The 5-3 decision in Chamber of Commerce of the United States v. Whiting found that the federal Immigration Reform and Control Act of 1986—which requires employers to verify that all their workers are eligible to work in the United States—does not preempt the Legal Arizona Workers Act.
Impact: The decision will no doubt prompt other states to enact similar legislation requiring employers to use the E-Verify system. Eleven states already do. E-Verify is also mandatory for federal contractors, although it remains voluntary for most private employers.
The Arizona law calls for the “corporate death penalty” for companies that employ undocumented workers. Companies can have their business licenses revoked if they are caught with ineligible workers.
That provision is what won the case for the state of Arizona.
The federal IRCA preempts state and local laws from imposing sanctions for employing unauthorized workers “other than through licensing and similar laws.” The plaintiffs argued that only the federal government can require employment eligibility verification.
By making the penalty the possible loss of a business license, the Supreme Court ruled, the Arizona law “falls within the confines of the authority Congress chose to leave to the States and is therefore not expressly preempted.
An odd coalition of business and civil rights groups had joined the U.S. Chamber of Commerce in opposing the Arizona law. They argued, in part, that the government’s E-Verify system sometimes falsely flags certain legally authorized workers as “illegals” and often fails to detect identity fraud.
Under Arizona’s law, employers that use E-Verify have a “safe harbor” demonstrating their good-faith efforts to comply with the law, even if they are found to employ unauthorized workers.
Lessons learned: If you are an Arizona employer, you must immediately begin complying with the Legal Arizona Workers Act. If you’re not in Arizona, it’s time to become well versed in how to use E-Verify. It’s quite likely that your state will adopt a similar law in the future.