On August 24, United States District Judge Sharon Blackburn heard several hours of oral argument in three federal lawsuits challenging the constitutionality of the new Alabama Immigration Act. Most of the provisions of the new Act, which has been described by both supporters and opponents as the toughest state immigration law in the country, were set to go into effect September 1. However, on August 29, Judge Blackburn entered an Order temporarily enjoining enforcement of the new Act to give herself additional time to address the numerous challenges asserted in the three lawsuits. In her Order, Judge Blackburn made clear that she was not addressing the merits of the parties’ positions and stated that she would issue rulings on the merits by no later than September 28. We summarized the new Act in a previous Labor & Employment Alert.

Most observers predict that many of the most onerous and controversial provisions of the new law will be declared invalid. Employers, however, should note that the provisions of the Act which impact them the most are not being directly challenged in any of the three lawsuits. This includes Section 15 of the Act (which requires all Alabama employers to use E-Verify and imposes stiff penalties – specifically, the suspension and loss of business licenses – on employers who are found to have knowingly hired or employed unauthorized aliens) as well as Section 9 (which requires contractors and subcontractors to use E-Verify and to provide sworn affidavits attesting to immigration compliance as a condition for the award of a contract with the State of Alabama, a political subdivision of the State, or a State-funded entity). These employment-related provisions are not being challenged because of the U. S. Supreme Court’s May 2011 decision in Chamber of Commerce of the United States of America v. Whiting, which upheld the constitutionality of similar legislation enacted by the State of Arizona.

Fortunately for employers, neither Section 9 nor Section 15 was set to go into effect on September 1, as was most of the remainder of the Alabama Act. Under the Act, the effective date of Section 9, which applies to state contractors and subcontractors, is January 1, 2012. The effective date of the wider-ranging Section 15 is not until April 1, 2012. However, because these provisions will almost certainly survive regardless of how Judge Blackburn rules on the remainder the Alabama Act, Alabama employers would be well-advised to take certain measures now to reduce their risk of liability under the new law.

There are a number of important steps that an employer can take:

  • Have an independent audit conducted of its Form I-9 process. This includes taking steps to ensure that its existing Form I-9s are in order and that its hiring managers and personnel are trained in proper Form I-9 procedures. The new Act provides that good faith Form I-9 compliance is an affirmative defense to a claim that an employer knowingly hired or employed an unauthorized alien.
  • Become familiar with the E-Verify system. According to the new Alabama Act, once an employer is enrolled in E-Verify, it must use that system in accordance with the federal statutes and regulations. For instance, under the federal regulations, an employer cannot use E-Verify to verify current employees already employed at the time of E-Verify enrollment. Some of the E-Verify rules, such as whether rehired employees must be E-Verified, are tricky.
  • Review and make appropriate revisions to its subcontracts and staffing agency agreements. Employers are not required to complete Form I-9s for, or to E-Verify, the employees of its arms-length subcontractors and independent contractors. However, an employer may still be at risk if its subcontractors and independent contractors fail to discharge their legal obligations to properly verify their employees. An employer can alleviate this risk by including appropriate reps and warranties provisions and indemnity clauses in its subcontracts and other independent contractor agreements.
  • Prepare the required contractor and subcontractor affidavits for use on State and State-entity contracts. Section 9 requires the execution of affidavits containing specific attestation language as a condition for the award of a contract by the State, a political subdivision of the State, or a State-funded entity. The Alabama Act provides contractors with certain “safe harbor” protections if they secure the proper affidavits from their lower-tier subcontractors. The Act requires the Secretary of State to adopt rules to administer Section 9, so employers should also be on the lookout for any standard forms or additional guidance that may be issued.