those plans and instead bought a chain of 30 Hardee’s restaurants in Kentucky and neighboring states.
"I could poison people in my restaurant and the government wouldn’t shut me down," LeVecke says. "But if I should hire the wrong person, even by accident, I could lose my license. All they have to prove is that one of my 70 managers had this knowledge. No business would take that risk."
Ira Mehlman, spokesman for the Federation for American Immigration Reform, which advocates workplace rules to control immigration, sees all the carping about the Arizona law as an endorsement. What employers are really concerned about, he says, is the fact that some workers are opting to leave Arizona rather than apply for jobs and go through E-Verify. Similar experiences are being reported in other states and where tougher workplace rules are being enacted.
"In these places where local governments are enacting laws against employers, there has been a notable exodus of illegal aliens from those states," Mehlman says. "Now people are complaining that the law works too well."
Pace says one of the problems with the Arizona law is that it allows local law enforcement to act on anonymous tips alleging the presence of undocumented workers. Already local law enforcement officials, particularly around Phoenix, have begun checking up on employers in response to a rising number of tips.
"Three or four times a week, we get a call about a policeman or a sheriff’s deputy showing up at a company site or stopping a company driver," Pace says. "Suddenly employers feel like they have a bull’s-eye on them."
Pace says she has produced a "script" that she distributes to business clients detailing how they should respond if confronted by local law enforcement officials on allegations of having hired undocumented workers.
Toby Malara, government affairs counsel for the American Staffing Association, says the law has had an impact on staffing companies both inside and outside Arizona. Some companies, seeing the use of E-Verify as a coming national trend, have started asking staffing firms that supply them with workers to use E-Verify for all new hires everywhere in the country.
The pressure on staffing companies to use E-Verify is part of a national trend that is being pushed along by the Arizona law, says Ed Lenz, general counsel for the American Staffing Association.
Indeed, Congress is already considering several measures aimed at created a national mandatory verification system.
"I think there is growing consensus that E-Verify or something like it will be mandatory anyway as a matter of federal law," Lenz says.
And that would be just fine with Johnson, who sees herself on the front lines of a national push to stem illegal immigration.
"We have to do something," she says. "The problem is everywhere now."
Workforce Management, June 23, 2008, p. 47-53 -- Subscribe Now!