On May 26, the United States Supreme Court issued an opinion upholding the Legal Arizona Workers Act (also known as the Employer Sanctions law) against a challenge to the law’s constitutionality. The Court held that the Act is a licensing law and so it falls in within the category of laws that are not pre-empted by the Immigration Reform and Control Act, thereby allowing the state to regulate in this area.

As a reminder, the Legal Arizona Workers Act prohibits the knowing or intentional hiring of persons who are not authorized to work in the United States. Upon a first violation, employers’ business-related licenses at the location where unauthorized persons worked may be temporarily suspended, and the employer may be required to submit quarterly reports of its compliance with the law for up to five years. Upon a second violation within three or five years of the first violation, employers may be subject to the “business death penalty,” in which all business licenses necessary to conduct business at the location where unauthorized persons worked are revoked.

The Legal Arizona Workers Act also makes registration and use of the Federal E-Verify program mandatory for Arizona employers. While there are no affirmative penalties that may be imposed upon an employer for failing to register for and use E-Verify, use of E-Verify provides an affirmative defense for any charges of unlawful hiring of unauthorized persons. In addition, businesses that wish to receive economic development incentives (such as grants, loans, or performance based incentives provided by government entities), or contracts with the State, must participate in E-Verify.