In Chamber of Commerce v. Whiting, the United States Supreme Court upheld a controversial Arizona law that imposes penalties against employers who knowingly hire illegal immigrants. The Court held that the federal Immigration Reform and Control Act (IRCA) did not preempt Arizona’s Legal Arizona Worker’s Act of 2007, which allows Arizona courts to suspend or revoke the business licenses of employers who knowingly or intentionally employ unauthorized aliens. The Arizona law sets forth a graduated series of sanctions for violations of the Arizona Act. For example, employers who violate the law a second time by knowingly hiring an unauthorized alien can lose their business licenses. The Arizona law also requires Arizona employers to participate in the federal E-Verify program to check an employee’s eligibility to work.

The majority opinion, authored by Chief Justice John Roberts, explained the statutory background of IRCA and E-Verify. IRCA, enacted in 1986, makes it unlawful for an employer to knowingly hire unauthorized aliens and imposes civil and criminal sanctions for such violations. IRCA also prohibits any state or local law from imposing civil or criminal sanctions “other than through licensing and similar laws” upon employers who employ unauthorized aliens. E-Verify, which Congress enacted 10 years later in 1996, allows (but does not require) an employer to verify an employee’s status to legally work in the United States.

Chief Justice Roberts gave short shrift to the argument that IRCA preempts Arizona’s law by focusing on the express language of IRCA that allows states to impose penalties “through licensing and similar laws.” The majority ruled that Arizona’s procedures “simply implement the sanctions that Congress expressly allowed Arizona to pursue through licensing laws” and Arizona “went the extra mile in ensuring that its law closely tracks IRCA’s provisions in all material respects.” The majority opinion also held that Arizona’s use of E-Verify did not conflict with federal law and noted that “the federal government has consistently expanded and encouraged the use of E-Verify.”

In his dissent, Justice Breyer argued the Arizona law may increase job discrimination against Hispanic-American workers because employers might discriminate against “legal workers who look or sound foreign” rather than risk the permanent loss of the right to do business or the “business death penalty” by hiring unauthorized aliens. The Chief Justice, however, believed any fears about the law leading to discrimination against Hispanics were unwarranted. He argued that the “most rational path for employers is to obey the law — both the law barring the employment of unauthorized aliens and the law prohibiting discrimination — and there is no reason to suppose that Arizona employers will choose not to do so.” He further noted that license termination is the sanction for “egregious violations of the law” and “an employer acting in good faith need have no fear of the sanctions.”

This decision means a state may sanction an employer who knowingly employs unauthorized aliens by suspending or revoking its business license. Several states, including Colorado, Georgia, Missouri, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, and West Virginia have enacted laws similar to Arizona. The ruling may indicate that the Court will determine that Arizona’s controversial immigration law, SB1070, is also constitutional.