On May 26, 2011, the Supreme Court of the United States issued its decision in Chamber of Commerce v. Whiting, No. 09-115, 563 U.S. __ (2011). In a 5-3 opinion, the Court upheld the constitutionality of the Arizona Legal Workers Act ("Act"), which requires all employers to use the federal E-Verify system and authorizes the state to suspend or revoke the licenses of any business that intentionally employs unauthorized aliens. The U.S. Chamber of Commerce had challenged the Act on preemption grounds because the Immigration Reform and Control Act of 1986 ("IRCA") prohibits states from imposing civil or criminal sanctions on those who employ unauthorized aliens. In the Court's view, the Act was not preempted, either directly or by implication, because it fell within the IRCA provision that permitted states to impose sanctions "through licensing and similar laws."

The Court's decision promises to complicate the legal obligations of employers by breathing new constitutional life into the role of states in regulating the employment of undocumented aliens. Since the Court's decision, Alabama, Georgia, North Carolina, South Carolina and Tennessee have passed similar statutes, and state legislatures around the country are looking more closely into the issue. Thus, employers must satisfy not only IRCA's Form I-9 requirements but also state law requirements applicable to where they operate. In this regard, employers must be conscious of potential substantive differences between state and federal requirements as they seek to simultaneously navigate this statutory minefield and avoid possible discrimination claims.

Following its decision in Whiting, the Court also vacated and remanded the decision of the U.S. Court of Appeals for the Third Circuit in Hazelton, Pa v. Lozano, 620 F.3d 170 (3d Cir. 2010). In Lozano, the Third Circuit had affirmed a district court decision that invalidated a local Hazelton ordinance that, among other things, made it unlawful for employers to recruit, hire, or employ an undocumented worker, required employers to use E-Verify under certain circumstances, and prohibited property owners from "harboring" illegal aliens by leasing housing to them. The Third Circuit was directed reexamine its decision in light of the Supreme Court's decision in Whiting.