On February 7, 2008, Judge Neil V. Wake of the United States District Court for the District of Arizona issued an opinion on the merits upholding the Legal Arizona Workers Act (A.R.S. §§ 23-211 to 23-214) (Act). The Act authorizes the investigation and prosecution of employers that knowingly or intentionally hire unauthorized aliens, as that term is defined by federal law. Any employer found in violation is subject to temporary and/or permanent revocation of all business licenses and authorizations to do business in Arizona. In addition, the Act requires that employers register with the federal government's Web-based E-Verify program for I-9 employment authorization verification.

Several lawsuits which challenged the Act on facial constitutional grounds were consolidated for a preliminary injunction hearing and trial on the merits on January 16, 2008. This followed a prior dismissal on December 7, 2007, and a refiling, with some changes in the parties. Plaintiffs appealed the prior dismissal to the Ninth Circuit Court of Appeals, and are expected to appeal the February 7 decision and seek both to have it consolidated with the pending appeal and to obtain an expedited hearing. County attorneys in Arizona, who are responsible for enforcement of the Act, have represented that they will not institute enforcement proceedings before March 1, 2008.

In the recent decision, the court rejected the argument that the subject matter of the Arizona statute has been preempted by federal immigration law, finding that federal law specifically authorizes state licensing sanctions of the type involved in the Act. Concluding that the Act only regulates licensing and employment in Arizona, the court also rejected the argument that the Act impermissibly regulates in the field of immigration. The court found that the Act is consistent with the purposes and objectives of Congress and that it carefully tracks federal employer sanction laws, particularly the Immigration Reform and Control Act of 1986. According to the decision, the Act's sanction provisions for employers mirror those of federal law in all material respects and fall squarely within the State's police power. Nor did the court find any impediment to the Act's mandatory use of the E-Verify system for employers in Arizona.

Rejecting the plaintiffs' arguments, the court also found that the Act satisfies procedural due process requirements, particularly by allowing the employer to put on trial evidence to rebut the federal notification of unauthorized status, and to establish the employer's lack of knowledge. The court specifically found that "[t]he E-Verify process itself is fair, prompt, interactive, and adequate." The court declined to decide whether the Act applies to employees hired before January 1, 2008, but did state that the Act does not apply to casual hires or domestic workers. The court's February 7, 2008 order directing the entry of judgment in favor of defendants may be found here.

Plaintiffs have indicated they will seek an expedited ruling from the Ninth Circuit. Absent a ruling from that court, Arizona employers must register with and use E-Verify as of January 1, 2008. If they have not already done so, Arizona employers should:

  • Register for E-Verify and become familiar with the system and its requirements including the memorandum of understanding (which requires retention of I-9 identification documents not previously required to be kept), completion of the program tutorial and designation of a company representative.
  • Review I-9 files and current I-9 practices to ensure compliance with requirements, modify hiring procedures as necessary to comply with the Act and train appropriate personnel responsible for compliance.
  • Prepare for delays and other complications relating to the I-9 verification process.
  • Educate human resource employees, management and other relevant personnel on appropriate practices and any changes required for compliance with federal and state laws.
  • Establish company policies for dealing with governmental inquires, responding to complaint investigations and handling information regarding employee immigration status, and train hiring, administrative and management personnel regarding these policies. Anticipate any potential business disruption and cost increases resulting from state investigations, possible state court proceedings and potential loss of company employees or a reduced employment pool.