In its Arizona v. U.S. decision last year, the U.S. Supreme Court invalidated parts of Arizona's tough illegal immigration law as inconsistent with federal regulation of immigration. Last week, the Third Circuit Court of Appeals used the Arizona precedent to in turn invalidate a municipal ordinance that would have made it unlawful for city businesses to employ illegal workers.

Lozano v. City Of Hazleton involved a Pennsylvania local ordinance that contained the hiring prohibition. It also prohibited city landowners from renting property to undocumented immigrants. The Supreme Court previously remanded the case to the Third Circuit for consideration based on the Arizona decision. On remand, the Third Circuit concluded that both of the challenged provisions were an unconstitutional infringement by the city on federal powers to regulate immigration.

The city argued that the employment provisions of the ordinance were constitutional because the Supreme Court previously upheld Arizona's ability to revoke the business licenses of companies found to have employed illegal workers. The Third Circuit distinguished this decision on the basis of the breadth of the Hazleton ordinance. It not only prohibited employment of illegal workers, but also extended to use of contractors, self-employed individuals and even volunteers. The ordinance's E-Verify safe harbor would not apply with respect to these workers.

As a result, the ordinance prohibits a wide range of economic interactions with undocumented persons that infringes on federal powers to regulate such commerce. It also imposed sanctions that went beyond Arizona's license revocation measure. Municipalities could react to this decision by adopting ordinances in line with the Arizona decision, but broad prohibitions on employment or use of undocumented workers will face continuing constitutional challenges.