Only four years after the law was enacted, we now know it’s here to stay. Yesterday the U.S. Supreme Court handed down its decision in Chamber of Commerce of the United States of America et al v. Whiting et al, ruling that LAWA (also known as the Arizona employer sanctions law), is NOT preempted by federal law. Under LAWA, Arizona employers that knowingly or intentionally employ unauthorized aliens are subject to suspension or revocation of their business licenses. LAWA also requires all Arizona employers to enroll in the federal E-Verify program.

The Court held that LAWA is not preempted by federal law because it does nothing more than impose licensure sanctions on Arizona businesses, implementing a little-known section of the 1986 Immigration Reform and Control Act (IRCA). Specifically, IRCA prohibits states from imposing “civil and criminal” sanctions on employers of unauthorized aliens, except “through licensing and similar laws.” That, the Court observed, is precisely what the Arizona law does – it allows states to suspend or revoke the business licenses of Arizona employers that are found to knowingly employ unauthorized aliens.

The Court also held that LAWA’s E-Verify requirement is not preempted because even though IRCA made E-Verify a voluntary program at the national level, it did not express any intent to prevent states from mandating participation. Under federal law, the Department of Homeland Security may not require any person or entity outside the federal government to participate in E-Verify (except when imposing IRCA sanctions). However, the Court ruled that such restrictions apply only to the federal government, not to the states. Moreover, the Court noted that the consequences of failing to enroll in E-Verify under the Arizona law are the same under both state and federal law – the employer forfeits an otherwise available rebuttable presumption of compliance with LAWA.

For many Arizona employers, this decision will simply encourage them to continue adhering to their employment verification compliance programs. For others, this decision may be the stimulus needed to begin developing a compliance program. Employers who are unsure about their level of workplace compliance should start with an external audit of their hiring practices, including a thorough review of Form I-9 completion and E-Verify enrollment.