On May 26, 2011, the Supreme Court issued its decision in Chamber of Commerce v. Whiting, No. 09-115. In the 5-3 decision, with Justice Kagan taking no part, the court affirmed the Ninth Circuit and held that the federal Immigration Reform and Control Act (“IRCA”) does not preempt provisions of Arizona’s Legal Arizona Workers Act (“LAWA”) imposing civil penalties on employers who hire unauthorized aliens and mandating that employers conduct employee background checks through E-Verify.

Background

The IRCA makes it “unlawful for a person or other entity . . . to hire, or to recruit or to refer for a fee, for employment in the United States an alien knowing the alien is an unauthorized alien.” 8 U.S.C. § 1324a(h)(2). While the IRCA prohibits states from imposing “civil or criminal sanctions” on employers who hire unauthorized aliens, it does allow states to impose penalties through “licensing and similar laws.” LAWA does just that, allowing Arizona courts to suspend or revoke the licenses necessary to do business in that state if an employer intentionally or knowingly employs an unauthorized alien. Ariz. Rev. Stat. Ann. §§23–211, 212, 212.01.

The IRCA additionally requires employers to document via an Employment Eligibility Verification Form, commonly known as Form I-9, that all individuals hired after November 6, 1986, are either United States citizens or aliens properly authorized to work in this country.

As a supplement to the I-9 process, Congress created E-Verify, an online system that confirms employment authorization for new hires through queries in databases maintained by the Department of Homeland Security and the Social Security Administration. Whereas under federal law E-Verify is primarily an optional tool (with the exception of certain government contractors), LAWA requires all Arizona employers to use E-Verify.

Whiting upholds the challenged provisions of LAWA that allow courts to impose licensing penalties and mandate the use of E-Verify, holding that there is no express federal preemption of the Arizona law and affirming the Ninth Circuit’s judgment that the Arizona law also was not impliedly preempted.

Practical Guidance for Employers

Although LAWA applies only in Arizona, the Whiting decision will impact employers in other states with analogue statutes. At present, 11 other states have passed similar legislation [see Conn. Gen. Stat. §31–51k (1973) (enacted 1972); Del. Code Ann., Tit. 19, §705 (Cum. Supp. 1978) (enacted 1976); Fla. Stat. §448.09 (1981) (enacted 1977); Kan. Stat. Ann. §21–4409 (1981) (enacted 1973);1985 La. Acts p. 1894; 1977 Me. Acts p. 171; 1976 Mass. Acts p. 641;Mont. Code Ann. §41–121 (1977 Cum. Supp.); N. H. Rev. Stat. Ann.§275–A:4–a (1986 Cum. Supp.) (enacted 1976); 1977 Vt. Laws p. 320;1977 Va. Acts ch. 438].  Others may soon follow suit with Whiting paving the way.

The vast majority of employers work hard to comply with federal immigration laws, and the enforcement of a state law similar to LAWA should not radically affect the day-to-day realities of those employers. But the decision does have one major implication for employers nationwide: the rise of E-Verify. If your state has a statute requiring use of E-Verify, the enforcement of the statute may have been on hold pending the outcome of Whiting. Enforcement may now start in earnest.

Even if your business is not currently required to use E-Verify, statues requiring its use are on the rise, and you may want to get ahead of the curve by voluntarily implementing its use. Indeed, the number of employers electing to use this system is on the rise. According to the Department of Homeland Security, over 238,000 businesses already are enrolled, and approximately 1,400 businesses enroll each week. With increasing mandatory and voluntary background checks conducted through this system, E-Verify will likely become increasingly ubiquitous, and employers should remain alert for any new federal or local requirements regarding its use.