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Immigration Law Ruling Raises Employer Fears

June 9, 2011

A U.S. Supreme Court decision upholding an Arizona immigration law could result in employers facing a patchwork of onerous anti-immigration laws unless Congress decides to take action, attorneys say.

Furthermore, the court's 5-3 decision in late May in Chamber of Commerce of the United States of America et al. v. Michael B. Whiting et al. gives implicit approval to a sometimes unreliable federal immigration verification system, which also can cause problems for employers, observers say.

In its ruling, the high court upheld lower court rulings that found that Arizona’s 2007 Legal Arizona Workers Act is not pre-empted by federal law.

Under the Arizona law, employers that violate the law a second time by knowingly hiring an illegal immigrant can lose their business license.

The Arizona law requires that after hiring an employee, all Arizona employers must verify their employment eligibility using E-Verify, according to the ruling.

Congress established E-Verify, an Internet-based system under which an employer can verify an employee’s work authorization status, in the Illegal Immigration Reform and Immigrant Responsibility Act of 1996.

In ruling on the Arizona law, the high court said the Immigration Reform and Control Act of 1986 expressly pre-empts “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.”

According to the opinion, the U.S. Chamber of Commerce had argued “that the Arizona law’s provisions allowing the suspension and revocation of business licenses for employing unauthorized aliens were both expressly and impliedly pre-empted by federal immigration law, and that the mandatory use of E-Verify was impliedly pre-empted.”

But the Supreme Court disagreed. The majority said the Washington-based Chamber of Commerce “and the United States as amicus argue the Arizona law is not a ‘licensing’ law because it operates only to suspend and revoke licenses rather than to grant them.” However, the high court ruled, “this is contrary to the definition that Congress itself has codified. ... It is also contrary to common sense. There is no basis in law, fact or logic for deeming a law that grants licenses a licensing law, but a law that suspends or revokes those very licenses (is) something else altogether.”

Arizona’s procedures “simply implement the sanctions that Congress expressly allowed Arizona to pursue through licensing laws,” the majority ruled, saying the state “went the extra mile in ensuring that its law closely tracks [the Immigration Reform and Control Act’s] provisions in all material definitions.”

Consistent with law
On the E-Verify issue, the high court ruled that Arizona’s requirement that employers use it “is entirely consistent with the federal law. ... In fact, the federal government has consistently expanded and encouraged the use of E-Verify,” the high court ruled.

The Chamber of Commerce and Supreme Court Justice Stephen Breyer, in his dissenting opinion, argued that employers “will err on the side of discrimination rather than risk the ‘business death penalty’ by ‘hiring unauthorized workers.’ ”

However, the majority, in the opinion written by Chief Justice John Roberts, responded by saying license termination “is not an available sanction” for simply hiring unauthorized workers, and only “far more egregious violations of the law trigger that consequence. ... An employer acting in good faith need have no fear of the sanctions.”

Justice Elena Kagan did not participate.

Reacting to the ruling, the Chamber of Commerce’s National Chamber Litigation Center issued a written statement that said, in part, the decision “does not give states or local governments a blank check to pass any and every immigration law,” which “continues to be predominantly a federal concern.”

David Selden, a partner with the Phoenix-based Cavanagh Law Firm who filed the original lawsuit on behalf of two Arizona business groups, said the decision in the immediate future “is going to result in a lot of states enacting a lot of different immigration laws with penalties against employers.”

In the longer term, it “will increase pressure on Congress to reform federal immigration laws, because having a patchwork of 50 different immigration laws in the different states is burdensome for large and small businesses to have to worry about complying with,” Selden said.

This is a “wake-up call” to Congress, said Elena Park, a member of Cozen O’Connor in West Conshohocken, Pennsylvania.

The decision “also shows the importance” of employers conducting self-audits and “by having comprehensive hiring practices so they’re prepared” if there is workforce enforcement action, Selden said.

E-Verify concerns
Observers say one major concern is the ruling’s implicit endorsement of E-Verify, which is a voluntary federal system, but mandated by Arizona law. Mississippi, Utah and Virginia also have such a mandate, according to the ruling.

John Doran, a shareholder with Greenberg Traurig in Phoenix, said, “The obligations that are required under Arizona law, including a mandatory use of E-Verify, create significant burdens for employers and, frankly, you wonder if all of a sudden, you have a national E-Verify mandate” as a result of the ruling.

Observers say the E-Verify system is flawed and prone to error. “It isn’t quite as effective as people might think it is,” said Craig Peterson, a lawyer with Dorsey & Whitney in Minneapolis.

“They do get it wrong, and when they do get it wrong, there are serious consequences,” said Robert Whitehill, a partner with Fox Rothschild in Pittsburgh, of the E-Verify system.

Furthermore, Whitehill said, “I think it’s entirely possible that [the ruling] will have a discriminatory effect.”

David Grunblatt, a partner with Proskauer Rose in Newark, New Jersey, said employers “will err on the side of compliance, even if it violates the rights of the individual, because their bigger fear” is of the state government.

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