In a decision broadening states’ powers to enforce federal prohibitions on the employment of illegal immigrants, the United States Supreme Court issued its much-awaited decision in Chamber of Commerce v. Whiting, No. 09–115. In the May 26, 2011 decision, the court held by a 5–3 majority[1] that federal immigration law did not preempt an Arizona statute that imposes licensing penalties on businesses that knowingly or intentionally employ unauthorized workers. The Arizona statute further requires businesses to use the federal E-Verify system to determine whether a worker is authorized to work in the United States.

Factual Background

The 1952 Immigration and Naturalization Act (INA) as amended by the Immigration Reform and Control Act of 1986 (IRCA) makes it “unlawful for a person or other entity . . . to hire, or to recruit or refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien.” 8 U.S.C. § 1324a(a)(1)(A). Contained within this statute is the requirement that employers attest via Form I-9 that they have verified that each newly hired employee is not an “unauthorized alien.” 8 U.S.C. § 1324a(b)(1)(A). E-Verify, originally launched as a pilot program in 1996, is a federal internet-based system that allows employers to verify whether an employee is authorized to work. Using E-Verify to determine that an employee is authorized creates a rebuttable presumption that the employer has not violated the law. Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA) § 402(b)(1), 110 Stat. 3009–655. When an employer is determined to have violated IRCA, federal civil and criminal penalties may apply.

Each of these components of federal immigration law interacts in a distinct manner with states’ authority to create and enforce immigration law. IRCA “preempt[s] any State or local law imposing civil or criminal sanctions (other than through licensing and similar laws) upon those who employ . . . unauthorized aliens.” 8 U.S.C. § 1324a(h)(2). The statute governing the E-Verify system, on the other hand, prohibits the Secretary of Homeland Security from requiring any non-federal employer to use E-Verify.[2]

Through enactment of the Legal Arizona Workers Act, Arizona, like many states, attempted to assert greater control over employment and immigration law. Ariz. Rev. Stat. 23-211–23-214. The Act authorizes, and in some circumstances mandates, the suspension or revocation of a business’s licenses if it knowingly or intentionally employs an unauthorized alien. License is defined to include articles of incorporation, certificates of partnership, and grants of authority to foreign companies to transact business in Arizona. The Act further mandates that employers use E-Verify to determine the authorization status of potential employees. Much of the language included in the Act parrots language used in IRCA, and the Arizona law expressly prohibits state, county or local officials from attempting “to independently make a final determination on whether an alien is authorized to work in the United States.”

After enactment of the Legal Arizona Workers Act, the Chamber of Commerce of the United States, along with various business and civil rights organizations, filed a preenforcement suit, arguing that federal law preempted Arizona’s new law, in regard to both the licensure and E-Verify provisions. The District Court of Arizona upheld the law, a decision affirmed by the Ninth Circuit and Supreme Court.  

Supreme Court’s Decision

Chief Justice Roberts, writing for the majority, held that federal law neither expressly preempted the licensure revocation and suspension provisions nor impliedly preempted the mandatory E-Verify provision of the Arizona statute. Chief Justice Roberts, writing for Justices Scalia, Kennedy, and Alito further concluded that the licensing provisions were not impliedly preempted and that the statewide E-Verify mandate did not obstruct the objectives of the federal E-Verify program. The Court first addressed the question of whether the licensing provisions were expressly preempted by IRCA, finding that the Arizona law fell safely within the plain text of IRCA’s savings clause (preempting state action “other than through licensing and similar laws”). The Court, noting that the “Arizona law, on its face, purports to impose sanctions through licensing laws,” explained that the Arizona law’s definition of “license” largely echoes the definition used by the Administrative Procedure Act (APA). See 5 U.S.C. 551(8). The Court found support for Arizona’s inclusion of license examples such as articles of incorporation in both the general APA definition as well as in the Webster Dictionary definition of license (defining license as “a right or permission granted in accordance with law . . . to engage in some business or occupation, to do some act, or to engage in some transaction which but for such license would be unlawful”).

In rejecting the Chamber of Commerce and United States amicus argument that the law was not a licensing law because it only revoked, and did not grant, licenses, the Court noted that “revocation, suspension, annulment, [and] withdrawal” of a license are all licensing processes explicitly included in the APA definition of licensing. Finally, the Court rejected several arguments put forth by the Chamber regarding the Migrant and Seasonal Agricultural Worker Protection Act (AWPA), which was amended to repeal worker authorization procedures upon enactment of IRCA. Chief Justice Roberts concluded his discussion of the licensing provisions by finding that Congress, by “specifically preserv[ing] such authority for the States,” intended to allow states to use licensing as a means of work authorization, noting that the Arizona statute “went the extra mile” to ensure its compatibility with IRCA.  

In upholding the E-Verify portions of the Arizona law, the Court noted that the implementing federal statute IIRIRA contains no language “circumscribing state action,” though it does put constraints on federal action. The Court pointed out that the federal government used this distinguishing language in support of an Executive Order mandating E-Verify use by federal contractors, even using Arizona’s E-Verify law as an example of a permissible use of the system. The Court further noted that the rebuttable presumption created by use of E-Verify under Arizona law was the same rebuttable presumption created under federal law. Chief Justice Roberts concluded by relying on the Department of Homeland Security’s assurances of E-Verify’s capacity potential to refute the Chamber’s argument that were all fifty states to mandate E-Verify use, the federal system would be overwhelmed, and its purpose would be undermined.

What this Decision Means for Businesses Around the Country

An increasing number of states have enacted laws similar to Arizona’s licensing and E-Verify laws. The court notes that Colorado, Mississippi, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia all impose licensing sanctions of employers failing to comply with employment authorization laws. Further, Mississippi, South Caroline, Utah and Virginia have all passed legislation mandating the use of E-Verify. In light of the ruling in Chamber of Commerce v. Whiting, these and other states are likely to increase their involvement in enforcement of employee authorization verification.

Especially in light of the Court’s endorsement of Arizona’s mandatory E-Verify law, businesses that do not already use E-Verify may be well-advised to plan for the possibility that they could soon be required to do so. In Minnesota, however, an Executive Order issued in 2008 by then Gov. Tim Pawlenty that required private employers who contract with the state government to use the E-Verify system expired in 2011 when newly elected Gov. Mark Dayton refused to extend it. That could change, however, as states review the Supreme Court’s decision in Whiting.

In a closely related case, the United States government has challenged in federal court key provisions of Arizona Senate Bill 1070 (S.B. 1070).  S.B. 1070 makes it a misdemeanor for an alien to be in Arizona without carrying immigration documents and prevents state and local officials from restricting the enforcement of federal immigration laws. In April, the U.S. Court of Appeals for the Ninth Circuit upheld a lower court’s injunction blocking certain enforcement of certain provisions of S.B. 1070.   United States v. Arizona, No. 10-16645 (9th Cir. 2011). The state of Arizona has until July 11, 2011 to petition the Supreme Court for review of this decision.Though some commentators believed the decision in Chamber of Commerce v. Whiting might provide insight into whether the Court would uphold a challenge to Arizona Senate Bill 1070 (S.B. 1070), many now argue that the Whiting decision does not reveal how the Court might rule. Had Whiting been decided in favor of the Chamber, commentators predicted S.B. 1070 would also fall. However, the Court’s ruling leaves room for much speculation, given that S.B. 1070 is much broader and includes a wider array of legal issues than did the Legal Arizona Workers Act. Ultimately, the Court gives little indication of the degree of latitude it would provide states to enforce federal immigration law beyond licensing provisions.